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6/15/2013
Heatherdale reassurance

By SCOTT BOWLEN

Daily News Staff Writer

Heatherdale Resources remains committed to the Niblack mineral project as it seeks funding for further exploration in a difficult global investment climate, company officials reiterated Thursday in Ketchikan.

"We're still financially strong; we’re alive and well; we’re very committed to the Niblack project," Heatherdale President Patrick Smith told the attendees of the Alaska Miners Association Ketchikan/POW Chapter luncheon on Thursday.

Smith, along with Heatherdale Project Manager Graham Neale, attended the event to elaborate on earlier news that the company had only minimal staff at the copper-gold-zinc-silver prospect site on southeast Prince of Wales Island and wouldn’t proceed with a surface-drilling exploration program this year unless it could secure additional funding.

They assured the audience that the Niblack Project itself continues to be a good prospect to move ahead toward becoming an actual mine.

"I can't say that there's anything wrong with the project," Smith said. "It’s fantastic. It’s a fantastic opportunity to develop and a lot of other companies have recognized that."

However, the global investment environment isn’t favorable for the mining industry at large — despite solid pricing in mineral commodity prices, according to Smith. That’s made it difficult for companies like Heatherdale to raise money for exploration work.

"There's not a lot of (investor) confidence in the industry as a whole, financially," he said. "So the financial dollars, the investment dollars, don't seem to be coming to the mining industry, that sector of the overall market at this point, and it’s been that way for 18 months to two years."

But Heatherdale and its "flagship" project have some advantages in their favor.

Heatherdale — a publically traded junior mineral exploration company based in Vancouver, British Columbia — is part of the larger Hunter-Dickinson Inc. mining group that operates globally.

"That gives us the technical and financial backing and support to keep things moving along, even when we’re struggling in the marketplace somewhat," Smith said.

He cited HDI’s 25-year history of obtaining financing for and developing mining projects around the world.

The affiliation with HDI allows Heatherdale to conserve its financial resources by carrying few staff of its own while drawing from HDI’s Vancouver-based staff as needed.

"They’ve got geologists and engineers and legal staff ..., so when I need a bit of legal advice, when I need a geologist to pull in, or a geophysicist, I basically hire them for the (time) that I need them," Smith said.

That way, Heatherdale doesn’t have a high "burn rate" on its financial resources from staffing.

Heatherdale also recently ended its participation in another project near Tok in order to focus solely on the Niblack project.

Heatherdale had acquired an interest in the Delta project, which involves a mineral deposit similar to Niblack’s, but is in an earlier stage of exploration/development.

In May, Heatherdale decided against spending an additional approximately $1.5 million to secure a 60-percent interest in the Delta project, and instead relinquished its interest to Agnico Eagle Mines Ltd.

Smith said Heatherdale’s involvement in the Delta project made sense until probably earlier this year, "when we found that … really any dollar that we have in our treasury, we're going to put at Niblack, because that's our flagship, that's the one we want to aggressively move ahead."

The relative advantages for the Niblack project includes its presence within a "very good jurisdiction," according to Smith.

"We know what the laws are here; we know what the regulations are; we have the large mine permitting team with the state that helps us move along through all of the federal and state permitting agencies," Smith said. "We have community support, and there aren’t many projects, when I talk about this project outside ..., that measure up in that way very well."

In regards to its resources, a Niblack mine would produce high-value copper and zinc concentrates that are attractive to smelters.

It’s that aspect of the Niblack project that might prove helpful in securing a partner to help finance further exploration at the site.

Smith said Heatherdale has been talking with companies with a potential interest in becoming a partner, including companies that operate smelters.

"We’re attractive to those kind of companies," he said. "So what they'll do is bring money to the game, and we'll promise offtake — in other words, they'll get first rights to our concentrates."

Heatherdale is taking its time in talking with potential partners, said Smith. The goal is to find a partner with a similar view of how to advance the Niblack project, while not diminishing the opportunity for Heatherdale.

An audience member asked whether Heatherdale would consider raising money through a stock sale.

As on officer of a publicly traded company. Smith said he could not answer the question directly. However, he noted in general terms that Heatherdale’s current share price is "extremely diluted."

Heatherdale’s share price has slid steadily from a high of more than $1.30 (Canadian) in the fall of 2011 to 7 cents on Friday.

"We (would) have to sell a lot more shares ... to raise $2 million," Smith said. "I don’t see that as a true alternative way to move this. It never has been the way we move this project forward. It will be through ... a combination of debt and equity."

Whether the process of securing funding will be done in time for a drill-exploration program this year, "it’s hard to say," Smith said.

At present, Heatherdale is managing the Niblack project site near Moira Sound in a "ready state," taking care of equipment, water monitoring and other daily necessities associated with the site, according to Smith.

The current situation is similar to 2012, when exploration funding came through in time for a drill exploration program to start in July, he said.

"If we were funded tomorrow and we said we’re going to launch a drill program, it would be like last year," Smith said. "The team would be able to throw it together ... in about two or three weeks’ time, I have no doubt that we can get things going quickly if we need to."

Smith and Neale responded to several questions from the audience, including where the Niblack project is in the development process toward a mine, permitting, and potential roadblocks.

In a response to a comment from Richard Peterson of Kasaan about POW support for the project, Smith acknowledged that Heatherdale officials need to go and talk to people on POW soon.