Niblack defines resource at Alaskan VMS project (September 10, 2008)

Vancouver – With an exploration adit finally complete and underground drilling underway, Niblack Mining (NIB-V) released the first resource estimate for its namesake volcanogenic massive sulphide project on Prince of Wales Island, in Alaska.

And while the initial deposit isn’t large, the grades are promising and the expansion potential considerable.

The calculation pegged indicated resources at 1.42 million tonnes grading 2.86 grams gold per tonne, 41.73 grams silver per tonne, 1.04% copper, and 2.14% zinc. Inferred resources add 1.89 million tonnes grading 2.07 grams gold, 29.21 grams silver, 1.65% copper, and 2.71% zinc.

“It’s certainly a good estimate and we’re glad to have it out, but it’s just a start,” says Darwin Green, vice president of exploration.

The estimate determined resources for the project’s two main zones, known as Lookout and Trio. The Lookout zone, true to its name, sits on top of a hill and Trio outcrops a few hundred metres east.

Mineralization at Niblack is hosted by a thick sequence of rhyolite. If Niblack’s model is correct, the Lookout and Trio zones are part of the same overturned limb of a synclinal fold in the rhyolite, except that the fold itself has weathered away.

Trio plunges steeply to the south and the zone remains open at depth. Lookout also plunges deeply to the south. If Niblack’s model is correct, the Lookout zone rhyolite folds almost in half deep inside the hill and pops back out north of Lookout, near the base of the hill in an area known at the Mammoth zone.

Niblack recently completed an 800-metre exploration adit into the hill, with the portal essentially in the Mammoth zone. While permitting and developing the adit Niblack drilled Lookout and Trio from surface, limiting most drilling to depths less than 450 metres.

The estimate only incorporated data from those surface drill holes, which means the resource is confined to the upper reaches of the mineralization trajectory. Green says underground drilling to test the down-plunge potential is underway.

“We’ve basically spent the last three years getting to this point it took that long to get the permitting done and then drift in the adit,” Green says. “So it’s pretty exciting to finally be here.”

The company finished the underground access tunnel in mid-July and has since drilled 15 holes probing the depth extension of the Lookout zone. Assay results for some of those first underground holes are expected shortly.

The goal from here is to expand the resource at depth while also completing enough infill holes to upgrade most of the inferred resource to indicated status. The ability to drill from underground now is going to allow Niblack to continue its exploration efforts through the winter.

Green is happy to have a resource estimate complete but it is clear his vision for the Niblack property goes far beyond defining a deposit.

“I know it’s early to think about these things but it’s a pretty great set-up for a mine,” says Green. “All of the deposit defined to date sits inside a hill above you, so there would be no need to sink declines or truck ore up and out of a mine you could just pull it out the bottom, maybe even straight onto a barge.”

The project sits on a deep tidewater inlet. In fact, the Niblack camp is on a barge; having a floating camp made more sense than building one on the precious little flat ground in the project. Travelling to the camp requires just a short float-plane trip from Ketchikan.

Green says the company will soon embark on an internal scoping study to investigate the project’s economics and development options. One option would be to put off developing major infrastructure at the site and instead take advantage of the tidewater inlet to ship ore directly, even if only to fund further development.

The other major Niblack news is that the company is merging with Committee Bay Resources (CBR-V). The two companies announced merger plans in May. Provided shareholders approve the deal, Committee Bay will acquire all Niblack by exchanging shares on a one-to-one basis.

In addition, Committee Bay is providing up to $10 million in financing to Niblack by way of secured convertible debenture. Committee Bay has already advanced more than half of the $10 million to Niblack to fund exploration.

“In this market, we’re quite lucky to have a partner,” says Green.

Committee Bay is a Vancouver-based exploration and development company focused on its Greenstone Belt gold project in Nunavut and its Jaurdi Hills gold project in Western Australia. A March estimate pegged resources at Greenstone Belt at 2.5 million indicated tonnes grading 5.94 grams gold plus 1.3 million inferred tonnes grading 5.34 grams gold.

News of the Niblack resource left the company’s share price unchanged at 11.5, a new share-price low to which it had sunk the previous day. Niblack shares have a 52-week trading range of 11.5 to 78 and the company has 49.7 million shares issued.