Crowflight Hits High-Grade Nickel At Bucko Lake

VANCOUVER — Expansion drilling at the new Bucko Lake nickel mine in Manitoba is proving up a new high-grade zone just 100 metres from current underground operations for owner Crowflight Minerals (CML-T, CMLGF-O).

The new zone, known as the North zone, sits just 100 metres north of currently producing areas on the 1,000-ft. level at the mine. Drilling has been so successful that Crowflight has already directed crews to start developing access.

The zone routinely returns intercepts grading better than 1.3% nickel, and often considerably better. Hole 94 cut 22.2 metres grading 2.11% nickel, hole 95 returned 21 metres averaging 1.96% nickel, and hole 97 hit 18 metres of 2.1% nickel. An earlier set of results included 16.9 metres grading 1.43% nickel, 6.6 metres averaging 3.3% nickel and 20.9 metres of 1.35% nickel.

The new zone is a boon for Canada’s newest nickel producer, as the company expects ore from the North zone will sustain increased rates of production at the nascent mine for the duration of 2009 and into 2010. The new zone allows the company more flexibility in its mine plan, while still ensuring consistent volumes of ore with high nickel content.

Crowflight has already completed 8,600 metres of drilling in 39 holes this year in its second-phase exploration and underground ramp delineation program at Bucko Lake, which sits near Wabowden, Man. Initially, the company focused its exploration drilling on stopes accessible from the 450- ft. level; as the program progressed, the drills moved deeper into the mine. Drills are now working from the 900-ft. level.

In mid-February, the company shipped its first rail car of nickel concentrate to Xstrata’s (XSRAF-O, XTA-L) nickel smelter in Sudbury, Ont., pursuant to their offtake agreement. And in the first three months of the year, the Bucko Lake mine produced 139,000 lbs. nickel, even though the mine has not yet attained commercial production.

With commissioning near complete, Crowflight has revised its production outlook slightly, reducing payable nickel output to 7.9 million lbs. from 9.1 million lbs. Average operating cash costs are US$3.61 per lb. nickel.

According to a mid-March reserve update, Bucko Lake is home to 3.7 million proven and probable tonnes grading 1.45% nickel.

In other Crowflight news, the company finalized a US$10-million line of credit. It intends to use the facility to bridge working capital requirements, allowing it to leverage its receivables pipeline up to six weeks sooner. As part of the facility, Crowflight will hedge the price of nickel and possibly the Canadian- U. S. dollar exchange rate when nickel concentrate is delivered to the smelter to mitigate the potential impact of provisional pricing adjustments over the three to five months between delivery and final settlement.

In the first quarter, the company reaped the rewards from earlier hedging, realizing $10.1 million by monetizing all remaining nickel forward sales and foreign exchange contracts. Crowflight then used $7.6 million of that amount to pay off the outstanding balance on its debt facility, leaving the company debt-free despite having just built a mine.

Also during the first quarter, the company closed two private placements. In the first, Crowflight sold 46 million units for 17¢ each to raise $7.8 million; in the second, the company sold 29.4 million units at the same price to bring in $5 million. In each, a unit comprised a share and half a warrant. Proceeds from the second placement were used to repay amounts owing to Dumas Contracting, a contract miner.

And the company appointed a new president and CEO. Michael Kelly just took over the reins at Crowflight, after 10 years as general manger of the New Britannia mine in Snow Lake, Man., and earlier time as vice-president of mining for Vale Inco’s Thompson mines.

On news of the North zone drill results, Crowflight’s share price gained 5¢ over two days to close at 25¢. The company has a 52-week trading range of 9-72¢ and 369 million shares outstanding.