Black Hawk looks for more gold at Hoyle

Drills are turning once again at Black Hawk Mining’s (TSE) gold property in Ontario’s Hoyle Twp.

The company has begun a 8,400-metre, 37-hole drill program to test the continuity of the known gold zones across a width of 800 metres and to a vertical depth of 300 metres. In addition, an untested geophysical anomaly, known as the North conductor, will be tested by four shallow holes.

Drilling earlier this year on the V-1 zone intersected 13.4 grams gold per tonne across 3.7 metres, 6.2 grams across 7 metres and 18.6 grams across 4.2 metres. On the V-2 zone, values of 44.1 grams across 5.7 metres were encountered, while the V-3 zone intersected values of up to 115.8 grams across 1 metre.

Black Hawk will buy a 60.5% interest in the Grubstake syndicate, which owns an option to acquire the Hoyle property. The purchase will allow Black Hawk to increase its interest to 84.2%, subject to a 2% net smelter return royalty, which increases to 3% after the payback of capital. Negotiations to purchase the remaining 39.5% interest in the Grubstake syndicate are in progress.

The terms of the purchase require Black Hawk to issue 1.25 million common shares along with 375,000 warrants exercisable for two years at $1.25 and the same number exercisable for two years at $1.50. If the remaining 39.5% interest in Grubstake is purchased, Black Hawk will issue an additional 816,116 common shares and 489,670 warrants.

In another development, Black Hawk has signed a custom milling and smelting contract with Falconbridge (TSE). The agreement calls for Black Hawk’s Redstone mine near Timmins, Ont., to provide high-grade nickel ore to Falconbridge’s Strathcona processing facilities in Sudbury, Ont. for a period of at least two years, at an approximate rate of 300 tonnes per day.

The Redstone deposit has proven and probable mineral reserves of 182,325 tonnes averaging 3.28% nickel and 0.038% cobalt. Just below those reserves, Black Hawk drills have intersected 2.76% nickel across 5.9 metres and 5.28% nickel across 2 metres. Potential for additional reserves also exists along the main ultramafic-dacite contact that hosts the Redstone deposit.

The Redstone operated from 1987 to 1992, with a ramp developed to below the 244-metre level. Dewatering has begun and is expected to be completed by the end of August. The BLM Service Group owned by William Resources (TSE) has been awarded the dewatering and mining contracts for Redstone.

The first new production from the mine is expected in October.