Blue Pearl jumps on Davidson drilling

Shares in Blue Pearl Mining (BLE-T) were $1.60, or 75%, higher at an all-time high of $3.74 in late afternoon trading in Toronto on Feb. 6, after the company reported encouraging drill results form the Lower zone at the company’s Davidson molybdenum deposit near Smithers, B.C.

The company’s first hole designed to test mineralization situated some 300 metres below the main deposit cut 48.8 metres grading 0.46% MoS₂, beginning 295.6 metres downhole. The intersection is believed to represent the zone’s true thickness.

The hole is around 30 metres southwest of hole 143, sunk by Climax Molybdenum in 1972. That hole yielded 0.37% MoS₂ over 36.5 metres. Climax hole no. 142 surrendered 0.46% MoS₂ over 49 metres.

Assays results are pending for another 4 holes; a sixth hole is in progress. Blue Pearl’s holes represent the first follow-up holes on Climax’s discovery holes. The company has another drill on the way, and plans to sink another 12 holes.

The top of the Lower zone is around 300 metres below the level of the existing underground workings, and just above the elevation of a proposed new portal.

The zone is not included in the project’s National Instrument 43-101-compliant measured and indicated resource totalling 83 million tons grading 0.295% MoS₂, or 293.5 million contained lbs. of molybdenum metal. The estimate is based on a cutoff grade of 0.2% MoS₂.

Blue Pearl intends to excavate a second adit under the existing one. Thereafter, the deposit would be mined at the rate of 2,000 tonnes per day. On an annual basis, 700,000 tonnes grading 0.57% moly would be mined, equivalent to 4.8 million lbs. moly.

High-grade ore would be conveyed 3 km from the portal to an existing Canadian National Railway station. Blue Pearl estimates that the cost of transporting concentrate to the Endako mill by rail is US$5.30 per tonne.

In all, the company believes startup is possible at a total capital cost of US$20 million.

At a molybdenum price of US$15 per lb., the Davidson mine is expected to generate annual revenue of US$72 million; at US$35 per lb., the figure soars to US$170 million. Costs are pegged at US$5-6 per lb.