Cap-Ex’s iron ore discovery grabs market’s attention

Just two short months ago, Cap-Ex Ventures (CEV-V) was one of the smallest and least visible explorer looking for iron ore in Eastern Canada’s Labrador Trough. But as the first assays from the company’s main Block 103 iron ore property near Schefferville, Que., come rolling in, the market has started taking notice. 

Cap-Ex’s shares have risen from a 25¢ low in early October to a high of $1.24 on Nov. 22. They rose 27¢ on 3.74 million shares traded that day after the company announced it had adopted a shareholders’ rights plan to prevent any unattractive takeover bids. 

Brett Matich, Cap-Ex’s president and CEO, told The Northern Miner that “it’s early stage, but we’ve had a lot of interest from analysts, brokers, end-users . . . it’s just a matter of, we don’t want to be in a position where someone takes advantage by taking the company out at a price we feel isn’t right for shareholders.” 

Matich is headed to China in December month to meet with prospective Asian investors and possibly major steel producers. “With iron ore being a bulk commodity, on surface you can have extremely wide-spaced drilling, and it’s known in the industry that you’ll get a high percentage of converting that into an National Instrument 43-101 resource. This particular deposit, and the size of it, it’s gotten to the stage where it has strategic value for the North Americans, Australians, the Asians, et cetera.”

Cap-Ex has come a long way since completing the very first drill hole on the property in July. Mapping, sampling and drilling have outlined a main zone of magnetite mineralization called Greenbush that extends for 12 km along strike on the West limb and 8 km along strike on the East limb. The West limb extends as much as 2 km in width in places while the East limb reaches up to 1 km wide. The average true width of the magnetite mineralization is estimated at 110 metres. Both limbs remain open in all directions. 

As Matich explains, “After the discovery hole, we started stepping out quite big amounts in relation to the high-mag anomalies, and in some cases with these anomalies we had a little bit of outcrop and sometimes we had absolutely nothing. From there, we started drilling in between the anomalies, finding out that the orebody continued whether there was high-mag, low-mag or even no-mag – that it was continuous. What was putting everything off was the folding. The tips of the folding were showing up in the mag, but the valleys of the folding had no mag at all.

“I suppose it’s one of those typical deposits where at the end of the day, you’ve just got to drill it. And sometimes when you drill it, you get what you want.”

The Australian mining executive made the move to Canada a few years ago after identifying a dormant iron ore mine in Western Australia and bringing it to the feasibility stage. ASX-listed Mount Gibson Iron (MGX-A) took over the company in 2006 and now produces 3 million tonnes of hematite each year from the mine.

Matich helped Cap-Ex option Block 103 and a set of other prospective iron ore properties in the Labrador Trough in January from a vendor he worked with on a previous deal. Adriana Resources (ADI-V) conducted 670 line km of airborne surveys on Block 103 in 2008, and according to Matich, when Adriana asked for an extension on the option timeline, the vendor instead gave the option deal to Cap-Ex after Matich convinced the vendor that he would quickly advance the property. 

Over the past two years, a string of acquisitions and major deals with the world’s biggest iron ore and steel producers has put the Labrador Trough firmly in the international spotlight. Cap-Ex’s properties are well-located to take advantage of the boom in activity, sitting between the KeMag and LabMag deposits being developed under a $4.5-billion deal between New Millennium Iron (NML-V) and Tata Steel. Also nearby is Labrador Iron Mines (LIM-T), which began operations at its Schefferville area project earlier this year at a rate of 3.65 million tonnes of iron ore per year. Cap-Ex’s flagship Block 103 property is 30 km northwest of Schefferville. Three major mining companies also have large active iron ore operations in the trough, including Rio Tinto (RIO-N, RIO-L), ArcelorMittal (MT-N) and Cliffs Natural Resources (CLF-N).

Recent drilling at Block 103 has yielded impressive intersections, such as hole 103-7, which returned 159 metres grading 31.2% iron in magnetite and Davis-tube weight recoveries averaging slightly higher than other projects in the area at 30%. The resultant Davis tube concentrate estimates have an average grade of 66.9% iron and 5.6% silicon dioxide. Drilling and sampling at the property has delineated an area with strong magnetite mineralization at least 16 sq. km in size.

Matich says of the 17 drill holes completed so far at the Greenbush zone – assays are back for 10 of them – all have encountered magnetite mineralization, with seven holes based on visual observations of drill core. The average length of mineralization found in the core intercepts is recorded at 128 metres. The mineralization generally starts near-surface and is open in all directions. Of note, the western limb of the Greenbush zone exhibits a folded sequence that is observed in hole 44. This 265-metre hole goes through the main Sokomon formation, exits the formation and then re-enters in a reverse-formation sequence. Assays remain pending for the hole.

Matich also said a back-of-the-napkin resource calculation for Block 103 appears to result in a 4-billion-tonne resource, but he was forced to retract a similar statement in a subsequent press release because the company has not yet completed a National Instrument 43-101-compliant resource estimate or economic studies for the deposit.

Cap-Ex has also discovered a separate zone on Block 103 it calls the Northwest zone, 3 km west of Greenbush in the northwest corner of the property adjoining land controlled by New Millenium and Tata Steel. “There’s no doubt that this particular orebody goes on to the neighbour’s ground,” Matich explains. “It’s not going to be the same size as Greenbush – we simply don’t have the same size footprint and it’s not as thick – but magnetite deposits in the 100-metre thickness, they’re treated with a lot of respect.” Of the six holes completed to test the zone over 5.3 km of strike, assay results are out for only the northernmost drill hole nearest the property border. Drill hole 103-11 returned 108 metres from near-surface averaging 31.8% iron, with 31.6% Davis-tube weight recovery.

Matich hopes to obtain an National Instrument 43-101 inferred resource for the deposit by the end of next year following an extensive infill drill program in 2012. The company will also look to sign an agreement with the local aboriginal group, the Innu of Uashat mak Mani-Utenam, which tried to stop the company from completing exploration on the property this summer. “I feel confident that with the relationship we’ve got we’ll be able to do something,” Matich says.

Cap-Ex had 44.1 million shares outstanding, 60.7 million if fully diluted as of November, and $6.5 million in its treasury. The company has a 52-week share price range of 25¢-$1.62.