Houston Lake digs Kenora

SITE VISIT

Kenora, ONT. — The rolling hills and quiet lakes outside of Kenora, Ont., offer up many an idyllic Canadian panorama. The casual Sunday driver would be forgiven for thinking the land was used for little more than fishing and sky gazing.

But beneath the surface lies world-class mineral potential that may one day host some of Ontario’s more economic gold mines — as it did in the past.

“Before Timmins and Red Lake,” says Grayme Anthony, president and chief executive of Houston Lake Mining (HLM-V, HLKMF-o), “there was Kenora.”

At the turn of the last century, the Kenora region was responsible for producing half of Ontario’s gold output, and if Houston Lake has its way, the junior will be a key player in the revival of mining in the region through its West Cedartree project.

The property, which is a roughly 40-km drive southeast of Kenora along a paved highway, consists of four near-surface, high-grade deposits.

Recent drill intervals of 4.6 metres grading 10.51 grams gold and 6.1 metres of 5.09 grams at its Dogpaw property, a potential open-pit mine, point to the project’s potential.

Another zone near Dogpaw with similar open-pit ambitions, Angel Hill, also returned significant mineralization, with one hole cutting 479 grams gold per tonne over 1.22 metres.

Such high-grade potential open-pit zones aren’t easy to come by in an area as mining friendly and politically stable as northwestern Ontario.

But Anthony has a few tricks when it comes to securing such ground: do the opposite of everyone else and be patient.

Anthony took the helm of Houston Lake in 1997, shortly after the Bre-X Minerals scandal broke. With the ensuing collapse of metal prices and investor flight from the minerals sector, it looked like the worst time take charge of a junior gold company.

But Anthony held firm to his new post and following the axiom that when others are greedy, be fearful and when others are fearful, be greedy, he and his team snagged properties in the three areas of the commodities market they thought would have the most long-term potential — gold, platinum and rare earth metals.

Houston Lake still holds early-stage platinum and rare earth metal projects, but the key to its story is West Cedartree and it is moving towards proving up 100,000 oz. of gold resources there.

And while the aforementioned Angel Hill and Dogpaw properties are important in Houston Lake’s development, neither is considered to be the flagship property.

That distinction goes to Dubenski, where gold was first discovered in 1935.

Acquired by Houston Lake in 2007, Dubenski came with a historical resource of 355,286 tonnes grading 6.32 grams gold for roughly 72,000 oz.

Farther east of the northwest-trending fault system that gave rise to Dogpaw and Angel Hill, mineralization at Dubenski is more closely associated with the Cameron Lake fault system that hosts Nuinsco Resources’ (NWI-T, NWIFF-o) Cameron Lake project.

Dubenski sits adjacent to the Cameron Lake fault system and just 10 km southeast of the Cameron Lakeproject itself, which has a measured and indicated resource of 120,000 oz. and an additional inferred resource of 170,000 oz.

“It’s all an open book as far as we’re concerned,” Anthony says of the property. “There’s a lot of work to do but we’re focusing on generating ounces and resources towards getting a mill built and then will have the cash to explore more.”

Assay results show that the company is doing a good job of getting those ounces, hitting some of its best intersects earlier in the year. Highlights include 33 metres grading 12.11 grams gold, 14 metres grading 8.78 grams gold and 3 metres grading 256.94 grams gold.

Unlike Dogpaw and Angel Hill, however, Dubenski will have to be mined via underground methods due to its proximity to a body of water.

Watts Griffis and McOuat is currently putting together a report on Dubenski’s Shaft zone that will update the zone’s historic resource. Gold at the site occurs as fine-grained free gold, concentrated along foliation planes.

Houston Lake’s second key property, Dogpaw, sits roughly 1.3 km from Dubenski and has a historic resource estimate of 54,000 tonnes grading 15.43 grams gold per tonne for roughly 27,000 oz.

Houston Lake acquired Dogpaw in 2006 for 400,000 shares and $400,000 in work commitments. Anthony says the deal was made after his team determined that mineralization at the property was likely a continuation of its Angel Hill and McLennan properties.

Dogpaw saw roughly 2,500 metres of drilling last year, which helped to better define the gold- bearing veins that form a mineralizing system that extends over 280 metres.

The most prospective vein is known as the No. 1 Vein, where gold mineralization has been tracked to 210 metres depth.

This year’s drill plan includes 34 holes totalling 3,209 metres, largely focused on the No. 1 Vein. The first 22 holes of the program have been reported, with 18 intersecting significant gold values of 3 grams gold per tonne or higher.

Another 14 holes and 2,062 metres defined the No. 2 Vein, which has been traced to a depth of over 140 metres and a distance of 100 metres along strike.

Anthony expects to have a resource estimate for Dogpaw by the end of the year.

The third most prospective project at West Cedartree is Angel Hill, a property that holds an important place in the company’s emerging story.

“Our story really started to evolve with Angel Hill,” Anthony says. “It was missed by everyone else, but our geologist found it while doing some road cutting.”

The property currently has an inferred resource of 106,400 tonnes grading 2.97 grams gold for 10,160 oz.

While that resource is small at this point, Anthony points to a large hole in the earth left behind by the 2006 bulk sample as a cause for optimism.

Some 190 oz. of gold were produced from 1,041 tonnes of mineralized material pulled from the ground, and with a 93% recovery rate and an average head grade of 5.67 grams gold per tonne, it was very economic rock. But such impressive numbers weren’t just economically significant, they also represented the first time in 10 years gold had been produced in the area –an occasion marked by a tidy cash bonus paid to the company as it netted a $52,000 profit on the sample.

The prospect for more mineralization being pulled from Angel Hill looks good as the zone currently extends across a strike length of 200 metres and remains open at both ends and at depth. The overall zone that hosts mineralization has been traced over 2.8 km and induced-polarization surveys and geophysics show that it could extend to more than 6 km.

With three prospective properties in an area with the infrastructure, the workforce and stability that help turn a project into a mine, Houston Lake’s main task now is to keep the funds coming in so that drilling can keep raising the overall tonnage.

Towards that end, the company recently completed its second financing of the year, which brought its kitty back up over the $1-million mark.

And Anthony, with his 25 years of experience in the exploration game –he’s worked as an exploration geologist on four continents and was vice-president of exploration for Norcan Resources — knows exactly what he wants to do with the cash.

Eschewing corporate philosophies that favour self-promotion over the nitty gritty of good geological work, and geological approaches that propose drilling everywhere but lack a clear understanding of what’s there, Anthony, instead, is the manifestation of the steady-hand approach.

“The ones that tried to do too much didn’t end up going anywhere,” he says. “The ones that succeeded did focused work.”