Hunter Dickinson’s Northcliff options N.B. tungsten-moly play

With an eye on a rising tungsten price, the Hunter Dickinson group has picked up an option on Geodex Minerals‘ (gxm-v, g2w-f) advanced exploration-stage Sisson Brook project in central New Brunswick.

Northcliff Exploration, a private company controlled by Hunter Dickinson, can earn a 70% interest in the tungsten-molybdenum project by investing $17 million in exploration, feasibility and project costs. In addition, as operator, Northcliff will seek to obtain project financing for mine construction and start-up. Geodex will retain a 30% interest in the project.

As part of the deal, Northcliff will take down a $1-million private placement in Geodex, at a price of 30 cents per share, representing a 160% premium to the closing price on August 30 when the transaction was first announced. Geodex says the funds will be used for general working capital purposes.

“Sisson Brook has been an important discovery, for Geodex and for New Brunswick,” remarked Jack Maris, chairman of Geodex. “The Northcliff agreement sets Sisson Brook on a clear development path towards the opening of a new Canadian mine.”

The Sisson Brook property, 100 km north of Fredericton, hosts a large porphyry-type deposit that is potentially amenable to open-pit mining.

Measured and indicated resources total 177.4 million tonnes grading 0.094% tungsten oxide (WO₃) and 0.031% molybdenum, based on a 0.1% WO₃-equivalent cutoff.
Inferred resources contain an additional 69 million tonnes of 0.086% WO₃ and 0.033% molybdenum.

Northcliff says there is potential to both expand and upgrade these mineral resources with additional drilling.

“The Sisson Brook project is very attractive for both open-pit development potential and its location in a secure and mining friendly jurisdiction,” stated Robert Dickinson, chairman of Hunter Dickinson. “It is well suited to the mining development strengths we have developed at Hunter Dickinson over the past 25 years.”

“I am pleased to return to the tungsten industry at a critical juncture in the industry’s evolution as the tungsten price continues to rise and a secure supply source, such as New Brunswick, becomes increasingly vital to the global industry,” remarked Dickinson in a press release.

The Hunter Dickinson stable of companies include Northern Dynasty Minerals (ndm-t, nak-x), Taseko Mines (tko-t, tgb-x), Continental Minerals (kmk-v, kmkcf-o), Farallon Mining (fan-t), Anooraq Resources (arq-t, ano-x) and Amarc Resources (ahr-v, axref-o).

Tungsten and molybdenum mineralization at Sisson Brook was first defined through drilling programs that ran from 1978 to 1982 by Kidd Creek Mines. This work outlined two tungsten-copper zones, known as zones I and II, and the much larger tungsten-molybdenum deposit, called zone III.

Since acquiring the property in 2004, Geodex has worked primarily on better defining the resources in zone III. The preliminary economic studies completed to date have considered only the potential mine development of zone III and the smaller Ellipse zone off-shoot.

A preliminary economic assessment completed in 2009 suggested a 20,000-tonne-per -day operation could support a mine life of 20 years and provide a pre-tax internal rate-of-return of 23%, with a payback of less than four years. Capital costs were estimated at US$339 million.

The base case scenario used metal prices of US$220 per tonne WO₃ and US$15 per lb. molybdenum. Recoveries were estimated at 74% for tungsten and 70% for molybdenum.

Geodex has continued to work on improving projected costs and metal recoveries by conducting further metallurgical test work. The initial results from the current program suggest that a crushing and pre-concentrate sorting circuit could significantly boost per-concentrate grades ahead of the more cost intensive mill processing steps, such as grinding and flotation.

“This allows for up to half the mined rock volume that is ore sorted to go directly to the mine dumps, resulting in an increase in the grade sent to the mill and a reduction in capital and operating costs,” reports Geodex.

Geodex will have 103.7 million shares outstanding, or 133.7 million on a fully diluted basis, once the Northcliff private placement has closed. The junior is trading at a 52-week high of 18.5 cents.