Xmet grabs land around Zenyatta’s Albany graphite play

VANCOUVER — Several months ago, explorer Xmet (TSXV: XME; US-OTC: XMTTF) hit the brakes on its acquisition of the resource-stage Duquesne–Ottoman gold project from Clifton Star Resources (TSXV: CFO) due to tough market conditions. Xmet had envisioned a multi-million ounce gold project 30 km north of Rouyn-Noranda, Que., but couldn’t finance the requirements of its earn-in agreement.

According to chairman and CEO Alex Stewart, Xmet’s management saw the difficulties facing gold juniors, and began looking for alternatives that it could take to the market.

One opportunity Xmet reviewed was a stable of graphite properties 60 km northwest of Hearst, Ont. These properties happened to be in the neighbourhood of one of 2013’s most exciting discoveries: Zenyatta Ventures’ (TSXV: ZEN; US-OTC: ZENYF) Albany hydrothermal graphite deposit.

“It became pretty obvious we were unlikely to find any financeable opportunities in the gold sector,” Alex Stewart comments during a phone interview. “We were aware that they had proximity to [Zenyatta]. After we conducted some research on regional graphite up there, it seemed there were reasonable prospects for finding similar assets in an area that’s quite underexplored. There was a bit of historic geophysics done decades ago, which told us a bit about the structures in the region.”

Albany’s mineralization is classified as a magmatic-hydrothermal graphite breccia, which is a deposit type that is attractive due to ultra-high carbon purities and relatively low-cost processing. Zenyatta released a maiden resource at Albany on Dec. 2, which totals 25 million indicated tonnes grading 3.89% graphitic carbon and 20 million inferred tonnes averaging 2.2% graphitic carbon.

On Nov. 4, Xmet entered into an option agreement with Metals Creek Resources (TSXV: MEK; US-OTC: MCREF) for a block totalling 24 claims that tied onto the northwestern margins of Albany. Xmet made the agreement conditional on additional staking in order to be sure its spending on geophysical surveying did not go to waste.

Xmet staked another 46 claims to complete its northwestern block, and proceeded to double its land position on Nov. 8 when it staked 111 new claims located 7 km east of Albany. The staking gave Xmet two land positions located within the border phase of the northwestern and southeastern margins of the Nagami River carbonatite-alkaline intrusion.

“There’s a bit of geophysical context you need when looking for graphite. In terms of those historic reports, we were really looking for those magnetic lows as our primary indicator,” says president Stephen Stewart. “The trick is finding one of these lows that is coincident with a conductive area. Then you’ve got a target. There are two levels of geophysics we’re trying to pin down, and something lit up really brightly from the helicopter when we flew our second electromagnetic survey.”

Market activity picked up for Xmet in early December after it released results from a time-domain electromagnetic survey flown over its eastern claim blocks. The company identified a large northeast-trending anomaly with a strong electromagnetic response measuring 300 by 800 metres that is situated within magnetic, low-flanking, northwest-trending magnetic diabase dykes.

By early January Xmet’s newly staked project — which it named Blackflake — totalled 90 sq. km across its eastern and northwestern blocks.

Between Dec. 13 and Dec. 24, Xmet shares were trading an average 3 million shares per day, with a 30-day average of 1.3 million shares daily at press time.

“Following our first round of geophysics we went out staking in order to fully encapsulate this anomaly we’d hit. We wanted to get a better picture of it, and there was a bird in the area, so we flew a second round of electromagnetics that also included our new claim blocks,” Stephen Stewart notes. “We clipped something again, which was an entirely new anomaly. That’s when people really took notice of our story, because it shares an awful lot of similarities with the Albany project. It got us really excited because it truly lit up from a conductivity standpoint.”

The next step for Xmet is acquiring drill permits and coming to an agreement with the regional Constance Lake First Nation. According to Stephen Stewart the drill program should be relatively “low impact” due to high-quality infrastructure, which includes a road that runs through Xmet’s priority anomaly on Blackflake’s eastern blocks. The company intends to meet with Constance Lake representatives soon to get its drills turning at the project by March.

“We’ve wanted to raise money incrementally due to a relatively low stock price, so we’re looking to do it in ‘bite sizes’ that allow us to advanced the project,” Alex Stewart says. “We now have enough money to complete our ground geophysics and drill quite a number of holes so that should take it quite a bit further along.”

Xmet locked down a non-brokered private placement to start 2014, with the company raising $700,000 for exploration at Blackflake by issuing 1.6 million shares priced at 12.5¢ per share.

Xmet’s shares have jumped 420%, or 11¢ since early November, en route to a 15¢-per-share close at press time. The company has 65 million shares outstanding for a $9.7-million market capitalization.