Wednesday, July 17, 2013

Big news Coming for Happy Creek -HPY.v

Drilling has begun! Mark the calender if you're a trader. Given the shallow deposit occurrence the results will come faster. Many of us have waited patiently for some time for this program. In my last report I detailed some of the cost cutting measures but now we have it. 1200 meters gives us a lot of holes. With 12-15 holes we are going to get a very clear idea of the economics.

When the data infills the deposit we may very likely see the Koreans come back to the table with a real offer in hand. I calculate an IRR at 55%. Any IRR over 15% is good. But a small fast operation at @55 or better is outstanding.

For Comparison:
Tungsten Mining NL, (ASX:TGN) a company exploring for tungsten in Western Australia, on Thursday released the results of a scoping study showing the economic viability of its Kilba project. 
The study values the project, an open-cut mine slated to produce 154,000 MTU of WO3 a year for 7 years, with a net present value of $36 million with an internal rate of return of 34 percent. The $56 million capital expenditures outlay is expected to be paid back within the first year of operation.
Happy Creek:
Drilling on the Fox property is planned to consist of approximately 1,200 metres in 12 to 15 holes. Most holes are planned to be relatively short in length due to the near-surface position and near-horizontal orientation of the main mineralized zone, however a number of holes will test for additional mineralized horizons. Mapping between and beyond the known zones will be performed to provide a wider geological perspective of the area.

Drill highlights from 2011 and 2012 at the RC prospect include 7.35 metres of 1.22% tungsten (W03), 19.4 metres of 0.82% tungsten, 11.0 metres of 0.80% tungsten, 20.0 metres of 0.63% tungsten and 24.7 metres of 0.68% tungsten. One kilometer to the south at the BN prospect, F12-27 returned three intervals: 4.1 metres of 1.78% tungsten, 14.8 metres of 4.0% tungsten and 24.0 metres of 0.79% tungsten including 5.8 metres of 2.01% tungsten (Refer to Press Release dated November 19, 2012). Geological mapping and results from drilling in three areas indicate the main calc silicate/skarn unit hosting variable concentrations of tungsten is around 25-40 metres in thickness and approximately two kilometres by over one km in dimension. Results from F12-27 suggest multiple (stacked) mineralized zones occur.

In case you forgot or missed this:

A positive feature of the mineralized skarn zone is its potential to host very high grades: results include 0.40 metres of 9.60% tungsten, 3.64% zinc and 19.20 g/t indium (DDH F11-07). A grade of 0.7% tungsten contains 7.0 kg W03 per tonne of rock, and tungsten APT prices have recently risen to around $40/kg W03. Indium is a rare metal used in liquid crystal and touch screens and prices have also risen to over US$550/kg ($5.50/gram).

Happy Creek is bigger. The known mineralization confined to just the drill holes is $66M. If you expand this out on the asumption that all the data is correct it balloons to over $300M. I'm taking some liberties here but I'm confident about F12-27. Put a 50m by 50m square around it and go a bit deeper...

Highlights of Fox Property Tungsten Drill Results

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