When Donald Hoy first met Ewan Downie back in the mid-1990s, the geologist saw something different about the then-contractor.
“He worked hard, he had enthusiasm and he had an amazing memory,” Hoy says of his early impressions of Downie.
Downie went on to form Wolfden Resources — which sold to Australian-based Zinifex in 2007 for $363 million — and also built Premier Gold Mines (PG-T) into a company with a market cap north of half a billion dollars.
Now Downie has teamed up with Hoy in an effort to make it big on the back of New Brunswick’s geology. And the name they want to do it under is none other than Wolfden Resources (WLF-V).
“It’s a name that has positive associations for people,” Hoy says with a smile at a investment presentation in downtown Toronto on Jan. 31.
And while the name is closely tied to Downie, its principal asset has more to do with Hoy.
The new Wolfden’s most advanced project is Clarence Stream, which was discovered when Hoy was vice-president of exploration for Freewest Resources. Freewest was a success story as well, as it was acquired by Cliffs Natural Resources (CLF-N) for $240 million in 2009.
“A prospector came to us back in 2000 and told us about the boulders at the property that were returning good grades,” Hoy explains of his first encounter with Clarence Stream.
His team was intrigued that the boulders, or massive sulphide floats, had an angular structure, which meant they likely hadn’t travelled far from their source when the glaciers made their retreat.
The hypothesis proved correct, and in 2001 Freewest drilled into the first Clarence Stream discovery. Once Cliffs made its acquisition it became a low-priority gold play — but Hoy never forgot about it.
So after getting Downie on-board he began negotiations with Cliffs, a company that Hoy had stayed with for a year after the Freewest acquisition as vice-president of exploration and development.
Despite his ties to the company, Hoy says the initial price was too high, and after some intense negotiation, they bought it for $3 million in cash and $2.1-million worth of stock.
Considering they were buying a project that came with global resources of 554,000 oz. gold, the price of roughly $9 per oz. in the ground looks like a good deal.
And Hoy believes that the site is primed to deliver many more ounces.
“We want to get inferred resources to over 1 million oz., so we will step out along strike at both ends of the deposit with 100-metre spacing,” he explains.
Wolfden has a 10,000-metre, $1.8-million exploration budget for Clarence for this year.
Most of the current resource comes out of the Proximal deposits that trend northeast over a 2-km strike length. When combined with the Distal deposits, roughly 2 km northwest of Proximal, the property has indicated resources of 822,000 tonnes grading 9.11 grams gold for 241,000 uncut oz. gold, and inferred resources of 1.23 million tonnes grading 7.95 grams gold for 313,000 uncut oz. gold.
This resource was based on 54,000 metres of drilling, but most of it was done at just 25-metre spacing, leaving plenty of potential along strike to the east and to the west, both of which are still open.
Mineralization at Clarence is associated with a granodiorite intrusion that triggered a gold-forming event some 400 million years ago.
Hoy says an added benefit of exploring for gold in New Brunswick is the high correlation seen between gold-in-soil anomalies and gold-zone discoveries.
On that front Clarence could have much more to give. While the correlation holds true for Proximal and Distal, the property has seven other gold-in-soil anomalies that Wolfden will investigate this year.
Further down the road, both figuratively and literally, the company may be able to take advantage of Adex’s (ADE-V) Mount Pleasant mill. It’s on care and maintenance, although Adex has plans to start it up again in the near future.
The mill is located 10 km from Clarence Stream and could help lower capex costs after a more sizeable resource is proven up at the property.
The company’s second key asset is Armstrong Brook, which sits in New Brunswick’s famed Bathurst Mining camp.
Armstrong is located 15 km northwest of the Brunswick No. 12 deposit, which is one of the world’s premier massive sulphide deposits, with global reserves of 100 million tonnes grading 3.65% lead, 8.99% zinc and 110 grams silver.
Armstrong is a long way from those kinds of numbers, but the boulder story that leads to a discovery at Clarence could be at play again at Armstrong.
The site is littered with mineralized boulders, the best of which assayed up to 24% zinc, 7.08% lead and 337 parts per million silver.
An airborne geophysical survey registered conductivity that correlates well with the massive sulphide boulder clusters, and Hoy believes that those clusters have a local bedrock source.
“In this part of the world,” Hoy says, “boulders are usually not more than 400 metres from their source.”
The company has early stage exploration work planned for select areas of the property, with drilling to follow around the third quarter. Wolfden expects to drill 1,500 to 2,000 metres at Armstrong.
It seems that Wolfden is off to a good start. The company did its initial public offering in October 2012 and raised $10 million in a tight equity market. It has $5.4 million in the treasury, and with a total exploration budget of $2.5 million for the year, it shouldn’t need financing any time soon, and could deliver a steady stream of news flow to the market throughout 2013.
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