Talk of platinum and palladium usually leads a mining investors’ mind to such far off places as South Africa and Zimbabwe.
But Pacific North West Capital (PFN-T) wants to bring their attention a little closer to home.
The company is in the midst of an aggressive drill program here at its River Valley project, which sits just 60-km northeast of exotic Sudbury.
And while PFN isn’t exactly a trailblazer when it comes to exploring for the metal in Ontario it is a key part of a fledgling trend in a province known more for its massive nickel and gold mines.
North American Palladium’s (PDL-T, PDL-X) Lac des Iles project northwest of Thunder Bay and Stillwater Mining’s (SWC-T, SWC-N) Marathon project both attest to the provinces strong PGM potential.
Additionally Magma Metals (MMW-T, MMW-T) has the Thunder Bay North project, an advanced staged exploration project with indicated resources of 9.5 million tonnes grading 2.3 grams platinum equivalent for 695,000 oz.
Pacific Northwest’s (PFN), however, is banking on an entirely different geological formation, known as the River Valley Intrusive, to vault it into the same category as some of its more advanced counterparts.
The Intrusion covers roughly 200-km within the Grenville Front tectonic zone – a 900 metre thick, mafic, sulphide-poor layered intrusion.
With the rights to 80% of the River Valley Intrusion locked up, PFN is the dominant player on the formation with its only neighbors being Mustang Minerals (MUM-V) and Implats (IMP-J), two companies that are joint-ventured on some land to the south of PFN.
The River Valley project is made up three main mineralized areas all of which contain platinum group metals, gold and small amounts of copper and nickel that would likely count as credits at any future mine.
Broadly speaking, the company has divided the property up amongst three main areas: Dana Lake, Lismer’s Ridge, and Azen Creek.
Dana Lake is further broken up between the Dana North and Dana South zones, while Lismer’s Ridge holds both the Lismer’s Ridge zone and the Lismer North zone.
Using a cutoff of grade of 1 gram platinum and palladium, the two Dana’s, Lismer Ridge, Lismer North and a fifth zone, known as Varley, have a combined measured and indicated resource of 19.3 million tonnes grading 1.64 grams palladium, platinum and gold.
The zones have a further inferred resource of 881,000 tonnes grading 1.821 grams platinum and palladium.
While the resource comes out of five specific zones, the entire mineralized area actually stretches out over a strike length of 9-km and is made up of seven zones.
The Dana Lake area, which lies within a north-trending portion of the River Valley intrusion, makes up the largest portion of the measured and indicated resources and is the current focus of the company’s exploration program.
The intrusion at Dana is an up-thrusted and rotated offshoot of the main intrusive body and the latest drill results there expanded known mineralization with highlight intercepts of 2.16 grams platinum, palladium and gold over 27 metres and 2.6 grams platinum, palladium and gold over 30 metres.
PFN also reported that a separate hole in the area returned 2.05 grams rhodium over 2 metres.
That last rhodium assay dovetails nicely with results released at the beginning of August which found the metal in the first eleven holes of its drill program at Dana North.
Taken together, the results confirm a geochemical study PFN had done on the project which estimated that rhodium concentrations were roughly 10% of the platinum grades at the deposit.
That is significant news because rhodium is not only rare, but it also plays a crucial role as a hardener for platinum and palladium. That characteristic makes it highly valued in the construction of both catalytic converters and jewelry.
While rhodium wasn’t included in the last resource estimate done on the deposit, PFN’s chairman and chief executive Harry Barr says it will go into the next resource estimate which he expects will be out by March of next year.
In the months leading up to the resource update, PFN will keep the drills turning, as it is in the midst of a $5 million, 15,500 metres diamond drill program at the property. The drilling is fully funded, and will be guided by a key new addition to the PFN team.
On Sept. 7 the company announced that William Stone will be stepping in to serve as president. Stone, who has a Ph .D in geology, is one of the foremost experts on PGM projects in Ontario and has served as VP of exploration for both Magma and North American Palladium.
Getting Stone on the team furthers Barr’s reputation for bringing in top talent.
Indeed one of PFN’s strength is the deep well of expertise it has to draw from thanks to Barr’s ability to build a group of companies under one banner.
Pacific Northwest sits as part of the International Metals Group, a group which also includes Fire River Gold (FAU-V), El Nino Ventures (ELN-V) and Next Gen Metals (N-V).
By constructing a host of companies instead of one individual company, the group benefits from shared costs, resources and expertise with technical teams, engineers, corporate financiers and management all sharing in the mission to develop a portfolio of projects.
The idea of collaboration is also seen in an inclination shared across the group to find joint venture partners on early stage exploration projects.
Barr’s philosophy is that by joint-venturing with larger companies, a junior gains both dollars and a different way of looking at a project that often bears some significant fruit.
The philosophy is responsible for bringing River Valley to its current status- although it was a bit of a winding road to get it here.
The earliest recorded work at the property was done by Kennco Explorations in
1968 and was mainly composed of an airborne electro magnetic survey over the Janes, Davis, Henry and Dana Townships.
Such early efforts were thwarted in 1973 when the provincial government put a group of townships, and River Valley along with them, into a withdrawn area known as the “Temagami Land Caution”. Any resource activity in the area was prohibited until 1996.
That left River Valley abandoned before anyone had even thought to explore for its PGM potential.
PFN acquired the land at the beginning of 1999, for the paltry sum of 600,000 shares and $265,000 in cash to be paid over 4 years. It also had to fork over as 3% NSR but it has the right to buy back 2% of that for $2 million.
Just six months after acquiring the ground the company shrewdly cut a deal with a subsidiary of Anglo Platinum (AMS-J) that would put Anglo on the hook for funding all exploration up to the completion of a feasibility study.
From 1999 until 2007, Anglo spent over $22 million on the property, defining a resource and gaining information that has proven invaluable to PFN.
The taps were turned off, however, after the financial crisis of 2008 when Anglo told PFN that it wouldn’t be spending any more cash at the project.
That paved the way for PFN to buy back Anglo’s 50% interest for 8.1 million PFN shares and warrants on another 3 million shares with a strike of 30¢. The deal was completed in April of this year and gave Anglo a 10.5% of PFN’s shares.
Anglo joins other significant shareholders in PFN which include Stillwater Mining, which holds 7% and Pinetree Capital, which holds 8%.
After closing the deal with Anglo, PFN wasted no time getting to work as it immediately launched a $1 exploration program. It represented the first drill program on the property since 2005 and has since been expanded to the $5 million level.
Once the updated resource estimate is done in March it will focus on getting a prelim
inary economic assay report done six months after that.
The current exploration program is using one drill rig to drill off sections at 25 metre intervals through the 900 metre long, north-south trending Dana Lake deposit. Previously, the area was drilled at 50 metre intervals.
But the program will also test new drill targets found outside of the contact by a geophysics survey and deeper targets that were generated to follow the footwall mineralization down dip.
That last intention could prove to be key, because while River Valley already has considerable resources PFN believes that it has yet to hit the real Motherlode.
A recent study of the geology indicated that the known mineralization in the resource came from another, as yes undiscovered, source.
The geological story River Valley is that the current resource is a result of platinum group element rich sulphides pulsing into the River Valley chamber over time.
The source of that platinum rich magma has not yet been identified but PFN’s senior geologist Ali Hassanallizadeh theorizes that it will lie at a deeper depth and geophysical tests have produced some signatures that he is eager to test with the drill.
Bolstering the idea that more resources could be waiting for discovery at greater depths is the known geology in the area. Mines in the Sudbury basin typically go down to 2,250 metres, and North American Palladium’s Lac Des Iles Mine reaches down to 1,220 metre
Whether or not a source for the current deposit is discovered, Barr is confident that the company will be bringing the right metals to the market should a mine be erected at the site.
That confidence is borne out by both the scarcity of platinum and palladium and their practical usages. While 81 million oz. of gold and 680 million oz. of silver get mined every year by comparison only 7 million oz. of palladium and 7 million oz. of platinum are mined.
PFN shares have moved between 9¢ and 40¢ over the last 52-week period and are currently trading in the 25¢ range. The company has 94 million shares outstanding.