Zinc and lead explorer Rathdowney Resources (CVE:RTH) said Monday it will make a $4.4 million investment in Heatherdale Resources (CVE:HTR), gaining a "significant" interest in the Niblack copper-gold-zinc-silver project in southeastern Alaska.
Under the terms of the deal, Rathdowney said it will subscribe for 22
million common shares of Heatherdale, in a private placement, at a
price of 20 Canadian cents per share.
The placement, which is subject to TSX Venture Exchange approval,
will result in the company holding about 18.4 per cent of Heatherdale.
Rathdowney noted that Niblack has "excellent operating characteristics and potential for development" over the next two years.
The private placement deal is part of the company's new plan to boost
its near term development pipeline by gaining an interest in later
stage projects, and to farm-out its early stage zinc projects in
Drilling by Heatherdale over the past two plus years has
significantly expanded Niblack's mineral resources, with indications
that drilling planned for this year will underpin prefeasibility work to
advance the project rapidly, said Rathdowney.
The project also has local government and community support which,
combined with existing underground infrastructure, will facilitate
production in the near term, the zinc company added.
"We see this investment as a compelling opportunity for exposure to a
quality project like Niblack, which is closer to production than Olza
[Poland zinc project], with metal diversification but still with a
common zinc theme," said president and CEO John Barry.
On completion of the financing, Rathdowney will also have the option
to appoint up to two members to Heatherdale's board of directors and
provide input to the technical management group.
"There is real value available in these depressed markets and we are
in the happy position to be able to take advantage while still having
have sufficient funds to continue to advance our larger-scale Olza
Project," continued Barry.
Rathdowney’s flagship Olza zinc
project is located in the upper Silesian mineral district of
Poland. Olza hosts "extensive Mississippi-valley-type zinc-lead
deposits" as indicated by widespread drilling and historical resource
estimates conducted by the Polish State.
An extensive drilling program was undertaken by the company over the
past year to confirm this historical information, and the company said
the campaign has indeed been "very successful."
Rathdowney said an NI 43-101 compliant estimate of the zinc resource
will be delivered in the next six to eight weeks, which is the first
step in progressing Olza toward development over the medium term.
At the end of June, Rathdowney updated investors on drilling results
from its Olza zinc project, saying additional holes have been drilled
that will be included in the resource estimate.
The zinc and lead explorer stressed that the compilation of results and resource modelling is progressing according to plan.
But a number of the additional holes to be included in the resource
report are currently awaiting final quality control approval and are
expected to be released shortly. Rathdowney's initial goal was to
release its first resource estimate for the project by mid-year, but it
will now wait to allow the inclusion of the additional holes.
Highlights of recent drilling at Olza include 2.30 metres of 19.66
per cent zinc in hole OLZ-078, and 17.72 per cent zinc over 3.25 metres
in hole OLZ-102. In addition, hole OLZ-096 returned 5.05 per cent zinc
over 14.7 metres.
Last week, the company optioned off part of its Mallow zinc-lead project in Ireland to Antofagasta Plc (LON:ANTO).
The 337 square kilometre property rests south of the Pallas Green
mineral district in Ireland, which consists of 11 prospecting licenses.
Antofagasta Minerals, a unit of Antofagasta Plc, could earn a 75 per
cent interest in the property if it spends $250,000 in the first
12-months and exercises two options.
If Rathdowney or Antofagasta’s stake becomes less than 10 per cent,
then their interest would convert to a 1.5 per cent net smelter return