QIS Capital - New Feature Company - Blue River Resources Ltd. - February 14th 2017
Included in this update:
QIS Capital Initiates Coverage of Blue River Resources Ltd. (BXR:TSX-V)
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Blue River Resources Ltd. (BXR:TSX-V)
Current Price: $0.045 (coverage commenced February 14/17 - $0.045)
Blue River Resources is a Canadian-based exploration company focused on developing the Banlung gold project in Cambodia, and the Mazama copper deposit in Washington state.
The company is exploring for a near surface gold deposit, which subject to economic gold grades, could begin small-scale gold production in the next 12 months. Blue River is also well positioned to take advantage of rising copper prices with a significant land holding and potential billion pound deposit in one of the most prolific copper belts in North America.
Blue River Resources was incorporated in September 2008 and went public in September 2011. The company is currently focused on gold exploration and development in Cambodia, and copper projects in the Quesnel trough copper belt. Blue Mountain’s three main development targets are the Banlung gold concession in Cambodia, the Mazama copper project in Washington State and the Castle copper project near Princeton, BC.
Cambodia is one of the few countries in the world that has not had intensive modern exploration of its mineral resources. This is about to change as Cambodia’s topography, geology, government, and workforce are ready for the development of a responsible mining sector.
In May 2016, the company entered into a US$3.5 million property option agreement with Angkor Gold Corp. to explore Angkor’s 100% owned Banlung Tenement located in Cambodia. The agreement gives Blue River the option to acquire up to a 70% interest through staged cash payments of US$1.1 million, US$2.4 million in exploration expenditures over 4 years, and by completing a banking feasibility study.
The Banlung Concession is 150 sq. km of land where previous exploration indicates the potential to host a large gold/copper porphyry deposit. In addition, the property has several locations where gold is recovered by panning during the rainy season.
Exploration completed in October 2015 discovered a 2 sq. km surface gold anomaly called Okalla West that has recently been expanded to a 4 sq. km mineralized zone from work conducted in January to April 2016. This zone was discovered by sampling 12,400 termite mounds over an 8 sq km area. The surface gold-mineralized zone is approximately 6 meters in depth to bedrock. Recent auger assay results revealed that gold mineralization is located in a 2m thick lateritic soil layer. 28 samples analyzed from within the laterite soil layer returned an average grade of 0.34 gpt gold, with some samples reaching 2.45 gpt gold. Trenching and sampling to bedrock is expected to commence in the next 30 days.
Plans for 2017 include a bulk sampling program which will consist of a 10 tonne/hr operation utilizing a compact mobile concentrator. After determining the size and grade of the deposit through auger drilling and bulk sampling, Blue River will apply for an alluvial mining license (no cyanide). Work to date indicates the potential for up to 400,000 to 800,000 ozs of gold with an average grade of 1.5 gpt. The initial production target is 40,000 ozs of gold per year but if the resource is doubled to 800,000 ozs, production could be ramped up to 80,000 ozs per year. The estimated capital cost of the mine is under $1 million with production expected to commence by mid-2018. It is estimated that breakeven could occur with an average grade of around 0.3 gpt gold.
Achieving gold production of 40,000 ozs/yr and splitting profits 50/50 with Angkor, allows Blue River to fund ongoing exploration commitments and pursue the larger source of the gold mineralization, which is believed to be located on the 150 sq. km property.
Blue River also has the option to acquire a 100% interest in a prospective copper project in the prolific Quesnel Trough copper belt, recognized as one of the most prolific copper belts in the world. The Quesnel Trough copper belt trends over 2,000 kms and currently hosts 8 producing copper mines and numerous other deposits.
On February 25, 2013, the company signed an option agreement to acquire a 100% interest in the Mazama Copper Project located in Okanogan County, Washington State. The project is a near surface, bulk-tonnage, copper deposit with an historic copper resource of 149 million tons grading 0.36% copper or approximately 1 billion lbs of copper.
The Mazama copper deposit was extensively drilled from 1970 to 1974 by Inspiration Development and then Quintana Minerals, who together drilled 23 diamond drill holes and 47 percussion holes. The project was shelved due to low copper prices at that time. Road access is excellent and power and water are located nearby.
The company’s near-term exploration plans include a property-wide geophysical (magnetic) survey and a detailed surface mapping and sampling program. Surface sampling in the Flag Mountain zone is a high priority as a 60 ton bulk sample grading 0.10 ozs / ton gold was reportedly mined from this area in 1918.
With the rainy season in Cambodia expected to slow exploration and development at Banlung by late summer, Blue River is planning to drill 5 holes at Mazama starting in August 2017. The company has had to wait almost 3 years to get drilling permits and has already prefunded approximately half of the $200K estimated drilling costs.
Finally, located near Princeton BC, the Castle Copper Project is comprised of four mineral claim groups approximately 25 kms north of Copper Mountain Mining, a mid-tier copper producer that commenced production in June 2011.
The Castle Copper Project is situated on the Nicola Fault, a regional fault that appears to control the copper mineralization in the Copper Mountain / Princeton area. The Nicola Fault trends in a northerly direction through Aspen Grove and is considered to be the southern extension of the Quesnel Trough. The Nicola fault runs through the Castle Project for approximately 8 kms.
Exploration to date has focused on a 1 km by 500m area. Drilling in 2011 encountered copper mineralization in 8 of 11 holes. The largest intersection was 600 feet grading 0.04 % copper, approximately 90 feet from surface, indicating a significant porphyry system could exist on the property. Future exploration will include diamond drilling and a ground IP survey of the balance of the 8 kms of the Nicola Fault located on the Castle property.
In November 2016, Blue River completed a financing consisting of 25 million shares at $0.05 per unit. Each unit consisted of 1 common share and a half warrant exercisable at $0.09 per share for a 2 year period.
Management of Blue River has had previous experience in bringing exploration and development properties into production. Griffin Jones, president of Blue River was part of a team at Minerex Resources Ltd. that successfully financed and placed into production, an open pit, heap-leach gold mine in Nevada. Minerex was eventually acquired by Amax in 1995.
Blue River Resources should have considerable news flow over the next 12 months as the company roles out its line trenching, bulk sampling and eventually a mining license at Okalla West, as well as the commencement of drilling at Mazama in the Fall. Should things progress as planned, future financing needs should be mitigated by early cash flow from production.
Blue River Resources Ltd.
501-525 Seymour Street
Vancouver, BC V6B 3H7
Phone: (604) 682-7339
Contact: Griffin Jones, President & CEO