Market Commentary: Interview With Patricio Varas, Chairman of Boreal Metals (2/3) - Stockpools

What is Stockpools?

Need an account?

Play for free for a chance to win.

Join the Stockpools community today

Register now

Stockpools on your Phone

Follow Stockpools

Market Commentary: Interview With Patricio Varas, Chairman of Boreal Metals (2/3)

Written by Peter Bell

undefined

Welcome to part two of this three part dialogue between Peter Bell and Patricio Varas, Chairman of Boreal Metals Corp. In this second part, we learn more about the kind of grade Patricio is looking at, and Peter probes further into Boreal's operations. Boreal Metals is also featured in our latest contest; The Cobalt Boom! Join now for your chance to win $2,500 in prizes.

Boreal Metals (TSXV:BMX | FWB:03E) is a mineral exploration company focused on the discovery of Zinc, Copper, Silver, Gold, Cobalt and Nickel deposits in exceptional, historical mining project areas spanning Sweden and Norway. The Company aims to discover new economic mineral deposits in known mining districts that have seen little or no modern exploration techniques. The Company is led by an experienced management and technical teams, with successful track records in mineral discovery, mining development and financing.

undefined

Peter Bell: Looking at the presentation deck, I see info on the Gumsberg project where Boreal is drilling now. There are several projects nearby, like Garpenberg owned by Boliden. I see from your deck that Garpenberg has around 3.6% zinc and 1.4% lead average grade for the resource estimate. We talked before about how Boreal liked Sweden for the potential of high-grade deposits, but that doesn’t scream high-grade to me. What’s going on there?

Patricio Varas: That’s right Peter, they're not. That's the great thing – if you go and look at the Boliden website and talk to them, then you will find out that this is one of the Boliden’s most profitable mines! It goes to show you that the kind of grades you need for a successful mining operation in this area can be surprisingly low. Keep in mind that the numbers for the global resource at Garpenberg are enormous, but there are smaller volumes of much higher grade mineralization in that system.

Boliden currently has 76 million tonnes in the proven and probable categories at Garpenberg now, which will provide many years of mining. At 109 grams per tonne silver and 5-6% zinc-lead combined, it doesn't sound like high-grade but it works! We've had some really nice intercepts in our first five holes at Gumsberg and they are probably very similar to what they have at Garpenberg. I'm sure they have some high-grade material in some of their replacement deposits at Garpenberg, as that simply sweetens the material that goes on to become a concentrate. What's remarkable is that you don’t need this high-grade material we’re drilling to have a profitable mining operation – but you can imagine what would happen if you have some of that high grade to sweeten the mill feed.

Peter Bell: There are quite a few historic mines on the Gumsberg trend there. I see four different shafts indicated. How deep are they?

Patricio Varas: Some of them are shallow, like 50-100 meters. The deepest one is the Östrasilvberg and it went down approximately 250 meters. That's not very deep by modern standards, but you have to remember that Östrasilvberg was mined between the 1200's and the 1600's, I believe. It was not like they were mining like we do today in an industrial way.

Peter Bell: The pictures of it flooded now with standing water at surface in the presentation are pretty amazing photos.

Patricio Varas: I have a feeling, based on the widths they were mining in that particular area, that they had some fantastic grades there. You can get a feel for it already in our drill results. The mine was primarily a silver producer, which makes sense with what we are seeing in our fifth hole. There was a gaudy intercept with almost 1,000 gram per tonne silver – I'm pretty sure they were chasing those kinds of grades in that area.

It's nice to have those grades but we don't know how much of that resource is going to be present there. Regardless of how much is there, it provides a sweetener for whatever your ultimate operation might be.

Peter Bell: Yes, particularly if you're approaching this as a high-grade operation.

Patricio Varas: Exactly.

Peter Bell: I can just imagine the horror stories where the high-grade gets mixed into the wrong processing stream and missed out. What's the processing for these VMS deposits?

Patricio Varas: You'd have to mill it and process it in a variety of circuits, but an important thing to remember about this high-grade is that you can sometimes just ship it directly to where it is smelted. You probably don't have to do a lot of processing along the way.

There's a little story that we tell to help explain why we're chasing these smaller deposits with higher grades. There was a deposit called Storliden that was mined by the Lundin Group – one of the first thing they ever developed. Our presentation shows that they invested something like $14 million as capex to get it into production. It wasn't a very big deposit, only about 1.8 million tonnes of material, but in about 2-3 years they made a profit of $300-$400 million. That's not too bad on a $14 million investment.

undefined

A lot of that happened because they were able to direct ship the ore, so it was not high-cost material. We don’t know if that would work for us at any of our projects yet, but it is interesting to consider. It can be a great way to have success in exploration in an old mining district like this where you have mining operations nearby. For example, I can easily foresee how a small or medium sized deposit with good grade could be economic as mill feed for one of Boliden’s operations. They'd be quite interested in that I would think. If you find something much larger, then you have the opportunity for someone else to come in and offer to buy you out of course. Or, we can take it as far as we can under our own steam and try to get it into development. There are more options with these deposits that initially appear to be smaller, but all that is down the road. For now, it is a great place to work with great infrastructure. You can drive to the area in about two hours from Stockholm on paved roads – a four lane highway. There's power nearby and all this mining going on in the area, I think it's just an ideal place to be.

Peter Bell: Sorry, I can’t get over the example of Storliden! It’s stunning.

Patricio Varas: Storliden was in a mining district called Skellefteå, which is not far from one of our projects called Adak. It wasn’t a company maker, but I think that that deposit helped the Lundin Group get on their feet.

It also helped Boliden because they needed mill feed for their smelters. That's not necessarily what we're looking for but if we find 4-5 million tonnes of high-grade material, then it becomes quite significant.

Peter Bell: It's a great example of what a good high grade mine can look like, right? And it's not a story that's often talked about. Thank you for sharing it

Patricio Varas: I think a lot of people over the last two decades have been concentrating on low grade, bulk tonnage, large operations, and I'm not sure that they've been that successful. People have put a few into production, but many more didn't go into production. In any case, you're working with very low-grade material and it doesn’t offer a lot of room for error. Large fluctuations in metals prices are common in our industry. If, all of a sudden, zinc prices take a tumble, then I think this focus on high-grade material is a great way to insulate yourself. You may not make as much money as the bulk tonnage projects when things are good, but you're not going to lose money when times are tough with the high-grade.



Click here to view the latest presentation.

To learn more about Boreal Metals, visit http://borealmetals.com/

undefined


Boreal Metals Corp. (TSXV: BMX)
is featured in Stockpools’ latest contest: The Cobalt Boom! They’re awarding $2,500 to the winners of this contest over 9 weeks, with a winner each week! Stockpools is free to join, free to play, and free to win.
Join here. This is a great way to track Banker’s Cobalt over the course of the contest and keep up to date with their progress. Contest starts April 23rd, 2018.



Forward-Looking Information

This is not in any way investment advice nor any sort of stock recommendation. Please do your own due diligence and talk to a qualified investment advisor.

The contents of this article are for informational purposes only. Nothing in this article, in any way whatsoever, should be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. Note the inherent risks when investing in microcap stocks. Prior to making any investment decision, we recommend that you seek outside advice from a qualified and registered investment advisor.

Boreal Metals Corp. is a paid marketing client of Stockpools Inc. and one or more of the owners does own shares in Boreal Metals Corp.