When Don Hoy first met Ewan Downie back in the mid-1990s, the geologist recognized 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.
Since that time Downie went on to form Wolfden Resources, which was sold to Australian-based Zinifex in 2007 for $363 million, and to build Premier Gold Mines into a company with a market cap north of a 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.
“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 is more closely tied to Hoy.
The new Wolfden’s most advanced project is Clarence Stream, a project that was discovered when Hoy was VP of exploration for Freewest Resources. Freewest was a success story as well, as it was acquired by Cliffs Natural Resources for $240 million back 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 by the fact that the boulders, or massive sulphide floats, were still very angular in their structure, which indicated that they likely hadn’t travelled far from their source when the glaciers made their retreat.
The hypothesis proved correct, and in 2001 Freewest made the Clarence Stream discovery. It being a gold project, however, once Cliffs made its acquisition it became a low priority play, but Hoy hadn’t forgotten about it.
So after getting Downie on board he began negotiations with Cliffs — a company that Hoy had stayed on with for years after the Freewest acquisition as VP of exploration and development.
Despite his ties to the company, Hoy says the initial price was too high and it took some intense negotiations to bring it into a range where they felt comfortable enough to move on it. That price was $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 of 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 one million ounces 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, $1.5 million exploration budget for Clarence this year.
The bulk of the current resource comes out of the Proximal deposits that are northeast trending 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 g/t Au for 241,000 oz of uncut gold and inferred resources of 1.23 million tonne grading 7.95 g/t Au for 313,000 oz of uncut gold.
That resource was based on 54,000 metres of drilling but most of it was done with 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 granite diorite intrusion that caused the gold forming event roughly 396 to 400 million years ago.
Hoy says an added benefit of doing gold exploration work in New Brunswick is the high correlation 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 begin to investigate more closely over the course of this year.
Further down the road, both figuratively and literally, the company may be able to take advantage of Adex’s Mount Pleasant mill, which is currently on care and maintenance, although Adex does have plans to start it up again in the near future.
The mill is roughly 10-km from Clarence Stream and could help to 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 sits roughly 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% Pb, 8.99% Zn and 110 g/t Ag.
Armstrong is a long way from those kinds of numbers, but the boulder story that led 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% Zn, 7.08% Pb and 337 ppm Ag.
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 meters from their source.”
The company has early stage exploration work planned for select areas of the property with drilling to follow in the late summer. Wolfden expects to drill 1,500 to 2,000 metres at Armstrong.
So while it is still early days, it is clear that Wolfden is off to a good start. The company only did its initial public offering in October of 2012 and managed to raise $10 million in a tight equity market. It still has $5.4 million in the treasury and, with a total exploration budget of $2.5 million for the year, it will be in no need of financing any time soon and should be delivering a steady stream of news to the market over the course of 2013.
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