Braveheart Resources (BHT) - Gold Revenue to Unleash the Copper Beast?

April 16 2021, 10:43 GMT+01:00

Braveheart Resources

  • TSX-V: BHT
  • Shares Outstanding: 164.3M
  • Share price C$0.10 (06.04.2021)
  • Market Cap: C$16M

Braveheart is a Canadian based junior mining company focused on building shareholder value through exploration and development in favourable Canadian mining jurisdictions at or near past-producing properties.  Braveheart's main asset is the 100% owned Bull River Mine project near Cranbrook, British Columbia which has a current Mineral Resource containing copper, gold and silver.  Braveheart’s newest acquisition is the 100% owned Thierry Mine project near Pickle Lake, Ontario containing copper, nickel, palladium, platinum, gold and silver.

We caught up with Ian Berzins, President & CEO of Braveheart Resources which has 2 Copper projects but now also has a Gold asset too. We last spoke just before Christmas when we had a detailed run through the company business plan, the strategy, the team and the financial situation of Braveheart Resources.

Company Overview

Braveheart Resources is a junior mining company that started as an exploration company. The company is now moving quickly through development and into production and they expect to be one of the newer producing mines or junior mining companies in Canada. They have a principal asset called the Bull River mine which is Copper, Gold and Silver, near Cranbrook, British Columbia, with infrastructure nearby. When we last spoke, they were trying to acquire a larger project in Pickle Lake, Ontario, which is called the Thierry mine with Copper, Nickel, but it also has Palladium, Platinum, Gold and Silver. This operation was run by UMEX for 6 years between 1976 and 1982 and there's a large resource over 22Mt underground and about 1.7% Copper and also a large open-pit project that's in the inferred category. There are significant assets there and Braveheart Resources now owns 100% the project for CAD$2.5M. The plan is to get Bull River up and running and get a modest cash flow from Bull River, understand Thierry a little bit better from the point of view of the geology and how to attack the project.Braveheart Resources (BHT) - Gold Revenue to Unleash the Copper Beast?

Gold Asset Acquisition: Why?

Braveheart Resources has also acquired another asset, Alpine Gold, which is a Gold asset this time rather than a Copper asset. The Gold margins are now much better at USD$1,800 and the company owns 100% of a mill in Cranbrook BC, which is about 300km away, so they hope to mine the high-grade, pre-concentrated ore field at Alpine Gold and take it over to Bull River for milling. It is narrow and flat with some interesting mining challenges but the margins will be pretty good once the mines are permitted. They have about 140,000oz at 16.5g/t and through ore sorting, have established that they can take that grade up to 22g/t.

Braveheart Resources will build the road from the main highway near Nelson, BC up to the mine at about 7,000ft elevation and will design, permit and build that road by December 2022. They have done the pre-engineering work and need to permit the road this summer, and possibly build the road this summer at an estimated cost of around $350,000. In a market that seems to be rewarding Silver and Gold more than Copper, Braveheart Resources is keen to have a diversification of metals.

The Alpine Gold property is strategic as the reality is that it will provide incremental cash to help develop the Thierry mine because Thierry is not going to be financed with Bull River alone. The cash flow on a unit basis out of Alpine will be about 4x higher than Bull River. Bull River is a good operation with 1.7% Copper and at current Copper prices, the economics are pretty good. At lower Copper prices, Bull River would be on the cusp again, whereas at Alpine Gold with pre-concentration, they will get above 4 times the value. They plan to get Alpine Gold permitted and run Alpine ore 3-4 days a month, otherwise running Bull River ore and just need to add a gravity concentrator at the current mill to do so. They have done the metallurgy where they know that 80% of the Gold at Alpine Gold is gravity recoverable. The Alpine Gold project is not a distraction for Braveheart Resources and it's not going to take capital away from the Bull River project so it is not a change in focus at all, but rather a accretive addition says Berzins.Braveheart Resources (BHT) - Gold Revenue to Unleash the Copper Beast?

The Alpine Gold mine will add cash to the amount that Bull River can contribute in terms of positive cash flow, so that the company can use the cash to focus on the Thierry mine which is a significantly larger asset and the real prize down the line.

Bull River Mine: 3 Months Later 

One of the most important projects that they are lacking at Bull River is a permit to be able to mill tailings at the site and deposit them on surface. They've almost completed the work towards the filtered tailings or dry stack, which in British Columbia is considered one of the best available technologies and those studies are ready to be submitted to the government as part of the permit application. At Bull River, they have a unique situation with 165,000t of material on the ground which was material that originated in the underground mine and is Sulphide-bearing Copper rocks, mainly Chalcopyrite, but there is some leaching which has happened from that pile. From an environmental perspective, Braveheart Resources needs to get rid of that pile and wants to make a bit of money in doing so.

The project is a brownfields site and the permit discussions are progressing with the first phase to mill the surface stock. This is not tailings, this is run of mine material that will grade about 1.7% Copper equivalent and it's on surface. They also need to put together an avalanche study which will cost between $11,000 to $18,000 as part of the permit application. Braveheart Resources (BHT) - Gold Revenue to Unleash the Copper Beast?

Braveheart Resources will be putting out some results very shortly and in the big picture they want to work on a design for the new mill at Thierry. As they mine underground at Bull River, they currently have about 6.5 years there but if they're able to apply ore sorting, then arguably, they could be ultimately feeding a higher-grade product that may allow them to take the mine deeper which will add to mine life at the project. 

The Alpine Gold contribution on the current resource could be $175M over a period of 6 years, which is very significant, depending on the mining rate and whether or not they can expand that resource. The money from Alpine Gold and from Bull River is going to be put back into development of the Thierry project. 

Why Hasn’t Braveheart Raised Money? 

The Bull River mine will be a small project which is why Braveheart Resources acquired the Thierry project, which is now a 10 to 15 times larger project for the company. When they acquired Thierry, they paid about CAD$2.5M to buy the asset which is valued in the PEA at $240M NPV after tax at a 6% discount rate. At today's Copper price of $4, the NPV goes up to $400M. Part of the deal was that the underlying owner, Cadillac would retain a 2% NSR, which they could buy back 1% of that for $1M. So they issued some shares of Braveheart equivalent value about $300,000 to reacquire the full 2%. By issuing about 2.5M shares of Braveheart, they've acquired the Royalties on the whole property and have offset a future liability of $40M to $50M it is hoped.  

At Bull River, Braveheart Resources haven't spent any money on a Pre-Feasibility or Feasibility on a project that they're going to build anyway but Thierry was different and they have completed a PEA in 30 days. They have a base study on underground for Thierry and if they were to focus initially on the open-pit potential as a starting point, they could cut the capital cost down to maybe $150M to $175M which is considerably less than $400M. They have about 53Mt at 0.4% Copper near surface plus 0.1% Nickel, Palladium, Platinum, Gold and Silver by-product potential. This summer, they will be drilling some follow-up holes on  successful work from 2013 where the previous owner drilled 825ft at 0.4% with continuous mineralization.

They are probably still 3 years away at Thierry from having all the permits completed and in the meantime, Bull River is the fastest route to free cash so they plan to get to cash flow this year at Bull River and all the time they are learning more about the Thierry project.Braveheart Resources (BHT) - Gold Revenue to Unleash the Copper Beast?

Shareholder’s Opinions: Where Will The Money Go?

Once the company has some cash flow from the Bull River mine, it will be a trade-off between acquiring other assets, when they could be criticised for lack of focus, or investing the money in the Thierry asset. Braveheart Resources has successfully, in two different undertakings, eliminated $6M of convertible debt and have been looking closely at debt with the goal that through the early proceeds from Bull River they want to completely eliminate debt and be an operation with projects that are all 100% owned, no Royalties, debt free, with a modest cash flow. There has been about $30M of historic drilling that was largely successful at Thierry and Braveheart wants to gain more understanding of the property with the potential to go in with a larger player if necessary so that they don’t miss the cycle there.  

Missing The Super-cycle: Any Concerns?

Braveheart Resources began dialogue with Ktunaxa First nation in September 2018 before they actually owned the mine because they realised that it was going to be critical to what they were doing. These relationships are important and Braveheart is very close to being able to sign an engagement agreement with Ktunaxa. As stewards of the land they have particular concern for water management so those are the issues that Braveheart is going to have to deal with. Braveheart has advanced the relationship with Ktunaxa further than it's ever been in the history of the mine which is a huge milestone. 

Concentrate Off-take Agreement: Who With & Why?

The concentrate off-take agreement is with Ocean Partners who has agreed to buy the first 45,000 wet metric tonnes and they have a ROFR after that going forward that would represent 3 or 3.5 years. They also agreed to loan $3.5M at terms that are slightly better than the current senior secured creditor.   

Potential Capital Raising: Anytime Soon? 

Braveheart Resources plans to raise about CAD$2M within the next 3-4 months to procure equipment for Thierry. They have done a lot of work between engineering and procurement to define exactly what is required at the project.Braveheart Resources (BHT) - Gold Revenue to Unleash the Copper Beast?

Braveheart Resources has been busy in the 3 months since we last spoke. They need to get the permit completed for Bull River, and they have the negotiations with First Nations to conclude. There are a few other things to do to be in a position where they can get to a cash flow position which is what people want to see moving forwards. We are intrigued by how they’re piecing this together but they're going to need something significant before the market reacts and the share price starts moving in the direction that they want it to be moving. We look forward to following up with the Braveheart Resources story with interest going forward.

 To find out more, go to Braveheart Resources' Website.  

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