Categories: Base Metals / Precious Metals
Topics: General Base Metals / General Precious Metals

Blackwolf Copper & Gold Ltd. (TSX-V: BWCG)(OTC: BWCGF) CEO Robert McLeod on Advancing the Flagship Niblack Copper-Gold-Zinc-Silver Project in Southeastern Alaska

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Blackwolf Copper & Gold — Mr. Rob McLeod. Rob, how are you? It is a pleasure to have you on!

Robert McLeod: It's excellent to be on! Thank you for having me and giving me the opportunity to talk about Blackwolf and anything you want in northwestern BC or Alaska.

Gerardo Del Real: Well, Alaska, my old stomping grounds, right? I lived there for 17 years. My wife… we were talking off air… born and raised there; has family there still. But look, let's get right into it. 

I've been familiar and a fan of your work for years on end. And a part of that was because some of your past success led to my bank account looking better than it did before I heard of Rob McLeod, right? 

So, specifically, with Underworld and a couple of other projects you were involved with… I've done well following successful teams that know how to structure companies properly and then, obviously, have the technical acumen to develop the projects that they're looking to develop. 

Blackwolf checks every single one of those boxes. So for those that may not be familiar with your background, can you give us just a brief overview of some of that success because I think it's pretty substantial and worth highlighting?

Robert McLeod: Yeah, you bet. So I come from a mining family; a third-generation miner from Stewart, BC. And working specifically in the exploration side of the industry is something that I've always really wanted to do. I've been fortunate to be mentored by great explorers and others that have really showed me what to look for in the rocks when it comes to making discoveries. 

And at least half of my career has been in the state of Alaska. And actually, out of all the places one can go to explore — specifically in North America — I think it's, by far, the most underexplored place you can go where you can still develop mines for reasonable cost and with reasonable permitting risk. But actually, most of my early success came from areas that I haven't been working in for a while such as, as you mentioned, Underworld Resources up in the Yukon. 

And talking about what you look for before you make a discovery… and an exploration geologist that I've long admired — and he's in the Canadian Mining Hall of Fame; a guy named Mark Rebagliati — he told me:

You always look for size; look for endowment; look for big, big geochem anomalies. Or look for ultra-high-grade to go out and find something new. 

And Shawn Ryan had presented this property — it was called White Gold — and there's this 8-km-long soil anomaly. And there's these veins with super high grades. And there's the intangible in exploration where — and it's probably anything in life, maybe even in romance where you know right away in your gut that there's something there — that this is a really special property. 

So Underworld Resources was the first one where we made a big discovery; created the biggest staking rush since the original Klondike in the Yukon. And we ended up selling that company to Kinross, actually, with very good timing in 2010.

But I'd been involved in discoveries when I was an employee… just telling one of my geologists about the discovery history of a million ounce deposit called Naartok up in Nunavut, for Miramar, which became Hope Bay Gold. And actually, my most recent company was IDM mining, which was acquired a few years ago by Ascot Resources. 

Of course, all throughout my history, I've made a few missteps as well, too. And whenever you start something new or pick up a new property… you certainly try to learn from those. So one that, in terms of Blackwolf, as we put the company together, having an excellent share structure and, in particular, excellent shareholders, is the key to delivering big value for your investors, particularly when it's early-days. 

And so, with less than 30 million shares outstanding — actually, we do have a live financing but we will crest the 30 million mark — but it starts with a very, very good share structure. That's how you're going to deliver returns. So that's part of my background and leads us to the company topic at-hand.

Gerardo Del Real: Let's get right into that share structure because… the way that I was brought up in this business was… that's what you look at first. It kind of speaks a bit to how the company views its shareholders, right? 

And so when you talk about 29.1 million shares outstanding — 31.3 million fully-diluted — not only is it a great structure but you have some great shareholders. As you mentioned, you have Crescat in there; you have Delbrook and a few others.

Walk me through the flagship a bit because you aren't just ‘greenfields’ exploration. Blackwolf Copper & Gold — despite the market cap, right — I remember a market where this team, alone, would command a market cap north of C$50 million. Obviously, we're in the midst of a consolidation in the sector. I think that's turning. I think we're actually going to end the year with a higher gold price, a higher copper price, a higher silver price. 

But walk me through the flagship. There's already a resource there. It seems like you've made a step-change in the geologic model. And I know that you love talking geology. I am not a geologist but this is probably where our conversation is going to go a bit longer than we anticipated. But a lot of potential there. I'll let you provide the context.

Robert McLeod: Absolutely. So the deposit called Niblack is a polymetallic volcanogenic massive sulfide deposit. And so what that means is that, 600 million years ago, at the bottom of the ocean, you had this accumulation of metals that ended up surviving plate tectonics for almost half a billion years and has ended up right on tidewater in southeast Alaska and outcropping on surface. 

There's currently 5.6 million tonnes of indicated resources. And I know we're not supposed to… we're going to stick by the book here… we can't add them all together. 

Gerardo Del Real: I can!

Robert McLeod: You can! But hey… I'm a QP. So, if say, somebody else added them up — they'd be 9 million tonnes! But it's almost half a million ounces of gold. Look, I just broke my own rule there! Half a million ounces of gold; hundreds of millions of pounds of zinc and copper, and, as well, there’s silver there. 

So it's already quite a substantial resource, and it is wide open for expansion. And it's wide open in a sense that there's really good explorers that were working there before. But there was kind of what started out as just a subtle scientific research program by a master student, which was to get precise age-dates of the different lava flows that made up this VMS deposit. 

And what this fellow found is that the whole system was actually turned upside down. And this was a surprise to all of the previous operators. And so, when we started our first drilling program earlier this year, we said, Okay, this is a big step… let's pick an area where we can test this theory. 

And so we tested an area; actually, it was where there was some historic production, and it was thought to be what's called an anticorn. So this is like an upside down U shaped like a mountain. And it was thought to be eroded off on the top and faulted off on the bottom… so it had no place to go. So with the new interpretation, actually, you turned the whole thing on its head. And it's a sin form, which is shaped like a letter U. 

And so we drilled it and we hit two limbs of the fold. And the headline intercept was 7.5 meters of 10% copper equivalent. Virtually, every hole hit exceptionally good grade. But the really important thing is that it showed that this model works. And so, as we applied it to the current resource and the exploration potential throughout the property, we saw that areas that were thought to be closed off were wide open. In fact, not drilled at all. 

And this is where we're going to see the path — with this new interpretation that's been verified — to 20 or 30 million tonnes. There’s been a lot of work done; there's over 450 drill holes; there's a full-size production decline on the property. It's well on its way to a development story, which is still our ultimate vision for this company.

One of the areas you can make real value in a company is, we see, actually, now some really low-hanging fruit where we can drill wide intervals of mineralization that will add a lot of tonnes because — in addition to really good grade — it's also a wide ore body. It's over 120 meters wide, actually, at its thickest portion. So you can add a lot of resources that are potentially amenable to low cost mining. 

And so an upcoming drill program, and we just set up a brand new camp. We've fully rehabilitated the site, and we're set up to really make these things work. You have a good one-and-a-half to three-year aggressive drill program(s) to expand resources and make new discoveries.

So that's the median-term outlook for Niblack for the company. And in the meantime, we're also looking at other corporate development opportunities that would be accretive and complimentary to Niblack. 

And I'm so excited to get some assays back from some new claims that we staked in the Golden Triangle — but on the Alaskan rather than the Canadian side of the border — where 99% of the historic exploration work and mining has been done. So that is going to be one of our big catalysts coming up.

Gerardo Del Real: So assays pending; resource update upcoming. What's the market cap at right now, Rob?

Robert McLeod: We announced a unit financing at C$0.70 so we're basically trading around a C$24 million market cap. So we're exceptionally cheap. We're trading… we go through periods where we have a decent amount of liquidity. But most of the time, we've hardly been trading. 

So I think — since we don't have a lot of warrant overhang — once we start moving, we will be back in the C$1.50 range that we were at in April-May of this year. We're way undervalued just for the assets that we already have at the company — let alone for future news and future potential.

Gerardo Del Real: I mentioned the advanced-stage of the project — despite the fact that it's got all of this exploration upside, right — we know that these VMS deposits tend to happen in clusters. They don't tend to happen in isolation. 

I understand you also have an agreement in place for a low interest loan of C$125 million — an infrastructure loan — from the Alaskan government. Is that accurate?

Robert McLeod: That's correct. And you’ve spent a lot of time up in the state. There's some tremendous incentives from, particularly, the state government for natural resource development. And there's a branch of government called AIDEA that provides low interest loans. 

And these are like LIBOR-plus-2%-type rates that go to help fund particularly remote or infrastructure-challenged areas. It dates back a couple of decades. But when the Red Dog Mine was put into production — that's operated by Teck, and, in fact, it was Cominco that developed it — even a company of that size was challenged to develop the mine. 

So they were provided with low interest loans to build roads and a port facility. So that loan was passed. It was approved by the state legislature that would go towards development of a mine and processing facility at Niblack.

Alaska, really, is a great place to explore and develop mines with good support from locals and government as long as you play by the rules and do it right and minimize your impact on the environment. And, certainly, with an underground project like Niblack, it would have an exceptionally low footprint; small footprint. 

So this is the ideal… like many of us expect to see copper break US$5 per pound soon…  

Gerardo Del Real: Absolutely!

Robert McLeod: …it’s going to be these high-grade, underground, low capex, low operating cost type projects versus some — to be blunt — Pebble, or Resolution down in Arizona, that are pretty massive that maybe some don't want to see developed. 

And so I really think the smaller, higher-grade polymetallics are the future to supply the metals that we're going to need for the electrification of our planet.

Gerardo Del Real: Agreed. You mentioned the polymetallic nature of the flagship, right? You have copper, zinc, gold, and silver. How is the metallurgy?

Robert McLeod: So since this is a geologically older deposit, it has been folded and recrystallized. And because of that, it is, absolutely, excellent recoveries for the copper and zinc. And that's such a great question for any base metals deposit. 

It's in the mid-90%-recoveries range for copper and 90%-92% for zinc — which is very good. Where I'd like to see some improvement is in the precious metals. We have a sort of 70%-74% recoveries for gold and silver. 

And since the base metals are so good — we're not too sure why — so we're doing some studies… looking at the mineralogy… and also looking at some test-work, potentially, for a pyrite concentrate where some of the gold-silver might report or maybe a finer grind where we can get the gold recovery in around the 80% range. 

That would really make the economics sing for Niblack!

Gerardo Del Real: As far as the metal contribution, how much are you getting from the copper… from the zinc… how does that break down?

Robert McLeod: Okay, so the copper is — in terms of percentage — copper is the most important metal. But it's pretty closely followed by gold; actually, has a little bit more to do with what the metal prices are doing. And then, there's good zinc… and, looking at the price, zinc is becoming more important. 

Honestly, silver — which averages around just a little under an ounce per tonne within the deposit — is comparatively the least important. But you'll still take it. And when it comes to, say, funding development in the future, silver streams are often the way to go. 

It's also good when you have three or four key metals; certainly, mine operators like these types of projects because you can spread your risk around a little bit. Usually, one of the three or four metals will be performing well… and rather than just being tied to one particular metal and the volatility that you might get with that commodity. 

So I really like these polymetallic-type deposits if you're going after base metals.

Gerardo Del Real: Excellent! You mentioned being on the M&A hunt, right, and looking to possibly roll in other projects. We know that Pretium was just taken out for C$3.2 billion. BC is, obviously, getting a lot of well-deserved attention. Can you speak to the rest of the portfolio briefly?

Robert McLeod: Yeah, you bet. And I'm a little sad that you said ‘briefly’ because I could probably go on for about an hour because it's close to my heart, and I truly love discovery, and I love discovery stories. 

And so we staked three properties in the Golden Triangle. They are early-stage. And there isn't a lot of information on them because there's essentially been no exploration. Or, in many cases, because they're a very small single mine — mom and pop producers back in the 1920s and ‘30s — that are located in the Golden Triangle near where Pretium is located. 

One project in particular — which in terms of that feeling you get as an explorationist that this is a very, very special property — is called Cantu. It is directly across the Alaska border from a mine development project called Premier that I know very well. 

And to make a long story short… I've driven this road that went past this property a hundred times. I had no idea that there was a 100 foot wide gold-bearing vein that was sitting right there that has never been drilled. There's just a few samples out of it that, I think, averaged 21.1 grams per tonne. 

And they used to direct-ship ore without any processing from this vein just prior to the market crash of… when was it… 1928-1929… and I have no idea why this particular target was missed by previous explorers. I was fortunate to be tipped-off by an old-timer in Stewart, and he gave me some old maps that showed the location of these veins. 

And I flew over in a helicopter not believing there'd be a hundred foot vein sitting out there. But there it is! You can see it on my Twitter feed. I absolutely can't wait. And the next step is, drill it… like this is waiting for discovery. 

And I believe it's actually part of the same system that Ascot is developing, which is a five-million-ounce-plus resource from multiple areas. So that is just a real value-add for the company of an opportunistic property that actually could yield what could be a pretty significant discovery. 

Juniors have a funny… throughout their lives… of going through, you know, you start out with one intent… like Underworld, for example; our original business model was actually to explore in New Zealand. And you never know if you have a property that comes past that just looks so good. And this is one of them. It was the same with White Gold up in the Yukon that… we need this property!

If you’ve got that opportunity right in front of you — you have to grasp it! 

These new claims are not core to our vision, which starts with Niblack and, potentially, looking at other development plays in the area in a hub-and-spoke-type ‘multiple mines in one mill’ arrangement. 

More news on that will be coming shortly. But when you have a new property that, essentially, no other explorationists have looked at that has such great potential — you go for it. So, hopefully, you sense a little bit about my excitement for Cantu and some of the other properties in the Hyder area that we recently staked.

Gerardo Del Real: You have a great team; you have a great flagship with a great resource with great grades. You have a C$125 million loan — an infrastructure loan — with the Alaskan government. You have other assets with great exploration upside and a tiny market cap. That's a lot of boxes checked, Rob. 

Anything else to add… because I suspect you and I could probably talk for hours… anything else to add before I let you go?

Robert McLeod: No, if any of your listeners are interested, please send me an email. Information is on our website or on any of our press releases. You can check us out at blackwolfcopperandgold.com. 

You can also check us out on Twitter where we're quite active; either my own handle at goldfinder12 or just search for our Blackwolf Twitter page; BlackwolfCuAU, I believe it is. Thank you so much for having me on your show today.

Gerardo Del Real: It's been an absolute pleasure and looking forward to having you back on. Hopefully soon! It sounds like there's lots of news upcoming so let's do it again.

Robert McLeod: Absolutely! Over the next six weeks or so… keep your eyes peeled for some news coming up.

Gerardo Del Real: Alright. Thanks a lot, Rob!

Robert McLeod: It's going to be an exciting fall. Alright, thanks! 

Gerardo Del Real: Love it! Appreciate it. Thank you.