Winston Rings the Bell for Copper Exposure
April 11, 2006 by admin
Riding the Commodities Super Cycle
Bell Resources (BL, TSXV) New - Riding Copper's Super Cycle
Bell is a mineral exploration company that has four high potential properties with a heavy emphasis on copper in it’s portfolio of plays with the most advanced being the Granduc Mine in northwestern British Columbia.
The Granduc Copper Project
The Granduc was in production for 16 years and operated by first Newmont and then Esso Minerals before it was shut down in 1984 due to copper prices dropping below 60 cents per pound.
Data shows that the Granduc had produced over 420 million pounds of copper and 4 million pounds of silver. 200 million pounds remain in place based on the data compiled by Esso and Newmont, which is not 43-101 compliant, but in theory could be produced if the infrastructure was in place.
On Friday I spoke with Dr. Tim Marsh, the V.P. of Exploration of Bell Resources.
Though the 200 million pounds of copper does make the Granduc mine highly prospective in and of itself, Dr.Marsh is much more interested in exploring for shallow resources along the 3.5 Km strike length to the north and south of the Granduc mine.
At the very end of the strike to the south, a cluster of drill holes were done by Esso across the Granduc structure, the best of those cut over 20 feet mineralization in excess of 3% copper. This is an area they are going to revisit; some 36 years after those drill holes were completed.
Dr Marsh believes there is a possibility that Bell could add an additional 20 million tons at a grade of 2% or better which lies at a more accessible, shallower area. If their drilling program proves that out, it could bring an additional 800 million pounds of copper into their inventory.
Last summer, a phase 1 drilling program was completed on the south side which extended the mineralization 800 feet to the south of the historically mined area.In between the drilling done last summer by Bell and those old drill holes, the company will drill 1,000 foot centers across the structure to see if there is indeed continuity of mineralization.
To the north, Esso Minerals did some drilling in 1982 and 1983. They found over 20 feet of mineralization in excess of 2% copper. There were about 10 drill holes into that target, not enough to be categorized as a resource but solid evidence that mineralization extends along a strike length to about 3.5 kilometers.
This year step out drilling will be done to prove the continuity of strike length to the south. Based on successful results, next year a complete infill drilling program will be done to calculate a resource to the south and start exploration drilling to the north.
In 2006 Bell has Advantages Newmont and Esso Never Had
A lot can change in 22 years and it certainly has in the copper market. The key driver of this market is of course the hot demand from Asia . To that end, Bell has made contact with a couple of Asian companies who are very hungry for copper concentrate. Though production from Granduc could take 5 years, copper buyers are taking a long term approach to secure supplies. This is a far cry from the 1980’s when copper was plentiful. Another aspect about Granduc which plays in Bell’s favor is that a company called Premier Power is building a generating station just a couple of miles east of Granduc Tunnel. So there will be a local source of cheap power. Esso and Newmont had to truck diesel fuel up the mountain from the port of Stewart , in northern B.C.
Also Bell has purchased this mine site for a mere $34,000 plus 1.1 million shares with a 2% royalty to the vendor. In addition to the 200 million pounds of copper in place and undiscovered resource potential, they also have inherited the Granduc Tunnel, a key part of the mine infrastructure.
Dr Marsh told me “I’ve walked 23 miles round trip from the east portal back to the west side where the mine is and returned to the east portal and it is a fantastic piece of engineering work. It was built right, 35 years ago and it is in great shape today. I hired a mining contractor out of Vancouver, Procon who inspected the structure and they said for four months work and $4 million they would rehab that tunnel.” I don’t know what that would cost today to build but easily several times the cost of the rehab. It’s not like they are starting from scratch, there is a lot of infrastructure in place and underground access to get the program moving. Newmont and Esso did the hard work.
In summary, the Granduc is a stand alone company maker but there are 3 other properties being drilled this year too.
Sombrero Butte Copper Project
A drilling program will soon be starting in southern Arizona which Dr Marsh tells me has a “high probability for success.” This area was mined about 80 years ago but worked stopped because of some lawsuits regarding the claims. Before the work stopped, car loads of 10 ton ore were being shipped that graded 20% copper.
Bell is the first company to explore there in modern history and when Dr Marsh says they stand a good chance of hitting I would have to agree. You see there is green copper outcropping right at the surface. So they have a fairly good chance that they will besuccessful with the early drill holes.
This is in an area where Glenn Zinn and Tim Marsh worked five years ago known as the Copper Creek district about 1.5 miles to the north. There they drilled breccia pipes which are the style of mineralization on the Sombrero project. They followed those breccia pipes though high grade ore and further down to an underlying porphyry copper system grading .7 -.8 copper over 300 million tons on that Copper Creek property that is currently held by Red Hawk Resources.
As an interesting aside, the mining news service, Resource Investor did a bullish write up on Red Hawk Resources this month where they stated “The Company’s flagship asset is the Copper Creek project in mining-friendly Arizona , “well situated in regards to existing general and copper mining infrastructure.” This large land package is in elephant country, with major mines nearby, and already hosts a large (few billion pounds) resource and a smaller (several hundred million pounds of copper) high-grade resource.”
Dr Marsh concluded “I suspect we will see the same relationship at depth (at Sombrero ) and that there is a transition into a porphyry copper system.” Drilling is scheduled to start in one month’s time.
Kabba Project – A Molybdenum Rich Porphyry Copper System
The Kabba porphyry copper prospect is located in northwestern Arizona . The Company controls 232 unpatented mining claims covering over 4200 acres on the highly productive Copper Creek-Resolution-Bagdad porphyry trend. This lies on a line connecting the Phelps Dodge Bagdad mine that produces 200 million pounds per year with the Mineral Park mine. Kabba lies between those two deposits.
Also in the area, Rio Tinto has confirmed over 1 billion tons of copper ore averaging over 1.5% copper at their Resolution mine.
It turns out Dr Marsh is well acquainted with this area and the Resolution mine specifically. “I came to Bell from my position as Chief Geologist of Rio Tinto at the Resolution porphyry copper discovery. That stands as the largest discovery of copper in North America in probably the last century. Currently the word I hear is that they have a resource of 2 billion tons of 2.5% copper and growing. What I see with Kabba is the roots of a porphyry copper system as well.”
Bell will be drilling this play in September, looking for 500 million tons of 1% copper – this is a grassroots play but a potential company maker nevertheless.
The Train Project – High Grade Nickel, Copper, Platinum Group Metals
Another project which will be drilled in June is this nickel copper platinum group element play in northern Michigan .
“A Former employer found a very nice deposit up there called the Eagle group element deposit that’s about 5 million tons, the average grade of those tons is about $1,000 per ton. Very high valued ore. ” commented Dr Marsh.
About 25 miles away is a similar geological setting where Bell will be drilling this June to find another Eagle. This is another grassroots wildcat play with huge potential.
As you have just read, Bell Resources has some terrific upside. The company generally has been ignored by the main stream market which is a good thing for us at this point in time. Over the next few months I can see that changing.
Starting now and into the fall they will have four independent drilling programs starting up any of which, if successful, should start to put Bell on some radar screens.
We will have some idea of the potential of the Sombrero Butte play before the summer starts and I have a funny feeling this could produce some eye popping drill results but as always, we will have to wait for the lab tests before we pop the Champagne corks.
In May the next phase of drilling will be done on the south end of the Granduc strike to prove up the continuity of the mineralization. If the drilling shows anything close to what Esso Minerals found, this play will be a whole new ball game.
I really like the prospects of those two plays but when you toss in the two wildcat programs at Kabba and the Train Project – you’ve got added potential to further double or triple your capital gains going forward.
Bell is also earning an interest in a play called the Fox River project in Manitoba with Callinan Mines who are the operators. This area has the potential for both diamonds and nickel-platinum group metal deposits. Callinan will be drilling this one as well very soon.
All told, a very nice portfolio of plays any one of which could double the share price in fairly short order.
Bell Resources closed on Friday at 93 cents which gives them a market cap of $39.5 million. Given their property assets this is a low premium for their share value. Bell will no doubt be trading at $1.50 over the next few months so I wouldn’t hesitate in getting a position while it’s still trading at under a dollar.