BullMarketRun.com

Something that’s of little or no value isn’t worth fighting for – hence, last week’s fascinating dust-up in resource-rich northwest British Columbia speaks volumes as a Tahltan activist group led by TCC President Chad Norman Day blockaded Doubleview Capital’s (DBV, TSX-V) Hat Project discovery in the prolific Sheslay district.  As DBV reported, the company is reviewing all of its options as it works toward a resumption of drilling at the Hat as quickly as possible.

In a political way, this illegal blockade confirmed what a multitude of geologists and a couple of highly respected geoscientists (from different companies) have been speculating about for more than 2 years now – that this large area of the Stikine Arch has a strong probability of hosting a series of world class Cu-Au porphyry deposits like “pearls on a string” across a minimum 30-km long NW/SE trending mineralized corridor after a total of 50 completed drill holes in the district since the spring of 2013, combined with a plethora of valuable historical data going back more than half a century.  One or more high-grade Gold deposits is also possible, several geologists believe, around the edges of one of these porphyry systems or somewhere at considerable depth.  Northwest B.C. is a geological wonder.  And the fluid “throughput” in this particular district has been remarkable according to the experts.

Keep in mind, there were also Tahltan blockades and protests as the world class Red Chris deposit, on the same trend about 120 km to the southeast, matured to its current mine stage (it has just become the 6th mine to open in B.C. since 2011).  Day cleverly steered the Red Chris situation for the Tahltan, and managed to negotiate an “historic” agreement between the Tahltan Nation and mine owner Imperial Metals (III, TSX) earlier this year, not long after the fallout over the Mount Polley spill.

A “Monster” Of A Hat

In the Sheslay district, it’s important to note that nothing has been proven up yet on any property in terms of NI-43-101 resources (no estimates completed so far), but some back-of-the-envelope calculations do light up the imaginations of many.  Defining a high-grade starter area will be key.

The Hat is leading the way at the moment with a Gold-rich Copper porphyry system now interpreted to extend well beyond the company’s original significant discovery reported in January 2014.  DBV President and CEO Farshad Shirvani mortgaged his house to drill those key holes during a major early winter cold snap in November 2013 (he should have won Prospector-of-the-Year, but that opportunity may yet come).

Also of growing interest is the yet-to-be-drilled Grizzly Project.  It covers a whopping 284 sq. km (Garibaldi Resources, GGI, TSX-V) and has prime targets scattered throughout with astonishingly similar structures and geophysical and geochemical signatures as the adjoining Hat and Star properties.

It may seem convenient for him to say this, but GGI President and CEO Steve Regoci, who has found success for Garibaldi in Mexico, is a genuine huge believer in the Sheslay district and recently referred to the Hat as a “monster” following the release of an updated interpretation of the system by Doubleview on July 2.

Stopped In Mineralization…Due To A Blockade!

How often has this ever occurred?  In what must have been a dramatic moment, the Tahltan group pictured below stopped drilling of H-25 at the Hat late last Tuesday while the hole was in a zone of Gold-Copper porphyry mineralization at a depth of 270 meters as reported by DBV – very significant, perhaps, because H-25 was a whopping 1-km step-out to the northwest of the Lisle Discovery Zone.  That’s what turned DBV into a 10-bagger and sparked a district staking rush early last year (subsequent rounds of drilling have produced even better results than discovery holes H-8 and H-11).

The Issue

So what is the Hat/Sheslay district protest all about?  The district is primarily in Tahltan territory, and there is no question the Tahltan have important interests at stake.  It’s incumbent upon the companies working in the area to deal with all First Nations cooperatively and respectfully.  That goes without saying, and at BMR we have no patience anymore for junior resource companies who “drop the ball” and snatch defeat from the jaws of victory, whatever the issues might be.  In this case, however, we stand firmly on the side of Doubleview, Garibaldi and others in the district who are having to deal with chaotic actions as part of a certain agenda.

Industry and government officials and of course investors have every reason to be shaking their heads at statements made by Day since he started the Sheslay Circus with a May 21 letter that was posted on the Tahltan website and delivered to 3 companies including of course Doubleview: 

“Our Elders have provided consistent direction about the critical need to protect the Sheslay now and for future generations,” Day wrote in his letter.  “Our people have been clear that mining in the Sheslay will not be tolerated, and the Tahltan Nation does not support mineral exploration activities occurring in this area.”

Oh, really?  The Tahltan’s actions and inactions, however (including Day’s), tell a much different story.  And why is it that Teck Corporation (TCK.B, TSX), which has been carrying out exploration at the large Eagle Project contiguous to the southern boundary of the Grizzly, didn’t receive a letter? 

History

1.  Exploration in the district dates back at least 6 decades, a period during which the Tahltan actively participated in exploration activities in the area and even helped build and maintain important infrastructure to enable development – i.e., the Golden Bear mine access road and the bridge over the Sheslay River to connect to the past producing high-grade Golden Bear Gold mine east of the Grizzly (of course there’s also the Sheslay airstrip where you can probably land a WestJet plane in an emergency – we’ll get to that on another day).

Permits Granted

2.  There was no Tahltan opposition to the multi-year exploration and drill permits issued to Doubleview, Garibaldi or others by the B.C. Ministry of Energy & Mines, so these companies have the full legal authority to drill.  First Nations consultation is a requirement to receive a “NOW” permit, and the Tahltan had multiple opportunities to voice their concerns.  Day’s answer to this is that they were not “properly” consulted.

It’s noteworthy that in late April of this year, Doubleview announced that it had received an “expanded 5-year exploration and drilling permit” from the Ministry.  The Tahltan were consulted on the amended or “expanded” permit, and it passed through their land management division.

Garibaldi received its 5-year exploration and drilling permit during the 2nd half of last year (after Day’s election as TCC President), and Prosper Gold’s (PGX, TSX-V) expanded permit was awarded in early 2014.

All this under the watchful eyes of the Tahltan.  Are we to believe that a bunch of people were just simply asleep at the switch?  They weren’t.  Some were actually very focused on trying to make money off this hot exploration play as about $10 million has been invested in the district since 2013.

Tahltan Does The Drilling

3.  The real difficult question for Day to answer, given his strange claim that the Tahltan Nation does not support mineral exploration in the area, is why Tahltan Drilling Services has been allowed to drill every single hole so far at the Hat Property?  And why have other Tahltan-related exploration services companies been carrying out work in the district?

Up until the end of last month, as announced at the Tahltan AGM during the first weekend of July, Tahltan Drilling Services (formed around 2009) was under the majority (51%) control of the TNDC, the business arm of the Tahltan Nation.

The fact that the Tahltan drilled the first couple of dozen holes at the Hat, even holes after Day was elected TCC President including H-23, is as big of an endorsement of exploration in the district as one could give – it’s not good enough to simply state that there’s a “separation” between the business arm of the Tahltan and “leadership”.

As it states on the TNDC website, TNDC is a 3-decade old business corporation owned by the people of the Tahltan Nation through the Tahltan Band, the Iskut Band and the Tahltan Central Council.

Hole 23, Revised Hat Model, & Day Goes Into Action Mode

Day’s “light bulb” moment in late May was no coincidence, in our view.  Importantly, his uprising over the Sheslay district did not start until after results from DBV‘s hole 23 (a game-changer) and public release of powerful new geological conclusions regarding the size potential of the dynamic Hat system from an exceptional DBV technical team led by Dr. Abdul Razique, who Shirvani smartly recently recruited from Copper giant Antofagasta (known to be looking for a big project in B.C.).

As far as the blockade is concerned, it came just 5 days after DBV’s critical July 2 news release and the announcement of a major step-out – 1 km – from the Lisle Discovery Zone.  And just as Garibaldi is gearing up to drill the Grizzly for the first time ever for a potential 3rd important discovery in the area.

Leverage, Leverage, Leverage 

Day leveraged a special opportunity, given market conditions and Imperial Metals‘ troubles over Mount Polley, to cut what apparently is a favorable agreement for the Tahltan with respect to the operation of the Red Chris mine.  Both sides should be winners, really, but Day came out of that looking strong and that was good for him and his people.  Score one for The Kid.

“Government and industry understand that the First Nations people need to benefit when these things are built,” Day was quoted in a recent Vancouver Sun article.  “But with the Tahltan, it actually makes a lot of sense to partner with us because we have the capacity, we have the work ethic, we have the experience.”

Dr. Razique has a fascinating model for the Hat, and it seems Day has his own very interesting model for creating “unique” partnerships between the Tahltan and resource companies.

Our conclusion is that what’s really happening here is a high-stakes game of Chad Day “leverage” against both the provincial government and Doubleview, and of course against Garibaldi and other participants in the Sheslay district.

It’s no secret Day is hoping to strike a deal as quickly as possible on a broad-based land management agreement between the Tahltan and the province, and using a high-impact exploration play with major potential like the Hat Project and the Sheslay district in general could be viewed as an astute strategy, as long as he doesn’t slip on a few banana peels of course.

As he stated in his May 21 letter, “The Tahltan Central Council is currently engaged in government-to-government negotiations with the Province of British Columbia to reach a long-term approach to land planning, management and decision-making throughout Tahltan territory where the Tahltan Nation plays a central role.”

So, Minister Bennett and Premier Clark, how does it feel to get the “Sheslay Squeeze” from a rising 28-year-old star, fresh out of the University of Victoria?

Within the Tahltan, there do appear to be internal divisions over land management “strategy”, and it’ll be interesting to see how Day deals with this.  As we reported last week (information that was confirmed on the Tahltan website), the Tahltan’s very amicable long-time manager of land management issues, Nalaine Morin (Project Manager for THREAT, a division of the TCC), abruptly resigned last month.

Money, politics and power – that’s what’s really driving all of this.  That’s the world we live in.  And you can’t take a major discovery in B.C., as mining-friendly as it is, and turn it into a mine without going through a lot of “noise”.

Consequently, investors should be more convinced than ever of the immense potential mineral wealth that Doubleview is uncovering at the Hat, that GGI believes exists at the Grizzly, and could be found elsewhere along the Sheslay mineralized corridor which is clearly one of the country’s most promising mineral districts.

Note:  John and Jon both hold share positions in DBV and GGI.