BHT.V: Update on Progress at Bull River Mine of Braveheart Resources

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By Steven Ralston, CFA

TSX:BHT.V | OTC:RIINF

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Braveheart Resources Inc. (TSX:BHT.V) (OTC:RIINF) is a Canadian-based junior mining company focused on the exploration and development of proven, past-producing mines in Mining Districts of East and West Kootenay of British Columbia. Braveheart’s primary focus and main asset is the recently acquired 100% interest in the 9,785-hectare Bull River Property, a past-producing copper, silver and gold mine. The company also has an option to acquire 100% of the 2,602-hectare Alpine Gold Project near Nelson, British Columbia, also a past-producing gold mine.

Significant Developments during the First Quarter of Fiscal 2020

During the first fiscal quarter (ended August 31, 2019), Braveheart Resources

continued to advance the Major Mines Permit application process in pursuit of a tailings disposal permit and an amendment to increase the maximum allowable capacity to 1,000 tonnes per day.

◦ A condemnation drilling program has been completed.

◦ A groundwater drilling program is ongoing.

procured a used 10 MVA transformer in anticipation of increasing the allowed load to 10MVA with the British Columbia Hydro and Power Authority

completed a 14-hole, 3,085-meter diamond drill program at the Empire-Strathcona property located on the Bull River land package, extending the expiry date of all the mineral claims for the entire Bull River Mine property until May 2022

On the financing front, the company completed two private placements of an aggregate of 3,823,530 flow-through shares at $0.17 per share. Net proceeds were $630,000. Furthermore, the company has received $880,369 through the exercise of 7,318,293 warrants.

In addition, upon review of the company’s mineral claims, management decided to focus solely on the Bull River Mine (aka Purcell) and Alpine mineral claims. In July 2019, Braveheart Resources acquired an additional 589 hectares of mineral claims, which are located immediately adjacent to the Don prospect on the Bull River Property. All other non-core claims have been written down to $8.

Update on Application Process for Restarting Operations at Bull River Mine

In order to begin processing the on-surface stockpile, a permit to store tailings is required. Currently, the Bull River Mine property does not have a permit to store tailings.

In addition, in order to optimize the capacity of the installed surface infrastructure, management seeks to increase the permitted mining rate on the existing Small Mine Permit from 205 tonnes per day to approximately 1,000 tonnes per day.

On August 16, 2019, Braveheart Resources received an amendment to its Mines Act Permit M-33 from the Ministry of Energy, Mines and Petroleum Resources of British Columbia. The amendment allows for exploration drilling and groundwater drilling at the 116-hectare Bull River Mine area. Both drilling programs are necessary to complete the application process for the restart of mining operations.

Under the amendment, a condemnation drilling program has been completed that aids in ensuring that the primary proposed location for a dry stack tailings or filtered tailings storage facility is not underlain by economic, near-surface mineralization. Based on the results of this program, the company can now proceed with the design of a filtered tailings storage facility, which begins with a detailed engineering analysis of trafficability, slope stability, liquefaction potential and seepage. The completion of a design for a dry tailings facility is a critical component of the application process for a tailings disposal permit from the Major Mines Permitting Office of British Columbia’s Ministry of Energy, Mines and Petroleum Resources.

A groundwater drilling program is required to install water wells, which are needed to implement a groundwater monitoring program. Currently, there is a surface water monitoring program in place, along with a dewatering program for the existing underground workings, which are under care and maintenance. However, an expanded groundwater monitoring program is another critical component of the application process of the Major Mines Permitting Office. Management anticipates that a groundwater drilling program will be completed during the fourth calendar quarter of 2019.

Procurement of 10 MVA Transformer

Braveheart Resources continues to work with the British Columbia Hydro and Power Authority in order to increase the load to 10 MVA (Mega Volt Ampere). First, a System Impact Study Agreement must be signed in order to initiate a System Impact Study, which is necessary in order to assess the impact of connecting the Bull River Mine’s plant to BC Hydro’s transmission system. The System Impact Study should consist of various Feasibility Studies. Currently, the plant at the Bull River Mine is connected to grid power but at a lower load factor. In anticipation of a successful outcome, Braveheart Resources has secured a used 10 MVA transformer, which is expected to be moved on site this year. The total of the transformer is $265,000, of which $165,000 has been paid.

Drilling Program at the Empire-Strathcona Property under 5-year MYAB

In June 2019, Braveheart Resources received approval from the British Columbia Ministry of Energy, Mines and Petroleum Resources for a multi-year area based (MYAB) permit, which allows a company to conduct exploration activities over specific time period, usually five years. Braveheart’s MYAB permit extends for five years and covers the entire 9,785-hectare Bull River Property, including prospective mineral occurrences at Cedar/G Zone, Dean, Rex, Empire Strathcona and Burt. The MYAB permit allowed Braveheart to conduct its 2019 drilling program at Bull River.

On October 17, 2019, management disclosed the results from the 2019 exploration program, which consisted of a surface drilling program conducted on the Empire-Strathcona property during the summer. All of the 14 drill holes intersected narrow mineralized structures down dip and along strike of earlier underground workings; but the grades currently do not support further exploration. However, due to the contiguous nature of the claims, these drilling activities have extended the expiry date of all the mineral claims for the entire Bull River Mine property until May 2022. The exploration program was fully funded by a private placement of flow-through shares that closed in June.

Braveheart Resources Commences Trading on OTCQB Venture Market

On September 11, 2019, Braveheart Resources was approved for trading on the OTCQB Venture Market, being uplisted from its OTC Pink status. Now, RIINF is Depository Trust Company (DTC) eligible. The OTCQB listing should expand awareness of the company among US investors, both retail and institutional. The company’s primary continues to be the Toronto Venture Exchange under the symbol BHT.

Recent Financings

During fiscal 2019, Braveheart Resources issued 18,175,000 shares to provide capital for the company’s operations. Net proceeds were $1,775,900. In addition, 31,877,029 shares were issued in connection with the acquisition of the Bull River Mine property.

Thus far in fiscal 2020, Braveheart Resources has completed two private placements of an aggregate of 3,823,530 flow-through shares at $0.17 per share. Net proceeds were $630,000.

Also, Braveheart Resources issued 333,333 Units at $0.15 per Unit. Gross proceeds for the Units were $50,000. Each Unit is comprised of one common share and a 2-year, half-share warrant exercisable at $0.21 per share.

In addition, through August, the company has received $880,369 through the exercise of 7,318,293 warrants.

Valuation

Managements of junior mineral exploration companies create value through evaluating, acquiring, exploring and/or developing mining properties. Management’s strategy is to increase shareholder value through opportunistically acquiring the Bull River Property. With the acquisition of the mill, management is able to fast-track production at the mine, beginning with the surface stockpile.

Our calculation of share value of attributable resources is based on the ascertained net asset value of each property, which is determined by adjusting the value of estimated resources for the expected recovery rate and mining/processing costs. Also, the resources are assigned a confidence factor that attempts to take into account the risks of each project, such as the locality of the deposits, the assurance level of the resources, various technical mining/production risks, etc. The methodology also accounts for balance sheet adjustments for working capital and assets, such as property, plant and equipment, along with anticipated development capital costs. Based on our calculation of share value of attributable resources, our target for Braveheart Resources stock is $0.60.

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