Rockhaven updates Klaza resource with higher grades

Rockhaven Resources (TSXV: RK; US-OTC: RKHNF) is pushing ahead at its Klaza gold project in the southern part of Yukon's Dawson Range gold belt, updating metallurgy and resources while trying to demonstrate the potential of the project.

"We're kind of everything people are looking for in an exploration project," company president and CEO Matt Turner says from Dawson, Yukon, at a conference in late June.

"It's close to a town, close to the capital city of Whitehorse. It's road accessible and it's in a developed area."

The 287-sq.-km property is a 3-hour drive from Whitehorse. It's 50 km west of the town of Carmacks, which has a population of 493 people, and accessible by taking the Klondike highway to a dirt road largely maintained by the Yukon government.

"The access road is government maintained year round up until the old mine site, which is 8 km away, because they're doing reclamation on the old mine," Turner says.

As of mid-April, the company had achieved 82% gold recoveries in the project's Eastern BRX zone by using flotation and cyanide leaching. Previously, the Eastern zone responded poorly to flotation test work, and, as a result, the company didn't include it in its 2016 preliminary economic assessment (PEA).

The company adds that three of the four main zones now respond well to pre-concentration test work. Using dense media separation, the company more than doubled its average gold grades. Its recoveries now range from 87% to 98.2% gold.

An aerial view of the Klaza gold project. Credit: Rockhaven Resources.

"There is this stigma out there around the metallurgy," Turner says, "but we've found a way that works and it's conventional, and I think it's just further educating people that we've figured it out."

Due to the recently updated resource, that PEA is now out of date. Per that study, the project had an $86 million after-tax net present value at a 5% discount rate and a 14% after-tax internal rate of return.

As of a June 5, 2018 update, the Klaza project contains 4.45 million indicated tonnes grading 4.8 grams gold, 98 grams silver, 0.7% lead and 0.9% zinc for 686,000 oz. gold, 14.07 million oz. silver, 73 million lb. lead and 92 million lb. zinc.

The project also contains 5.7 million inferred tonnes at 2.8 grams gold, 76 grams silver, 0.6% lead and 0.7% zinc for 507,000 oz. gold, 13.9 million oz. silver, 77.5 million lb. lead and 89 million lb. zinc.

About half of the overall resource is pit-constrained; the other half the company would have to mine using underground methods.

Nearly 60% of the overall ounces are now in the indicated category. The company infill drilled in 2017 for about $4 per oz. gold.

"I'd say on the Klaza resource area, in particular, we have a really good grasp," Turner says. "The resource that we just put out confirms that as we go in and infill this, the grade's increasing. That comes back to structural continuity and grade continuity."

An EBA signing ceremony with Chief Eric Fairclough of LSCFN and Rockhaven CEO Matt Turner in 2015. Credit: Rockhaven Resources.

The main property contains 11 mineralized zones totaling more than 10 km strike length, concentrated within a 4 km by 3 km structural corridor.

All veins start at surface, and the company has found mineralization as deep as 450 metres below surface. However, it says its model suggests mineralization could extend to a depth of 1,000 metres or more. The system remains open to the east.

Rockhaven has trenched 24,500 metres, completed airborne and ground surveys and sampled soil geochemistry on a project that, according to Turner, is "quite simple" from a geological perspective.

"You've got a mid-cretaceous intrusion," Turner explains. "It's very brittle, homogenous, so it's broken quite well. And then you've got quartz-feldspar porphyry dykes that have come up into these faults, and then after you would have had the veins come in."

Rockhaven's drilling season typically lasts from the end of May to early October. Usually it will "hit it hard" from early June until the end of August. That's what it did last year, drilling 16,000 metres over 98 holes in two and a half months, and finishing mid-August. In total, the company has drilled nearly 100,000 metres across more than 400 holes.

With future drilling, the company will look to upgrade the resource to a point where a prefeasibility or feasibility study is viable but also drill a few step out holes to expand the deposit.

"It always seems like, especially in this market, to really move the needle in a major way a lot of it seems to be based on new discoveries," Turner says.

"We want to keep adding value on the current resources, but I think you've got to throw some of those new discovery shots in, too. You've always got to give people that chance for the five to 10 bagger when they invest in these stories."

The company identified some new mineralized zones in 2017 outside of the main resource area, including the Rusk target, a 2.6 sq. km soil geochemical anomaly lying just a few kilometres to the south.

Shares of Rockhaven are currently trading at 14 ? with a 52-week range of 12 ? to 18 ?. The company has a market capitalization of $21 million and about $600,000 in working capital. It owns 100% of Klaza, which has no royalties on resource areas.

Last year, Coeur Mining (NYSE: CDE) invested $2.7 million for 9.9% of the company. The investment helped fund last year's drill campaign. Its biggest single shareholder is Strategic Metals (TSXV: SMD; US-OTC: SMDZF), which owns 39% of the company.

"This truly is where the market is right now," Turner says. "You just have to stick to your guns and keep moving the project forward, and there's going to come a point when the market catches up."