BHT.V: Zacks Initiates Coverage of Braveheart Resources

By Steven Ralston, CFA



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.

The surface infrastructure of the Bull River Mine includes a 750-tonne per day conventional mill, crushing facilities, office building and mine maintenance facilities. The property is connected to the power grid power and accessible all-weather, paved roads.

With this potentially transformational acquisition of the Bull River Mine, there are expectations that Braveheart Resources will transition from an exploration and development to a producing company, especially considering the on-surface stockpile of ore. Though the Bull River Mine has been on care and maintenance since the fall of 2009, the surface infrastructure includes a 750-tonne per day conventional mill, crushing facilities, administrative building, mine shops, maintenance facilities and other structures. The mine property is accessible year-round by all-weather, paved roads and connected to the electrical power grid. Only modest capital expenditures should be required to re-activate the existing and permitted processing plant, though two additional permits and project financing also need to be obtained.

View Exhibit I

In addition, the Bull River Mine with its underground copper, silver and gold mineralization has a recent NI 43-10-compliant Technical Report (dated January 22, 2019) with an Indicated Resource of 1.511 million tonnes grading 2.263% Cu Eq. and an Inferred Resource of 343,000 tonnes 1.855% Cu Eqv. (at a 1.0% Cu Eq. cut-off). The mine has approximately 21,000 meters of underground development (ramps, levels, winzes, drifting, ventilation raises, etc.) over seven levels.

The tables below summarize the Indicated Resource Estimates. The Technical Report’s base case copper equivalent (Cu Eqv.) cut-off for underground mining is 0.6% (which is highlighted in the tables), while management is focusing on the 1.0% cut-off.

View Exhibit II

Management’s Strategy

Management’s primary goal is to restart the crushing and milling operations at the Bull River Mine in order to process the large surface stockpile of ore located at the mine site. Management estimates the approximate 165,000-tonne stockpile holds a metal value of between $20-to-$22 million. Management is moving forward with its development plan by seeking two permits from the BC Ministry of Energy, Mines and Petroleum Resources and by pursuing a CDN$10 million financing to fund the restoration of the mill to operational condition and the initial processing expenses. The company is looking to amend the existing Small Mine Permit in order to increase the maximum permitted ore mining capacity from 205 tonnes per day to 1,000 tonnes per day. Also, a tailings disposal permit is required. The time frame for the completion of the permitting process (which began in April 2019) is usually 9-to-12 months; therefore, management expects to be able to begin processing the stockpile at Bull River sometime between late 2019 and early 2020.

The Bull River Mine is a past producing, copper, silver and gold mine, located in southeastern British Columbia. Braveheart Resources acquired a 100% interest in the property in January 2019 through the acquisition of Purcell Basin Minerals Inc. via the Companies’ Creditors Arrangement Act (CCAA) process. A large surface stockpile is on site, which management plans to mill and have processed. Over the years, between $200 and $300 million of investments has been committed to exploratory drilling campaigns, the construction of access roads and infrastructure projects at the Bull Mine resulting in an underground mine with approximately 16,600 meters of access ramp and level development, along with a 750 tonne-per-day mill, administrative & maintenance buildings, assay & metallurgical laboratories, an electrical substation and other support buildings.

View Exhibit III

Bull River Mine Surface Infrastructure

As a result of this successful mining operation between 1971 and 1974, the Bull River Mine has the surface infrastructure to resume operations with only a modest amount of capital expenditures required to restore the mill and facilities to production condition. The crushing plant was last used during the pilot plant trials in 2007 and 2008. The mill requires some modest refurbishment to operate. The flotation circuit has been removed and needs to be replaced. Also, the wooden fine mill feed silo needs to be restored to working condition.

View Exhibit IV

Also, an unspecified amount of mining equipment, including a fleet of mobile equipment, was listed in the inventory of the Court ordered sale of the mining. In addition, there are also numerous pads, which were constructed for baseline testing of acid rock drainage and monitoring water quality.

View Exhibit V

The mine is accessible year-round by all-weather roads, and power is available from an electrical power station located approximately 2.5 kilometers from the mine site.

Bull River Mine Underground Infrastructure

The underground infrastructure of the Bull River Mine was established from extensive developmental programs, primarily between 1996 and 2009, which were designed to gain exposure to mineralized structures. The 2,555-meter access ramp leads to 14,050 meters of level development comprised of seven sub-levels at approximately 40-meter vertical intervals1. Including ventilation raises and an escape route, total development work spans approximately 21,000 meters2. Though the work focused on exploration activities (for sampling, drilling, etc.), allowances were made for the anticipated future mining operations. For example, numerous cross-cuts and sill drifts were established to provide access to prospective mill feed. Also, the dimensions of the existing decline and levels are sufficient for the operation of production equipment. Only a relatively small amount of additional pre-production development is required to bring the mine into operation.

View Exhibit VI

Opportunistic Initial Project

Once Braveheart Resources acquired 100% of the Bull River Project, management began actively working on renewing the permitting process. First, even though the mine is allowed to produce of up to 75,000 tonnes of ore per year under the current Small Mine Permit and Waste Management Permit (PE-16034), a tailings disposal permit is required in order to be able to processing of the surface stockpile. Braveheart seeks to obtain a permit to allow for surface and underground tailings deposition. The company is working completing certain documents (such as a mine operating production plan, a reclamation plan and environmental studies) need to be completed prior to filing the permit applications. Management’s plan is to utilize dry stack tailings deposition by dry stacking on the surface or by cemented backfill underground.

Second, with the aim of optimizing the original mill infrastructure, management is also seeking a permit to increase the allowed mill throughput rate from 205 tonnes per day (i.e. 75,000 tonnes of ore per year) to 1,000 tonnes per day. The Bull River Mine has been on care and maintenance since 2009; however, the facilities were in use during a pilot plant testing program, which was conducted from January 2007 to December 2008. Though the conventional mill circuit has a nameplate capacity of 750 tonnes per day, during 1972 and 1973, operating production averaged 720 tonnes per day.

Management’s plan is to rehabilitate the concentrator circuit with relatively modest capital investments and simultaneously boost the capacity of the circuit to potentially 1,000 tonnes per day. With the current crushing circuit designed to process mill feed at a meaningfully higher rate than the mill, there is the opportunity to crush the feedstock to a smaller size so that the mill throughput can be enhanced. The company is currently sourcing a surface transformer and flotation cells for the concentrator circuit.

In early June, Braveheart Resources received approval for a multi-year area based (MYAB) permit. The completion of three private placements of flow-through securities has provided the company with over $600,000 to fund exploration programs. The focus of the drilling program will be on the prospective mineral occurrences outside the Bull River Mine area on the contiguous land package, specifically at Cedar/G Zone, Dean, Rex, Empire Strathcona and Burt.

On August 16, 2019, Braveheart Resources announced the receipt of 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 Bull River Mine area. Both drilling programs are necessary to complete the application process for the restart of mining operations. An exploratory drilling program will help ensure that the stockpile is not underlain by economic mineralization, and a groundwater drilling program in required needed to install water wells.


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 (see table below), our target for Braveheart Resources stock is $0.60.

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1. Gallowai Bul River Mine Scoping Study, Moose Mountain Technical Services, October 29, 2013, page 24.
2. Technical Report on the Gallowai Bul River Mine, by Roscoe Postle Associates, March 30, 2012, pages 6-1 and 6-2