Initiating coverage on Castle Silver Resources Inc. (“CSR”) today with yesterday’s release of highly promising sampling results from its 100% owned Castle Mine Property near Gowganda in Ontario, Canada. The company announced that chip sampling from the back of a quartz-carbonate vein on the first level of the past producing Castle Mine confirmed the presence of high-grade cobalt and nickel.
The Castle Mine was in production sporadically between 1917 and 1989, during which time previous operators only mined and assayed for silver in their exclusive focus on exceptionally high-grade silver production (total of 9.5 million oz silver and 300,000 lbs cobalt).
A short distance inside the adit, chip sampling results show strong mineralization along a 4 m length of a vein as wide as 30 cm. The vein is observed to continue for some 90 m. The first 5 chip samples average 1.06% cobalt, 5.3% nickel and 17.5 g/t silver. In general, cobalt grades of 0.5% are considered high-grade. Although chip samples are selective samples and thus not representative of the mineralization hosted within the target area, the results show the great potential of an upcoming drill program to discover more representative mineralization. Underground sampling, covering multiple target areas, continues ahead of drilling.
CSR is currently also completing a series of bulk samples to be processed with the company’s proprietary Re-2OX hydrometallurgical process to produce high purity cobalt powders for battery sector end buyer evaluation.
Meanwhile, CSR is also using its “highly adaptable” Re-2OX process for testing recovery of cobalt and lithium from used lithium-ion batteries as the company vigorously pursues exciting opportunities in recycling technology. Re-2OX strips battery casings to leach the cathodes in order to create a high-purity precipitate containing the metal. CSR expects to soon release first-stage results from SGS Lakefield.
Extremely high-grade mineralization was encountered in 3 of the 5 chip samples:
• 1.8% cobalt, 8.6% nickel and 25.2 g/t silver (CSR-17-S03)
• 1.6% cobalt, 7.6% nickel and 32 g/t silver (CSR-17-S04)
• 0.81% cobalt, 5.9% nickel and 4.1 g/t silver (CSR-17-S01)
Frank Basa, CSR President and CEO, stated in yesterday’s news, which was released after market close in Canada:
“We are very pleased with these initial results which demonstrate how Castle features strong upside potential for unmined cobalt and base metal mineralization throughout 11 levels covering a footprint 727 meters east-west, 455 meters north-south and 258 meters deep. Significantly, our proprietary Re-2OX process is designed for high recovery of multiple metals and elements, opening opportunities that simply didn’t exist decades ago at this mine or throughout the northern Ontario Silver-Cobalt district. We refer investors to our May 1 news release and the importance of the 300-meter thick Nipissing diabase intrusive that underlies a large portion of the property.”
In a recent interview with Isabel Belger, Frank explained:
“The most exciting thing is that we have a process for the Cobalt Camp that can separate the cobalt from the silver and produce a cobalt product for the end users in the battery market now. We are also looking at using our process to recycle the old lithium ion batteries. We started the test work and we feel our process should be able to recover the cobalt from the used lithium-ion batteries. And that, to us, is kind of a long-term approach to recovering cobalt. And then when you come on line to mine and produce cobalt, the process will be available and operational. So you are able to recycle the cobalt, we call it a ‘green process that closes the loop’... Underground access at the Castle mine and our unique Re-2OX hydrometallurgical process to create high-purity cobalt powders for end-users in the battery sector have established CSR as the innovation, exploration and development leader in Canada’s richest cobalt-silver district.”
In a recent interview with David Morgan, Frank explained the exceptional opportunities which CSR now seeks to unlock for its shareholders:
The innovative Re-2OX process was developed by Frank Basa in conjunction with the National Research Council during the Castle Mine’s last production cycle. Basa worked at the Castle Mine in the early 1980s after graduating from university as a metallurgical engineer. At that time, the mine was leased by Agnico Eagle and he worked in the mill processing ore from Castle and other mines in the Cobalt Camp. According to a recent interview with the Northern Miner:
”Agnico initially was not recovering the cobalt,” he recalls. “They left the cobalt in the concentrate after they extracted the silver and there was also cobalt left in the tailings.” Basa was Agnico’s first metallurgical engineer at the mill and he told them they could separate the cobalt along with the silver. He took the cobalt waste and produced 13,000 tonnes of cobalt, which at the time, he estimates, was worth around $52 million.
“We spent a lot of money on developing the process for doing that,” he says. “We got funding from the government. We engineered a process that separated both the cobalt and the silver from the concentrate and made the cobalt into a commercial product we could sell.”
With low silver prices of around US$6.50 per oz., however, Agnico stopped mining at Castle and elsewhere in the Cobalt camp in 1989, and subsequently shifted its focus to gold. “When that happened, we picked up some of the assets that we knew to be high-grade, and we judged them to be the best for redevelopment,” Basa says.Since then, Basa says, he has refined the separation process further into what he calls Re-20X, which the company hopes to use to produce high purity cobalt salts. He and his team are also using the technology for test work at SGS Lakefield to see if it will work for extracting cobalt, lithium, and other metals from used lithium-ion batteries.
“If we can show that it works, we could be in a position to open up a new line of business extracting cobalt and other metals by recycling spent lithium-ion batteries,” he explains. “We’ve asked around and we haven’t found anyone else in Canada doing that right now.”
Rockstone is eagerly waiting for the release of independent results. This processing technology, along with the prospects of re-starting a past producing silver-cobalt-nickel mine with potentially high-grade cobalt and nickel grades, is what sets CSR apart from other junior exploration companies attempting to put a foot into the booming cobalt space. CSR is eyeing up the battery market from more than just one angle. As Bloomberg recently put it: “The race is on to supply more of the cobalt needed for batteries in the fast-growing market for electric vehicles -- and that means fresh competition for the big players Glencore Plc and the Democratic Republic of Congo.“
In case the technology works economically and sufficient mineable resources can be delineated, CSR may decide to re-start production rather quickly as management has indicated recently in the interview with the Northern Miner that Asian cobalt buyers are interested and want to sign agreements with CSR:
“Everyone is just scrambling to get cobalt... In China the first thing they said to us was: ‘Do you need money?’ That’s the first thing they said! We told them we’re just at the exploration stage, but they said: ‘We’re interested.’
We said we don’t even have an NI-43-101 estimate of resources, and they’re still interested!... We’re just a little group out of northern Ontario and the Japanese companies knew everything about us,” he says. “They were so well-prepared, and they asked us how they could work with us.
The same with the Chinese companies ... When we got here they already had our power point presentation before we talked to them. They really mean business here”, Basa said in a telephone interview from Beijing with the Northern Miner.
“In Japan, within two hours of meeting a large Japanese trading company, Basa says, he received a spec sheet for the grade of cobalt they wanted in cobalt salts that they need for lithium-ion battery production.
The Japanese are far more concerned about nailing down supplies of cobalt than they are of lithium, Basa explains, adding that the powerful island nation prefers to source its cobalt from outside of the Democratic Republic of the Congo...
“We will produce a sample for their evaluation to see if we can meet their specs,” he says. “Although the Japanese and Chinese ask for the same product the specs are different. But they will take anything with cobalt in it.”
Above map shows areas where the Nipissing Diabase (purple) is known to occur at or near the surface. Silver and cobalt are typically found close to the Nipissing Diabase. CSR owns 100% of the Castle Silver Property, including the past producing Castle Mine and the near-by Golden Corridor Zone. CSR also owns 100% of the Beaver Silver Cobalt Property, including the past producing Beaver Mine. CSR also owns 100% of the Violet Silver Cobalt Property, including the past producing Violet Mine.
According to Bob Moriarty’s article “Castle Silver should be called Castle Cobalt” (May 23, 2017):
“The best place to ever find a deposit is said to be in the shadow of an old head frame. With the Castle Silver Mine that seems to be true. While past mining focused on the production of silver, many of the adits contain visible cobalt veins and at least a bulk sample for testing purposes would be easy to mine and permit.”
Above map represents on-going efforts to digitize the extensive data available on past underground mine workings and drill holes at the Castle No.3 Mine. The map shows the underground workings (pink lines) at Level 1 at a depth of 79 feet (24.1 m) and the exploration holes (yellow lines) that were drilled from Level 1. Mining occurred on 11 different levels during the 1900s down to approximately 850 feet (259.1m). The map also shows seven of the 12 surface holes (blue lines) drilled by the Company in 2011 (with five others drilled in 2011 located to the east of the area shown). The terrain details are from a drone survey completed in the spring of 2016 that provided current and accurate surface elevation data. Coloured dots on the map show silver grades (cobalt grades were not recorded). (Source: CSR Corporate Presentation, May 2017)
• CSR owns 100% of the 3,200 hectares Castle Mine Property, 85 km northwest of the historic Cobalt Silver Mining Camp, including the past producing Beaver and Violet Mines near the city of Cobalt.
• All of the 3 properties are located near several historic mines in the Greater Cobalt Camp which produced over 500 million oz silver and tens of millions lbs cobalt in the 1900s.
• The Castle Mine, with its high silver grades, was one of the last in operation (historical production: 9.5 million oz silver and 300,000 lbs cobalt).
• Agnico Eagle, which operated the mine between 1979-1989, closed the mine because of low silver prices ($6 USD/oz).
• Historical production of silver didn’t focus on cobalt mineralization. Silver and cobalt are typically found together in quartz and calcite veins, however low-grade silver veins were largely ignored, even if they had high-grade cobalt.
• 2011 drilling showed exceptionally high silver/cobalt intercepts, such as 6476 g/t silver over 3.09 m (CA11-08) and 1.44% cobalt over 0.12 m (CA11-09).
• Preliminary metallurgical tests in 2017 showed excellent recoveries for silver (98.5%) and cobalt (70.5%) as well as high concentrate grades (11,876 g/t silver and 10.5% cobalt). Additional testing underway to test for optimization of grind and reagents.
• Geophysical IP survey completed in 2017 to target future drilling locations.
• First Nations agreements in place.
Above: Sample of a quartz-carbonate vein with cobalt rosette. Cobalt rosette typically have cores of silver. It should be noted that due to the elements occurring naturally in the Cobalt-Gowganda Mining Camps, the mineral assemblage is quite varied. The cobalt minerals are often referred to as cobalt sulphides and cobalt arsenides and include minerals such as skutterudite, safflorite, gersdorfite, cobaltite, arsenopyrite and many others. Metallic elements occur in their pure (or native) forms such as silver, and bismuth. (Source)
Above: Cut surface of a quartz-carbonate vein with high-grade silver and cobalt mineralization. The darker grey (matte) are the cobalt minerals and the more reflective metal is silver shown here with dendritic growth. (Source)
Management & Directors
Frank J. Basa (President, CEO, Director)
Mr. Basa has over 28 years’ global experience in gold mining and development as a professional hydro-metallurgical engineer with expertise in milling, gravity concentration, flotation, leaching and refining of precious and base metals. He is a member of the Professional Engineers of Ontario and a graduate of McGill University. Mr. Frank J. Basa, P.Eng., has been the Chief Executive Officer and President of Castle Silver Resources Inc. since September 15, 2015 and the CEO and President of Granada Gold Mine since June 18, 2004.
Dianne Tookenay (Director)
Ms. Tookenay holds a Certificate in Mining Law from the Osgoode Hall Law School, York University, a Joint Masters of Public Administration from the University of Manitoba, a Bachelor of Administration from Lakehead University and Native Band Management and Indian Economic Development Diplomas from Confederation College Applied Arts and Technology. Ms. Tookenay’s experience, knowledge and deep roots within the First Nation communities will add significant value to Castle’s development efforts over the coming years.
Jacques F. Monette (Director)
Mr. Monette is a career miner who has been engaged in every facet of underground mining for more than 40 years. His previous positions included Shaft Project Coordinator with Cementation Canada Inc., Vice President of Operations/Mining Division for Wabi Development Corp., Vice President of Development for CMAC Mining Group, Operations Manager for Moran Mining and Tunneling, as well as Area Manager for J.S. Redpath Group. He has been an Independent Director of Castle Silver Resources Inc. since September 15, 2015. He has been a Director of Granada Gold Mine since July 7, 2008.
Thomas P. Devlin (CFO)
Mr. Devlin brings to the company over 40 years of accounting and management experience in the investment and junior resource industries. Mr. Devlin, also known as Tom, has been the Chief Financial Officer of Castle Silver Resources Inc. since September 23, 2015. He has been Chief Financial Officer of Granada Gold Mine since July 3 2009.
Robert Setter (Director)
Mr. Setter is the former Senior Financial Editor for Report on Mining and a former public company Director. He brings an extensive business, marketing and analysis background to the company, is a graduate of UBC and holds a BA in Economics. Mr. Setter serves as Corporate Research and Analytics for Granada Gold Mine since 2012. He has been a Director of Castle Silver Resources since January 2016.
Annemette Jorgensen (Director)
Annemette Jorgensen brings over two decades of public company corporate development, finance, media, and public relations and investor relations expertise. Ms. Jorgensen has served on the board of Granada Gold Mine since April, 2012. As Manager of Debentures Investments with Samoth Capital Corporation, Ms. Jorgensen was responsible for raising over a million dollars per month.
Tina Whyte (Corporate Secetary)
Tina Whyte brings over 20 years of experience in the corporate and securities industry. Her expertise spans to areas of corporate governance, continuous disclosure, financing transactions and regulatory filings and compliance. Ms. Whyte holds corporate secretary positions with other publicly listed companies.
All New Approach to Mining
Management’s philosophy is to acquire previously producing mine sites in politically safe pro mining jurisdictions then systematically and efficiently explore with the goal of defining a viable resource as a first step on the road to production. CSR has a minimum of 3 prospective mineralization targets including cobalt, silver and gold.
CSR owns a 3,300 hectares property formerly known as the Castle Silver Mine. The property was a past producing silver mine near the northern Ontario community of Gowganda, Ontario which is situated 85km northwest of the historic Cobalt Silver Mining Camp. This former Castle Silver Mine property is acknowledged to be situated within the traditional territories of 2 primary First Nations. When CSR acquired the property on September 15, 2015, it inherited 2 memorandums of understandings with First Nations entered into by the predecessor to Granada Gold Mine, Gold Bullion Development Corp. The MOUs inherited are 2 agreements: An agreement with Matachewan First Nation and an agreement with Temagami First Nation and the Teme-Augama Anishnabai. The agreements were entered into in order to ensure responsible and progressive development of exploration projects since they are located within the traditional territories of 2 First Nations. CSR will continue with these agreements to honour and maintain the pre-existing relationships thus ensuring any development carried out at the Castle Silver property will be consistent with the previously signed agreements.
Interview with Frank Basa (by Isabel Belger)
Castle Silver Resources Inc.
3028 Quadra Court
Coquitlam, BC, V3B 5X6 Canada
Phone: +1 819 797 4144
Shares Issued & Outstanding: 44,388,150
Canadian Symbol (TSX.V): CSR
Current Price: $0.26 CAD (06/12/2017)
Market Capitalization: $12 Million CAD
German Symbol / WKN (Frankfurt): 4T9B / A2DG7E
Current Price: €0.165 EUR (06/13/2017)
Market Capitalization: €7 Million EUR
Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist.