Resource World Magazine

40 www.resourceworld.com a u g u s t / s e p t e m b e r 2 0 1 6 A little over two years ago I toured the Treasure Mountain silver mine and mill of Huldra Silver, the predecessor company to Nicola Mining Inc. [NIM- TSXV; HUSIF-OTC]. Unfortunately, shortly thereafter, the mine suspended opera- tions due to a lack of operating funds. The company was able to carry on under the Companies' Creditors Arrangement Act allowing it to restructure its financial affairs. Today, with a name change, new management and recent financings, the company has another shot at success. Guiding the revived company is Peter Espig, CEO, who is uniquely qualified to rise to the challenge. A former investment banker with Goldman Sachs and armed with a B.A. from the University of British Columbia and a MBA from Columbia Business School, Espig also served as Vice-President of Olympus Capital, a New York private equity firm. As a member of Goldman's Special Situations group, he participated in creating opportunistic platforms and corporate restructuring, the latter of which is now his specialty. Nicola Mining has a number of 100%- owned assets, two of which are generating cash flow. The primary cash generator is its mineral processing facility located on the historic Craigmont Mine site, 14 km northwest of Merritt, British Columbia. The fully permitted 200 tonne-per-day mill (gravity and flotation) is designed to process gold and silver ores. The mill originally cost $21.6 million to construct and comes with a $2.0 mil- lion fully-lined tailings impoundment with zero discharge into the local environ- ment. In addition, the company paid $8.0 million in order to own the land freehold, which highlights the value of its mill infrastructure. Currently, the mill is processing gold ores from the Dome Mountain gold mine (8 g/t gold) near Smithers, BC, and ore from Siwash Minerals (4 g/t gold estimate) which is located about 90 minutes by road from the mill. Rather than the usual toll- milling arrangements, Nicola has created mutually beneficial profit sharing partner- ships with its milling clients. In addition, the mill has the potential to be expanded to process 1,000 tonnes/day. While the company is permitted to pump up to 1.3 million gallons of water per day from wells, it has found that it is only needed in emergencies. Normally, water for flotation in the mill is derived from natural springs in the nearby mountain; the water is recirculated and neutralized. Another cash flow generator is sales from the extensive sand and gravel beds on the Craigmont property. Current revenues are $50,000-$70,000/year with operations per- mitted for up to 60,000 tonnes per year. A rough estimate of approximately 21-29 mil- lion tonnes of sand and gravel represents about 200 years supply for the local market. There is another potential source of cash flow in the 90 million tonnes of rock that was stripped and stockpiled during open pit mining at the Craigmont Mine in the 1960s. With copper prices at approxi- mately US $0.60/lb back in the 1960s, this copper-mineralized rock was not economic at the time; however, with copper trad- ing for US $2.05/lb, these huge stockpiles could be a real cash cow. Craigmont's cut-off grades ranged between 0.7-1.2% copper, easily ore-grade considering that the material has already been mined. It is envisaged that the stockpiled material would be processed in a large copper mill in southern BC. Nicola is planning further sampling of the stockpiles. Geological studies have indicated that a large, lower grade halo surrounds the high- grade Craigmont ore body. A great deal of knowledge has been gained by company geologists re-logging some 7,000 metres of old Craigmont diamond drill cores conve- niently stacked nearby. Now named the Thule property, this copper-iron skarn and copper porphyry area will be the focus of exploration for the 2016 field season where a 1,500-metre drill program is planned. This area is characterized by carbonate- rich silicate and intrusive rocks found along the southern flanks of the Guichon Batholith, approximately 20 km south of the 140,000 tpd, Teck Resources, Highland Valley copper operation. fiElD r e p o rt Nicola Mining: a new start with cash flow by Ellsworth Dickson Left to right, Dr. paul Johnston, p.geo, Director, peter espig, Ceo, Brian may, project geologist, and tyler punk, project geologist at Nicola mining's 200 tonne-per-day mill near merritt, British Columbia. photos by ellsworth Dickson.

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