Deer Horn Capital

Developing Gold, Silver and Tellurium Resource for the Renewable Energy Sector

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Overview

Deer Horn Capital (CSE:DHC) is a Canadian exploration company developing the Deer Horn property in west-central British Columbia. Deer Horn is the only known silver-gold-tellurium property with an NI 43-101 tellurium resource and the company is focused on providing minerals to the growing green energy industry. Silver and tellurium are crucial elements for photovoltaic energy and new battery storage technology.

In May 2018, the California Energy Commission released a mandate stating that any homes built after January 1, 2030 must include solar panels. This order aligns with the state’s efforts to cut carbon emissions by 40 percent by that year. Cadmium-telluride (Cd-Te) solar panels, on a lifecycle basis, have the smallest carbon footprint, lowest water use and shortest energy payback time of all solar technologies. According to the National Renewable Energy Laboratory, Cd-Te is the second most-utilized solar material in the world next to silicon.

Aside from its use in solar panels, tellurium is also used in a variety of products including mobile phones, LED displays and projectors, wearable electronic devices, gaskets, lighting, thermo-conductors and phase change memory chips.  As a result, the global tellurium market is expected to grow by a CAGR of three percent between 2018 and 2022. However, tellurium is one of the rarest metals and makes up only 0.0000001 percent of the earth’s crust.

In 2017, the US Geological Survey (USGS) calculated that approximately 90 percent of the world’s tellurium supply depends on copper mining, where tellurium is produced as a byproduct of copper electrorefining. As copper grades decline, miners are employing different refining methods that exclude tellurium recovery.

Deer Horn Capital is focused on advancing its silver-gold-tellurium property into production to help address the global need for tellurium. The company owns 50 percent of the Deer Horn property with an option to acquire up to a 75 percent interest. The property has an indicated resource of 414,000 tonnes grading 5.12 g/t gold, 157.50 g/t silver and 160 ppm tellurium and an inferred resource of 197,000 tonnes grading 5.04 g/t gold, 146.50 g/t silver and 137 ppm tellurium. Deer Horn Capital completed a preliminary economic assessment (PEA) on the property in June 2018, which reported an after-tax NPV (five percent) of $36.5 million and an initial rate of return (IRR) of 42 percent. The PEA also outlined an open-pit mine life of nine years and an expected return on initial capital costs of $28.3 million in 1.6 years after taxes.

The PEA was conducted on only 20 percent of the known silver-gold-tellurium resource. Moving forward, Deer Horn Capital will conduct additional drilling on the deposit and expects to apply for a small mines permit. The property also hosts potential tungsten and copper porphyries that require further follow-up work to determine the extent of the system.

Deer Horn Capital’s management and advisory board includes industry leaders in mineral property development, finance, geology, mineralogy, metallurgy, solar power, engineering, research and economic development. The team is committed to developing strong ties to the First Nations’ communities in the area and in providing vital minerals to the solar power industry and emerging green technology sector. Deer Horn Capital’s CEO Tyrone Docherty and his family notably own approximately 23 percent of the company’s shares.

Company Highlights

  • Developing Canada’s first NI 43-101 silver-gold-tellurium resource.
  • Tellurium is a critical metal used in solar panels and in a variety of technologies and manufacturing.
  • Tellurium is produced mostly as a copper electrorefining byproduct.
  • Once in production, the Deer Horn property is expected to provide a consistent source of tellurium.
  • Exploration potential with copper and tungsten porphyries indicated on the property.
  • Indicated resource of 414,000 tonnes grading 5.12 g/t gold, 157.50 g/t silver and 160 ppm tellurium.
  • Inferred resource of 197,000 tonnes grading 5.04 g/t gold, 146.50 g/t silver and 137 ppm tellurium.
  • After-tax NPV (five percent) of $36.5 million and IRR of 42 percent.
  • Initial capital costs of $28.3 million.
  • Nine-year open-pit mine life
  • CEO and family notably own approximately 23 percent of the company’s shares.

Deer Horn Project  

In August 2009, Deer Horn Capital signed an option agreement with Guardsmen Resources Inc. to acquire up to a 75 percent interest in the Deer Horn property. Deer Horn Capital has so far earned a 50 percent interest in the property after spending $5 million in work expenditures within four years. With 50 percent of the property acquired, Deer Horn Capital can obtain the final 25 percent if they are able to bring the property into commercial production.

The 5,133-hectare property is located south of the town of Smithers, British Columbia and approximately 36 kilometers south of the Huckleberry copper-molybdenum mine. The property offers one of the few significant tellurium discoveries outside of Asia. Exploration is focused on a 2.4-kilometer-long vein system comprised of high-grade silver, gold and tellurium with areas suitable for bulk tonnage. The property has also seen historical exploration for tungsten, molybdenum and copper by previous operators.

Exploration

A 1952 report on the Deer Horn property noted a large area of tungsten mineralization that was discovered approximately 1,000 feet west of the main silver-gold-tellurium vein. Trenching conducted by Deer Horn Mines investigated an area with a reported slope length of 1,590 feet with an average width of 172.6 feet that could contain 21,100 tons of tungsten-bearing talus.

In September 2009, Deer Horn Capital completed a fall work program that included detailed structural mapping and the compilation on all the pertinent historical geological data, trenching and channel sampling to determine priority areas on the property. The company also initiated a Phase 1 environmental baseline program.

This work was followed by 3,150 meters of drilling and 2,000 meters of trenching in 2011, focusing on the silver-gold-tellurium showing. However 650 meters of drilling and 1,000 meters of trenching were devoted to exploring the tungsten target.

The company found tungsten trioxide or gold-silver-tellurium in every drill hole from the 2011 work program. The results also showed the potential for a near surface deposit as most of the mineralization ranged from 5.55 to 166.7 meters in depth. Deer Horn Capital was also able to extend the vein system another 2,400 meters, uncovering new tungsten showings and adding to the silver-gold-tellurium strike length, which is currently 875 meters.

Results from the trenching included three trenches that returned anomalous tungsten values and the fourth trench encountered three consecutive two-meter samples that averaged 1.08 percent tungsten trioxide and 114 g/t silver with weak levels of tellurium. Further testing of the samples returned assay results of up to 2.14 percent tungsten trioxide and 192 g/t silver.

Prospecting in 2012 uncovered a previously-buried copper porphyry system that was exposed by receding glaciers. Samples produced results of up to 4,240 ppm copper and 6.6 g/t silver. Two zones, known as the Pond and H-spot showings, could contain porphyry-style copper-silver mineralization that can offer bulk tonnage potential. A third anomalous zone along the northwestern ridge of Kenney Lake has returned grab samples that graded from 10 to 4,540 ppm copper, 0.07 to 7,072 ppm silver and less than five to 262 ppb gold.

Resource estimate

In April 2012, Deer Horn Capital released an updated resources estimate for the property. Using a 1 g/t gold cut-off, there is an indicated resource of 414,000 tonnes grading at 5.12 g/t gold, 157.50 g/t silver and 160 ppm tellurium and an inferred resource of 197,000 tonnes grading at 5.04 g/t gold, 146.50 g/t silver and 137 ppm tellurium. The deposit remains open to the east, west and down-dip, offering the opportunity to expand the resource in the future.

Preliminary Economic Assessment 

In June 2018, Deer Horn Capital released their PEA for their Deer Horn property. Highlights from the PEA include:

  • Initial capital costs of $28.3 million including a contingency of 20 percent.
  • An after-tax NPV (five percent) of $36.5 million and an IRR of 42 percent.
  • An after-tax payback in 1.6 years.
  • A nine year open pit mine life.
  • Life of mine production of 73,000 ounces gold, 2.1 million ounces silver, 67,000 kilograms tellurium, 1.7 million pounds copper and 3.6 million pounds zinc.

Deer Horn Capital plans to operate the property as a high-grade small mine under the British Columbia Mines Act, which means that there will be a simplified and expedited permitting process with low up-front costs. To keep costs low, the mine will only be operable in the summer.

“We’ve engineered Deer Horn for low capital costs and rapid payback in a well-established mining jurisdiction,” said Docherty. “Our strategy is to put the project into production quickly and establish its viability initially on a small scale. Since the PEA was calculated on only 450 meters of a 2.4-kilometer-long mineralized system, we believe we can explore and expand the operation over time using mining cash flow and exploit the knowledge of the system that we gain as we mine.”

Moving forward

Moving forward, Deer Horn Capital will be conducting additional drilling to expand the resources and to complete a pre-feasibility study. The company will apply for a small mines permit for mine development for their gold, silver and tellurium deposit after completing the preliminary feasibility study.  Deer Horn Capital will also further investigate the copper and tungsten porphyries that have been found on the property and is planning on exploring for other mineralized structures that could contain molybdenum, zinc and lead.

“It’s also important to remember that Deer Horn is largely unexplored over its 51 square kilometers,” said Docherty. “The gold, silver and tellurium represent only a portion of the targets we plan to explore further. For example, prospecting in 2012 identified new showings indicative of a buried copper porphyry system. We also have important concentrations of tungsten on the property. We will report more on these additional targets in the near future.”

Management

Tyrone Docherty — President & CEO

President & CEO of Quinto Mining Inc., where with limited resources in a difficult market he raised more than $30 million and advanced a Quebec iron ore property to a viable project. Sold Quinto to Consolidated Thompson Iron Mines in June 2008 for a share value equal to $175M (starting from $4M). Consolidated Thompson eventually sold to Cliffs Resources for $4.9B. From 2012 to 2018, he was Director and Chairman of Mason Graphite Inc. Mr. Docherty has worked in the financial and minerals markets for over 30 years.

Pam Saulnier — CFO & Secretary

Pam Saulnier has over 10 years’ experience with public companies in accounting, corporate governance and regulatory compliance and is a Member of the Certified Management Accountants Association. She held numerous roles as CFO and/or secretary of multiple mining companies, such as Berkley Renewables Inc., Cresval Capital Corp., Mill Bay Ventures, Gray Rock Resources Ltd., Great Thunder Gold Corp. and Westkam Gold Corp.

Tony Fogarassy, M.Sc., LL.M. — Chairman

Lawyer and geologist. Graduated as gold medalist in geological sciences from the University of British Columbia and in law from the London School of Economics. Extensive legal and technical expertise in minerals, oil & gas, coal and renewable energy projects and environmental and aboriginal/indigenous law in North America, Africa and Asia.

Matt Wayrynen — Director

CEO of Solar Flow Through Funds, one of Ontario’s leading solar developers. Also president of Berkley Renewables Inc., a solar energy development company. Former CEO of Bralorne Gold Mines Ltd. Extensive venture capital experience and has successfully raised hundreds of millions of dollars for public and private ventures in Canada, the USA and Mexico.

Allen Schwabe — Director

Allen Schwabe has been a successful entrepreneur in the Lower Mainland region for nearly 40 years. He has also held President and Director positions for various mining companies for the last 25 years, playing key roles in fundraising and property acquisitions.


 

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