Puget sees lustre in base metals

Plummeting prices and demand didn’t discourage Puget Ventures (PVS-V) president Erin Airton from forming a junior focused on base metals over the last year. In fact, she says it seemed like the logical way to go.

There’s a popular belief, Airton says, that when the world is in a recession there is no demand whatsoever for base metals.

“Clearly that’s not true,” she says during a Toronto visit in early April. “I think we’re in for a tough couple of years but ultimately these kinds of assets will be rewarded again.”

Airton has come from Vancouver to drum up support for Puget, which listed on the TSX Venture Exchange in May 2008.

Days before, Puget had announced what Airton calls a “potentially company-changing” agreement to acquire some Kenora, Ont. properties along the Werner Lake Mineral Belt.

First the company signed an option agreement with Harper Capital to acquire the Norpax Nickel deposit for $120,000 in cash plus 50,000 shares, with the obligation to spend $1 million on exploration by 2013.

Then Puget announced the real prize, the acquisition of the Werner Lake Mineral Properties. The deal is contingent on a $1-million financing, which Airton says is near completion, and allows Puget to have almost the whole belt to itself with only Teck Resources (TCK.B-T, TCK-N) having a property smack in the middle of it. Spread over 17 sq. km, the belt includes several properties with historical resources and a past-producing cobalt mine, which is a rare find in itself, as it’s usually produced as a byproduct.

Puget first acquired the east end of the belt through a 60% joint venture with Benton Resources (BTC-V) for the Werner Lake/Rex Lake claims last year. At the same time Puget was trying to get the west end of the belt but as the markets crashed, Puget was forced to walk away from the deal. Patience paid off; the company negotiated a better deal this spring. “We were very fortunate,” Airton says.

Things are coming together for Puget. Base metals stocks have gained ground in the last few months with the increase in commodities prices and an inkling that investor confidence is beginning to return.

“It’s a big step forward for us, we are really optimistic that we are going to hit the turn in the base metals market perfectly,” Airton said just before press time.

Puget’s first property was a joint venture with Goldcorp (G-T, GG-N) to earn a 60% interest in the Trout Bay copper-zinc massive sulphide property in the Red Lake area, which has also shown to have high grade germanium and indium mineralization. The company must spend $5 million over five years.

Puget was able to delve right into the project where it was left off; Puget’s CEO, Michael Dehn, was the last geologist to work on the project when he worked for Goldcorp. Puget drilled 2,000 metres last summer with some promising results but it’ll be spending most of $750,000 in flow through money recently set aside for exploration on its new properties.

“We’ll be focusing most of that on the Werner Lake cobalt asset and that’ll include everything from data compilations to drill targeting and drilling later in the year,” Airton says.

The Werner Lake properties were formerly owned by Canmine Resources, which sold them to Commerce Capital in 2003 when it went through bankruptcy proceedings.

The cobalt property has historical reserves and resources totaling 770,000 tonnes grading 0.31% cobalt, 0.29% copper, and 0.011 oz. gold per tonne. These numbers were in an internal report reviewed by Stoner Engineering consultants in 1998.

Included in the proven reserves is a 6,200-tonne stockpile that Puget hasn’t found yet. Puget also has other historical drill data from Canmine up until 2002 that it hasn’t yet reviewed.

Airton says Canmine spent about $10-12 million advancing and putting in a decline shaft, drifts, doing the feasibility work and environmental work, pointing out that they could conceivably be mining it in the next 12-18 months.

“I don’t think we’ll take that approach, we’ll be more traditional and expand the resource,” she says.

Airton’s approach to business is conventional and cautious, though she notes that some may think getting into base metals in this environment was risky. “But I think it’s risky to do what everyone else is doing,” Airton says.

Up until 1997, Airton worked in British Columbia politics, running premier Gordon Campbell constituency office and later working for the caucus, touring the province with MLA’s to build relationships with key decision makers. She left politics for strategic planning, consulting for companies across a broad range of industries from pharmaceutical to forestry, and finally ended up with three junior mining companies as clients. Airton says she “utterly fell in love with the industry.

“I like the idea of finding something that people can dig out of the ground and sell to other people who can use it to build stuff, and particularly seeing China and India evolving … I’m very attracted to it.”