The road accessible DD Property is close to rail, power and a local workforce, and is located approximately 35 km southwest of Cranbrook, British Columbia. The property is comprised of the DD claims, 440 ha of land, that PJX optioned from Doug Anderson (50%) and David Pighin (50%), and the DD Extension Claims, 1900 hectares (ha) of land owned by PJX. In 2016, PJX granted Teck Resources Limited (Teck) an option to acquire up to a 75% interest in the DD property (see terms below).
The DD Property is also located approximately 120 km east of Teck’s Trail Metallurgical Complex that produced some 8 million tonnes of zinc, 9 million tonnes of lead, and over 285 million ounces of silver from processing Sullivan Mine concentrate. The Sullivan Mine produced concentrate for over 90 years before being closed in 2001.
The DD Property occurs within a sedimentary basin called the Panda Basin that is geologically similar to the Sullivan Basin hosting the Sullivan deposit located about 45 km to the north. The Company believes that the DD Property has similar potential to the Company’s Vine and West Basin Properties for hosting a Sullivan type (Sedex) zinc-lead-silverdeposit. The Company’s new insight on geological controls for mineralization on the Vine Property supports the potential for a Sedex type deposit on the DD Property. Mineralization at the Vine and West Basin Properties appear to be spatially associated with the synsedimentary Moyie fault structure. The Company believes that the Moyie fault is similar to the synsedimentary Kimberley fault that was important in controlling zinc-lead-silver mineralization at the Sullivan Deposit. The Sullivan time horizon target is estimated to be about 900m to 1200m deep on the DD Property. Only one hole has been drilled on the property and it was not drilled deep enough to test the target horizon.
Historical drilling (Holes L80-1, Panda 04-1, Irish 05-1, IR 07-1) by other companies adjacent to the DD Property suggests that the potential to discover a Sullivan type deposit increases toward the DD Property. The Sullivan deposit occurs at a geological time called the Sullivan Horizon. The thickness, alteration and anomalous zinc-lead mineralization of the Sullivan Horizon progressively increases in intensity the closer holes are drilled to the DD Property (see cross section “Panda Basin Geology adjacent to DD Property”). A similar increase in thickness, alteration and anomalous zinc-lead mineralization in the Sullivan Horizon occurs in proximity to the Sullivan Deposit.
A Magnetotelluric (MT) geophysical survey carried out by Quantec Geoscience on the DD Property has defined a conductive MT anomaly that appears to coincide with the anticipated depth of the favourable Sullivan Horizon (see “2D MT Resistivity Model” for grid Line PA1E and “Interpreted Geological Cross Section B-B’ through the MT Target Area”). The Sullivan deposit contained iron sulphides that that an MT survey could detect as a conductive MT anomaly. The significant MT anomaly on the DD Property occurs on two widely spaced lines, 700 metres apart, and is open to the north and south (see “DD Property in the Panda Basin” map that shows the conceptual drill target at Sullivan Horizon).
The DD Property MT anomaly occurs at a depth and is of a size that supports the potential for a Sullivan Type Deposit. The “DD Property in the Panda Basin” map shows a comparison of the approximate MT Target Area Outline and the Mined Footprint of Sullivan Deposit for scale.
In addition, the Gerry Vent on the DD Property is a tourmaline-albite altered breccia zone with anomalous zinc and lead mineralization that is similar in composition, alteration and mineralization to the vent at the Sullivan Deposit. The Gerry Vent is located over a kilometre north of the northern MT grid line (PA1E) and provides support for additional exploration potential for a Sullivan type deposit to the north at depth along the Sullivan Horizon on the DD Property.
Teck is assessing the MT target for drilling and is in the process of applying for the relevant permits.
Terms of the Teck Option Agreement (the “Agreement”)
The Option Agreement provides for Teck to earn an interest in the property as follows:
Stage 1: Teck has an initial option to earn a 51% interest in the DD Property by incurring $4 million of Expenditures (as such term is defined in the Agreement) by January 31, 2021 (the “First Option”).
Stage 2: Teck may elect to earn an additional 24% interest in the Property, thereby increasing its interest to 75%, by incurring an additional $4 million of expenditures by January 31, 2024 (the “Second Option”).
Provided that Teck has exercised the First Option, a joint venture (the “Joint Venture”) shall be deemed to be formed on the date (the “Participation Date”) upon which the earlier of the following occurs: (i) Teck declines or advises that it is no longer pursuing the Second Option; (ii) Teck delivers a notice to PJX notifying PJX of the exercise of the Second Option; or (iii) January 31, 2024. If either party elects to not participate in the Joint Venture their interest may be diluted on a pro rata basis to a 5% Net Profits Royalty.