Letter to shareholders from President
"Friends and shareholders:
Thank you all for your support in approving the recent sale of our interest in the Wabassi Joint Venture. Since becoming President of our Company in January of last year, I was concerned that continued expenditures at Wabassi were not sustainable in light of DHR’s financial resources and capital structure.
Wabassi hosted both VMS-style and shear zone gold mineralization. These types of targets are elusive and therefore drill-intensive. The property was remote and the mineralization was deep. Consequently, in 2013 our drilling costs exceeded $500 per meter. The situation at Wabassi was exasperated by the lack of access and infrastructure, and the unquantified risks resulting from several inconsistent opinions by the Supreme Court of Canada regarding native title issues. The continued postponement of efforts to improve access to the Ring of Fire mineral province, including the sale of Cleveland Cliffs’ chromium project, convinced both Management and the Board that sale of our Wabassi asset was in the best interest of the Company and its shareholders.
It is my sincere belief and opinion that in the past the Company undertook projects that exceeded its capabilities. We are a small company with two full-time and two part-time employees. The scope of our future activities must be commensurate with our managerial, financial and technical capabilities. Our Company's continued existence must be predicated upon less-expensive, but scalable, projects with better access and infrastructure profiles.
In 2014 our Company undertook an extensive review of available projects that fit these criteria. The 2BAR copper project in Nevada was deemed the best fit. Nevada is annually recognized as one of the premier locations in the world for mining investment. Nevada has a world-class mineral pedigree and is home to several major gold and copper mines. Lengthy negotiations resulted in an option agreement that will allow DHR to acquire 100% title to 212 acres of patented mining claims free of any royalties. Since June of last year, DHR has also staked nearly 4400 acres of unpatented mining claims on land managed by the Bureau of Land Management. The project area is free of any native title, endangered species or other access or permitting-related issues. There is road access to site from Lovelock, Nevada 18 miles to the east. A producing 75 megawatt geothermal power plant is located approximately 3 miles from our current drill sites in Dixie Valley.
Our activities during 2014 and 2015 have been confined to the patented claims. As this is private land, we are not required to acquire permits prior to exploration or drilling. In the future, as we move out onto the unpatented claims, we will be required to submit an Environmental Assessment to the Bureau of Land Management. This will require the expenditure of time and money, but Management is well acquainted with the procedure.
In 2014 we confirmed the existence of copper oxide mineralization, with grades greater than 1%, outcropping at surface on the patented claims. Drilling confirmed that this mineralization continued under cover. The total drilling meterage was small due to the mineralization occurring near surface and budget constraints. The proximity to established infrastructure has reduced our drill costs to approximately $180 per meter. The successful results of that Phase 1 drilling were reported in our Press Release dated the 26th of January, 2015.
Our activities last year confirm that the oxide mineralization occurs at the contact between older rocks and younger rocks. This “unconformity” is readily identified in satellite imagery and has a strike length of 6 ½ miles. During March and April our company staked unpatented mining claims along the entire strike of the unconformity. Soil samples taken concurrent with the staking indicate in-soil anomalies of copper, gold, silver, scandium, zinc, molybdenum, tungsten and tin. Several of these anomalies are coincident with magnetic highs identified by airborne gradiometer survey completed last year. These hotspots will vector us to areas for additional geological mapping later in 2015.
Our drill program this year will be preceded by an additional geophysical survey to commence in May. We hope to complete an approximately 2500 foot drill program prior to the end of June. This program has three goals:
Confirm that the geophysical signatures discovered from the IP and airborne gradiometer surveys correspond with copper mineralization and are a reliable tool for targeting future drill holes;
Confirm the extension of the copper mineralization under cover for an additional 100-200 meters at grades and intervals similar to those encountered in 2014.
Confirm the copper oxide mineralization outcropping at surface at 2Bar is “secondary mineralization” that has leached from a primary sulphide source. Our ultimate goal is to locate the source of primary copper mineralization.
Our current project concept is to identify 10,000,000 tons of +1% copper that will be amenable to heap leaching and solvent extraction / electrowinning production. Our goal is to justify the establishment of a small-scale, low-cost copper production operation within 5 years. The creation of even small cash flows in the short to medium term will give our Company control of its own destiny. If the oxide mineralization is the leach cap of a larger, heretofore undiscovered sulphide copper deposit, so much the better.
We never forget that we are your employees. Thank you for your continued support.
Frank D. (Bruno) Hegner