Houston Lake Mining's Corporate Update Positioned for Growth
Houston Lake Mining Inc. (TSX.V: HLM) announces 2012 has been a
very difficult year for small and large cap companies. Although gold
prices have remained somewhat stable after a short period of decline,
most retail and institutional investors have remained on the sidelines.
Share prices of many exploration and gold producing companies have
fallen dramatically and in many instances, reached all-time lows.
Needless to say, small caps have been hit the hardest. Many well funded
companies have had to suspend and defer exploration programs whereas
others have been looking for strategic partners. Raising monies for
exploration has become very dilutive and somewhat counter-productive
insofar as share prices did not reflect the increase in value from
having brought assets closer to the production stage. Overall, the
market has paid little attention to the investment monies spent to
enhance shareholder value.
HLM has taken decisive action on past interests expressed by North
American Palladium Ltd. (TSX: PDL, NYSE Amex: PAL) in our Tib Lake
property and Coventry Resources ltd. (ASX:CVY) in the West Cedartree
property. As you are well aware, HLM has been neighbours at our
respective exploration projects with these companies for several years.
Both PDL and Coventry put forward proposals to purchase our platinum
group metals and gold assets and we have taken advantage of these
interests and turn this opportunity into cash and to increase our focus
on our Pakeagama Rare Metals Project in Northwestern Ontario.
The focus on our rare metals project positions HLM in a market where
demand is growing, supply is under pressure and our project is unique
with both the occurrence of cesium and tantalum. Shortly after we closed
our deal with PDL and announced the Coventry Letter of Intent, we were
able to raise investment dollars to further explore our holdings at
Pakeagama. Ultimately, we are expecting to have a drilling program this
upcoming winter on our rare-metal asset.
OUR FOCUS ON RARE-METALS
In early 2011, consolidation by HLM enabled the Company to acquire a 100
percent interest in 1,024 hectares (2,530 acres) of mining claims at our
Pakeagama Rare Metals Project. This land position covers the known
exposures of the Pakeagama rare metal pegmatite and we believe that we
hold the key ground identified by the Ontario Geological Survey (OGS) in
their 1998-1999 rare metals evaluation of the region. High grade cesium,
tantalum, lithium and rubidium oxide values have been reported from the
exposed pegmatite which is open in all directions on our project.
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WHY FOCUS ON THE PAKEAGAMA RARE METALS PROJECT?
The market interest in rare metals and more importantly future supply
pressures afford the company an opportunity to illustrate the
outstanding value thought to be contained in the Pakeagama Rare Metal
Project. Independent geologists have indicated that this is a highly
prospective target containing rare metal signatures similar to Cabot
Corporations′ Tanco Mine, located 288km away in southeastern Manitoba.
The Tanco Mine ?is an ?underground ?cesium ?and ?tantalum ?mine. The mine has
the largest known deposit of ?pollucite (sole mineral ore for cesium) and
is the world's largest producer. The ?pegmatite ?ore body now mined by the
Tanco Mine was discovered in the late 1920s and the first mining started
in 1929. Cabot Corporation bought the mine in 1993, and began the
production of cesium ?brine ?from ?pollucite ?in
1996, and has recently re-commenced tantalum mining production.
Cesium reserves from the Tanco mine in the mid-90′s accounted for
approximately 82% of the reported world reserves. The principal end use
of cesium is in formate brines, a high-density, low-viscosity fluid used
for high-pressure/high-temperature (HPHT) oil and gas drilling and
exploration. Cesium formate possesses anti-oxidant and water-structuring
properties that protect drilling polymers from thermal degradation and
has the required density needed to maintain well control. Other
significant end uses are in biomedical, chemical, and electronic
applications.
The cesium mineral pollucite has been identified within the Pakeagama
Lake pegmatite and is only the fourth pollucite occurrence noted in
Ontario. Cesium values to date range from 400 g/t in a prominent
lithium-cesium anomaly to a 1,776 g/t average grade over 11m. These
highly anomalous values compare favourably to those defining the
prolific Tanco mine and attest to the high potential for economic cesium
mineralization at Pakeagama.
The main pollucite zone at the Tanco Mine only contains an approximate
400,000 metric tons of pollucite with an average Cs2O content of 24%,
and a secondary zone of approximately 100,000 metric tons of pollucite
contains an average of 5% Cs2O (USGS Cesium 2012); we see this as an
opportunity.
In addition to the cesium based opportunity is the existence of Tantalum
on Pakeagama. About 60% of Tantalum production in the world is used in
the electronics industry, mainly as powder and wire for capacitors,
owing to tantalum's particular ability to store and release electrical
energy. This allows components to be exceptionally small and they are
therefore favoured in space-sensitive high-end applications in
telecommunications, data storage and implantable medical devices.
Tantalum is also used for electronic sound filters and as a barrier
against copper diffusion in semi-conductors. In addition, Tantalum
carbide's hardness makes it ideal for cutting tools.
There has been an average yearly growth rate of 8% to 12% in tantalum
demand since 1995. The 2008 recession and the low tantalum prices caused
by the oversupply of tantalum in the market led many mines in Australia
and Africa to suspend production, leading to a more than 50% decrease in
mine production. Increasing demand and conflict free mineral pressures
increased prices three-fold in 2011 where currently the price is
approximately US$130/lb. with a tantalum oxide grade of 30%.
Tantalum has been identified within the Pakeagama pegmatite. Typical
mining grades vary from .03% to .20% tantalum oxide. Tantalum values at
Pakeagama have shown comparable to economic pegmatites with an average
of .034% tantalum oxide over 11m at surface.
PAKEAGAMA RARE METAL EXPLORATION
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In late 2011, HLM completed a Mobile Metal Ion (MMI) geochemical survey.
All results have now been received and we are expecting to announce
these results in the near future. The objective of the survey was to aid
in the targeting and planning of a Phase I diamond drill program. The
combined results from the MMI survey and the planned Phase I diamond
drill program will allow us to develop geochemical and geological survey
tools that we can use in the exploration for rare-metal pegmatites at
Pakeagama and other areas in northern Ontario.
Planning for a surface channel sample program is underway and the
program will be completed this fall. Recently HLM has raised $200,000 to
primarily complete the channel sample program and bring surface results
on the pegmatite to current NI 43-101 standards.
HLM is planning on drilling Phase I in early 2013 as it is preferential
to access the project utilizing the winter road network that runs within
4 kilometres of the property in order to eliminate the alternative of a
helicopter supported drill program. We expect a program of 900m ? 2500m
depending on the availability of investment dollars. The intention of
this first program on Pakeagama is to determine the orientation and
thickness of the pegmatite, to better define the pegmatite zonation, and
to refine the mineralogical characterization of these zones by
establishing their cesium, tantalum, and also lithium potential.
HLM′S LONGEVITY
Through strategic divesture we have positioned the company to take
advantage of the growing global demand for rare metals with the
objective of HLM cutting out a unique niche in a boutique market with a
focus on elements that are in short supply. With a small number of
companies exploring for Cesium in particular, HLM will be well
positioned to tap into available funds in order to move the asset ahead,
and subsequently gain unique support through its diversification in the
market for HLM.
With the increasing pressure of supply on high grade cesium ore in the
world HLM is seeing support for exploration on the Pakeagama Rare Metals
Project; and, with indirect gains from the continued successes of North
American Palladium and Coventry Resources I feel HLM is poised for
growth. I would like to thank our highly valued shareholders for your
support.
Cordially,
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Trevor R. Walker, MBA
President
Houston Lake Mining Inc.
Henry J. Kloepper, +001 705-897-7622
CEO
F.
+001 705-897-7618