This is a discussion with James at Strike Communications IR for Hpy.vn

The tungsten has caught the attention of a few groups. Further exploration by the Company will include the first drilling program at the Ridley Creek area and continued drilling at the Nightcrawler-Discovery zone.

After a fairly extensive examination of the geology found in several databases I came away with the opinion that the local area has the potential for a large scale tungsten-moly system. I’m fairly sure this is not the only occurrence. A comparison to other occurrences reveals that there may also be a lot more depth to it or another deposit cut off by shearing. In the event that this turns out to be the major discovery it will be enough to be a stand alone project. Looking back at the history of the work by David and the current data leads me to believe that they need to pull out all the stops and work up a resource right away. Looking at the potential of getting this sold, I would put this project in the 95% category.

Given the plan for 4000 meters of drilling I believe one season should be enough to get a proper resource on it. The wild card is the lab time. Given the potential based off the existing data they should not have any problem raising capital.

Ideally, PP shares moving into the hands of the longs would raise the sp making the PPs dilute much less. I’ll be speaking with people about the project over the next month to see what can be done in this regard and doing my usual blogging to draw attention to them. James at IR will also be doing the same thing. I have a target of 33 cents within the month. James thinks 35 cents. Before they need money it would be ideal to see it at 50 cents. Working out the sp progression vs dilution being above 50 cents greatly reduces the overall dilution. What the company could use is a no terms 2 million buck boost. That kind of patronage worked well for Ernesto Echivarria, insider at Copper Fox.

Normally I would say two years would be required but with the attention it’s starting to get I could see this being sold by Q1 2013 if someone doesn’t step in early.

I do think it’s in the shareholders interest to mine the deposit and not sell it. If the company had a revenue stream I’m confident their copper deposits could be brought to the FS stage and be ready for sale in a year hence. The other way to maximize the value of the properties is to get a large finance at a reasonable price and go all out on the tungsten and copper at the same time. Clearly, the only thing that’s held the work back is money. An examination of the finances shows that he has not wasted any money. He has delivered the goods. The setbacks I’ve uncovered do not reflect on the management.

I’m satisfied that a longer term investment at these prices is a worth while gamble. I also think that there is enough time to get some decent share holder return before the global situation goes to pot. I would temper my investment based off the results we should have in the next 3 weeks. We expect positive Nrs and informative results from the meetings with the lenders. Should those things come together we will be able to judge the worthiness of the investment by the rate paid and the size of the pp.

I would expect board changes to follow or an immediate activation of the board members to a hands on status. I think that those who wish a silent position should start the interview process right away. If we see this then I think further investment might be warranted.

(We are also discussing the Copper property because I’m seeing significant grades coming from the drills. The geologic setting and mineralization process applicable to that type of setting suggests they are onto something really big. I think it’s only a matter of time before we see a huge increase to the 30,0000,0000 cubic meters they have identified. I believe they have the potential to become a giant open pit. It’s rare to have grades like that and when it does happen there’s usually an associated mineral like gold or rhenium in high concentrations that goes with it. Look at Copper Canyon’s grades or the recent drill results of Imperial’s Red Chris.)

“Drilling of 13 holes over a 1.5-kilometre by 500-metre area of the Nightcrawler-Discovery Zone has confirmed the presence of a new, large-scale tungsten-molybdenum system with results from 11 of 13 holes received. The results include 2.0 metres grading 0.74% tungsten trioxide (WO3), 3.0 metres grading 0.34% WO3, and 0.50 metres grading 1.80% WO3, all from drill hole 07F-05. Molybdenite (molybdenum mineral) also occurs, with results including 1.7 metres grading 0.51% molybdenum (Mo) in hole F07-10. Drilling into the underlying intrusive rock has returned geology and mineralization that suggests the potential for a porphyry molybdenum system to occur.”

AND

“This first ever drill program at Ridley Creek has confirmed the high grade zone exposed in trenches continues in a near horizontal layer just below surface for at least 20 metres and remains open in extent. Obtaining tungsten grades in drill core of up to 8.45% has exceeded our high grade surface sample results and demonstrates the strength and potential value of this system. In addition, another new outcrop over two kilometres to the southwest has returned 3.0% W03. These drill results and continuing to find new high grade outcrops are positive steps forward for this new tungsten discovery.”

The full report on the Fox Property

http://aris.empr.gov.bc.ca/ArisReports/32054.PDF

What follows is the result of a couple of days worth of discussions and an examination of the facts.

Q. Teck is following the progress at Highland Valley. Do you expect any talks with them?

A. Teck does keep an eye on us but we are open to all comers. Groups with specific interests have been more directly involved in our discussions.

Q. Admin will become a focus this year. Will there be additions or changes coming?

A. We are trying to attract the right people who will take an active roll in the development of the properties. This process always takes time because the right people are hard to find. David is looking at professional services for the management aspects so he can focus more on the geology and building connections with potential buyers.

Q. Will we get a resource on the tungsten? When? (6 to 9 months is normal for this size of deposit)

A. That is being discussed. We’d like to try for Q4. We’ll have 1 drill working here. Our driller can do about 150 meters a day when all goes well. He’s got a lot of experience and the terrain is easy. If there’s an upswing in the share price we may look at a PP and add a drill but this could also come from direct financing if a major player comes to the table.

Q. What does the geology tell us about the NC and Ridely discoveries and what's in between them?

A. David is doing more field work there. The initial work suggest there may be a connection but we’d need to do a lot more to be sure. The moly suggests there could be more to it than appears. For now we want to focus on the potential for a large high grade deposit under Ridely. Ridely is open pittable and the IP does indicate a much larger source is there. This is why we are pouring resources into it. It is suitable for a small tonnage operation. Zone 2 will be getting resources too because once again there’s potential that needs to be explored.

2007 Nightcrawler Zone Diamond Drilling Highlights

2010 Chip Sampling Results from Ridley Creek

[Comparables: I’m not going into detail on those projects because it would simply take too much time. The differences like underground vs open pit etc would all have to be accounted for. I have appended them to the end of the report.]

Q. What is the plan for this year? How will the company go about unlocking some of the value?

A. We are focusing on tungsten and the HV areas. These have the strong economic interest and money is somewhat limited so we need to get bang for the buck. As I mentioned, the IP was an eye opener. When we put out the results we got calls from Euro Pacific and Sprott. We will be holding meetings on the 19th and I should have more info shortly after. You asked how we thought this deposit formed. That’s a very good question. I’ll have David get back to you on that. It is a unique deposit of high quality.

Q. Will there be discussions with groups like the NAI 500?

A. Yes. We will also be updating our major supporters like Alpha North.

Q. Who might come to those talks and who has expressed an interest so far?

A. D&D Securities, Pinetree of course, Sprott and some interest from EU groups. We have some discussion coming before PDAC and I can tell you more a bit later.

Q. When will drilling start and how does the company want to approach it?

A. We’re looking at March but that will depend on the snow. We want to get out there as soon as possible. Our focus is going to be on areas where we need to follow up from the previous years findings. We should have some IP studies out and these will be used in conjunction with soil samples etc to guide the drilling. Looking forward, we’d like to see the tungsten brought into production rapidly because it’s fairly straight forward. We also have Teck looking over the fence and if they see something of interest they could come and talk.

Q. Is Pinetree happy with the progress and will they continue to fund?

A. Yes, very happy. We are looking at various funders who’ve expressed an interest. The tungsten property is getting the most attention as you can imagine. Pintree would probably make a finance available if they saw encouraging results so it’s safe to say that money is becoming less of a problem. The rhenium is also catching some people’s attention. High grade results like that can be a smoking gun. We have tried to find out what Teck is doing with their numbers to get a better idea of the value and a better understanding of the distribution. As you mentioned, this does make for a more profitable deposit. We plan to chase this down this year.

Q. What evidence do we have to suggest the HPY property might be an extension of the old Moly mine?

A. We are waiting to see what they are doing. David is probably going to do more field work there if NMC finds something to indicate a continuation and so far results look encouraging. We are about 300 meters from them and our results suggest 1.5 km worth exploring in more detail.

Q. Why did Newmont buy a plug of land off us?

A. We’re not sure but it seems they want a toehold into our properties. They are following our lead in that area. We don’t have past experience with them but we are discussing the geology. (I mention here that Newmont has an attractive balance sheet and could be targeting the whole area). Response. I like the way you think. Yes, they could very well be wanting to take a bigger bite out of us. They may want the whole area depending on what we find. They are keeping things tightly under wraps so we have not been given any indication of their intentions other than a mutual interest in the properties.

Q. What field work will be done in the Ridely Creek area? When?

A. There’s some work being done this Spring. I’ll have to get David to answer that one. We have 3 million in cash so we are ready to roll as soon as the snow’s gone.

Q. Will the co do some shallow holes on the NC zone and will Fox get more priority?

A. Yes, we want to drill a few shallow holes to find the edges and start a bit of infill but our main focus will be the tungsten in the Ridely deposit.

Q. Are 12 guys in the field enough to meet the plans for this year?

A. You can always use more talent be we have enough quality people in the field for now.

Q. When can we expect a corporate update?

A. David is preparing one. We want to have our meeting first and possibly wait till after PDAC to help us refine our focus.

Q. Is there enough data to suggest HV is one big occurrence? This type of deposit generally is not a single occurrence but multiple halos.

A. That’s how these types of deposits work. We don’t have enough data yet. I’ll have to get David to fill in more details for that one.

Q. How many meters of drilling will be required to meet the development plans for Rateria and HV?

A. we were looking at 4000 but that can change. (Get more info)

Q. Is ACME improving the assay time?

A. Pause. Yes, but given the swamping from last year they are still trying to get back on track.

Q. You mentioned meeting, can you provide details? What is their interest?

A. We are talking to companies that want to finance the development to get production up and running. We’re also talking to companies who want to secure supplies. Follow up with me in three weeks and I should have more details.

Q. We talked about makers and movers. Do we have the right people with the right connections? You seem to be forging your own path.

A. We are. When the company was formed seats needed to be filled. Now we want active board members and people who have expertise in brokering deals, developing deposits, and people with connections. You can have a fantastic deposit and have trouble selling it at the right price. If you have the right people then the right information gets to where it needs to go.

Q. When will David delegate some of his duties so he can focus on what's important? We all respect frugality but at a certain point it hinders a co. Your current frugality score is in the 80% range. Any tighter and you'll bruise the pennies.

A. Chuckle. Yes, David has been frugal. We just come out of two tough times and money is just starting to flow back into exploration. It was necessary to be tight with the money. David is always frugal and wears too many hats. This year he does plan to delegate some of the task. See comment about professional services above.

Q. HPY seems poised to make some major movements this year? Will there be additions to the team in specific areas required to bring the deposits to the forefront?

A. Yes. We are looking for specific talents. We’ve been very happy with our performance so far and plan to develop the manpower further. We like to hand pick but you may see developments here as early as Spring time.

Q. At the round up the tungsten was talked about as being the first major discovery in Western Canada in the last 35 years. The deposit is definitely very high grade for BC. Will this generate more exploration for tungsten in the area?

A. The minister made mention of the fact that this was the first of its size and quality in tungsten in 35 years. Those comments were not lost on people. See comments above about meetings.

Q. We talked about some past results that did not meet the expectations. While those are not this year's focus the sampling was well above par. Can we get a general indication of your plans for those properties looking ahead?

A. The results were encouraging but those properties will have to wait for an expanded development program. We had expectations from the driller and want to see more done there. For now, they have to wait.