Will Happy Creek Minerals make you Happy?

There are ~340 copper (“Cu“)-heavy juniors listed in Canada, and roughly 120 nickel (“Ni”) + 130 lithium names. Yet there are numerous other critical minerals, mostly controlled by China, in which there are very few ways to play, for example, tungsten. Last week China announced it might restrict exports of tungsten.

Happy Creek Minerals (TSX-v: HPY) / (OTCQB: HPYCF) has three Canadian assets — any one of which could be a company-maker. For example, its sizable (~13,600 hectares), Fox project hosts a Top-decile grade tungsten resource with the potential for Molybdenum (“Mo“) as well.

Fox –> high-grade tungsten project with a potential molybdenum credit

Tungsten has been designated a critical mineral in the U.S., Canada & Europe. In the U.S., a strategic tungsten stockpile stands at just 10% of its post-war peak. China produces nearly 80%, and Vietnam, Russia! & North Korea!! add another 10% of annual supply. China is tightening export controls on tungsten, graphite, magnesium, and aluminum alloys.

Most global demand comes from its use as a hardening alloy in steel for cutting tools & drill bits and as an additive to armor plating in the defense sector. Tungsten is also crucial in the booming space sector & renewable energy, particularly in solar panels.

According to Argus,

“…there’s increasing demand from mining, oil & gas, and military & aircraft applications, and high expectations for tungsten’s use in nuclear fusion engines, expected within three years. The demand for tungsten wire in the solar industry has grown significantly in China. And, chipmakers like Nvidia & TSMC use tungsten wire for chip & panel production.“

Pure-play Almonty Industries, with an enterprise value [“EV“] {market cap + debt – cash} of $370M and mines/projects in Spain, Portugal & S. Korea is the leading tungsten company. It has an average grade of ~0.345% tungsten trioxide (“Wo3“) across its four assets, 2x the global average.

Almonty claims to be one of the largest tungsten players outside of China. Happy Creek’s Fox project grades 1.025% Wo3, 6x the global average, but it only has 3.4% of Almonty’s tungsten. If Happy Creek could book 4.25M tonnes (up from 1.15M) it would have 12.5% as much tungsten, worth ~$24M if valued at the $550/tonne average.

Management believes it could book a total of 3.5-5.0 M tonnes, at presumably the same grade, with 10,000 meters of shallow drilling at a total cost of ~C$3M. The Company recently announced plans to drill those 10,000 meters.

Almonty is in production and has advanced projects. Yet, Fox (if ascribed 1/2 of Happy Creek’s EV of $5.2M) is valued at just $2.6M, which seems way too low. Almonty should be willing to pay a lot more than $2.6M for Fox, which is more valuable in a portfolio of assets than as a standalone project.

In addition to tungsten, management has identified separate zones of Mo in outcrop, drill core, and soil samples. Could Mo be a viable credit to high-grade tungsten? Mo is valued at about 7x the price of Cu.

Silverboss + Hen-DL –> Mo/Cu/Au/Ni/Ag showings, lots of smoke, where’s the fire?

The 100%-owned Silverboss project consists of ~155 sq. km in south-central B.C. adjoining & surrounding the past-producing high-grade, open-pit, and underground Boss Mountain Mo/Ag mine and is contiguous with the Hen-DL to the south and east. Boss Mountain operated from 1963 to 1983 and is now owned by Glencore Canada.

This year’s fieldwork on the two properties was described in a Nov. 21st press release. In addition to mapping and other work, the Company collected 56 rock, 113 soil, and 17 stream sediment samples from Silverboss and the Hen-DL projects, that comprise contiguous claims with a combined area of ~172 sq.

Assays confirm anomalous Cu, Au & Ag values and the potential to discover significant deposits on Silverboss and/or Hen-DL. In looking at the image above, it’s clear there are numerous attractive drill targets.

On Hen-DL, the Company identified a large boulder (3 m x 2.5 m x 2.5 m) that returned highly anomalous assays for nickel (2,080 ppm Ni), chromium (1,575 ppm Cr), cobalt (101.5 ppm Co) & platinum (0.009 ppm Pt).

In addition to the potential for Mo deposits adjacent to Boss Mountain, the underlying geology and the presence of Cu & Au showings provide an opportunity to discover porphyry Cu-Au deposits beneath glacial till-covered areas.

A five-year exploration permit at Silverboss allows for up to 30 drill pads, 100s of holes + trenching, access trails, and related work. The 2024 exploration program follows up on a large IP anomaly identified around the historic Silverboss shaft & adit area.

Exploration targets include the Silverboss Shaft & Adit area, where at a depth of ~200 m a roughly 750 X 400 m area shows nine > 15ms chargeability occurrences.

The East Breccia / 10 Mile Creek target is ~350 x 600 m east/SE of the Shaft zone, highlighted by showings of Cu, Mo & Au. The Dogtooth prospect is a quartz vein that assayed 10.1 g/t Au + 26 g/t Ag over 1 m and is open.

Widespread rock grab samples from Dogtooth to the 10 Mile Creek returned up to 53.2 g/t Au + 365 g/t Ag within an area of ~1 sq km. Horse Trail consists of Cu, Mo & Au values in outcrop rock samples & soils. An IP survey over this area shows moderate to very strong anomalies beneath Cu-Au surface samples.

The Gus prospect contains two sub-parallel Cu in soil anomalies. The northern one covers ~2.0 km x 100 to 150 m, and the southern area is ~1.5 km x 250 m. Low values of Ni, Ag & palladium occur in the northern anomaly which is road accessible and presents as a magmatic Cu-Ni & Platinum Group Element style of deposit.

Highland Valley Cu project –> sold, but not forgotten

On October 4th, the Company announced a meaningful transaction, the sale of its 240 sq. km Highland Valley project to Metal Energy Corp. for equity issuance totaling ~$6.3M (11,736,100 shares issued on Nov. 7th) over four years +$300k in cash (paid) + $250k in exploration expenditures by 12/31/24.

$1.0M, $1.0M, $1.5M & $2.5M worth of shares in Metal Energy will be issued on the 1st, 2nd, 3rd & 4th anniversaries, respectively. Importantly, Happy Creek will retain a 2.5% NSR on the project of which 1.5% can be repurchased by Metal Energy for $5M.

Based on the terms of this transaction, Happy Creek will likely end up owning 19.9% of Metal Energy and receive most of the remaining $6M of value tied to the above-mentioned share issuances in cash.

As part of the Ore Group, Metal Energy will leverage its extensive experience to remodel historical data into a modern database. The Highland Valley project is permitted to drill and has > 55,000 m of historical drilling across 402 holes.

A systematic drill program will expand known high-potential zones and uncover new targets. CEO Jason Bahnsen’s technical team thinks there’s a possibility of up to 50M tonnes of — 0.25 to 0.30% Cu — in Zones 1 & 2 {see map above}.

Strong Mo grades at the Highland Value project include; 126.0 m at 0.8%, 92.4 m at 1.1%, 5.0 m at 3.1%, and 32.5 m at 1.1%. As a frame of reference, 1.1% Mo equates to 8.5 g/t Au or 7.6% Cu.

Will Happy Creek Minerals make investors Happy? Time will tell, but exposure to Tungsten, Moly & Cu in a great jurisdiction makes this an interesting opportunity worth considering.

Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Happy Creek Minerals, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Happy Creek Minerals are highly speculative, and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.

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