Interview with CEO of Blackheath Resources Inc. on their Ambitious Tungsten Mining Project

Peter Epstein |


I conducted this interview of CEO JAMES ROBERTSON, B.SC., P.ENG. Director & CEO of Blackheath Resources Inc. ($BHR.V) by phone and email from 4/24/15 – 4/28/15. The opinions and facts reflected in Mr. Robertson’s answers are entirely his own. I, Peter Epstein, merely asked the questions. I have no prior or current relationship with any company named herein. Readers should conduct proper due diligence, including consulting with their own investment advisors before buying or selling speculative stocks. As of April 28, 2015, I own no shares of Blackheath.

Epstein: Please describe, in a single paragraph, Blackheath Resources to readers unfamiliar with the company.

Robertson: Our story is simple. We hold five of the top past-producing tungsten metal mines in Portugal and we plan to return the best of these to production. The mines closed in the mid-1980s when metal prices plummeted. Little work has been done prior to Blackheath’s activity. Tungsten is a strategic, high value metal that tops the critical supply lists in Europe, the UK and the US. Portugal is a supportive jurisdiction in which to work. Our team is very experienced working in Portugal and in tungsten exploration and mining. We plan to move the projects forward quickly, thereby developing significant shareholder value.

Epstein: Reports show that Portugal has experienced economic challenges over the years. How do you find working in Portugal?

Robertson: It’s true that Portugal and other European countries have faced difficult economic times, but the country seems to be making good progress. We are very familiar with Portugal – several members of our team were involved with Primary Metals, listed in 2003 at $0.15/share and owned the Panasqueira tungsten mine. That company was subsequently sold, in 2007, to Japanese interests for $3.65/share.
Portugal is highly supportive of mining activities and sees the industry as being a driving force to a stable economy. The mining laws are well established and realistic, and there are no significant hurdles to developing a mine. We work very closely with our technical team based in Portugal, a group that has extensive experience and is highly regarded at all levels in the country.

A recent study by the independent Fraser Institute placed Portugal at #5 in the world terms of attractiveness for political stability, #7 for their taxation regime and #1 for considerations of socioeconomic and community development. We find working in Portugal to be a highly rewarding experience.

Epstein: Many mining companies are interested in gold or copper or base metals. Why is Blackhealth interested in tungsten?

Robertson: There is no question that the demand for tungsten is increasing in the longer term – projections indicate an average growth of 2.6% to 4% per annum. Tungsten is a critical metal with industrial uses in hard-wearing tungsten carbide and in specialty steel alloys. Most tungsten resources are located in China with limited sources elsewhere in the world – which is why it tops the critical supply lists. There are very few companies pursuing production of tungsten and Portugal is one of the countries where tungsten is found. Also, the price of tungsten fluctuates but is now significantly higher than when we sold Primary Metals. As a result of our past experience, we are keen to see renewed tungsten production in Portugal.

Epstein: In Portugal, you have five of seven top past producing properties. How important is it to own past producing mines?

Robertson: The first thing to recognize is that these mines closed because of the serious depression of tungsten prices in the mid 1980’s. Since these are past producing mines, we avoid much of the expensive grass roots exploration work to define our targets. There is known mineralization in these areas and, in fact, there were historic resource estimates for tungsten on three of our projects when we acquired them. Also important is the existing infrastructure including electricity, water and roads. One can drive a car to all of our projects – and there is a culture of mining in the local villages that grew up around the mines.

Our projects include Covas, which has the potential to be a mid-size producer again, Borralha, which is the largest past-producing mine in Portugal. Borralha has the potential to become a major open pit mine, and Bejanca, which is a past producer of tin as well as tungsten and hosts a surface deposit that may contain large amounts of tin and tungsten that could be extracted from sandy gravels.

Epstein: On March 31st, Blackheath reported its NI 43-101 compliant independent maiden resource estimate for the Covas Tungsten Project. Please explain its importance.

Robertson: The Covas project was our first acquisition in Portugal. it held an attractive historic tungsten resource based on 329 drill holes and work undertaken until 1980 by Union Carbide. They recognized the value of the asset but for various reasons, including a drop in the tungsten price and unrelated difficulties, they withdrew and no work was carried out until recently. We proceeded with drilling and prepared an independent resource estimate showing increased contained tungsten in the ground with 449,800 MTU’s of indicated resources at a grade of 0.42% WO3 and a further 767,100 MTU’s of inferred resources at a grade of 0.35% WO3. Preparing the current resource estimate adds credibility to the project and is a step closer to a preliminary economic assessment.

Epstein: How significant is the grade in the NI 43-101 report? How does the grade compare to other tungsten mines?

Robertson: The tungsten grades at Covas are high when considering that most of the mineralization is at surface and would likely be mined mostly by open pit methods. It’s difficult to compare mines but the expected grade at the Hemerdon open pit mine under construction in England reportedly has a grade of roughly 0.18% WO3 and the current grade at the Panasqueira underground mine in Portugal is around 0.14% WO3 so we are happy with our grades at Covas which were calculated after capping several of the higher grade drill intercepts. There are certain areas of higher grade mineralization and we will be drilling these areas further before starting our preliminary economic assessment.

Epstein: Blackheath very recently announced drill results from work at its Borralha Project. You expressed some excitement about these results – can you explain why you were pleased?

Robertson: Our Borralha Project shows some indications of its potential to become a very large, bulk-tonnage open pit mine. It was the largest past-producing tungsten mine in Portugal, mostly mined underground with a limited production from shallow open pits. We located a large zone on surface and based on encouraging work from assays of surface trenches, we carried out the first drilling program ever on the Santa Helena Breccia at Borralha.

Our results from this initial program were highly encouraging and included a diamond drill hole with what appears to be the highest overall tungsten content, starting at surface, of any hole drilled anywhere, based on available records. We are planning a follow-up program in preparation for a possible resource estimate at Borralha later this year.

Epstein: Can you discuss the Tungsten market, supply and demand, historical and current pricing, etc?

Robertson: Tungsten is a metal with unique properties, making it an essential component in many industrial applications. Critical properties include a very high melting point, very high density, hardness close to diamond, thermally and chemically stable, excellent conductivity, and environmentally benign. The most important use is as tungsten carbide in hardmetals, used mainly for industrial drilling and cutting tools. Secondary uses are in electronics and specialist steels.

China accounts for over 80% of world tungsten mine production; western world supply is very limited, while USA, Europe and Japan consume around 55% of world tungsten, but produce only around 5%. Further, Chinese domestic demand has increased, and China has moved from a net exporter to net importer of tungsten concentrates.

Concerns over security of supply of concentrates to western processors and industry end-users resulted in the EU categorising tungsten as a “critical raw material”. Tungsten demand is forecasted to grow by an estimated 2.6% to 4% annually and growth markets for tungsten are still being identified, such as nickel-tungsten alloys that could replace chrome plating and nickel-tungsten alloys that could replace gold-nickel plating. Tungsten, with essential applications in industry, aerospace and military, is a strategic commodity and the US, Russia, China and Japan have indicated that they have or intend to build stockpiles.

The price of tungsten is quoted in US$ per metric tonne unit (MTU), a unit of 10 kilograms of WO3, or tungsten trioxide. Historically, it has ranged from around $15/MTU in the 1980’s to a high of over $400 and currently sits at US$260/MTU.

Epstein: In researching Blackheath I found that one of your properties could go into production relatively soon?

Robertson: We are highly optimistic that this is correct and will be carrying out further testing in coming months. Although it is not the largest project, Bejanca could see early production of tungsten and also tin, perhaps by next year. We have historic reports of a large eluvial sandy gravel deposit on surface at Bejanca, carrying around US $45 per tonne of “recoverable” tin and tungsten based on work by a California engineer many years ago. If accurate, we could see a simple and inexpensive gravity operation without any chemicals to extract the values, providing funds for exploration of our other projects and reducing further dilution by avoiding equity financing.

Epstein: Can we get a snapshot of your latest capital structure–shares, full-diluted shares, debt, cash, options/warrants?

Robertson: First, we have no debt. We currently have 29,842,957 shares issued and 11,443,210 warrants exercisable to purchase at prices between $0.35 and $0.53. We also have a total of 1,500,000 stock options to employees, management, consultants and directors. Our current cash is a little under $500,000, sufficient for our immediate needs.

Epstein: Can you name or describe any key shareholders? What percentage of the company is owned by management and the Board?

Robertson: We have been pleased to welcome some major long-term investors in Blackheath, including Shandong Donglin, a family-owned Chinese conglomerate, which owns around 13% and Shining Capital, a Chinese fund operated out of Hong Kong, which owns about nine percent of Blackheath. Also, Ernesto Echavarria, a Mexican investor, owns around eight percent and management, directors and associated insiders hold around 25% of the shares.

Epstein: On what stock exchanges is Blackheath’s stock traded? In Canada, the daily trading volume is low. Is that a problem?

Robertson: Our shares are traded on the TSX Venture Exchange with the symbol BHR.V and also quoted in Frankfurt, symbol 04B, both available for market transactions. Our major shareholders are taking a longer-term view and do not intend trading their shares while investors with smaller positions seeking shorter term options are able to trade the shares on either exchange.

Epstein: Thanks again for your time. Blackheath is an interesting company for those looking for tungsten exposure.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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