North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Aston Bay Holdings Ltd. March 29 reported the closing of the third tranche of a C$4.47 million financing, providing the company with funds for a 2018 exploration program at the Storm Copper and the Seal Zinc projects on Somerset Island, Nunavut.

In this third tranche of the financing, Aston Bay raised C$2.25 million through the issuance of 12.8 million units at C15 cents each and 2.1 million flow-through shares at C16 cents each.

Each unit consists of one common share of the company and one-half of a warrant – with each full warrant entitling the holder to acquire an additional Aston Bay share at C20 cents for a period of 24 months from the date of issuance.

The flow-through shares follow under a provision of Canada's Income Tax Act that allows mineral exploration companies to transfer exploration expenses to individual investors that purchase the flow-through shares. Most exploration companies do not generate revenues, so they do not need the tax write off, however, the flow-through investor can apply his portion of the exploration expense to reduce or eliminate his tax liability. The exploration company must spend the flow-through dollars raised on a qualifying mineral project in Canada within two years of closing the financing.

Proceeds from the financing will be used for a planned 2018 drill program on the Aston Bay property, which hosts the Storm Copper and Seal Zinc projects, and for general corporate purposes.

In December, the company published an updated resource estimate for Seal based on drilling carried out by Cominco in 1995-96 and Noranda in 2001.

At a 4 percent cut-off grade, Seal hosts 1 million metric tons of inferred resource averaging 10.24 percent (227 million pounds) zinc and 46.5 grams per metric ton (1.5 million ounces) silver.

"This initial mineral resource estimate for the Seal zinc deposit demonstrates the potential for high-grade zinc deposits on our Aston Bay property," said Aston Bay CEO Thomas Ullrich. "The property is already known for its prospectivity for copper mineralization, based on the multiple mineralized zones present at the Storm copper prospect."

Situated about 30 kilometers (19 miles) southeast of Seal, Storm is a strata-bound and structurally-hosted copper zone of mineralization.

Highlights from historical drilling at Storm include: 110 meters of 2.45 percent copper from surface; 56 meters of 3.07 percent copper from a depth of 12.2 meters; and 49 meters of 1.79 percent copper from surface.

Aston Bay believes that the fluids responsible for both Storm copper and Seal zinc may have mineralized other permeable horizons that remain concealed at depth. As such, the known surface expressions of mineralization at Storm and Seal may be indications of other, potentially larger, zones of mineralization concealed within the flat-lying sediments on the Aston Bay Property.

Aston Bay commissioned a Falcon Plus Airborne Gravity Gradiometry survey, a geophysical technique that measures minute differences in the earth's density to yield information on underground geologic structures, to help identify potential areas of concealed mineralization.

All three areas surveyed – Seal, Storm and Typhoon Zinc – returned strong gravity responses that will be evaluated in detail by the company's geological and geophysical team prior to selecting targets for a drill program planned for this summer.

Ullrich said the Aston Bay team is "encouraged by the potential for discovery of additional blind mineralization at both Seal Zinc and Storm Copper, as well as potential blind mineralization elsewhere on the property."

Due to strong indications of institutional demand, Aston Bay has applied for conditional approval to raise an additional C$2 million in a separate offering of flow-through shares. Proceeds of this offering would be used to fund a second drill rig and expand existing plans for exploration at Storm and Seal this year.

–SHANE LASLEY