The perils of platinum

Northern Shield Resources Inc. is among the many junior mining companies that are taking a hit from a slump in commodity prices across the world economy.

In June the company located significant mineralization from its Huckleberry project in the southern Labrador Trough, Quebec, but despite the hopeful outlook for the project, it’s tough to raise money for exploration projects let alone development of promising sites.

Ian Bliss, the founder and CEO of Northern Shield, says that share prices have collapsed everywhere, regardless of how good a project may be.

“Junior mining exploration is very high risk so when doubt creeps into the world economy and the stock market, the first thing that gets kicked out is high risk interests like exploration,” he says.

Northern Shield Resources is a prominent junior mining exploration company and the only one in Canada that specializes in exploring for platinum and palladium deposits. Due to political and economic instability in major platinum producing countries such as South Africa, Zimbabwe and Russia, Northern Shield hopes eventually to provide a stable alternative source of the minerals, with Canada supplying platinum and palladium internationally. These elements may not seem as important to the global economy as oil or graphite, but platinum and palladium are key components in a number of everyday items including jewelry, electronics and most importantly, catalytic converters which help reduce exhaust emissions in vehicles.

“Nobody stops to think about the metals that go into your computer, your bicycle, your car,” says Bliss. “No one understands what it takes to produce all those commodities.”

A tough six months

Northern Shield has undergone some tough times over the past 10 years but has especially suffered in the last six months.

Its most recent financial statement for the nine-month period, which ended September 30, 2015, reported a loss of $484,953, had negative cash flows from operations of $500,130 and by the end of the period an accumulated deficit of $22 million. The stock has traded at one to four cents per share over the past 52 weeks and as of Dec. 20 Northern Shield’s shares were trading at one cent on the TSX Venture, giving the company a market capitalization of $1.6 million.

Bliss blames the decrease in share value on a decline in the world economy which has affected commodity prices most directly. The company had gone through similar slumps since its inception in 1999 and during those times Northern Shield would turn to bigger mining companies for assistance. This time, that’s not possible.

“With the commodity prices so low, a lot of these big companies are hurting,” says Bliss. “There are a lot fewer big mining companies that have disposable cash to throw at juniors.”

Twice now Northern Shield has worked with Impala, a South African-based company and the second biggest platinum miner in the world.

Impala worked extensively with Northern Shield and was a partner in its Idefix platinum- group property in the Labrador Trough. However, as a result of labor strikes and mine closures in South Africa, Impala’s revenue has declined and it has withdrawn from its partnership with Northern Shield.

Bliss says that large mining companies also face problems with budgeting for projects.

“When they go build mines and expand mines it’s been a character of the last couple years that they have been way off-budget,” he says. With equity markets dried up and projects costing more than anticipated the result is there is nothing left to support junior mining companies that rely on the bigger players to keep them afloat.

However, Northern Shield’s status as one of the only platinum and palladium exploration companies gives it an advantage over other juniors.

“We have a lot of credibility in the mining world with our expertise in exploring for platinum and palladium,” Bliss says. “So that motivates us to keep going. We know technically we’re right. Now we just have to find a way to beat these market conditions: the way the world economy is, the way the local stock market is.”

Some encouraging results

On Nov. 9 the company announced encouraging drilling results from its most promising project, the Huckleberry project in the southern Labrador Trough in Quebec.

“Northern Shield has developed a fairly thorough knowledge of the magmatic rocks in the Labrador Trough and Huckleberry certainly stands out as being very complex and dynamic. When it comes to large Ni-Cu-PGE deposits, complexity and dynamism is always a good thing,” says Christine Vaillancourt, Northern Shield’s chief geologist. “We already see very extensive copper mineralization on surface which has likely segregated from the nickel-rich portion. The complexity of the geology suggests that we could be sitting above or near the conduit and that’s likely where the nickel-rich massive sulphides are located.”

Vaillancourt and Bliss both believe Huckleberry could be the beginning of a very promising development area.

Even with the positive results from the latest drilling, Northern Shield still has many hurdles to overcome. Although Bliss says his job can sometimes be tough, he remains positive.

“It’s a giant detective game. Everybody loves detective games or puzzles and at the end of the day it’s the reward: finding a multi-million dollar deposit for your shareholders and for yourself,” he says.

30