Bayfield Ventures (CVE:BYV) is a junior exploration company aggressively exploring its flagship Burns Block gold-silver property in the Rainy River District of northwestern Ontario. The 80-acre Burns Block, which is owned 100 percent by Bayfield, is located adjacent to the east and on strike to Rainy River Resources' (TSE:RR) multi-million ounce gold deposit.
Rainy River's June 2011 NI 43-101 resource estimate shows a measured and indicated resource of 4.41 million ounces of gold averaging 1.17 grams per tonne (g/t) gold, in addition to an inferred resource of 2.33 million ounces of gold averaging 0.94 g/t gold.
In this resource estimate, Rainy River considers the material above the final depth of the conceptual pit shell (450 metres vertical depth) offers reasonable prospects for economic extraction from an open pit, using a cut-off grade of 0.35 g/t gold.
Recently, Bayfield reported that a wide shear zone is now in the initial stages of exploration on the far east portion of the Burns Block. This zone is the easterly strike extension of the main ODM17 gold target that hosts Rainy River's deposit as well as the zone that hosts Bayfield's high grade gold and silver mineralization 700 metres to the west.
Bayfield's CEO, Jim Pettit, told Proactiveinvestors that the Burns Block is basically a rectangular block in the middle of Rainy River's property, and since 2010, Bayfield has completed about 70,000 metres of diamond drilling from the western border heading east, and is budgeted for another 30,000 metres of drilling in 2012.
The aim of the campaign, said Pettit, is to explore and expand the extension of gold and silver mineralization that is being defined by Rainy River on its ground adjacent to Bayfield's claims.
Early on in the 100,000 metre program at the Burns, hole RR10-15 tapped into a high grade gold and silver shoot and returned 31.71 g/t gold and 50.23 g/t silver over 3 metres at 160 metres below surface right beside the western border.
The company quickly followed up this result with hole RR10-18, which returned 35.93 g/t gold and 360 g/t silver over 10 metres.
Drilling on Burns Block was halted for a break over the holiday season, but has since resumed with exploratory drilling of mineralization initially discovered at surface in 2010 on the eastern portion of the Burns Block.
Earlier this month, the company reported assay results from this program that conclusively showed that structurally controlled gold-silver mineralization continues for at least 700 metres from west to east across the Burns Block property. Much more infill and definition drilling is planned along this strike length.
Initial wide-spaced drilling in the eastern portion of Burns Block has intercepted multi-gram gold assays, including values up to 5.58 g/t gold and 32.87 g/t silver over 1.9 metres.
Pettit said he believes that more detailed drilling in this eastern area has an "excellent chance" of intercepting richer assay results once key high-grade mineralized structures are identified.
In late 2010, surface mapping and sampling found that mineralization underneath the till cover on the western portion of the property was widely exposed at surface in an outcrop on the eastern side of the Burns Block, leading to further exploration and drilling in 2011.
Much like the western portion of the Burns Block, Bayfield is defining a lower grade envelope that could encompass much higher grade gold and silver zones at depth over to the east, the company said.
The potential for this is seen with one of the latest holes, RR11-205, which intercepted a 22.0 metre wide zone containing several distinct zones of gold mineralization in the range of 1.74 to 5.58 g/t gold, along with silver values up to 34.30 g/t silver.
Also in the northeast quadrant of the Burns Block, hole RR11-202 returned 3.00 metres of 2.56 g/t gold and 9.00 g/t silver as well as 1.50 metres of 4.08 g/t gold and 9.80 g/t silver.
Indeed, Bayfield said gold and silver values are getting richer at depth, and approximately 500 metres of the down plunge distance within the south-dipping shear zone is unexplored.
In November, Rainy River Resources released a preliminary economic assessment on its property, with plans for a combined open pit and underground operation, with a planned underground decline development looping right around the Burns Block property.
The report, which looked at mining operations over 13.2 years, estimated a life-of-mine net present value of $786 million using a $1,200 gold price, a $25 silver price and a discount rate of five percent. It also reported a 19.4 percent internal rate of return and a payback period of 3.4 years.
Pettit noted though that Rainy River's initial mine plan is "very cost-sensitive" because of the lower grades, with a mill head grade of 0.7 g/t gold, an open pit cut-off grade of 0.30 g/t gold and an underground cut-off grade of 2.0 g/t gold.
Pettit suggested that as a result of this sensitivity, underground mining is planned to hit pockets of high grade below the pit to enhance the initial economics of the mine. He added that this underground mining could target some of Bayfield's high grade zones that are "very rich in grade" and are located near to the initially proposed underground workings in Rainy River's 17 East Zone.
Life-of-mine average annual production for the Rainy River gold project is currently projected at 329,000 gold ounces and 497,000 silver ounces, with production anticipated to start in the second half of 2015.
The ODM17 gold zone, which extends onto the Burns Block near surface, is the first zone to be fed into the proposed mill, according to Rainy River's mine plan, added Pettit.
Pettit went on to note that another potential benefit of owning the Burns Block property is the "nice, big" outcrop located on the asset, "ideal for Rainy River's needs for constructing a mill", he said. An outcrop is an area of visible bedrock that is not covered with soil and it offers hard, stable ground as most of the district is quite boggy.
The Burns Block property can be accessed through numerous all-weather, secondary provincial highways and township roads, which lead off of paved provincial highways 11 and 71. The project therefore has good access to labour and equipment.
Aside from Burns Block, which accounts for around 99 percent of Bayfield's asset value, the company also holds the B Block and the C Block properties in the Rainy River district, which constitute "blue sky" exploration potential for the company.
Diamond drilling is now underway on the 1,976 acre C Block property situated to the west of Rainy River Resources' deposit, an area that has never before been drilled.
Around 3,000 to 3, 5000 metres of exploratory drilling is planned at the C Block, with the aim of establishing the character of the bed rock across the under-explored property. The vast majority of the asset is covered by glacial till deposits, necessitating a drilling technique called overburden drilling, which uses a reverse circulation drill, to establish gold targets for diamond drilling.
Drill targeting is also being guided by the results of ground magnetic surveys completed in 2007, and by the results of helicopter VTEM and magnetic surveys flown for Bayfield in late 2010. Bayfield said the geophysical data is similar to that collected from its Burns Block and B Block properties, as well as the area hosting Rainy River's deposit.
At the 1,185 acre B Block, around 2,500 metres of drilling is planned. In 2008, Bayfield drilled 2 metres of 5.84 g/t gold in the south-central portion of the B Block, with the mineralization lying within 200 metres of the surface.
Bayfield, with just under $4 million in the treasury, said it is fully funded through the balance of its exploration plans, and doesn't expect the need for more money via a financing.
Pettit, who has more than 15 years of experience managing junior resource companies, is confident with his exit strategy plans for the company given the drilling and exploration that has been done to date.
Aside from Pettit, Bayfield's management boasts president and director, Donald C. Huston, who has over 25 years in the mineral exploration industry, having been an in-field manager for several projects in North America.
Bayfield's stock has risen nearly 28 percent since the start of 2012, currently changing hands at around 61 cents, suggesting a takeover may be in the works.
In early January of this year, Doug Casey's International Speculator refreshed its "buy" rating of Bayfield Ventures, noting that the company's bulk-tonnage lower grade mineralization in addition to higher grade drill results continue to add value to the Burns Block property, and that whatever the size of this new area of mineralization to the east is, it simply makes a takeover more likely.