Managing director Simon Rigby told Proactive Investors today Black Fire Minerals is able to advance the project very rapidly because the company has the benefit of historic data.

Following the delivery of a JORC Resource at Desert Scheelite, Black Fire Minerals plans to begin exploration on the two other advanced prospects, Gunmetal and Garnet, and commence a Scoping Study for Pilot Mountain.


Exploration Upside

Providing exploration upside at Pilot Mountain is the 11 other prospect areas identified within the 13 square kilometre area, which is strategically located less than 20 kilometres from an intrastate highway and grid power.

The Desert Scheelite Prospect is one of three advanced prospects which were historically extensively drilled and subjected to mining feasibility studies by Union Carbide during the early 1980s.

Union Carbide “mothballed” the project in the mid-1980s in response to a significant fall in tungsten prices at that time and there has been no significant exploration undertaken since.

Black Fire Minerals has outlined an exploration target for Desert Scheelite of 4-5 million tonnes at 0.3-0.34% tungsten, while the overall exploration target across the three advanced prospects is 7-9 million tonnes at 0.3-0.37% tungsten.

Rigby said in terms of grade, Pilot Mountain is well above the grade curve in comparison to other tungsten mines and projects around the world.

"To add to that we have the benefit of location. We’re only 20 kilometres off a major intrastate highway that links Reno to Las Vegas, 20 kilometres from power and we’re in a good regulatory environment like Nevada," he said.

"The U.S. is a net importer of tungsten concentrates anyway so conceivably there’s a domestic market for our product.

"The fundamentals of its location and the infrastructure and everything else makes it quite an attractive target."

The company is aiming to deliver a maiden JORC Resource at a time of high tungsten demand and corresponding high prices.


Business Development

Black Fire Minerals is currently focusing on building value in its current project portfolio, which also includes the Kangeshi Copper-Silver Project in the Democratic Republic of the Congo, the Longonjo Rare Earth Project in Angola and Mystique Gold Project in Western Australia.

The company is also evaluating a number of potentially synergetic projects. Importantly, Black Fire Minerals is financially well placed to do this with A$4.5 million in cash on hand at the end of the December 2011 quarter.

Another plus is the location, with the project around 250 kilometres south of AngloGold Ashanti’s 5 million ounce Tropicana Gold Deposit.

The Torquata drilling program will comprise up to 1,000 metres of diamond drilling in five holes.

Historic aircore drill holes intersected a number of zones of modest gold mineralisation, with better intersections including 3 metres at 2.92 grams per tonne (g/t) gold, 1 metre at 0.62g/t, 6 metres at 0.2g/t and 1 metre at 0.84g/t.

However, due to overlying Tertiary cover sequences (10-60 metres), historic aircore drilling of this prospect was vertical and therefore not optimally orientated to test for bedrock mineralisation.

Black Fire Minerals has defined a number of high priority drill targets from an examination of the historic drill results and new geophysical and palaeo-topographical interpretations.

Part of the rationale of these targets is that significant geochemical depletion of gold has been reported at other gold deposits within the Tropicana Belt, whereby gold is depleted in the weathered zone above bedrock mineralisation.

Importantly, it was not until deeper reverse circulation or diamond drilling was undertaken to test fresh rock that significant, or above 1g/t gold, intersections were reported at a number of these discoveries including the 5 million ounce Tropicana Gold Deposit.

Black Fire Minerals chose the method of diamond drilling to better cope with the unconsolidated Tertiary sand layers that lie immediately above the bedrock that hampered previous drilling attempts using a reverse circulation drill rig.

The program should take around three weeks to complete with first results expected in early April.


Mystique Gold JV Project

The Mystique project is an early stage gold project located within the highly prospective Albany-Fraser Belt, 240 kilometres east-southeast of Kalgoorlie.

Black Fire Minerals can earn up to 75% equity in the 433 square kilometre project by spending A$2.5 million on exploration over five years.

The current drilling program will allow the company to bring the project to a decision point and subsequent follow-up work will be dependent on the results of the initial drill program.

Exploration programs

Drilling at Kangeshi and Pilot Mountain is set to begin shortly, with Black Fire targeting Mineral Resources for both projects by June 2012.

Kangeshi, in the Democratic Republic of the Congo, is the most advanced of Black Fire’s five prospects defined to date, and looks to have strong potential to deliver a significant bulk tonnage, moderate grade Copper-silver deposit.

Holes drilled by Brazilian major Vale in 2008 intersected significant Copper-silver mineralisation in a shallowly dipping sedimentary horizon over 5 kilometres of strike.

Intersections from Vale’s drill holes in the Black Fire target area included 11 metres at 1.1% Copper and 23.6 grams per tonne (g/t) silver, 10.5 metres at 1.2% Copper and 22.6g/t silver, 4.7 metres at 1.42% Copper and 37.2g/t silver.

At Pilot Mountain, in Nevada, U.S., more than 150 drill holes were completed by Union Carbide in previous decades.

Best results from that drilling include 12.6 metres at 0.59% tungsten, 8.93g/t silver and 0.48% Copper.

These deposits were never exploited due to a significant collapse in tungsten prices in the mid-1980’s, and no significant modern exploration has been undertaken on the project since then.

Black Fire acquired full rights to Pilot Mountain in September.

Black Fire is also planning a drilling program for the Mystique Gold Project, Western Australia, in January 2012, and is continuing reconnaissance work on a number of historical prospects at the Longonjo Project in Central Angola.

Intersections from Vale’s drill holes in the Black Fire target area included 11 metres at 1.1% copper and 23.6 grams per tonne (g/t) silver, 10.5 metres at 1.2% copper and 22.6 g/t silver, 4.7 metres at 1.42% copper and 37.2g/t silver.

These intersections form the basis of Black Fire’s initial exploration target for Kangeshi of 25-35 million tonnes at 0.8-1.2% copper and 15-20g/t silver.

The drilling program at Kangeshi will comprise up to 5,000 metres of drilling 45 holes, to be drilled as an infill pattern around broadly spaced holes drilled by Vale in 2008.

The drill program is expected to take approximately three months to complete, with the aim of providing sufficient information for an initial JORC resource estimate, which is expected to be completed in the first half of 2012.

Kangeshi is the most advanced of Black Fire’s five prospects defined to date, and looks to have strong potential to deliver a significant bulk tonnage, moderate grade copper-silver deposit.

Proposed Exploration

Black Fire intends to commence an aggressive exploration program with the aim of bringing the historically drilled mineralisation into JORC compliant resources.

This program is planned to begin at the Desert Scheelite Prospect with a program of 18 diamond drill holes twinning and infilling historic holes. Permitting for this initial program has already been completed and the company is currently seeking an appropriate drilling contractor to commence the work.

In addition to the proposed drilling programs at the historic prospects, work will also commence in reviewing the many other known, but less advanced prospects throughout the project area including the Good Hope Prospect where an historic vertical drill hole returned 43 metres at 0.41% WO3 from surface. Activities will include geological, geochemical and geophysical evaluations.


Location & Tenure

The Pilot Mountain Project comprises 154 unpatented Mineral Claims for 12.9km2 located on the eastern flank of Pilot Mountain, 250km southeast of the city of Reno and 20km east of the town of Mina, in Nevada USA.

This ground package is the result of a consolidation program undertaken by Black Fire who staked 109 Claims to secure additional nearby prospects prior to acquiring the rights to PGC’s 45 claims over the historic deposits.

The project is located on open rangelands with excellent infrastructure including grid power and intrastate highway less than 20km to the west. Nevada is the “mining capital” of the USA with a favourable regulatory environment and availability of equipment and a skilled workforce.

Geology & Mineralisation

The Pilot Mountain project area is located within a thick package of bedded marine sediments of the Jurassic Luning Formation, which importantly comprises units of limestone and calcareous sediments which are the host to the tungsten-copper mineralisation.

Intruding these sedimentary rocks are a series of Cretaceous age quartz monzonites and granodiorites which have developed the skarn style mineralisation within the limestone beds.

Mineralisation is therefore effectively stratigraphically controlled where the favourable beds are in contact or close proximity to the causative intrusives. The principal tungsten mineral present is scheelite (CaWO4).

To date, mineralisation has been traced up to 200m away from the intrusive rocks and up to 600m along strike with widths ranging from 2 – 10m.

Three advanced prospect areas are known including Desert Scheelite, Gunmetal and Garnet and it is these prospects that were extensively drilled by Union Carbide between 1977 and 1983. A further 11 prospects at various stages of exploration fall within the project area.

Desert Scheelite Prospect

The Desert Scheelite Prospect is currently the largest known mineralised system in the project area. A total of some 134 holes (mostly vertical diamond core) have been drilled to date on a largely 100 x 100 foot (33m x 33m) pattern.

The skarn body is tabular in shape and extends for over 600 meters along an intrusive contact of a quartz monzonite body. The skarn has an east-west strike and steep northerly dips ranging between 50 to 70 degrees.

Mineralisation has been traced by drilling to a depth of at least 300m and is open at depth and to the east.

Two tungsten bearing zones are commonly present, each averaging about 7m in true thickness which in places coalesce to attain a true thickness of over 16m.

Tungsten intervals of up to 0.7% WO3 have been reported with the average arithmetic grade of mineralised intervals being 0.33% WO3.

Pyrite and base metal sulphides (principally chalcopyrite and sphalerite) can comprise up to 20% of the skarn in unoxidized samples with erratic historic base metal assaying reporting average grades of 0.20-0.25% Cu and 0.5 – 0.9% Zn.

Gunmetal Prospect

Drilling to date at the Gunmetal Prospect has been largely on a 400 x 200 foot (133m x 67m) pattern and has defined extensive tungsten mineralisation both as sub-vertical bodies formed along the contact of the causative intrusive, but also as flat lying stratiform replacement bodies along favourable carbonate horizons.

Overall the average tungsten grade of mineralised intervals in drilling is around 0.43% WO3 with copper, zinc and silver mineralisation also being reported. Silver grades range from trace to several ounces per tonne but averages less than one ounce per tonne.

The North Gunmetal area hosts the earliest known tungsten discoveries in the Project area and had some limited production from underground workings around 1920.

Garnet Prospect

The Garnet Prospect is located northeast of Gunmetal and comprises extensive largely sub-horizontal tungsten skarn development. Drilling to date comprising some 60 diamond holes has been on 100 – 200 foot (33m – 66m) spacings.

This work has defined a series of mineralized east-west lenses (sometimes stacked) in the order of 130m - 260m long by 50m-66m wide. Mineralised widths from the drilling vary from 1–10m. The average tungsten grade of the mineralised intervals in drilling is 0.37% WO3.

Other Prospects

A total of 11 other prospect areas have been defined within the claim areas. These are at various stages of exploration, from conceptual targets based on geophysics through to targets that have received some limited first pass exploration drilling.

The latter includes the Good Hope Prospect where an historic drill hole (RH#2) returned 43 metres at 0.41% WO3 from surface.

Terms of the Transaction

Under the terms of the agreement with PGC, Black Fire paid an initial US$50,000 in cash for a 100 day exclusive due diligence period which was subsequently extended by agreement between the parties to allow resolution of certain title issues.

The company has now exercised its right to acquire a 24 month option to purchase by making a further cash payment of US$450,000.

At any time before the end of the option period, the Company may acquire 100% of the project for further cash payments spread over a further two year period totalling US$1.5 million (or at the $1 million payment mark elect to revert to a 50:50 JV and make no further payments).

A further and final cash payment of US$1 million will be made upon the commencement of commercial mining. The project is also subject to a royalty agreement with a third party totalling 2% of the gross revenue of any mining operation.

Black Fire has been notified that title issues affecting 45 of the 154 Mining Claims that comprise the project have been solved - and now believe that title is unencumbered.

Once the due diligence is completed, Black Fire can then make a final decision regarding exercising the option to acquire the project from Pilot Mountain Resources Inc.

About the project

In February this year Black Fire entered into an agreement to acquire the advanced project from Pilot Mountain Resources, as subsidiary of Pacific Gold Corporation (OTCBB: PCFG).

The project ranks favourably in tungsten grade with many existing tungsten mines and resource projects worldwide.

Under the terms of the deal with Pacific Gold Corporation, Black Fire will pay an initial US$50,000 in cash for a 100 day exclusive due diligence period and then may exercise its right to acquire a 24 month option to purchase for a further cash payment of US$450,000.

At any time before the end of the option period, the company may acquire 100% of the project for further cash payments spread over a further two year period totalling US$1.5m.

A further and final cash payment of US$1 million will be made upon the commencement of commercial mining.

The project is also subject to a royalty agreement with a third party totalling 2% of the gross revenue of any mining operation.

The project is located 250 kilometres southeast of the city of Reno in the mining friendly state of Nevada, USA, and its tenure covers significant tungsten, copper and silver mineralisation.

Union Carbide Corp initially discovered the prospect in 1916 and explored it between 1977 and 1983.

The strategic move by Black Fire is due to the project being located in a copperbelt with the second largest global copper endowment after Chile, running from the DRC south into Zambia.

Highlighting the prospectivity of the area, major global players are already active nearby to Black Fire's potential acquisition interest, including Vale (NYSE: VALE), Glencore (LON: GLEN), Freeport (NYSE: FCX) and Anvil Mining (TSE: AVM).

The ASX listed contingent includes Tiger Resources (ASX: TGS).

The option gives Black Fire the right to acquire up to a 54% effective interest in the project, which holds a significant ground holding of 271 square kilometres.

Some exploration has already been undertaken, with the Kangeshi mineralisation occurs as an outcropping, shallowly dipping sedimentary horizon that has returned extensive plus 1% copper and plus 10g/t silver rock chip assay results over in excess of 10 kilometres of strike.

Broad spaced diamond drilling at the Kangeshi prospect by Vale in 2008 comprised nine holes along a 5 kilometre strike, which intersected significant near surface copper-silver mineralisation up to 1.3 kilometres down dip (but less than 180 metres down-hole) from the surface copper outcrops.

The best true width drill intersections included:

- 11.00 metres at 1.10% copper and 23.6g/t silver;
- 10.50 metres at 1.20% copper and 22.6g/t silver;
- 4.70 metres at 1.42% copper and 37.2g/t silver; and
- 9.85 metres at 0.85% copper and 16.3g/t silver.

Black Fire is looking to unlock the potential of the project quickly and has already established an initial exploration target for the Kangeshi prospect of 25Mt to 35Mt at 0.8% to 1.2% copper and 15g/t to 20g/t silver.

Better still for the potential of the project, the Kangeshi prospect is just one of five known prospects in the project area.

The Kangeshi copper mineralisation is in the form of highly favourable chalcocite which generally produces a very high grade concentrate.

At the moment a 5,000 metre diamond and reverse circulation drilling program infilling and extending Vale’s drill coverage is planned, targeting a maiden JORC Resource within 6-8 months - scheduled to commence before the end of September.

Black Fire’s acting chairman, Anthony Baillieu, commented “We are very excited about the potential of the Kangeshi Project to deliver a large tonnage, mid- grade copper and silver deposit in the highly copper prospective and very active mining province of Katanga, where a number of other ASX & TSX listed companies are also having success."

The option is with Canadian private company, Rift Valley Minerals Ltd (RVM) and private DRC company, TSM Entreprise s.p.r.l.

To assist in the funding of the minimum investment of US$1.5 million under the terms of the Kangeshi transaction, Black Fire has received applications from sophisticated investors for around 7.9 million shares at $0.10 to raise $792,500.

The Longonjo project is located in central Angola.  The rare earth element anomaly, which based on historic sampling covered an area of 2 kilometres by 1 kilometre, has been extended a further 500 metres to the south-east and remains open.

The latest samples are the first at Longonjo that have been assayed for the full suite of rare earth elements with the results confirming highly elevated neodymium (peak 0.70% Nd2O3) and praseodymium (peak 0.18% Pr6O11).

Importantly, the remaining 401 soil samples are expected in the next week, which cover the south-east extension.

To follow-up on the latest results, a 5000 metre aircore drilling program to broadly test the soil anomaly is currently planned to commence in July.

Anthony Baillieu, acting chairman, said “We are very pleased with these new soil results as they continue to confirm the company’s strong belief that the Longonjo Carbonatite has the potential to grow into a significant and highly competitive rare earth element project.

"Longonjo continues to represent an extraordinarily exciting early stage rare earth element project that the company is intending to advance as quickly as possible through aggressive drilling programs planned to commence in July."

Longonjo is located close to infrastructure including the regional city of Huambo and road networks, as well as the recently recommissioned railway to the port city of Benguela which passes less than 3 kilometres from the project.

In other Black Fire news, copper-gold-uranium-iron mineralisation and historical mine workings have been discovered at the Cassenha Hill Prospect, also located within the project.

Rock chips peaked at 9% copper and 6g/t gold.

The project area covers some 3,600 square kilometres of Archaean/Palaeoproterozoic greenstone rocks.

Comment

These encouraging results for Black Fire would seem to have very significant similarities to Peak Resources' (ASX: PKR) Ngualla Rare Earth Project in Tanzania.  Black Fire's Longonjo project appears to offer investors a cheaper entry point yet with similar potential to Peak Resources, which is roughly 12 months in advance of Black Fire which is preparing to drill Longonjo aggressively in July.

As part of the due diligence process, Black Fire conducted an 88 sample trenching, pitting and rock chip geochemical sampling program, which returned highly encouraging results.

The primary target was the Longonjo Carbonatite REE Prospect.

Black Fire said the prospect comprises a large rare earth element, niobium and phosphate soil geochemical anomaly with 0.5% cerium, and is in excess of 2 kilometres by 1.5 kilometres, and is currently open to the southeast.

Trenching results included:

- 17 metres at 3.72% total rare earth oxide (TREO), 4.3% phosphate and 0.29% niobium;
- 19 metres at 3.54% TREO, 4.3% phosphate and 0.30% niobium; and
- 16 metres at 1.60% TREO, 6.6% phosphate and 0.33% niobium.

The best bedrock pit samples included; 18.91% TREO, 11.54% phosphate and 0.32% niobium, and 18.06% TREO, 7.77% phosphate and 0.8% niobium.

Black Fire said that although the assays are dominated by light rare earth elements, the tenor of the results are highly significant.

Of the 88 samples, they averaged 1.5% cerium oxide (peak 9.48%), 0.7% lanthanum oxide (peak 5.17%), 0.6% neodymium oxide (peak 2.77%), 0.2% praseodymium oxide (peak 0.87%) and 0.1% samarium oxide (peak 0.24%).

Adding to the potential for more encouraging results, a further 575 soil samples collected on a 100 metre by 100 metre spacings and covering the “open” southeast extension of the current soil anomaly are still pending, and are expected within two weeks.

Importantly, the project is close to infrastructure including the regional city of Huambo and road networks, as well as the recently recommissioned railway to the port city of Benguela, which passes less than 3 kilometres from Longonjo Carbonatite.

In addition to the Longonjo REE Prospect, copper‐gold‐uranium‐iron mineralisation and historical mine workings have been discovered at the Cassenha Hill Prospect which is located within the project.

The best rock chip assay results include 9% copper and 6g/t gold.

To move the project forward quickly, Black Fire intends to immediately commence an aggressive systematic exploration program with early stage drilling at Longonjo planned to commence in July.

The option agreement

Under the agreement, Black Fire has made a A$100,000 option payment to Australian company Sable Minerals Pty Ltd (Sable), for an exclusive 18 month option to acquire a 70% equity interest in Longonjo.

Sable’s holds the interest from a joint venture agreement with Angolan private company, Discovery Group Lda, who hold title to the project.

Under the agreement Sable have a 70% equity interest and are project managers while Discovery Group holds a 30% equity interest, and is being free carried to a decision to undertake a Bankable Feasibility Study.

Consideration

In February 2011 Black Fire negotiated an option to acquire 100% of Sable Minerals and thereby their interests in Longonjo.

Under the terms of the agreement with Sable, Black Fire was granted:

-A 100 day exclusive due diligence period in return for a cash payment of US$175,000 directly to the Angolan Ministry of Mines on behalf of Sable to cover project licence fees.

- At the completion of due diligence Black Fire was then able to exercise its right to acquire an 18 month option to purchase by making to Sable a cash payment of A$100,000 whilst agreeing to pay on behalf of Sable, ongoing licence fees and Government performance bonds during 2011 totalling US$268,000.

- Upon payment of these licence fees Black Fire will be granted a non-dilutable 25% shareholding in Sable.

- At any time before the end of the 18 month option period, which now expires on 31st October, 2012, Black Fire may acquire the remaining 75% shareholding in Sable by paying A$1,750,000 in Black Fire ordinary shares to be issued in two tranches, subject to obtaining relevant Black Fire shareholder approvals.

Tranche 1 will comprise A$1,250,000 worth of Black Fire shares to be issued at the VWAP for the 20 day period prior to the announcement by the company of its election to enter into the option agreement after due diligence.

Tranche 2 will comprise A$500,000 worth of Black Fire shares to be issued at the VWAP for the 20 day period prior to the announcement by the company of its election to exercise its option to acquire the remaining 75% equity in Sable.

Investors are supporting Black Fire shares in morning trade, with the company trading 28% higher.

Black Fire did not allude to which country or resource the potential acquisition update focuses on.

Black Fire shares will remain in pre-open until Wednesday 1 June, or earlier if the company is in a position to make a release.

Black Fire said legal due diligence is incomplete with the project vendor, Pilot Mountain Resources, informing the company that they are now unlikely to be able to deliver unencumbered title to the central 45 (of a total of 154) Mining Claims by the end of the current agreed due diligence period.

Pilot Mountain has advised that they are currently taking action to deliver unencumbered title to these 45 claims and are confident of the outcome.

Due to the potential of the project, the Black Fire board have unanimously decided that despite the potential delay, Pilot Mountain represents a significant advanced project opportunity.

The potential is highlighted from the substantial tungsten price increases over the last few years, and as a result Black Fire has agreed to an extension to the due diligence period to allow resolution of title.

About the acquisition

In February this year Black Fire entered into an agreement to acquire the advanced project from Pilot Mountain Resources, as subsidiary of Pacific Gold Corporation (OTCBB: PCFG).

The project ranks favourably in tungsten grade with many existing tungsten mines and resource projects worldwide.

Under the terms of the deal with Pacific Gold Corporation, Black Fire will pay an initial US$50,000 in cash for a 100 day exclusive due diligence period and then may exercise its right to acquire a 24 month option to purchase for a further cash payment of US$450,000.

At any time before the end of the option period, the company may acquire 100% of the project for further cash payments spread over a further two year period totalling US$1.5m.

A further and final cash payment of US$1 million will be made upon the commencement of commercial mining.

The project is also subject to a royalty agreement with a third party totalling 2% of the gross revenue of any mining operation.

The project is located 250 kilometres southeast of the city of Reno in the mining friendly state of Nevada, USA, and its tenure covers significant tungsten, copper and silver mineralisation.

Union Carbide Corp initially discovered the prospect in 1916 and explored it between 1977 and 1983.