Amidst a marketplace that favours assets of the more advanced variety, any opportunity to leapfrog beyond the grassroots phase en route to production is enticing to the financial community. For Northern Vertex Mining Corp.
Amidst a marketplace that favours assets of the more advanced variety, any opportunity to leapfrog beyond the grassroots phase en route to production is enticing to the financial community. For Northern Vertex Mining Corp. (formerly known as “Northern Vertex Capital Corp.”) (TSX-V:NEE) (NHVCF), tapping into that mentality has landed them a pair of near-term projects in a relatively short amount of time, and at a $10 per ounce-in-the-ground cost that's far below the industry average.
Over a span of 7 months, the NEE team managed to raise $16 million in order to fund the acquisition of its two flagship properties in Idaho and Arizona. The business model is to negotiate the acquisition of historic gold resources at a discount, prove them up to 43-101 compliance through confirmation drilling, initiating baseline studies and in turn adding value over a short period of time. By seeking non-compliant resources, the Northern Vertex team managed to acquire ounces in the ground at a rate of less than $10/ounce, among a field that is paying on average more than $100/ounce.
LEMHI GOLD PROPERTY (IDAHO) - THE CONSOLIDATION OF YAMANA'S GOLD PROPERTY AND THREE PRIVATE LAND HOLDINGS
If there were a jewel of Northern Vertex's crown, it would the Lemhi Project, acquired in September. Through a joint venture with the privately owned Idaho State Gold Company, the Lemhi comprises four properties that include the Humbug Property, formerly owned by Yamana Gold (TSX:YRI) (NYSE:AUY). The project comes from the culmination of nearly 6 months of negotiations to consolidate 1.2 million historic gold oz, which resulted in NEE netting 51%, operatorship and the right to earn up to 75.5%.
After a financing for the project closed in November, work began shortly after to begin proving up the historic resource. With 32.36 million short tons at a grade of 0.0375 ounces per short ton, the Humbug Gold Deposit has a historic resource of 1.21 million contained ounces of gold, according to a 1996 report by Pincock Allen & Holt. With the original payment of $4.5 million from Northern Vertex, the company has thus potentially obtained its share of the deposit at less than $8/contained ounce.
Whether or not the company moves to increase its share of the project will rest on the results of initial confirmation work. But, should the confirmation work conclude that there is indeed a 43-101 compliant of approximately 1.2 million ounces, it wouldn't take long for them to pull the trigger on acquiring a larger stake.
Should the company elect to increase its interest to 75.5% share in the project, it will still have only spent around $21/ounce; A very attractive entry point.
As for the historic report, this is not from a far-gone era. It was written in 1996 based on 277 reverse circulation holes totaling 157,000ft with a cut off grade of 0.0112 opt. That said, it is important to remember that this is a non-compliant 43-101 Geological Resource, hence the discount that Northern Vertex received when it took over operatorship. For what it's worth, coupled with the report was a non-compliant Pre-Feasibility Study performed on the Humbug also in 1996 by Kappes, Cassiday & Associates based on 15,675,000 tons of ore, and an approximate 6-year mine life.
Going forward, Northern Vertex isn't hesitating to get to work. In order to begin validating and expanding the Lemhi's historic resource, an initial 30,000ft infill drill and resource definition program is underway. Based on the company's previous experience generating a substantial NI 43-101 compliant gold-silver resource on its Moss project in Idaho, it's apparent management knows how to add value for it's shareholders.
MOSS (ARIZONA) - SUCCESSFUL COMPLIANCE TRANSFORMATION WITH WESTERN UPSIDE
Not too long before the Lemhi became the apple of Northern Vertex's eye, the Moss cemented the company's ability to prove a non-compliant resource's merit with proper testing and groundwork. And though the historic resource was around half the size of the Lemhi, the game plan was still quite similar, albeit even more cost effective per contained ounce of gold. With a $500,000 price tag, and a potential 600,000 ounces of gold in the ground, Northern Vertex obtained the project for a steal.
Over the course of five months that followed the acquisition, Northern Vertex completed a 27,000ft drill program that brought the Moss to a 43-101 compliant standard. The result was a 590,000 ounce gold equivalency, close to par with the non-compliant estimate.
What lies ahead is the further development of the property, with drilling set to commence on a western extension in hopes of expanding the resource to nearly double the size in the realm of 1,000,000 ounces. It's through the west extension that the blue-sky opportunity on the project is revealed.
But even more importantly, the Moss is a very noticeable structure at the surface, which should prove to be cheaply and easily mined. The possibility of a heap leaching, open pit mine scenario is becoming clearer with the further work that's gone into the project. That said, it's also possible that mining and milling operations could be utilized, should the heap leaching not be implemented.
The Moss property itself is a 5000ft long stockwork gold structure that from the surface looks a lot like the back of a dinosaur. It's through this back of the dinosaur that very good grades have been observed. Over 600 samples have now been taken across the Moss structure, and so far most of what's been observed on surface has been matched at depth. The company is now currently testing with drilling, and will continue until mid February, after which results would be expected of follow shortly after.
COPLEY (BRITISH COLUMBIA) - A BLACKWATER-DAVIDSON LOOKALIKE
Unlike the Lemhi and the Moss, Northern Vertex's Copley project doesn't utilize the same strategy of proving up historic resources to today's standards. Instead, the Copley represents the more grass-roots approach, and is the true exploration wing of Northern Vertex's program, representing a high-risk, high-reward blue sky opportunity within NEE's project portfolio.
Originally acquired as a qualifying transaction, the Copley is a Blackwater-Davidson lookalike in the Nechako Plateau, in northern British Columbia. From its drilling program a year ago, Northern Vertex hit 30m of continuous mineralization on the project. In December they returned to drill again, the results of which are due in the next couple weeks. From a speculation standpoint, Copley offers shareholders a homerun, swing-for-the-fence opportunity.
MANAGEMENT TEAM - FUNDRAISERS EN ROUTE TO PRODUCTION
From a capital standpoint, Kenneth Berry has proven that he can gain funding when it counts. Over a 7-month span, Northern Vertex raised $16 million to fund both the Lemhi and Moss acquisitions, with money to spend on drilling.
In addition to having the financing in place to advance its assets, the company has built an experienced team of mining-minded players with a history of bringing projects through to production. The latest addition to the team is Dave Farrell who led M&A activities for Endeavour Financial (now Endeavour Mining) for 12 years. Given that Endeavour has moved on to being solely a producer, Farrell's new role as a Director for Northern Vertex is more in line with his strengths and ability, which fall on the transaction side of the business.
From the operations side, Northern Vertex has the experience of Director Joseph Bardswich, a mining engineer who has run several mines over his career. On multiple occasions, Bardswich has been charged with overseeing 200-300 people, in roles ranging from contract miner, production supervision, mining engineering, heavy civil engineering and mine management in both underground, open pit and alluvial operations in Canada, the United States, Europe and Africa.
Going forward, the team's goal is to put 30,000-100,000 ounces of production on the books. Whether this comes from the Moss, which looks to be the closest to a production decision, or through an acquisition, is yet to be seen, but it's clear that Northern Vertex believes itself to be in a favourable transition period en route to being a producer in the near term.
G. Joel Chury
The Bottom Line Report
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