Three junior mining pros have tipped me off about the same company in the past week.
While almost every good mining promoter believes his deal is the next to go, these three people are better than my average sources, so I decided the rumour was worthy of basic investigation.
The richest places in the world for gold are the sediment-hosted gold trends of northern Nevada. According to Thomson Reuters, Nevada is responsible for 74% of the United States’ annual gold production or roughly 172.3 tonnes. Nevada is the largest production center for industry leaders like Barrick Gold and Newmont Mining, and home to ongoing large discoveries. The Carlin trend is also where Gold Standard Ventures (GSV.v) has its flagship Railroad-Pinion project.
Earlier this year, Gold Standard Ventures consolidated ownership of the Pinion (pronounced pinYON) project to become its first 100% owner. This was a hefty undertaking by the company as some 80 individual owners had to be negotiated with over the past three years, CEO Jonathan Awde says.
GSV just released their maiden NI 43-101 resource estimate at Pinion, with over 1 million ounces of close to surface, oxide gold (read: the good stuff). Nevada has been well explored and undeveloped oxide deposits are now scarce. These projects are advantageous because they are amenable to heap-leaching and don’t require an expensive processing plant and tailings pond to build.
The market is currently valuing Gold Standard at roughly $89 million, and its shares are 50% institutionally owned, according to a recent corporate presentation.
The thesis for GSV? It has the last remaining turnkey project that could give a mining company entrance into the Carlin Trend at relatively low cost. This is potentially desirable to the likes of Agnico Eagle, which just began the process of acquiring another company, Cayden Resources, last week. It’s reasonable to speculate that any gold miner would want to have a toe hold in Nevada. Newmont, which operates the heap leach oxide Emigrant Mine next door, may even want to stymie competition in the area with their own takeout of GSV. Emigrant is apparently one of Newmont’s most profitable mines and was built for a small capex.
Travis and I met Gold Standard CEO Jonathan Awde briefly in Vancouver last week to hear the story.
Awde said he is the money raiser and communicator for a talented technical team of geologists in Nevada.
Resource expansion drilling at Pinion is under way, and the company will test other targets on the property over the next few months, including Bald Mountain.
The company also has the North Bullion discovery, which produced some spectacular drill results in 2012, but in more challenging host rock, so was deemed as a lower priority in the current low gold price environment.
“In this kind of market, drilling $250,000-$300,000 holes into a refractory deposit, versus drilling $25,000-$30,000 RC holes into a near surface, oxide resource. We felt it was a lot better use of our capital in a market like this,” Awde said in Colorado of the company’s focus on Pinion.
Gold Standard Ventures CEO Jonathan Awde at the Precious Metals Summit, Sept 2014 (click for Awde's presentation)
Whenever you hear takeover hype in the junior mining business, it's wise to consider the source. In one week I was tipped off about GSV by three relatively credible junior mining pros: one geologist/promoter, one newsletter writer, and one broker. These are men I like and trust, but it’s important to remember to temper your expectations in the mining business.
Of note, Gold Standard's flat stock chart is not suggestive at all of a takeover right now, while Cayden’s share price tripled in the past year. In fairness to GSV, Cayden had a lot of news flow from a new discovery helping them.
The chart (courtesy Stockwatch) does not suggest GSV is about to get taken over.
I haven't bought any GSV stock yet. Thom Calandra owns it ($129 for Thom’s The Calandra Report newsletter here --- www.thomcalandra.com).
Always, always do your own due diligence.
