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Bright gold prices spur exploration

Bright gold prices spur exploration

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Exploration is on the upswing in Nevada with a boost from higher gold prices and a push for mining companies to increase gold resources in the state where mining has long been a part of the economy, but there are snags.

When gold prices go up, “people will invest in the gold market,” said NV Gold Corp. President and Chief Executive Officer Peter Bell. “It’s a perfect storm with high gold prices and the need to build resources and reserves.”

Gold prices have been hovering between the high $1,800s and the high $1,900s per ounce in the last few months, even reaching more than $2,000 per ounce in August.

Bell said there are many issues driving the market, such as the “U.S. printing dollars and the debt, and the pandemic. So is there money coming into the gold market. Yes. We’ve got capital, drillers are busy and exploration companies are busy.”

He said that at the same time, big producers “need to fill up their inventory sheets” to increase their gold resources and reserves. Major mining companies often look to the exploration companies to find that gold.

Dave Shaddrick, president of the Nevada Mineral Exploration Coalition that is open to anyone in exploration and related businesses, said that “as long as the big companies keep pumping out those millions of ounces, they have to be replaced.”

He said that in his opinion “exploration is increasing. Certainly, there are more deals being made and people seem to be busy.”

The COVID-19 pandemic is having an impact on exploration, however, at least on the Canadian junior exploration companies facing travel restrictions and quarantine when they return home, Shaddrick said.

Another exploration shortcoming is the shortage of geologists, he said, “because of the cyclical nature of our businesses. Geologists are the first to be hired and the first to be fired.” He said young geologists must have a real desire to be in exploration, especially when they see that when exploration slows, they face layoffs.

Mining claimsOne statistic that shows more interest in exploration is the number of mining claims.

Nevada Division of Minerals Administrator Michael Visher said the latest information from the U.S. Bureau of Land Management showed as of Oct. 6 that there were 199,862 active mining claims in Nevada, up 2% over the same time last year.

To encourage exploration and mining, Nevada has a reclamation bond pool, and the minerals division handles the pool established with the BLM to provide notice-level bonds for smaller exploration projects and bonds for plan-level projects.

Regulations updated at the end of 2019 reduced the annual premium on notice-level bonds from 3% to 2% and for plan-level bonds, the premium amount refunded upon exit increases from zero to up to 75%, Visher’s slides for the exploration summit show.

Brian Mikelson of Envirotech Drilling LLC said the drilling company is “super busy right now. Things have really picked up. We’re running at 100% capacity. We’re optimistic we will have a good 2020-21.”

He said there are a lot of factors leading to the uptick in exploration, including the higher gold prices and reserves and resources becoming depleted.

Although exploration is up in a time of good gold prices, Mikelson pointed out that the permitting process for major drill programs and mining projects takes time, and sometimes just the planning for a drill project takes years “before everything comes together.”

Salt Lake City-based Boart Longyear said there is increased exploration in Nevada. Boart Longyear’s marketing coordinator, Nicole Maier, provided a statement:

“Higher commodities prices, including gold, have contributed to an increase in exploration in Nevada. In addition, existing operating mines are now playing ‘catch-up’ with previously delayed programs due to COVID.”

Much of the exploration projects are currently in areas of Nevada outside the well-known and well-mined Carlin, Cortez and Battle Mountain trends.

Major Drilling is seeing exploration increase in Nevada compared to 2019 “due to junior companies raising more money,” said Nguygen Do, general manager for Major in North America. He attributed the success in raising capital to higher gold prices.

Kevin Slemko, corporate business development manager for Major, said reverse circulation drilling has picked up in the U.S. because RC drilling “gets results quicker and is cheaper than core drilling, and a lot of that is that gold projects are picking up.”

Exploring NevadaShaddrick estimated there are about six companies exploring for gold in southern Nevada.

Among them is Coeur Mining Inc., which has the Sterling and Crown exploration project northeast of the historic Sterling Mine near Beatty. The company reported that during the third quarter of this year there were up to three rigs on site, and Coeur stated that there would be more drilling for the remainder of the year.

Premier Gold Mines Ltd.’s lead exploration geologist, Tyler Hill, said “there is certainly more interest in exploration in Nevada. There has definitely been a shift in exploration strategies. They are looking at districts that had been overlooked.”

Premier’s senior vice president for operations, Brent Kristof, said that with higher gold prices companies are looking at properties and possible mergers.

Premier Gold is an exploration company and a mining company, owning 40% of the South Arturo Mine operated by Nevada Gold Mines, which owns the remaining 60%, and owning 100% of the Mercedes Mine in Mexico.

The Canadian company’s exploration projects in Nevada include McCoy-Cove south of Battle Mountain that is advancing toward an underground mine, the earlier-stage Baby Doe west of Tonopah near the California border, and Rodeo Creek on the Carlin trend adjacent to South Arturo.

Premier also is in the process of acquiring the Getchell Project from Waterton Global. The project site includes the old Pinson Mine.

NV Gold is busy in Nevada with two exploration projects, the Slumber in Humboldt County and Sandy in Lyon County. The company has 15 projects in the state but picks two or three each year to drill and “cross our fingers,” Bell said. “We don’t waste shareholder dollars.”

The Vancouver-based company began drilling at its 100%-owned Sandy Project in late October and planned to drill at Slumber in November. NV Gold believes Slumber turns into a Sleeper, the high-grade gold mine that operated in Humboldt County but closed in the early 1990s.

NV Gold staked 400 acres of Sandy on the same day that Eclipse Gold “staked the entire valley,” and now “it is a nice place to be,” Bell said. NV Gold had only spent about $40,000 to get to the point of drilling while Eclipse raised $20 million, so “we’re drilling and they’re drilling.”

Sandy is now surrounded by the Eclipse’s Hercules Gold Project.

Major Drilling is continuing drilling for Nevada Gold Mines at Cortez, Goldstrike and Turquoise Ridge. The company also is drilling at the Bald Mountain Mine operated by Kinross Gold Corp. and working on a couple of projects near Tonopah, Do said.

Major has roughly 350 employees in the United States, with U.S. offices in Salt Lake City and headquarters in New Brunswick, Canada.

Mikelson said Envirotech is doing exploration drilling at Starvation Canyon for Jerritt Canyon Gold north of Elko, Ridgeline Minerals’s Swift Project south of Battle Mountain, Western Exploration outside Mountain City in Elko County and Eclipse’s Hercules Project south of Dayton and is starting a drill project for Coeur Mining at the Sterling Mine.

Drillers hard

to findHe said Envirotech was running six drill rigs in October with roughly 45 employees, and it is difficult to find and keep good workers because it is “demanding and physical work.” The company needs people comfortable around equipment, working in the dark and working on steep hillsides. “The pay is very good.”

Boart Longyear stated that “it has always been difficult finding qualified people whether in times of increasing or decreasing demand for our services,” which include surface and underground core drilling, production drilling, reverse circulation, sonic, rotary and directional drilling, as well as water drilling and pump services.

“It’s still challenging to get people to work for us,” Do said.

Major also is still having problems due to COVID-19, according to Slemko, who said Nevada “hasn’t been too bad” but in other places, especially Alaska, employers are asking employees to work longer turnarounds and isolate.

Visher said at the Nevada Mineral Exploration Coalition’s virtual summit in October that after the industry’s recovery from the pandemic, there will eventually be renewed demand for exploration success.

Rick Rule, president and CEO of Sprott US Holdings Inc., also spoke at the exploration summit, and he said Sprott invests in Nevada, where there “probably is no deeper pool of mining-skilled people” and there is good infrastructure. “It is still one of the few places that value mining.”

He said the Carlin Trend model led to an exploration boom in Nevada that is now 40 years old, and his “current fondness for Nevada is my history with Nevada.” He said he first started looking at Nevada in 1977, and he was not “particularly successful” at first but that changed in the 1980s, when he was an initial shareholder with Franco-Nevada.

Rule also told the summit listeners that Nevada has a massive amount of historical exploration data that can be analyzed and can take advantage of new exploration technologies in the search for gold.

Exploration covers more than gold. Exploration and proposed development of Thacker Pass for Lithium Americas is under way in northern Humboldt County, where subsidiary Nevada Lithium is working with the BLM to permit a mine, and ioneer Ltd. has the Rhyolite Ridge lithium-boron project in Esmeralda County. Also, American Lithium Corp. is exploring at its TLC Project near Tonopah.

Lithium exploration has brought people to the Tonopah area, Shaddrick said.

Another COVID-19 impactShaddrick pointed to another negative impact of the pandemic on exploration companies. The mining and exploration events that allow those in the business to network, talk about their projects, recruit workers and raise capital in person were put on hold or held virtually because of COVID-19.

For example, the American Exploration & Mining Association that normally holds a large gathering in Sparks or Spokane each year scheduled a virtual convention this year on Nov. 30 through Dec. 4, and the Prospectors & Developers Association of Canada’s convention that normal attracts people from around the world is going virtual this year March 7-10.

In Nevada, MINExpo International that was to be held in September of this year in Las Vegas has been postponed to Sept. 13-15, 2021, and the Elko Mining Expo postponed its annual June event until next year. The Nevada Mining Association cancelled its 2020 conference, too.

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Barrick Gold Corp. on Thursday announced fourth-quarter production of 1.21 million ounces of gold, a drop from 1.44 million ounces in the 2019 quarter for all operations, and the company reported 546,000 ounces of gold production in the quarter for its share of Nevada Gold Mines.

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