Precious Metals Exploration
Positive signs in a challenging environment
Nevada’s geological trends, home to past-producing mines and present giants responsible for millions of ounces of precious metals production, make it an ideal jurisdiction for explorers and investors to chase for high profits. But even in arguably the best mining jurisdiction for exploration activities worldwide, juniors face challenges linked to attracting investment that present hurdles to the de-risking of their assets.
Nevada continues to retain all the ingredients for exploration projects to succeed. Besides its second-to-none geological endowment, the jurisdiction is politically, legally and fiscally stable and Nevada’s policies are strongly supportive of mining. The legal and regulatory conditions guaranteed to juniors through the federal Mining Act of 1872 can only be changed by Congress. Indeed, as put by Antonio Canton, president & CEO at Gold Springs Resource: “Nevada is the best mining jurisdiction in the world for exploration”.
This statement has been echoed by a majority of his exploration peers. “In Nevada, there is a very clear path to developing an asset - it is very regimented, we know exactly what we need to do from a regulatory point of view”, expanded Westward Gold’s president, CEO and director Colin Moore.
Unmatched trends
Nevada’s world-renowned Carlin trend remains a popular spot amongst explorers. Having produced over 80 million oz Au since the 1960s, Nevada’s Carling-Type gold deposits still contain over 255 million oz Au, making it one of only six gold belts this size across the world. Representing the bulk of Nevada’s gold production, Carlin-type gold deposits contain “invisible” or microscopic particles of gold that are deposited within pyrite in sedimentary rocks. As the lion's share of this trend is already being exploited by majors, getting land on the trend during a strong market is often difficult for explorers.
In 2022, Westward Gold saw an opportunity to get a foothold in the Carlin trend and seized it by growing its land package at the North Carlin project. Colin Moore explained the decision: “In this current market, we have been conscientious when it comes to our treasury as nobody wants to have to dilute at the current share prices. The North Carlin project is in a great area surrounded by majors. We are taking a longer-term approach to this asset and are looking at creative ways to advance the project, and this could be a JV structure, an earn-in structure, or an equity commitment - a partner with deep pockets who is not afraid to go after higher-risk exploration.”
In the Walker Lane trend’s Tonopah district – the “Queen of silver camps” - Summa Silver hopes to build on high-grade mineralization intersected at the Hughes project in June 2022. The trend is endowed with around 80 million oz Au and 700 million oz Ag and produces epithermal systems that are easier to understand compared with other trends. In 2022, drilling at the Murray target returned 535 g/t Ag equivalent on over 4.6 m, and Summa Silver intends to analyze all open zones at the project with the perspective of pushing an N43-101 at Hughes in 2023.
"Over time, as the US dollar rolls over and starts to trade back to levels that are more sustainable in the long term, it will create the next spark in gold that takes it to levels much higher than where it is today."
Brandon Bonifacio, CEO, NevGold Corp.
Challenges in maintaining momentum
2021 saw escalating interest from politicians, investors and the public in the energy transition and the mining community’s role became better understood. The exploration industry’s response was a 35% year-on-year budget increase between 2020 and 2021, which led to a robust exploration environment in Nevada, a boom in junior IPOs (five in 2021), and more mining claims in the Silver State.
A promising start to 2022 laid the hopes for juniors’ ability to maintain the momentum gathered in 2021, but how this year has unfolded has drastically affected those dynamics. S&P predicts a decrease of between 10-20% in exploration budgets in 2023. Several Nevada-based juniors, however, plan to start drilling campaigns in Q1 2023 and will likely have to tap into the market for added funding.
The surge in exploration activity and holes drilled in 2021 and early 2022 created a backlog among assay and core drilling results from Nevada’s metallurgy labs, pushing back deadlines for PEA releases, among others. Gold Spring Resources reached the first million oz Au M&I resources in 2022 at its Gold Springs project. The firm is now awaiting lab results before preparing the 2023-2024 drilling plan, with the objective to reach 3 million oz Au and advance on the permitting front in the next 24 months.
Ridgeline Minerals’ four-property portfolio makes it one of the largest landholders in the state. Having completed an IPO in 2020, the firm understood that the presence of under-graveled deposits and recent discoveries such as NGM’s Goldrush project made exploration at the Battle Mountain – Eureka Trend attractive. Battle Mountain is located downtrend of Ridgeline Minerals’ Swift project, a Carlin-type gold deposit. The firm entered a US$30 million earn-in agreement with NGM in 2021, with the giant committed to funding the drilling campaign. The results of the ongoing campaign are expected early 2023. Despite this milestone, president, CEO and director Chad Peters recognized access to finance mechanisms as a hurdle to funding for Nevada-based juniors. He explained: “We do not have the same access to financing mechanisms as some of our Canadian peers. Through flowthrough financing, Canadian companies can raise a premium to their trading valuation to continue doing exploration work, whereas we are having to stick to hard investor dollars with no tax incentives offered in Nevada.”
Breaking out from the pack or joining forces
The current conditions that favor late-stage projects and greenfield expansions should not hide the societal need for grassroots exploration. In that context, few regions have witnessed more drill turning and projects emerging than Nevada. The junior stage in Nevada has seen several alleys for players to demark themselves: partnering with majors, M&As, and technologies investments.
The need for consolidation through JVs, earn-ins, or M&As among the junior marketplace in Nevada is obvious. At least four material acquisitions took place in Nevada in 2022: Orla Mining acquired Gold Standard Ventures; Centerra Gold acquired the Gemfield project from Waterton Nevada Splitter; Calibre Mining acquired Fiore Gold, and AngloGold Ashanti acquired Corvus Gold. As the competition for funding is fierce, Derek Macpherson, president & CEO of Gold79, sees M&A activity as beneficial for actors in the state to unlock its true geological potential: “I think we need to see M&As as there are about 50 of us there. There needs to be consolidation as it is difficult to fund all these firms from the same pool of capital in public markets. This will lead to higher quality assets being explored and better attribution of capital.”
Convincing majors to take a chance on explorers’ projects remained key in 2022. Gold79 unlocked synergies with Kinross at Jefferson Canyon. In October 2022, both firms signed an exploration and option agreement whereby Kinross is to invest US$200,000 in Gold79 and commit to spending US$600,000 at Jefferson Canyon.
Attracting majors requires risk mitigation. After having gone public in 2021, Millennial Precious Metals aims to publish a PEA at the firm’s Wildcat and Mountain View flagship projects, which host a combined 1.2 million oz inferred oxide Au. In 2022, the firm completed a mapping and sampling program that identified high-priority targets that president & CEO Jason Kosec intends to drill in 2023 as the second part of its de-risking strategy: “One of the most important things in the exploration business is risk mitigation. This program was designed to remove show-stoppers and show the potential scale of the project.”
As conventional exploration becomes decreasingly scalable, and with the low-hanging fruits having been mined in Nevada, using new technologies to uncover targets and action historic data is likely to become a consolidating trend in 2023. But not at any cost. In the state, AI has not yet been proven to the point of being universally accepted for valuations, but it has shown to be useful in generating targets for drilling. Summa Silver was the first group to 3D-model the Tonopah district. NV Gold Corp leveraged tech firm Goldspot’s AI tools that help enhance geological decision-making to generate 31 additional targets at its properties in Nevada. NV Gold CEO John Seaberg explained: “The AI technology prioritized these targets based on geological data. We have a mountain of data that took a long time to digitize, and now it is in a state where we can action it rather than sitting in a warehouse.”
With dozens of drilling campaigns scheduled in Nevada for 2023, companies with substantial cash in the bank will be in a pole position in a market where money flows in droplets. NevGold Corp raised C$4.1 million in financing in December 2022, allowing the firm to mobilize drill rigs as early as Q1 2023 at the advanced stage Limousine Butte. Hoping to push the project towards the 1-1.5 million-ounce area, CEO Brandon Bonifacio shared: “We will likely go into a phase two program of approximately 6,000 to 8,000 meters, and then subsequently put out a resource estimate on the project in mid-2023.”
Overall, exploration firms in Nevada are leveraging an expertly crafted mix of “boots-on-the-ground” and new technology approaches to answer societal needs for more precious metals.
Image courtesy of WRE