Aiming for a competitive advantage, Golden Predator Corp. (TSX: T.GPD, Stock Forum) recently caused a ruckus in the Yukon by spending $140,000 to snap up all of the available claim tags.
“We wanted to stock up so that we don’t run short of things,’’ said Golden Predator chief executive officer Bill Sheriff, during an interview in Vancouver. The decision to purchase roughly 70,000 claim tags in January could wind up saving the company a lot of money in exploration costs, he said.
Sheriff explained that this is because the Yukon is in the midst of a major staking rush that is stretching the available resources to the limit, and recently prompted the government to change the rules to meet the needs of the roughly 140 companies involved.
The biggest mineral property staking rush since the Klondike days of the 1890s, the move to grab prospective ground is driven by new hard rock gold discoveries in the White Gold district 90 kilometers south of Dawson City and in the Selwyn Basin, 55 kilometres northeast of Keno City.
Faced with a temporary shortage of claim tags, the Yukon government was forced to change the rules to allow companies to stake prospective ground without the use of tags.
In doing so, it raised the cost of staking for companies that didn’t already have claim tags in their possession.
This is because staking in the Yukon is usually done with expensive helicopter support, at a cost of roughly $1,300 an hour.
As a result of the new rules, prospectors needed to make two trips – one to attach a number to staking posts and a second to attach the claim tag -- in order to secure exploration rights to available properties.
“By virtue of us having made that $140,000 investment, our cost of staking claims is by definition less than almost anyone else’s,’’ said Sheriff.
A 52-year-old geologist and former stockbroker from Dallas, Tex., Sheriff is at the head of an exploration group that has staked about 18,000 claims in the Yukon (roughly 10% of the available claims), making it one of the leaders in the rush to find new hard rock gold discoveries in the Yukon.
The other key players include Atac Resources Ltd. (TSX: V.ATC, Stock Forum), Kaminak Gold Corp. (TSX: V.KAM, Stock Forum), Kinross Gold Corp. (TSX: T.K, Stock Forum), and (NYSE: KGC, Stock Forum), and Ryan Gold Corp. (TSX: V.RYG, Stock Forum).
Having previously worked in Nevada where Golden Predator has royalty interests in a number of gold properties, Sheriff says he understands very well the need to be aggressive.
“If you aren’t in the lead in the pack, the view doesn’t ever change,’’ he said.
“Time and time again we were rewarded for being aggressive,’’ said Sheriff, who was Chairman of Energy Metals Corp. when it was sold to Uranium One Inc. (TSX: T.UUU, Stock Forum) for $1.6 billion in August 2007.
(At the time of the transaction, Energy Metals had uranium assets in the United States, including a processing plant in Texas).
“We are in a new area where there is a real premium attached to getting the best properties the quickest. I think we excel at that, and that is what we have done at Golden Predator.”
Sheriff said his company recently scored a major coup by recruiting Mike Burke, the former head of the Yukon Geological Survey’s Mineral Services division. “Basically, he is a walking encyclopedia of the Yukon’s geology and minerals business,” Sheriff said. He is now the junior’s chief geologist.
Golden Predator has budgeted about $16 million for exploration in the Yukon this year. That money will be split between the company’s Brewery Creek, Clear Creek, Grew Creek, and Harlan properties.
The company’s goal for 2011 is to establish NI 43-101 resource estimates for Brewery Creek, Clear Creek and Grew Creek.
On Tuesday (April 26th, 2011), Golden Predator shares surged to a 52-week high of $1.38 after the company tabled the final assay results from winter drilling on the Brewery Creek project which covers 165 square kilometres and is located east of Dawson City.
That was up from the previous day’s close of $1.05.
After closing at $1.24 on Wednesday, Golden Predator has a market cap of $86 million, based on 69 million shares outstanding. The stock trades in a 52-week range of $1.38 and 4 cents.
Brewery Creek is the site of a former heap leach gold mine, which operated from 1996 to 2002. Recent drilling on the property, which coughed up a 74-metre intersection, averaging 7.08 grams gold per tonne, was designed to expand the recently discovered Bohemian zone.
Backed by a team of 24 geologists, Sherriff believes Golden Predator’s arrival in the Yukon coincides with the start of a gold rush that could continue for many years to come.
It’s a view that is based on the hope that ongoing exploration will uncover the bedrock source of placer gold operations which have been a feature of the Yukon mining industry since the end of the 19th century.
“The likely developments over the next three decades in the Yukon are very similar to what we saw in the first 25 years in Nevada. “The reason I think it will last longer in the Yukon is because things will be a bit slower to develop because of the [lack of] infrastructure.’’
Mineral exploration firms, he said, will face some unique challenges, mainly because of the lack of a power grid, the small population and the absence of urban centres. “It will be a constant struggle to keep up with the demands of the mining industry,’’ he said.
Still, with $23 million in the bank and the ability to sell non-core assets if necessary, Sheriff says Golden Predator sees no need to raise more money in the near future. The junior also has a 20% interest in Silver Predator Corp. (TSX: T.SPD, Stock Forum), which too is engaged in exploration in the Yukon and Nevada.
On Wednesday, Silver Predator shares closed at $1.10, giving the junior a market cap of $31 million, based on 28.2 million shares outstanding. The stock trades in a 52-week range of $1.34 and 21.5 cents.