LAS VEGAS, Nevada – The Nevada word has come down: Give us another Comstock Mining, another mother lode in the desert.
A Comstock (OTC:BB: LODE, Stock Forum), having quadrupled in about 12 weeks, comes to us occasionally … if that. John Winfield and Corrado De Gasperis’s tiny prospector caught the wind of a rising silver price and benefited from a steady, years-long strategy of consolidating one of North America’s thickest silver belts.
My visit to the property in late August might have helped. That is, helped our Ticker Trax subscribers. Comstock’s over-the-counter-traded USA stock, thanks to clever financing and solid drilling assays, would have done fine by itself. The road show was thick with silver aficionados, Mr. Winfield tells me from Virginia City, Nevada.
Thus, at the bequest of our subscribers, I visited the desert this week in search of another low-priced lode in the making. Nevada is only 80 minutes by air (to Las Vegas) and three hours by automobile from our California home base.
From there, it was an hour by chopper, some 100 miles northeast of Vegas with a small group to see something called the Easter Project, a highly speculative La Quinta Resources (TSX: V.LAQ, Stock Forum) gold and silver property. (Photo:Geologist and La Quinta President Walter Martin, pointing at rock wall just inside a Depression era mine adit on the site; Montreal investor and communications consultant Jerome Cliche; and StreetWise Reports’ Gordon Holmes.)
This year, mostly after June 1, I have received requests from at least 10 Canadian geologists/promoters/financiers looking to show off a recent Nevada entry. Lots of concessions being sold, swapped, dealt, optioned. La Quinta, for example, years ago tried doing business in The Congo (DRC). Lots of money spent and government-fed anguish.
And now … Nevada. “Hey,” says StreetWise publisher and natural resources investor Gordon Holmes, “you don’t have to stare into a machine gun here, do you?”
Nevada P.R. pitches of late have included Boxxer Gold (TSX: V.BXX, Stock Forum), Victoria Gold (TSX: V.VIT, Stock Forum), Gold Standard Ventures (TSX: V.GV, Stock Forum), Kenai Resources (TSX: V.KAI, Stock Forum), La Quinta. Too many to name. Also, there are the companies operating elsewhere, such as South Africa’s Great Basin Gold (whose shares I long have owned) and Montana’s Timberline Resources (TSX: V.TBR , Stock Forum). Both of those last two have a footprint, or a mine-print, in Nevada.
Independence Mine
I have been able to look at one or two Nevada properties here and one or two there. General Metals (OTC:BB: GNMT, Stock Forum) and its Independence Mine just outside Battle Mountain, Nevada, was one. New President Paul Wang tells me he is confident the mine, next to a vast Newmont property, will be producing sooner … and not later. I saw the property in March … but the 220-plus million shares outstanding, even at five cents apiece, have spooked investors. See coverage.
“We are working on a fast track program whereby we expect to shorten the lead time to production of gold and silver,” Mr. Wang tells me. General Metals this week named a contractor and cited the possible 100 Caterpillar trucks needed to ore moving.
When I was there, I liked the open-pit target on the site and the strategy for an expandable heap-leach operation. I also like the Independence Mine’s access to highway; its proximity to Newmont (NEM)’s Phoenix Mine – literally a stone’s throw; and the fact the mine has a Canada-compliant resource estimate of 210,000 ounces gold and almost four million ounces silver. Oh yeah, and it is a 100 percent owned leasehold.
Lots of ifs there for sure. If it all works out on permitting … and if silver’s price keeps gaining … and if the contractor can secure the correct equipment and more cash … well, you can see how even 10,000 gold equivalent ounces a year in this era of $1,400 gold makes a $12 million market-cap company look like a steal. If the tiny General Metals team can overcome the ifs and its five-cent stock, that is.
As Ferdinand Dippenaar told me this week from London, where the Great Basin Gold (TSX: T.GBG, Stock Forum) CEO was laying over on his way home to South Africa, Nevada is a “pleasant” place to mine. GBG, thanks to its Nevada mine at Hollister and a restored mill at Esmeralda, has been able to balance the trans-Atlantic challenges of developing its Burnstone Mine in South Africa. I’ve been to both. I have owned the stock and researched GBG on behalf of Ticker Trax subscribers for almost two years.
In that time, GBG shares have about tripled. It is time to take some GBG chips off the table for personal portfolio allocation reasons. (Not that I am the size of Steve Ballmer at Microsoft!)
Great Basin Gold, now with $1.5 billion of stock market worth and another $150 million of debt, is on track to produce 260,000 gold ounces next year from both Nevada and the South Africa mines. That is up from a projected 120,000 ounces this year.
South Africa vs. Nevada
“We are at a sweet spot, and yes, Nevada is a pleasant place to do business,” says 49-year-old Mr. Dippenaar, a South Africa citizen whom I have known and interviewed since my CBS MarketWatch days in the late 1990s and into 2003. “But I think the market, the analysts especially, rerate our stock in part because they see we can do well in two quite different places. They see the fact that Burnstone (in South Africa), even three or four months late, is a large project and coming together. We just did our first gold pour there. So sure, there is the strong rand currency that makes our expenses higher there. There is this unnecessary debate about nationalization of mines. There are concerns about power supply. Then these same investors and analysts see our grades in Nevada, our increasing production and our mill (at Esmeralda) doing what it needs to do.”
During these years of following Mr. Dippenaar’s GBG, one thing has not changed. It’s still a lot easier for me to check out what is happening at bonanza-grade Hollister in Nevada (fly an hour to Reno and then connect by car or small plane) than it is to drop in at Burnstone (20 hours jet time from California, not counting layovers and Jo’burg driving time to the property.)
The last time I was at Burnstone in South Africa, I planted a tree and ate grapes and nuts. The last time I was at Hollister in Nevada, I ate fried tongue at a Basque restaurant. You take what’s on offer. (Please see ourTicker Trax & Stockhousecoverage.)
As for tiny La Quinta and its Easter Project, I can say this: President Walter Martin is convinced the low-sulphide quartz system is similar to Nevada landmark deposits Ken Snyder, Round Mountain and Sleeper.
This thing is still one of the earliest stage projects I ever have set foot on. And I have no intention of purchasing the shares. But I can see how one independent analyst in Toronto believes the stock should be three times higher. At least nine companies have worked the property since the 1980s, including the legendary Homestake Mining. There are 121 drill logs, and Mr. Martin and CEO Glen Watson even commissioned an SRK resource estimate. The Canada-compliant 43-101 verdict earlier this year was intriguing: 101,000 ounces of indicated gold and 1.1 million indicated of silver.
La Quinta still has the same hurdle that faces General Metals and other tiny operators: that darn five-cent stock and how you use it to raise a couple of million dollars for a multi-stage drill program. Says Mr. Watson, a 53-year-old Vancouver promoter and former Canadian insurance executive, “Hey, we spent $5 million in the Congo with nothing to show for it. Here? We wrote a $35,000 check in December to put a 65-35 venture in place. That feels worthwhile.”
Thom Calandra owns shares of GBG but none of the other companies in this article. Not even Comstock Mining.
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THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom was founding editor of MarketWatch, CBS MarketWatch and FT MarketWatch. He was the voice of Thom Calandra's StockWatch and The Calandra Report. Thom has been covering life-sciences and natural resources since 1988.
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