ELKO, Nevada - This gateway city to the Carlin Gold Trend is, if not booming, then teeming with tobacco-spitting geologists and engineers.
Hotels are booked thick. Elko County’s jobless rate is the lowest in the state of Nevada at 7.2 percent. Getting exploratory drill rigs to properties – and assay results back from local labs -- is just as nail-biting slow as it is in gold-rush Colombia, in Ghana, in Ontario and in The Yukon.
“We’re in the best jurisdiction in the world, bar none,” geologist and massive Nevada claim-staker Carl Pescio tells me. “That does not guarantee success, as most geologists are idiots, me included. But to be in the richest gold jurisdiction in the world … and the silver, better than South Africa hands down, well, this is good right now.”
Carl Pescio is the largest individual shareholder of Allied-Nevada Gold Corp. (TSX: T.ANV, Stock Forum) and (AMEX: ANV, Stock Forum), whose Hycroft Project and its 12.5 million gold-equivalent ounces, measured and indicated, is turning heads. Carl and his wife, Janet, became part of the Allied-Nevada family after selling the 4-year-old company about 50 Nevada properties.
This article is not about Allied-Nevada, whose market worth of $2.4 billion almost certainly will double, and double again, as long as exploratory drilling expands the gold and silver resource of its Hycroft lode.
No, this article is about Nevada and the prospect company that Carl Pescio and other state-bred geologists and property chasers say could lock Nevada into a century or more of club membership among the world’s top producing gold (and silver) jurisdictions.
The Rain in (Not Spain) Elko
The so-called Silver State produces 80 percent of all USA gold. The four geologic domes that account for that output are far removed from casinos, golf courses, nursing homes and bankrupt housing subdivisions built on real estate speculation. One of those domes, or windows, is at the southern end of the Carlin Trend one hour’s easy drive west of Elko – at the heart of a 21-square mile tract of land owned and operated by a company that is now part of Carl Pescio’s investment portfolio.
In the past four months, I have shifted my December attention to Nevada from grass-roots Colombia, emerging Panama and gold-dusted Ghana. Even the earliest stage projects, such as La Quinta Resources’ Easter Project not far from Caliente, Nevada, are worthy of a look-see at current metals prices.
Still, for every Nevada project I visit with high hopes, I turn down two or more. The one that draws me here today is Gold Standard VenturesCorp’s (TSX: V.GV, Stock Forum) Railroad Project, which is surrounded by the mammoth open pits and mines of what I call The Legends: Newmont Mining Corp.’s (NYSE: NEM, Stock Forum) Rain Mine, a Newmont super pit the size of a small town, Barrick’ Gold Corp.’s (TSX: T.ABX, Stock Forum) and (NYSE: ABX, Stock Forum) Goldstrike Complex… plus Gold Quarry, Tusk and others across the comparable geology of Nevada’s Rain District.
Carl Pescio, 58 or so, is here because 1) he is born and bred Nevada mining, including the requisite degree from University of Nevada at Reno’s Mackay School of Mines; 2)his Pescio Exploration is based in Elko; 3) he is in thick as gravity with Gold Standard’s exploration chief, a mid-60s fellow named David Mathewson.
Mr. Mathewson (photo above on site) is the erudite pick-axer and theorist who developed the Rain District model of targeting and nailing discovery holes for Newmont. He headed Newmont’s Nevada exploration team.
“We think, and I say this will all humility, that we are getting close to the major structure on the property,” Mr. Mathewson tells me as we first scan core samples at Elko headquarters with Carl Pescio and the 32-year-old CEO of Gold Standard, Vancouver financier Jonathan Adwe.
Why is that, Dave? “Well, we’re taking big step outs, 200 meters, 300 meters on 16 holes sunk this year (reverse circulation and diamond drill). So we are seeing collapsed breccias. The character of the alterations we are seeing in the rock is very much like the Rain model, and I can say, like at Rain, when you hit one of these in a discovery hole, you are in the game and just keep stepping out further.”
Gold Standard has material from three fresh holes waiting at the lab on the same street as its headquarters. ALS Chemex could send those assay results back as soon as next week. Says Mr. Adwe, “There are another three holes I believe waiting to be sent to the lab. We hope to put these out in two releases, one this month and one we hope next month (January).”
As for the Railroad Property, it is vast, some 16,000 acres adjoining the Rain District. I like to think that each tour of a property brings me some knowledge-morsel I lacked. To wit: when ordering T-bone steak at the Star Hotel in Elko, order it rare with plenty of fresh horseradish. This week, to wit: I learned the Carlin Trend once was called the Railroad-Pinon Trend.
At the property, Mr. Mathewson and his team took us across bubby, jagged and massive outcroppings of mineralization. The gravity, or densities, measured on the property are almost three times those of the Rain District (approximately 6 million ounces proven and probable gold ounces).
Carl Pescio reminds me that nearly all of this area was in private hands for 35 years. The legacy exploration drilling on Gold Standard’s property here tallies about 360 holes, but as Mr. Mathewson and another Gold Standard geologist, Warren Thompson, tell me, most were shallow reverse-circulation holes that never had gravity surveys.
Mr. Adwe is not raising money right now as Gold Standard has more than several million Canadian dollars in its treasury. He’s already spent $2 million of company cash on the current drilling program and is slotting $3.5 million for 2011.
Mr. Mathewson, fingering some of the rock on site, says, “Look, these targets are small, like at Goldstrike or Cortez Hills. Maybe 400 feet by 800 feet … but very high grade, 3 grams gold (per ton), collapsed breccias … but you have to be, you just have to be in the feeder zones and nail it. The Sleeper Vein (John D. Wood in Nevada’s Humboldt County) in ’86 was nothing until the 37th drill hole. It was 440 feet long and 30 feet wide and averaged something like eight ounces gold. For a time, those were the most profitable ounces on the planet.”
Finally, Carl Pescio, whose role at Gold Standard is that of an investor with a 6 per cent stake and not a consultant. (He sits on the Allied-Nevada board and predicts that Hycroft for Allied-Nevada will become Nevada’s largest gold and silver mine and “the largest silver discovery in Nevada.”)
Says Carl, a slim and fit runner with the weathered hands of a geologist, closes with this gold parable as we retire to the Stray Dog Pub downtown: “Barrick picked up Goldstrike in the early ‘80s with what, 1 million ounces? Supposedly it paid too much. Even Newmont next door was not convinced. Yet that one decision back then made that company; something along the order of 100 million ounces over the life of the mine. They looked. They saw just a few deep holes and they went to work. That’s what Dave (Mathewson) is doing here with Gold Standard.”
Gold Standard shares in Canada are 63 cents. I own none of the companies cited in this article. (Second photo: Carl Pescio left, Warren Thompson, in core shed – Thom Calandra all photos)
NEVADA COVERAGE: For the December round-up on these on-site visits – Comstock Mining Inc. (OTC:BB, LODE, Stock Forum), La Quinta Resources Corp. (TSX: V.LAQ, Stock Forum), and of great interest to those seeking multi-jurisdictional gambits, last week’s Golden Phoenix MineralsInc. at Mineral Ridge (OTC:BB: GPXM, Stock Forum) – please see www.tickertrax.com and for those non-subscribers, free coverage via Stockhouse.
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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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