Summary
-
Blockbuster drill results reported on October 21st including 0.119 ounces per ton, "opt" equivalent to 4.07 grams per tonne "got," over 58.1 feet. Best drill results in Pershing's history.
-
These results coming just 3 weeks after another set of high-grade, wide intercept drill results were announced on September 15th.
-
Pershing receives $10 million non-brokered strategic investment from Levon Resources Ltd. Pershing Gold remains debt free and poised for production in 2015.
Pershing Gold Corporation (OBB: PGLC, Stock Forum) has released 4 very meaningful press releases in the past 5 weeks, two of which depictblockbuster, high grade and wide interval drill results. One describes a $10 million strategic investment from Levon Resources Ltd. (TSX: LVN, Stock Forum) leaving Pershing debt free and very close to fully-funded to production. Another press release discusses key permitting developments at the Relief Canyon Mine. All roads point to a prudent and well managed path to the start of mining next year. Nevada is a tremendous place to do business. Sometimes permitting takes longer than hoped for, but following proper channels, the permits typically are granted. Having said that, the highlights of the past 4 press releases, culminating with today's (October 21st) press release, has been the exciting and better than expected drill results. This news is worth updating the market on.
Blockbuster drill results reported
On October 21, 2014, Pershing Gold announced spectacular results from continued step-out core drilling at its Relief Canyon mine. This set of drill holes was the best in the company's history and some of the best holes by any junior company in Nevada this year. Pershing continues to expand its new high grade gold zones in the North Target area. It should be understood that step-out drilling is far from a no-brainer, it's still an exploration exercise prone to disappointments. Pershing's team seems to have found a formula that works. It would be criminal for me to write another word without reporting the main highlight-- hole RC14-203 reported 0.119 ounces per ton ("opt") gold ("Au")/4.070 grams per ton ("gpt") Au over 58.1 feet. According to the press release:
"The 2014 drilling program, in progress, continues to extend intervals of high grade gold mineralization in the new high grade gold zone in the North Target area at the Relief Canyon Mine previously announced on September 15, 2014. Pershing Gold plans to continue systematic step out drilling along these higher grade trends for the remainder of the year. The drill holes include wide intervals of gold mineralization with grades from two to five times the average grade of the March 31, 2014 resource estimate for the Relief Canyon deposit. In addition to expanding the higher grade zone, the core program is also instrumental in gaining a better understanding of the controls on gold and silver mineralization at Relief Canyon."
Two to five times the average grade of previous documented results
Think about that for a moment, "two to five times" the average grade of the most recent technical report. Wide intercepts and high grades equal a lot more gold in the next NI 43-101 resource report expected in 1q 2015. Chairman and CEO Stephen Alfers had this to say:
"Our continued success in expanding this high-grade zone in the Relief Canyon deposit is very exciting," commented Stephen D. Alfers, Pershing Gold's Chairman and CEO. "Specifically, holes RC14-211 and RC14-211A offset the wide intercepts in holes RC14-193 and RC14-195 previously reported. In addition, holes RC14-205 and RC14-207 offset previously reported holes RC14-177 and RC-179. These two zones are more than 600 feet apart, and additional drilling is planned later this year to test the continuity of these zones."
Pershing Gold receives strategic investment from Levon Resources Ltd.
In other important news, On October 20th, Pershing announced it had raised additional equity capital from a strategic investment of $10 million in cash from Levon Resources Ltd. Following this non-brokered placement without warrants, Levon will own about 9.9% of Pershing's outstanding shares. Net proceeds totaled $9.9 million. This leaves Pershing very close to fully funded through to initial production next year. Recall that Cantor Fitzgerald estimated less than $20 million of cap-ex to reach production in its research report on Pershing. It will be interesting to see what Cantor and H.C. Wainright have to say about these drill results which were clearly above everyone's expectations. It's amazing that all of the drilling in past years has been done on less than 5% of the total 25,000 acres of controlled property.
On October 6, 2014 Pershing Gold announced that state and federal regulatory authorities have approved the final permits needed to start mining at Pershing Gold's Relief Canyon Mine in Pershing County, within the existing open-pit mine. These agencies had already issued permits for the heap leach mineral processing facilities at Relief Canyon. According to Mr. Alfers:
"This is a landmark event in the history of the Relief Canyon Mine, for the first time in nearly 25 years, the Relief Canyon Mine has all of the permits needed to begin mining the deposit and to operate the heap leach gold processing facilities. Now that we have all of the permits in place, we are in an ideal position to optimize our mine plan and fine-tune our processing facilities," commented Alfers. "Securing these permits puts us in the driver's seat in deciding when to start the mine and enables us to make an informed decision based on a thorough review of all of the pertinent technical and economic parameters."
The fourth key announcement from September 15th, referenced above, was the first set of high-grade drill holes, also with wide intercepts. These results were a surprise to the market as well. Some might have believed these results were one-off, not to be readily repeated, especially not so soon after September 15th. Pershing proved detractors wrong with the newest set of drill results. To reiterate, not only are the latest drill results the best in Pershing's history, but also some of the best drill results in Nevada this year. To be clear, the results from September 15th were quite strong as well. All of Pershing's drill results can be found on the company's website.
Conclusion
A year ago, Pershing was a solid heap leach project with a decent grade compared to nearby peers. It had strong financial continual backing by investors like Barry Honig and Dr. Philip Frost. It had fully built and paid for heap leach facilities that were recently refurbished by the prior owner. It had substantial infrastructure in place as a past producing mine. As of October 21, 2014 there's no doubt that Pershing ALSO has a high grade zone and a management team that knows where to drill.
Therefore, in my opinion, the chances of this company finding more Relief Canyons on its 25,000 acres or largely virgin, but known mineralized property has just gone up. Therefore, the price of poker has just gone up. Peers and mid-tier players in Nevada will be looking at these high-grade, wide intercept drill results for October 21st and September 15th in a new light. Companies like Newmont Mining (NYSE: NEM, Stock Forum), Franco-Nevada (NYSE: FNV, Stock Forum), Coeur Mining (NYSE: CDE, Stock Forum) and Barrick Gold (NYSE: ABX, Stock Forum). It's nice to have a near-production, nearly fully funded, solid heap leach operation and an expert management team. It's entirely different to have that asset as well as tremendous blue-sky potential from a second set of spectacular drill results. All of this on less than 5% of the company's property.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
Original article posted on Seeking Alpha.