Pershing Gold (TSX: PGLC; NASDAQ: PGLC) is pursuing step-out and infill drilling at its Relief Canyon gold-silver project in Pershing County, 150 km northeast of Reno, Nev., while raising capital to finish the project’s construction.
The company has a 101 sq. km land package in Nevada’s Pershing gold-silver trend along the Humbolt mountain range with what it calls numerous exploration opportunities for satellite deposits and discoveries. While it has drilled some of these targets, the objective of the US$2-million, 15,000-metre drill program is to expand the deposit at Relief Canyon. It will also apply for pit-expansion permits.
“We want to get ahead of the curve with the permit to make for a smooth transition down the road to the larger operation,” Pershing president and CEO Stephen Alfers says in a telephone interview with The Northern Miner.
Pershing is trying to complete the baseline work for expansion, even though it says it won’t need to expand for another 2.5 years.
Processing equipment on Pershing Gold’s Relief Canyon property. Credit: Pershing Gold.
Relief Canyon has 30.5 million proven and probable tonnes grading 0.7 gram gold for 634,900 oz. gold and 14.4 million proven and probable tonnes grading 3.87 grams silver for 1,632,600 oz. silver. It also has 41.8 million measured and indicated tonnes grading 0.65 gram gold for 789,000 oz. gold and 17.5 million measured and indicated tonnes grading 4 grams silver for 2 million oz. silver. The deposit is open for expansion to the south, east and west, and at depth.
This year’s first-phase program will continue exploring a step-out to the west that was first drilled last year. Part of the program will involve step-out and infill drilling, as well as pushing its boundary as far as 300 metres.
While exploring that western step-out, Pershing found what it calls “substantially higher grades” than the average 0.7 gram gold found in the Relief Canyon reserve.
“We suspected this would be the outcome,” Alfers says.
He says that former Relief Canyon owner Pegasus Gold only mined the property for two to three years, focusing on the higher-grade outcrops. As a result, the average grade of Pegasus’ project was higher than the average grade of Pershing’s project. But neither company had looked very far underground.
Equipment and facilities at Pershing Gold’s Relief Canyon project. Credit: Pershing Gold.
Based on the latest drill results, Alfers says that if Relief Canyon goes to production, Pershing could as much as double its average grade midway through the mine’s life by adding ounces from outside the main zone.
Initial drill results from the west step-out area include: 4 metres at 21.78 grams gold from 222 metres downhole, 10 metres at 4.31 grams gold from 224 metres downhole, and 16 metres at 1.31 grams gold from 157 metres downhole.
“But maybe the most exciting element of this drill program,” he says, “is that we’re drilling into the main zone itself. We’ve put some deeper holes in there and it appears mineralization will continue at depth.”
So far the company has dropped two new holes into the main zone at depths between 240 and 300 metres. It will wait for results from these holes before it proceeds.
Pershing acquired Relief Canyon in 2011 for US$20 million and has been busy over the past year. It finished a prefeasibility study in early June 2017. Since then it released a reserve estimate, attained mine permitting and launched a full feasibility study that it expects by May 2018. It’s also thinking about the next phase of the project.
Relief Canyon came equipped with three pits and a fully built heap-leach processing facility. The company still wants to build five new cells for heap-leach pads; build a new waste dump; reconfigure its layout so that the crushing operation and agglomerating operation will be closer together, which lowers the haul distance; and equip its refinery with mercury abatement equipment.
To get that done the company will need to raise US$24 million. Alfers says more than half of this is for the heap-leach pads and a conveyor system.
According to last year’s study, Pershing could produce 93,900 oz. gold a year over 5.6 years at Relief Canyon. The project would have all-in sustaining costs of US$802 per oz. gold and a sustaining capital expense of US$22.8 million. The project would feature an after-tax net present value of US$126 million at a 5% discount rate and an 85% after-tax internal rate of return.
“We know we’ve got a nice project with really strong economics,” Alfers says. “But we also know that it’s important for us to be thinking ahead and to do what we can to expand the reserve and extend the mine life.”
Shares of Pershing are valued at $2.69 within a 52-week range of $2.32 to $4.85. The company has an $88-million market capitalization.
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