When Northern Vertex (TSXV: NEE, US-OTC: NHVCF) released its first quarter production results of 9,912 gold equivalent ounces at its wholly owned Moss gold mine in Mohave County, Arizona on April 19, it marked the beginning of the metamorphosis of a mine that had been almost forgotten.
Moss is the state’s largest precious metals mine, with total measured and indicated resources of 360,000 ounces of gold and 3.8 million ounces of silver in 20.56 million short tons grading 0.0175 gold oz. per ton and 0.2171 silver oz. per ton. Inferred resources stand at 129,000 ounces of gold and 1.37 million ounces of silver in 11.96 million tons grading 0.0108 gold oz. per ton and 0.1149 silver oz. per ton.
Permits were received last year, allowing the company to expand its exploration programs from patented claims onto surrounding unpatented claims on public lands managed by the Bureau of Land Management. Three rigs are currently turning on the property, all within the mine footprint.
Moss mine is currently producing 30,000-40,000 ounces of gold per year. While the company name hasn’t changed, the management structure recently has, along with the vision and strategy, after a merger between Eclipse Gold and Northern Vertex closed in February.
“Production from the West Pit continues to improve as we have now developed large production benches, which allows for maximum mining efficiency,” says President Mike Allen.
“The initial stripping to expose the Moss vein in the West pit is largely complete. The current infill drilling program has identified numerous areas where additional drilling could improve the resource model and ultimately the mine,” Allen said.
“We are very excited about our evolving knowledge of the mineralization of the Moss Mine and believe that there are substantial opportunities to improve and expand the operation.”
Current chairman Douglas Hurst, a former analyst at “the original” Sprott Securities in the 1990s, brings to the board a track record of success.
In the early 2000s, Hurst was one of the founders of International Royalty Corporation, one of the early publicly traded royalty companies in Canada at that time. International Royalty bought the royalty on Voisey’s Bay plus a large portfolios of royalties and was eventually acquired by Royal Gold for about US$700 million.
Hurst was part of the founders group of Newmarket Gold, which merged with Crocodile Gold, and successfully unlocked the potential of the Fosterville mine in Australia prior to being acquired by Kirkland Lake Gold in 2016 for approximately US$1 billion.
Looking to enact the same plan he has seen work successfully before, Hurst said the Moss mine is one of those assets that is just under the radar.
“Early management did a great job in stick handling the mine through development and early teething problems,” he said. “They have streamlined the project, and it’s working well. It’s now generating positive cash flow.”
Hurst said the great thing about the Moss operation is its exploration upside. Very little drilling was done outside the mine footprint, but there are 8-10 kilometres of veins, some protruding above ground, with grab samples with gold and along with old mine workings.
“The best business model that we’ve found to generate value for shareholders is to find assets that everyone has forgotten about,” Hurst said, “Then apply some technical knowledge, risk management and capital markets discipline to generate value for investors.
“We’ve been able to step in just as the exploration potential is becoming apparent. Our plan is to enhance the value of the company through the drill rig. It’s our premise that we’re going to do a lot more drilling, find a lot more ounces, and justify a much bigger operation in the years ahead,” Hurst added.
“As we expand the resource from the current half million ounces at Moss to something substantially bigger, if you do the math, that half million ounces in a kilometre and a half of vein at Moss versus eight to ten kilometres outside that has never been drilled, with gold values on most of it, there’s a pretty good chance we’ll be able to justify a larger operation based on a much bigger gold resource.”
“Within a month or two we will be drilling that other eight kilometres of vein that sticks out of the ground.”
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