Ever since Newmont’s discovery of the large Carlin deposit in the 1960s, gold mining has become a focal point of Nevada’s economy. The state is consistently ranked among the top five mining jurisdictions in the world; in the latest Fraser Institute Investment Attractiveness Index, Nevada was number one.
Each year, more than 5 million ounces of yellow metal are produced, which based on today’s gold prices, amounts to about US$9.5 billion in value. Nevada is home to nearly 30 gold mines, with more to come.
The state offers an attractive tax regime with a low net profits tax and zero income tax. Regulations and permitting processes are transparent and easy for explorers to navigate.
According to the US Geological Survey, if Nevada were a country, it would be among the world’s top four gold producers. The Nevada Bureau of Mines and Geology tallies gold reserves at about 70 million ounces, enough to sustain gold production near current levels for up to 15 years.
The creation of Nevada Gold Mines in 2019 — a joint venture of Barrick and Newmont — has piqued the interest of other companies looking to discover and develop new ounces in the golden state.
One of these is Provenance Gold Corp. (CSE:PAU, OTCQB:PVGDF, Frankfurt:3PG). The Vancouver-based precious metals explorer has three projects in Nevada: White Rock, Mineral Hill and Silver Bow. 2021 exploration involves drilling at White Rock while sample collection/ drilling at Mineral Hill, followed by drilling for silver at Mineral Hill after the White Rock drill program is completed.
The White Rock property, located near Newmont’s Long Canyon mine, hosts a large gold system estimated to be 3.2 km long by 1.6 km wide.
Gold is found in the host rocks almost everywhere and elevated along and adjacent to large fault zones. Past drilling only tested the structures, which returned excellent results but no infill drilling was conducted. Much of the central area of mineralization remains undrilled.
Historical exploration consists of 65 holes, with most drilled during the mid-1980s; 191 intercepts were recorded, with grades between 0.34 grams per tonne gold and 5.7 g/t.
Previous operators include Amax Exploration, which drilled 51 holes between 1985 and 1899, and discovered a large near-surface, low-grade resource; Kennecott which drilled nine holes in the 1990s and achieved the highest historical grade; Terraco Gold, Golden Odyssey and Timberline Resources which each held the property during the ‘000s; and Provenance Gold which optioned the project in 2020.
Under the option agreement, Provenance must spend US$250,000 over four years to attain 100% of White Rock’s 258 claims covering 2,088 hectares. Ownership is subject to a 2% NSR with a $25,000 advance royalty payment due yearly after the property has been paid for.
Provenance theorizes that the project contains a large, near-surface oxide gold system suitable for heap leaching. Currently there are four target zones on the property: WR3, 038, Fork and East.
The company also believes the geological setting is similar to the nearby Long Canyon mine owned by US-based gold major Newmont Mining (NYSE:NEM). The open-pit operation started producing in 2016.
Provenance also has a high-grade past-producing silver mine in Mineral Hill. According to county geological reports, silver was first mined there in 1868 at a jaw-dropping 140 ounces Ag per ton (3.9 kilograms per ton). Mining continued until 1939, at an average grade of 25 oz/t silver, or 0.7 kg/t.
Surface samples from bedrock exposures returned values ranging from 50 to 1,215 grams per tonne silver, and 0.1 to 5.2 g/t gold.
Provenance acquired the property in April for 3 million shares of the company plus cumulative payments and escalating work commitments totaling $195,000 over eight years.
In a recent writeup on Provenance Gold, 321gold’s Bob Moriarty states that Large volumes of broken rock in various mine dumps around the property show grades between four to eight ounces of silver to the ton.
Limited exploration by Union Carbide in the 1960s and Santa Fe Minerals in the early 1980s focused largely on the unmineralized Vinini formation footwall. No modern exploration has since taken place, providing the company and its shareholders with tantalizing upside.
According to Provenance, The property has strong potential to host significant new ore bodies along the thrust fault zone, and potentially may host shallow bulk-tonnage resources amenable to modern open pit mining. Many large dumps from historic mining occur across the property. In 1968 Siskon Corporation conducted a detailed trenching and sampling program of the extensive dumps on the property. Their study reported that bulk values averaged more than 125 grams of silver per ton for the majority of the dump material. A program to validate these historic results and accurately measure the volume of the dumps will be undertaken. The Company believes just the dump material alone adds significant value to the property, and the new exploration potential is excellent.
Provenance Gold is co-founded and led by Rauno Perttu and Rob Clark.
Holding the chairman and CEO positions, Perttu is a registered professional geologist whose experience spans more than 40 years covering all aspects of mineral development throughout North, Central and South America, and Australia. He has worked with large and small companies involved with gold, uranium and coal projects, participating in all phases of project development from initial concept through exploration, feasibility, development and operations at senior management levels.
President Rob Clark is an entrepreneur and venture capitalist who has been the President of RBM Financial Inc. for the past 20 years. Clark has extensive experience in private domestic and international equity markets, having been a part of numerous transactions including mergers, acquisitions, company buyouts and corporate restructuring. Because of his past successes in selecting and selling critical mining properties and his experience with joint ventures, Clark brings valuable expertise and insight to Provenance Gold.
Rounding out the management team at Provenance Gold, Thomas Martin and Wesley Thompson serve as directors, and Fiona Fitzmaurice, a chartered professional accountant, is CFO.
The company has two experienced professional geologists serving as technical advisors.
Steven Craig is a senior consulting geologist with 47 years of mining experience. His career has taken him to many projects around the world, but his true passion is Nevada where he has focused most of his professional efforts. Craig previously led an exploration team for Kennecott/Rio Tinto as Regional Manager, where he discovered several gold deposits and/or developed resource expansions. During his time with Kennecott, he had a large exploration budget where he drilled over 110 gold projects and annually up to 150 reverse circulation (RC) holes per year at 10 different projects.
Following Kennecott, Craig was VP Exploration of four junior exploration companies, which he led to new discoveries, expansion of current resources, and development of new mining operations. He has a Masters in economic geology from Colorado State University, is a Certified Professional Geologist from AIPG and qualifies as a Qualified Person (QP).
Nathan Tribble has +13 years of professional experience in exploration and mining, with a focus on gold and base metal exploration and project evaluation. Past experience includes Director of Windfall Geotek, Senior Principal Geologist for Sprott Mining, Senior Geologist for Bonterra Resources, Jerritt Canyon Gold, Kerr Mines, Northern Gold, Lake Shore Gold and Vale Inco. He was also part of the exploration team that discovered the 8.2 million-ounce Côté Lake gold deposit for Trelawney Mining and Exploration. Tribble is registered as a professional geoscientist in Ontario and holds a Bachelor of Science degree in geology from Laurentian University.
Provenance Gold’s share structure is reasonably tight, at 60.977 million issues and outstanding shares, and 18.29 million warrants.
The stock trades under the symbol PAU on the Canadian Stock Exchange, PVGDF on the OTC market and 3PG on the Frankfurt Stock Exchange.
In April of this year Provenance Gold closed a non-brokered private placement totaling $315,000. The $0.10 financing will be put towards exploration and general working capital, according to the company.
Provenance Gold has a busy summer and fall ahead.
Drilling at White Rock began last week — 5,000 meters in 30 to 40 drill holes are planned and budgeted.
Provenance is looking to confirm historical drill holes that intersected numerous thick intervals of potentially open-pit grade gold mineralization, while confirming the company’s new understanding of the structural and stratigraphic controls of the gold mineralization. Drilling started near a historical hole that reported 76m of 0.6 g/t gold, within which 3.5 meters ran 5.7 g/t. The initial holes have already clarified and begun to confirm the new structural model for the gold system. Assay results are expected by early August, and visible observation of the drill samples is encouraging, the company reports.
At Mineral Hill, initial field work has focused on sampling and mapping the old workings and extending the mineral system beyond the historical production areas.
Provenance will start drilling the property after it completes the required meters at White Rock. The high-grade silver potential at Mineral Hill is compelling and so far what the company has found is encouraging.
A recent sample of on-site tailings assayed 216 g/t Ag. Five assays of lower loose rock piles, discarded from earlier mining, assayed from 6.1 to 301 g/t Ag, @ an average grade of 180 g/t Ag. Provenance notes that chip samples of wall rock from the historical mining averaged 430 g/t Ag. This compares to Coeur Mining’s active Rochester mine in Nevada, which averages around 20 g/t Ag.
To re-iterate, Mineral Hill has never seen modern exploration, and this represents a compelling upside for shareholders. Although a number of earlier holes were drilled into the unmineralized footwall of the mineralized zone which dipped steeply to the west, many were lost in open stopes.
As Provenance explains, The assay results from this historic drilling are nevertheless very encouraging. The highest silver value reported over 1.5 meters was 1200 g/t (38.6 oz/t) with every hole returning silver values from 34 g/t to 544 g/t (1 oz/t to 17.5 oz/t). Overall, the Company considers the Santa Fe program to be of limited success because they were unable to properly test the mineralized zone. An accurate test requires drilling angle holes across the mineralized 30-to-100-meter-wide zone, which extends for at least 1000 meters along the hill crest. Surface geology and historic prospects suggest the mineralization follows more than one zone and may also follow cross-structures.
In the July 8 news release, CEO Rauno Perttu states, “I have been to the property several times and every visit makes me more enthusiastic about the potential for high-grade silver along with bulk-tonnage silver amenable to modern open pit mining.”
Provenance is exploring for silver and gold in Nevada — in 2020 voted the best jurisdiction for mining investment attractiveness — at an interesting time for precious metals. Some of the world’s largest economies have emerged from the pandemic with advanced-stage vaccination programs and a loosening of restrictions. Normally, good economic news makes gold and silver prices track lower, yet despite experiencing a significant correction in June, gold is back above $1,800 and silver is holding steady around $24. (the monetary and industrial metal plunged to a virus-related 11-year low in June, 2020)
This week stock markets lurched due to worries over the highly contagious Delta variant, setting the stage for potentially another period of economic uncertainty that could benefit gold and silver. The US Federal Reserve has maintained its dovish monetary policy in spite of a robust US economic recovery, and that is being priced into spot gold and gold futures.
Last Wednesday gold climbed $18 to $1,826 per ounce, on dovish comments from Fed chair Jerome Powell.
At AOTH we love gold and silver, especially when the metals appear to be on the brink of a strong up-leg.
Consider: real interest rates are currently negative and have been for some time. The benchmark 10-year Treasury yield rose to 1.73% in April, amid inflation concerns, but since then, the yield has dropped to 1.3%, while the June inflation rate has risen to 5.4%, leaving a negative real yield of -4.1%!
Negative real rates historically have correlated to higher gold prices.
Given, therefore, the likelihood of a weak US dollar (many believe that the dollar, which fell to a 2.5-year low last year, will continue to face downward pressure in 2021 regardless of economic recovery), higher inflation owing to massive government stimulus and continued quantitative easing from the Fed and other central banks, and interest rates likely to stay low for the next couple of years, we think there is a strong case for taking a position in gold right now.
Gold (and silver) juniors historically offer the best leverage against rising prices, and one of the most promising I’ve seen in this current market is Provenance Gold.
The company offers assay catalysts at two of its projects, White Rock which it is currently drilling, then Mineral Hill.
Of the two, Mineral Hill is arguably the more exciting play, given its very high-grade historical silver intercepts and the potential for finding more of the same. Remember, the property hasn’t seen any modern exploration. Until now.
Provenance believes that White Hill contains a large, near-surface oxide gold system suitable for heap leaching, and that the geological setting is similar to Newmont’s nearby Long Canyon open-pit mine. Could White Rock be open-pittable? We know drilling has started near a historical hole that reported 76m of 0.6 g/t gold — a very acceptable grade for open-pit mining.
The same open-pit potential exists at Mineral Hill, with high-grade kickers. Provenance Gold recently received a $315,000 boost to its treasury, giving it the runway to complete drilling at two properties.
If the assays come through, reasonably priced PAU, which currently trades at just 12 cents Canadian per share, could be in for a very exciting late summer/ fall run.
Provenance Gold Corp
CSE:PAU, OTCQB:PVGDF, Frankfurt:3PG
Shares Outstanding 60.9m
Market cap Cdn$6.6m
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Richard owns shares of Provenance Gold Corp. (CSE:PAU).