A Junior Mining Management Team That Doesn’t Know How To Lose Is Back With The Next Incredible Opportunity In Nevada Gold Exploration
Nevada’s Walker Lane Trend has seen a gold exploration resurgence in recent years with several mid-tier and major mining companies moving into the area. Nevada is a tier-1 mining jurisdiction that is well known as the home of senior gold producers Barrick and Newmont, however, Barrick and Newmont are mostly focused on the Carlin Trend in the northeastern part of the state.
The Walker Lane Trend is a much less talked about area of Nevada, however, it is no less prolific with an endowment of at least 80,000,000 ounces of gold and 700,000,000 ounces of silver. In the last few years precious metals producers such as Anglo American (LSE:AAL), Coeur Mining (NYSE:CDE), Kinross (NYSE:KGC), and even Newmont (NYSE:NEM) have all moved into the Walker Lane Trend.
One of the more notable “bear market deals” that took place in the summer of 2018 was the purchase of Northern Empire for US$90 million by Coeur Mining. Northern Empire was transformed from a grassroots explorer to an advanced exploration company in 2017 in a US$10 million purchase of the Sterling Mine from Imperial Metals. In a little less than 18 months the Northern Empire team turned around and flipped the project to Coeur for 9x what they paid for it.
Having knowledge of Northern Empire and its management team (a featured article on Northern Empire that appeared on Energy & Gold on March 19, 2018 about four months before Northern Empire received a more than $100 million takeover offer from Coeur Mining) led me to find a junior explorer named Eclipse Gold Mining (TSX-V:EGLD). Eclipse is led by CEO Mike Allen who was also the CEO of Northern Empire. Mike Allen’s specialty is finding “orphan” projects in the Walker Lane Trend of Nevada, acquiring them for an attractive price, and then advancing them in order to generate returns for shareholders.
Eclipse acquired its flagship project, Hercules, from another company that had pivoted to lithium and left Hercules as an orphan project in its portfolio. Eclipse managed to acquire Hercules on favorable terms (modest cash payment and assume an underlying option agreement) and then stake a huge claims package all around its core project footprint, this increased the size of the property package by 10x.
The Eclipse Gold story definitely begins with its management team led by CEO and President Mike Allen. Mr. Allen comes from a technical background, having explored for gold in the Arctic, British Columbia, Ontario and Nevada. As CEO with Northern Empire, he acquired the Sterling Gold Project, a permitted, high grade, heap leach project located in Nevada’s Walker Lane. Northern Empire raised C$35M in two accretive financings (no warrants) in 2017 and 2018, which was a weak to flat gold market. Northern Empire was acquired in August 2018 by Coeur Mining for US$90 million, at a time when the gold sector was out of favor and takeovers at a premium to the market were almost unheard of.
Chairman Marcel de Groot co-founded Pathway Capital, in addition to having served as president, and is currently a Director of Equinox Gold and Asanko Gold. De Groot helped raise over C$140M through a series of transactions that lead to the creation of Equinox Gold, of which he is a founding director. Successes he’s had a hand in include Peru Copper ($869M take out) and the creation of Sandstorm Gold Royalties (now US$1.67B market cap).
Director Douglas J. Hurst is the former Executive Chairman of Northern Empire, and a current director of Calibre Mining and Newcore Gold. Hurst co-founded International Royalty Corp (sold to Royal Gold for $700M), and Newmarket Gold (sold to Kirkland Lake Gold for $1B).
VP Exploration Dr. Warwick Board is the former VP Geology and Chief Geologist of Pretium Resources, and Sr. Resource Geologist of Silver Standard Resources. He helped steward the Brucejack deposit from discovery to production. In addition, Board holds a B.Sc. (Hons.), M.Sc., and Ph.D. degrees in geology from the University of Cape Town, South Africa, as well as a Citation in Applied Geostatistics from the University of Alberta.
Eclipse Gold has an all-star management but what about the project?
The Hercules Project is located in close proximity to known mines and deposits in the Walker Lane trend.
There is extensive epithermal-style veining and alteration visible at surface across the property. Hercules’ likely success will be largely due to a low sulphidation epithermal deposit (model shown below). There is an apparent increase in thickness and grade of low sulphidation epithermal mineralization to the south. The highest gold grades are found in the red veins and brown ‘permeable lithology’, then in decreasing grades from dark yellow to light yellow to green.
The Phase 1 drill program intersected broad intervals of oxide gold-silver mineralization in all target areas, which demonstrates the strength and continuity across the Hercules Project. Shallow gold-silver mineralization was found in 11 out of the 12 holes drilled. The key takeaway from the phase 1 drilling is not only the potential for a near surface open-pittable bulk tonnage style gold deposit, but the potential for the system strengthening to the south, indicating the property wide system could be larger than previously imagined:
While Nevada gold mining is built upon near surface oxide bulk tonnage gold mineralization, there is significant potential for a high grade core zone at Hercules. Large bulk tonnage projects often need a high grade core to positively impact project economics early in the mine life:
Eclipse recently completed a C$12 million bought deal financing at C$.75 per share and the company wasted no time in commencing an airborne geophysical survey at Hercules. Electromagnetic (resistivity and conductivity), magnetic, and radiometric data will be collected for the entire Hercules property, with approximately 2,200 line kilometers planned. Previous work indicated a potential correlation between resistivity and gold mineralization on the property. The goal of the geophysical survey is to assess property-wide exploration potential at Hercules and generate a prioritized list of targets for further drilling programs across the company’s 85 square kilometer district-scale land package.
Eclipse just announced that a nearly 7,000 meter phase 2 drill program will begin at Hercules in the next week. This phase II drilling will test:
Potential extensions of known gold mineralization to the east of Cliffs
The newly defined Hercules Structural Zone that runs north-south through the Northeast and Hercules targets
Geophysical targets generated by the Company’s recent IP geophysical program between the Cliffs and Hercules targets
. Phase One drilling has shown an apparent increase in thickness and grade of mineralization of the low sulphidation epithermal gold-silver system to the south, indicating the property-wide system could be larger than previously imagined. Phase Two Drilling will focus on extending the Cliffs Target to the east towards the Hercules Target.
From an investor standpoint, this is an exciting time to be looking at EGLD shares; not only is the company cashed up but an important Phase Two drill program is about to commence. The combination of bullish seasonality for the junior gold mining sector and the catalyst of a nearly 7,000 meter Phase Two drill program at Hercules could propel EGLD shares above resistance near the C$.95 level:
Strong support near C$.75 with resistance at C$.95 – a breakout above resistance could quickly see 25%+ of near term upside in EGLD shares.
I have been accumulating EGLD shares in the lower end of the recent range and look forward to the commencement of Phase Two drilling at Hercules and an eventual upside breakout in EGLD shares.
Disclosure: Author owns shares of EGLD.V at the time of publishing and may choose to buy or sell at any time without notice.
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Eclipse Gold Mining Corp. is a high-risk venture stock and not suitable for most investors. Consult Eclipse Gold Mining Corp’s SEDAR profiles for important risk disclosures. EnergyandGold has been compensated for marketing & promotional services by Eclipse Gold Mining Corp. so some of EnergyandGold.com’s coverage could be biased. EnergyandGold.com, EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.
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