Gold mining in Nevada contributes the lion's share of U.S. production each year. The U.S. Geological Survey reported in August that 2.745 million troy ounces of gold were produced in the country from January through May, with 1.99 million troy ounces of that coming from Nevada. For comparison, Alaska produced 376,163 ounces and the combined states of Arizona, California, Idaho, Montana, New Mexico, South Dakota, Utah and Washington produced 382,593 ounces during the first five months of 2014.
Although it may seem like ancient history to some, it was only about 50 years ago that Newmont Mining (NYSE:NEM) discovered the now famous low-grade gold deposit at Carlin that was followed by more companies heading to mine the "invisible" gold about a decade or so later as the price of gold increased. New deposits are still being discovered today, including Barrick Gold's (TSX:ABX) Goldrush, located near its Cortez mine in Nevada, as the only 10-million-plus ounce greenfield discovery by a major gold producer in the past five years.
Barrick has put a focus on developing the area, a move that led to Morgan Stanley's Brad Humphrey saying that in the longer term he sees Goldrush as the future of Barrick in Nevada. In March, Barrick signed an agreement with Coral Gold Resources Corp. (TSX-Venture:CLH) for a 75% stake in the Gold Ridge project along the Cortez trend and in February acquired a 70% stake in the Spring Valley project near its Goldstrike mine. Barrick has also teamed up with Reno-based NuLegacy Gold Corp. (TSX-Venture:NUG) (OTCQX:NULGF), inking an earn-in agreement in which NuLegacy is earning a 70% stake in what is dubbed the Iceberg gold deposit adjacent to Goldrush.
The Iceberg project, which covers 60 square kilometres, is adjacent to the 14-million-ounce Goldrush and in the Cortez trend with two other world class deposits as well. Cortez Hill is a 15-million-ounce deposit and the Pipeline deposit, which contains a reported 21 million ounces of gold. The discovery of the Pipeline deposit is credited to Dr. Roger Steininger, founder (along with Albert Matter) and chief operating officer of NuLegacy. Incidentally, chief executive James Anderson said in an interview earlier this year that Steininger named the company's deposit "Iceberg" because he thinks what has been discovered so far is only a small portion of the full size of the deposit (e.g. "the tip of the iceberg").
NuLegacy's agreement with Barrick looks to be a good deal for the diminutive gold explorer. NuLegacy has less than $3 million in development obligations remaining to earn its 70% interest. To facilitate the requisite exploration, the company closed a $3.5-million share financing from Waterton Global in August. After NuLegacy completes earning its interest, Barrick will make the decision to either keep its 30% holding in the project or commit to spending $15 million on exploration, which will takes Barrick's interest back to 70 percent and leaves NuLegacy with 30%.
NuLegacy's Anderson says that $15 million will be enough to bring the project to production. In short, for a minimal spend, NuLegacy can own a 30 percent interest in a project at production in one of the most prolific gold regions in the country. The other side of the coin is NuLegacy retaining 70% and likely having to look for a partner or raise more capital to bring the project to production.
Seems safe to say the bridge will be crossed when the partners get to it. Right now it's about drilling to continue delineating the property. On Tuesday, NuLegacy released gold assays from the first three of seven core holes drilled as part of a Fall 2014 program at Iceberg. Along with the core holes, four reverse circulation holes are currently being drilled. Today's report was highlighted by hole RHB-30 returning 3.16 grams/tonne gold over 12.1 metres in the Central Zone. Coupled with 12.1 metres of 1.57 g/t gold in hole
RHB-29, the new finding establishes the continuity and expands the size of the higher-grade core in the Central Zone. The third hole, RHB-28, showed 1.31 g/t gold across 6.1 metres, which when combined with prior RC drilling confirms a "significant zone of
mineralization" more than 3,200 feet southeast of the Central Zone, according to the company.
"Our understanding of the stratigraphy and of the controls of mineralization in the Iceberg deposit has been significantly enhanced by our drilling of a limited number of core holes," commented Roger Steininger in a statement. He added, "Data will continue to flow in from the assay lab to be incorporated into our detailed logging of drill core over the winter months, which will undoubtedly improve our understanding of this large, Carlin-type gold deposit and guide our spring 2015 drilling program."
Venture-listed shares of NuLegacy have been pummeled recently, falling from a high of 17.5 cents in September to as low as 6 cents each earlier this month. The stock is up by a penny from Monday's closing price in Tuesday morning action, trading at 9.5 cents.
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