📈 The Nevada Mining Claims Rush
Private Capital Insider: Weekend Edition
While mainstream media outlets are talking about the SEC losing two high profile crypto lawsuits (Ripple and the Grayscale Bitcoin ETF), Mitch McConnell “glitching” again during a press conference, and whatever Elon Musk is doing…
The big story we’re paying attention to is the little-known event that happens every year here in the American mining ecosystem…
Each year, the assessment period for mining claims runs from September 1 - August 31.
In order for companies to keep their mining claim active, they must submit either a maintenance fee payment or maintenance fee waiver to the Bureau of Land Management State Office on or before September 1st each year.
If they don’t, the claim is declared “forfeit and void” and can now be staked and purchased by someone else.
This represents a huge opportunity for cashed-up buyers!
Let’s get into it,
P.S. If you enjoy this interview with Alan Day and want to learn more about Nevada Canyon Gold, be sure to check out their Regulation A+ offering.
As a reminder, securities sold under Reg CF, Reg A, Reg A+, and Reg D are often considered high risk, and speculative in nature. Please do not invest funds you cannot afford to lose, or otherwise need immediate access to the invested capital.
Interview With Alan Day, CEO Of Nevada Canyon Gold (NGLD)
Alan is considered one of the top mineral property landmen in the State of Nevada.
With 30 years of experience in the industry, he has a unique knowledge of the claims available in the region.
Not to mention, he has likely staked – or visited – many of the potential properties, and has access to a significant amount of historical reports.
Below is the transcript of a recent call I had with him, talking about the significance of the September filing deadline for mining claims (and some follow-up questions to NGLD’s most recent press release).
Question: Can you tell us a little bit about how mining claims in Nevada work?
Nevada has a long and storied history of mineral extraction dating back to the 19th century Comstock Lode silver boom. Today, gold and other precious metals continue to draw prospectors and mining companies to the Silver State.
However, those looking to profit from Nevada's minerals need to follow proper claim staking and annual filing procedures.
The process is overseen by the Bureau of Land Management (BLM) in accordance with the General Mining Law of 1872; the law makes “all valuable mineral deposits” in public lands “free and open to exploration
Since the law has been passed, more than one million mining claims have been located.
Nevada mining regulations allow staking of lode claims for hardrock minerals and placer claims for alluvial gold and other deposits.
Lode (aka hard rock) deposits are typically found deep beneath the earth’s surface, embedded in solid rock formations.
Lode deposits typically require heavy machinery and drilling to get access to.
Placer deposits are created when gold is eroded from its original lode deposit and concentrated by the forces of water, wind, or gravity.
Placer deposits can be found in streambeds, river channels, and other areas where the movement of water has sorted and concentrated the heavier gold particles.
In addition, mill sites and tunnel sites may be located to provide support facilities for lode and placer mining claims.
Claim sizes are limited to a maximum of 20 acres for lode claims and 160 acres for placer claims. Once claims are properly staked and recorded, the annual filing requirements help ensure the claims stay active.
Question: When we publish this interview, it will be September 2nd, one day after the BLM’s September 1st deadline. Why is this such a big deal in the world of mining?
Claimants must pay an annual maintenance fee of $165 per claim to the BLM, on or before September 1, or their claims are declared forfeited and open for staking.
September 1st is the most important date to remember for mining claims. If you don’t have your maintenance fees remitted – or otherwise clearly identified as sent – before the deadline, there is absolutely no grace period for late filings!
Failure to meet this deadline is what’s called a “non-curable defect,” and renders the mining claim abandoned, void, and closed.
Should this happen, you would need to stake and file new claims to regain any mineral rights.
Now, obviously, there are going to be people who, through some administrative error, lose their claims…
But otherwise, the biggest reason someone would choose not to renew their claim is likely a financing issue.
That’s not to say these maintenance fees are “expensive.” It’s more likely that the person (or company) with the claim has other properties in their portfolio they are focused on developing.
And instead of continuing to pay the carrying costs of properties they’re not going to do any work on in the near future, it makes more sense for them to simply not renew the claim.
Every year for the last 30 years, members of our management team have been working in the Nevada region. This month is like the “Superbowl” for miners, where a lot of properties start to change hands.
As one of Nevada’s top landmen, this is the equivalent of “Tax Season” for me and what I do. During these 30 days, my team winds up walking thousands of claims.
Question: What opportunities does this present for NGLD?
For a company like NGLD, our business model is to provide producing and pre-producing mines a source of non-dilutive capital in exchange for a royalty and stream.
In many cases, this means buying an existing royalty or streaming contract from someone else.
However, it is our opinion that the very best opportunities are in situations where we can create a royalty that didn’t exist in the first place.
And as you’d imagine, the absolute cheapest way to do this would be if we could stake our own claims, acquire the rights to explore the property, and otherwise create the royalty at a nominal cost.
Question: Assuming you can’t stake your own claim, how does NGLD approach this process today?
As part of our overall portfolio construction model for NGLD, we have a three-fold business model.
Royalties: We acquire and divest royalty interests from both companies and individuals, then package these to command a much higher valuation. We then sell the higher valuation royalty packages to larger royalty companies, creating a nice profit margin in the process.
Streaming: Precious metal streams are obtained by providing capital to project operators and explorers by selling us a portion of their current or future precious metal production.
The capital we provide is used to fund exploration work, mine development, construction, or expansion... without incurring dilution to their share structure, or debt to their balance sheets.
Exploration accelerator: We find undervalued or distressed mineral exploration properties, and provide investment capital, along with our geological and engineering expertise.
We then add value to the projects by increasing the geological potential of the properties. After that, we sell the property to other mining companies for a premium return, without all the large capital expenditures (like building and operating a mine).
We recover our costs, retain shares in the purchaser’s company, create and retain a royalty in the property, all while avoiding the high costs and time of putting a mine into production.
Question: Can you tell us more about how the Exploration Accelerator works?
First, we negotiate an “Exploration lease with an option to purchase.” This gives us the option to purchase the property at an agreed upon price, for an agreed upon duration of time – up to 10 years – as well as rights to start exploration on the property.
Ideally, we spend a little bit of money on Phase I exploration (~$100k - $200k), to get some confirmation of the property value, and then instead of executing the option to purchase the property, we go find a buyer for the property, and effectively sell it to whomever would be developing it.
Said another way, we are going to sell our option contract to a potential buyer for the property. As consideration for doing this, we would seek to recoup all the expenses we incurred during Phase I, as well as securing a royalty on the property.
This process could take ~3-6 months from the time we start Phase I exploration, and if it goes as planned, results in NGLD acquiring a royalty on a pre-production property at net-zero cost.
We are creating a royalty where one didn’t exist, and in effect, obtaining it as compensation for selling the property instead of purchasing it.
However, in some cases, the Phase I results might be so promising that we decide it would be potentially more lucrative to execute the option and buy the property, then spend the money to start a drill program, and later sell the property after we have results from the drill program.
To complete this second option would likely take 1-3 years. However, if successful, it would mean we could generate additional near-term cash flow from the sale of that property.
And of course, there’s always the third possibility. We start Phase I exploration, and nothing really comes of it. If this happens, we’d likely cut our losses on that project, and look to deploy capital in other projects from our portfolio.
We currently have four properties within our Exploration Accelerator portfolio:
The Swales Property: The Swales property consists of 40 unpatented mining claims covering approximately one square mile in the Swales Mountain Mining District, in Elko County, Nevada. The claims are located within the Carlin Trend, one of the richest mining districts in the world, and home to some of the largest gold mines in the U.S.
The Agai-Pah Property: The Agai-Pah Property consists of 20 unpatented mining claims, with a combined area of 162 hectares (400 acres). The Property is located in the northwestern portion of the Gillis Range, within the Buckley Mining District, in Mineral County, Nevada, which is 13 miles northeast of the town of Hawthorne, and 22 miles southwest of the Rawhide Mine
The Belshazzar Property: The Belshazzar Project consists of 10 unpatented mineral claims and seven placer mineral claims (156 acres), situated along the upper reaches of Fall Creek, within the Quartzburg Mining District, in Boise County, Idaho, which is about 25 miles north-northeast of Boise. The project is accessed via 16 miles of mostly gravel and four-wheel-drive road from Idaho City. The Quartzburg Mining District is in the western part of a larger mining region known as the Boise Basin, which produced over 2.8 million troy ounces of gold from placer and lode mines (Anderson, 1947)
The Loman Property: The Loman Project is within the Walker Lane shear zone, a 100-kilometer-wide structural corridor extending in a southeast direction from Reno, Nevada, located 18 miles southeast of Hawthorne, Nevada, along U.S. Highway 95. The project has excellent year-round access, and infrastructure within Mineral County, one of Nevada's most pro-mining counties
Question: In your most recent press release, you announced that planning is complete on the Company’s Phase I Exploration program on the Belshazzar Property. Can you tell us a bit more about the Belshazzar Property, and why you are participating in this project?
Again, the Belshazzar Property consists of 10 unpatented mineral claims and seven placer mineral claims (200 acres) located within the Quartzburg Mining District, in Idaho, which has produced over 2.8 million troy ounces of gold from placer and lode mines.
The Belshazzar Property hosts the past producing Belshazzar Mine.
In recent years, modern metal detecting of an historical waste rock dump has produced hundreds of wire gold specimens, ranging from microscopic in size to over 20 troy ounces. Total recent gold specimen production is estimated in excess of 800 troy ounces of gold.
There are approximately 3000 feet of historical underground workings, consisting of several adits with sub-levels, with connecting vertical shafts, and milling facilities.
Several high grade specimen rocks have been reported from the history of the Belshazzar Mine, including, in 1927, a reported "nugget," which yielded 12 ounces in gold equivalent.
Held by private interests for most of its history, the Belshazzar Property remains very underexplored, with no modern-day exploration programs.
The Property has exceptional potential for new discoveries, on several exploration targets, with multiple zones.
The exciting thing about this Property is it’s never seen modern exploration. The last known production from the Belshazzar Mine was reported in 1941.
For companies like ours, this means there could be a huge potential asset waiting to be discovered, that simply couldn’t be found with older exploration methods, which were mined by hand and without the benefit of industrialized equipment.
While exact production figures for the Property are not available, the purpose of Phase I is to determine if this property is, in fact, a viable target, and where the drill program would potentially start.
Question: Can you explain to us what a Phase I Exploration program is, and what significance it has for shareholders?
Phase I of the Belshazzar Property exploration program will consist of reconnaissance prospecting, geological mapping, surface trenching, sampling of old workings and mine dumps, and the mapping relocation of historical workings on the Property.
Basically, what we’re doing is walking around the Property, creating new maps with modern technology, collecting samples, and otherwise figuring out the literal “lay of the land,” and geology of the property (i.e., what types of rocks and structure).
Once we’ve collected samples, we send them to a lab to perform something called “assays.” The resulting assay reports give us an early indication of the quality and grade of the samples we’ve provided, and this is what we base our decision to pursue a potential Phase 2, or not.
If Phase 1 goes well, what would Phase 2 exploration look like?
Phase 2 would be a drill program. Generally speaking, there are two main ways to do a drill program:
RC (Reverse Circulation) drilling is a surface drilling method that uses compressed air to circulate cuttings and chips to the surface through an inner tube, while the outer tube remains fixed in place. It is a relatively fast and cost-effective drilling technique. RC drilling provides rock chip samples that can be analyzed to determine mineral composition and concentrations. It is commonly used for initial mineral exploration
Diamond core drilling extracts a solid cylindrical core of rock, by using a diamond encrusted drill bit. The core provides detailed geologic data and samples that can be logged and assayed. Diamond drilling is slower and more expensive than RC drilling, but produces high quality samples. It is often used to follow up on early stage RC drilling, by further defining resources. Diamond cores allow geologists to examine rock structures and mineralization characteristics
While we don’t know what would be the best option for the Belshazzar Property, that is what we’re looking to determine in the Phase I exploration.
In terms of the cost of a drilling program, this can be anywhere from a little bit to a lot. Really, this depends on if we do or don’t hit worthwhile targets, and at what point in the budget do we hit it.
For example, if the first round of drilling shows promise, investors are typically willing to spend more money to continue proving out the asset.
However, the reverse is also true. We only get so many “dry holes” before we have to call it quits.
Question: Beyond the Belshazzar Property, what other projects is the company currently exploring? How do you prioritize where to allocate resources?
Based on the recent success of our Regulation A+ fundraising efforts, the most cash efficient use of our initial funds is likely to begin Phase I exploration for the other three properties in our Exploration Accelerator portfolio – on average, we’re expecting $100k-$200k in expenses to complete Phase I (for a total estimated budget of ~$500k of capital).
However, the reason we’re raising capital is to put ourselves into a position to be opportunistic about our asset acquisition strategy going forward, especially now that we are entering into the “prime time buying” season in the world of mining.
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