These Two Projects Could Be Barrick's Next Cortez Acquisition Targets

These Two Projects Could Be Barrick's Next Cortez Acquisition Targets

Samuel Rae  | Jun 09, 2017 06:52AM ET

Barrick Gold Corporation (NYSE:ABX) took the top spot for most prolific (in terms output) gold producer in the world during 2016. The company also came in at number one during 2015, with Newmont Mining Corp (NYSE:NEM) and AngloGold Ashanti Ltd ADR (NYSE:AU) taking positions two and three on the list respectively for, again, both 2015 and 2016.

Some of Barrick's biggest exploratory achievements during the last 15-20 years have been based in Nevada. Specifically, and central to the company's reaching, and maintenance, of its number one spot, in and around a rock formation in Nevada called the Cortez Trend. The trend lies in the center of the state, just west of its more famous counterpart, the Carlin Trend.

The company is constantly seeking to expand its footprint in the region, and for good reason; three of Barrick's leading resources (producing multi-million oz. gold annually and estimated to hold in excess of 10 million oz. each) are located on the Cortez Trend – it's Pipeline, Cortez Hills and Goldrush deposits.

Back in 2008, Barrick acquired a large portion in what would become the Cortez Hills property from Rio Tinto plc (LON:RIO). In 2012, the company expanded its footprint in the region with the purchase of Mill Canyon from Victoria Gold Corp (VIT). Many mining investors track progress at a variety of projects in and around the Cortez Trend solely to try and anticipate which present as potential acquisition targets for the mining behemoth. One that has been touted recently as a potential Barrick target was Coral's Robertson Property. As of this week, it's now owned a Barrick-owned asset.

With this in mind, here's a look at two more potential Barrick targets in the same region – Keystone and Iceberg.

Let's kick things off with Keystone.

This one's owned by US Gold Corp (DRAM) and is located along the Cortez Trend, approximately 10 miles south of the two above mentioned Barrick properties, Pipeline and Cortez Hills. It's one of two properties owned by the company, with the other being a copper mine in Wyoming called Copper King. The former is what we're interested in here.

It was first drilled back in the late 1960s and has since been the focus of a number of small scale-type programs conducted by various entities. None of these entities, however, have conducted programs to the scale at which, and using the technology with which, exploratory gold drilling is conducted today. With the presence of gold having been established through the early programs, but in the absence of any full-scale programs, this is a very much underexplored property and one that could prove attractive to Barrick if US Gold Corp can go some way towards demonstrating the presence of the substantial resource the company expects it holds.

Historical drilling in the area has produced high grade and thick intercepts of gold and across the approximately 15 square miles (>7500 acres) of land, within which US Gold Corp holds 479 claims, the company expects the project has a potential in excess of 10 million oz.

The initial target for the company is 1 million oz. and management is working right now to establish a resource estimate to reinforce the reliability of this target.

For those familiar with the space, VP, Head of Exploration at US Gold Corp is geologist Dave Mathewson. For those not familiar with Mathewson, he's the guy that served as Head of Exploration in Nevada for the third company on the list in the introduction to this piece – Newmont – between 1989 and 2001. During this period he was responsible for the discovery exploration of the company's Tess, Northwest Rain, Saddle and South Emigrant deposits, a list that pretty much covers all of Newmont's most prolific and most stable producing properties.

US Gold Corp is currently midway through a drilling program aimed at establishing the above-mentioned resource estimate, and the company expects to ramp up its exploration program throughout late 2017 and early 2018 based on (guided by) the results of this initial program. Beyond that, a National Instrument 43-101, or NI43-101, will establish a resource estimate and serve as something tangible with which a company like Barrick can value the property.

Now let's look at Iceberg.

This one is owned by a Canada-based company called Nulegacy Gold Corporation (V:NUG). The company owns a region of land called Red Hill that is located between Barrick's Goldrush deposit immediately to the north and Tonkin Springs to the south. The property as a whole is the second largest independently owned land package in the trend, second only to Barrick Gold’s adjacent holdings. The company has actually made two discoveries in Red Hills, one called Avocado (discovered more recently, 2016) and the one in focus here, Iceberg (discovered in 2012).

The Iceberg deposit is a near surface deposit (meaning the gold is more readily accessible and – by proxy – that it's cheaper to extract) and is currently the subject of an expansive exploration program designed to establish a resource estimate. Early signals are positive, with the current target grades coming in at 0.9-1.1 oz./t, and in a specific northern region, reported as high as 3.9 oz./t.

Geographically, the project consists of three primary mineralization zones spread across more than 3km, and the company has drilled approximately 25% of the total claim-covered area.

Right now, Nulegacy is focused on expanding the gold content of the established near-surface oxide deposit through further drilling. As of May 16, a reverse circulation (RC) truck rig is on site at the project with the remit of, over the next six to eight weeks, drilling the first 12 of 24 holes planned for the expansion of Iceberg's established exploration target. The company also just reported results from what's called bottle roll leaching tests (the industry standard testing procedure for assessing leach potential at gold deposits) and the results read back as favorable, suggesting the project is a strong contender for economic viability.

Again, and just as with US Gold Corp's Keystone, this one's all about the drill results. Once they come in expect the bigger names, and especially Barrick, to sit up and take notice.

Samuel Rae

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Kevin Trevor
Kevin Trevor

From what I can tell, the Nulegacy Gold Corporation will probably make a good profit from the Iceberg deposit. I think it will be over 1.1 oz./t in most areas, maybe closer to 2 oz./t and more as they get closer to the northern region. This is an educated guess and it could be even better than that. . . Since they’ve only drilled 25% of the claim-covered area, there is still a lot of area to drill and there’s a good potential they’ll find an above par gold concentration. I will be following along with what happens here and I’m pretty sure Barrick will soon take notice (they are most likely thinking of making an offer once they see some consistent results from the drills). . . On another note, Dave Mathewson has a very good reputation so I expect him to do a great job again. US Gold Corp should (in theory) get a lot of those 15 square miles of land. I don’t know about 10 million oz. but 8 million sounds about right.  ... (Read More)

Jun 13, 2017 12:09PM GMT· Reply
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