NetworkNewsWire
Editorial Coverage: Whoever has the gold, makes the rules—this
expression seems apt for 2020, as a confluence of factors has
analysts predicting a “golden year” for the mining industry. Three
decades of dwindling gold mine discoveries combined with increased
industrial demand for gold across numerous industries has put a
serious floor under the recent rise of the gold price.
- Gold price up 18.4 percent in 2019 and up about 44 percent
since 2018 lows
- Many analysts see gold going to $3,000 and as high as $10,000 per
ounce.
- COVID-19 impact and global market of near zero interest rates
paints very bullish picture for gold prices, as well as safe haven
demand.
- Three decades of underinvestment and over-regulation has
resulted in a shortage of new economic discoveries, even as demand
from new sources begins to inexorably devour more of finite global
production.
Operating in one of the world’s premiere mining
jurisdictions, Bullfrog Gold Corp. (CSE: BFG) (OTCQB: BFGC)
(FSE: 11B) (BFG
Profile) controls the mineral rights to a strategic
5,000+ acre land package with exceptional exploration and
development characteristics. Located 125 miles Northwest of Las
Vegas, the area was ranked number
one on the Fraser Institute’s 2018 Investment Attractiveness
Index. Within the last year or so, mining giant Barrick Gold Corp (NYSE: GOLD) merged
with Randgold Resources and combined its Nevada assets with Newmont
Mining, creating a true juggernaut with six of the global top ten
tier-one gold assets under its thumb (three of which are in
Nevada). Coeur Mining
Inc. (NYSE: CDE) purchased Northern Empire for
US$90 million and spent much of the last 18 months pursuing
expansion drilling programs on this property located a few miles
east of BFGC. Corvus Gold Inc.
(TSX.V: KOR) (OTCQX: CORVF), another major player
in the Beatty, Nevada area, has seen a significant expansion of the
company’s Mother Lode resource position surrounded by Coeur Mining,
as well as significant land and resource positions in the North
Bullfrog Mining District located a few miles north of BFGC lands.
AngloGold Ashanti Limited (NYSE:
AU) recently secured the purchase of the Silicon project
from Renaissance Gold for a reported $3 million and plans to roll
out a sizeable 109 site phase one drilling program across the
3,630-acre project area, mainly located a few miles east of BFGC
but also on its lands adjacent to BFGC’s western land boundary.
Dwindling Supply, Steadily Increasing
Demand
Gold ($1727.60 June 15 COMEX close) hasn’t seen this kind of
exciting price action since 2010— an 18.4 percent uptick in U.S.
dollar terms last year and close to a 44 percent increase since the
recent $1202.44 low in September of 2018. A powerful blend of safe
haven buying, highly accommodative (near zero) interest rate policy
from the Fed through 2022, and the looming spectre of COVID-19
haunting the stock market has sent many investors stampeding back
into the yellow metal. The sudden surge in gold demand during the
coronavirus pandemic has surprised many veteran industry analysts,
with prices recently soaring to a seven-year-high despite key
traditional offtake sources like jewelry seeing a big sales slump.
Jewelry normally accounts for over 52% of gold demand. However,
World Gold Council (WGC) figures indicate a 65 percent year-on-year
drop in the retail gold market within China, the world’s largest
jewelry maker, as well as a similar drop in the other major global
jewelry market, India. The reality of the shutdown and the
transparency of accumulating safe haven demand forces on the gold price are now cast in stark relief.
S&P Global Market Intelligence data from April indicated
that some 20 mines in top producing countries were forced to close
due to COVID-19 and ongoing economic uncertainty could continue to produce unprecedented levels of
central bank stimulus around the globe.
At the same time, emerging applications for gold’s unique
properties continue to add new, broadening end markets across
diverse sectors such as medicine, electronics, and high-tech
industrial. Gold nanoparticles, for instance, are seeing increased
use in everything from disease detection and treatment to enhanced
efficiency solar cells and filtration systems. Tiny particles and
circuits may not seem like a big deal when we measure the global
gold market by tonnage. But, with key
applications in critical systems like municipal-scale water
filtration and robust/high-performance consumer electronics
components, the roughly 16 percent of global production currently
consumed by these end markets is growing steadily every year.
Price Spike Points to Supply Deficit
This gradual build-up of broader end markets for gold seems to
have put a solid foundation under COVID-19 and zero interest rate
related buying.
However, a stifling regulatory environment combined with years
of underinvestment in mining has led to a kind of perfect storm
when it comes to spiking demand. Bank of America anticipates a 5
percent decline among senior global gold producers over the next
four years, with declining production, lower ore grades and shorter
mine life exacerbating
the falloff in new, economically viable discoveries.
Overall, gold production fell by one percent last year, and
analysts across the board are now predicting that the ongoing
decline in gold reserves will continue to produce significant
M&A activity throughout the gold
mining sector.
A Bonanza in the Making
Bullfrog Gold Corp. (CSE: BFG) (OTCQB: BFGC) (FSE:
11B) (BFG
Profile) looks poised to capitalize on prevailing
market conditions via a host of factors which differentiate the
company and its project portfolio from competitors. The company’s
land package sits at the heart of one of the most active gold
regions in the world—the same location where Barrick previously
produced some 2.3 million ounces throughout the 90s via
conventional milling operations. The enormous epithermal gold
systems in the Bullfrog area previously
yielded some 26.1 million tonnes of open pit and underground
ores for Barrick, averaging 2.98 g/t gold and 4.57 g/t silver
before milling was ceased due to the price of gold being under $290
an ounce.
With a well-established 43-101 compliant mineral estimate and
significant exploration potential at the company’s sizeable land
package in the Bullfrog Gold District, BFGC is a regional veteran
that has been in this white-hot gold
area for more than a decade, long before any of the majors
arrived. To illustrate how well-situated Bullfrog is, imagine a
small landowner who was smart enough to buy up acreage in Palo Alto
back in the 70s—long before Silicon Valley was even a concept.
Exploration and Testing Confirms Established
Model
Last year Bullfrog completed hugely successful heap leach tests
on four bulk samples from the Bullfrog, Montgomery-Shoshone and
Mystery Hill areas. In early June 2020, BFGC completed 12,520 feet
of drilling in a 25-hole
program to better define expansion limits of two pits and
initially drill test the new Paradise Ridge exploration target that
is a compelling analog to the Bullfrog deposit. Assays on the first
six holes were
released on June 17, 2020, and remaining results will become
available in the coming weeks. The company is now in an optimal
position to execute on a forthcoming independent preliminary
economic analysis that will include updated resource estimates,
optimized pit plans, capital and operating cost estimates and
projected financial performance.
Bullfrog also completed two initial holes at its new Paradise
Ridge target a mile east of the main Bullfrog pit, given the frenzy
of activity by sector majors in the region, as well as promising
results from extensive surface sampling efforts. The Paradise Ridge
target even has host rocks that are identical to those in the main
Bullfrog deposit. This evidence reinforces management’s guidance
that much of the company’s lands have strong potential for
expanding known resources and making new discoveries.
The value proposition is readily apparent: excellent location,
very good potential for the company’s flagship site to become a
mine with strong financial performance based on existing resources,
strong exploration potential and the kind of acreage that will
likely help cement the Bullfrog Gold District as a potential new,
major gold production center in Nevada.
Over a year and a half was spent collecting four bulk samples
from the main Bullfrog pit, the adjacent Mystery Hill area, and the
Montgomery-Shoshone pit for leach testing at McClelland
Laboratories in Reno. Reports published in 2018 and 2019 included
results of the heap leach tests that yielded average gold
recoveries of 85.8% when using high pressure grinding rolls (HPGR)
to produce a very fine leach feed of 1/16-inch compared to 70.7%
from a coarser 3/8-inch size typically produced using conventional
crushers. In this regard, the Bullfrog area mineralization is
highly amenable to producing very fine sizes from HPGR’s as their
clay contents are very low compared to most other gold projects,
and the brittle, silicified host rocks do not produce much
superfine material during the size reduction process. Also, because
of the low sulfide content when the deposits were formed and
subsequent oxidation, lime consumptions for processing are low and
the waste and mineralized rocks do not create acid.
Premiere Mining Jurisdiction, Low-Cost
Logistics
Another key selling point for Bullfrog is the superb presence of
infrastructure available to the project. The company has a paved
Nevada State highway crossing the southern claims, and with robust
existing access roads and haulage ramps in place to access the
pits, BFGC can avoid millions in CAPEX otherwise required to place
a greenfield project into operation. Additionally, the existing
electrical transmission line and sub-station Barrick once used—as
well as requisite water rights (via lease/option) and ample on-site
water—make the project an easy kick off.
Moreover, BFGC is already in possession of a huge database of
some 155 miles of drill information, as well as all the extant
project plant, site condition, geologic, mining and processing
data. The company estimates that the treasure trove of data amassed
by Barrick throughout the district and available infrastructure
would cost more than $40 million to re-create.
In addition, the project plan favorably indicates that the north
Bullfrog pit and Montgomery-Shoshone pit can be sequentially mined
in such a way that the vast majority of waste from both pits can be
filled into the south Bullfrog pit—thereby drastically reducing
waste haulage expenses, avoiding the building or enlarging of waste
dumps on the surface, and minimizing environmental permitting and
reclamation costs.
Friendly Face Off
Soaring gold prices and enhanced M&A activity have ignited a
firestorm in the sector, with operators both large and small
looking for low jurisdictional risk
Barrick Gold Corp (NYSE: GOLD) recently
reported Q1 sales in April of some 1.22 million ounces of gold, as
well as preliminary Q1 production of 1.25 million ounces, the
lion’s share of which came from Nevada Gold Mines. This puts the
company well in line to achieve targeted 2020 guidance despite
extensive efforts on Barrick’s part to mitigate the spread and
impact of COVID-19 across its entire global footprint. One example
of these efforts is the $1.1 million dollar stimulus program
initiated by the company to support businesses in Northern Nevada
via checks issued to all Nevada Gold Mines employees by the Chamber
of Commerce. The follow-up report on May 6 confirmed that
trajectory and saw Operating Cash Flow up roundly to $889 million
and Free Cash Flow up to $438 million from Q4. Barrick’s share
price has seen a significant rise since the Randgold merger as
well, and the company was able to increase its dividend three times
in 2019, even as debt was slashed in half.
Coeur Mining Inc. (NYSE: CDE) was able to post
8 percent reserve growth at Rochester, Nevada in 2019, even as
significant additions at the company’s Kensington, Sterling
location in the Bullfrog area and Crown properties helped increase
overall inferred resource calculations. Kensington more than
doubled its inferred gold resources with the addition of the new
Elmira vein. Sterling and Crown saw a 35 percent uptick
year-over-year of inferred resources, driven by aggressive
expansion of the numerous Crown Block deposits. 2020 exploration
initiatives will be centered around further expanding the resource
base at existing properties such as Sterling and Crown while new
discoveries at Palmarejo and Kensington receive increasing
attention.
Corvus Gold Inc. (TSX.V: KOR) (OTCQX: CORVF)
has been champing at the bit since the company discovered a large
new gold mineralized zone below the existing Mother Lode deposit,
with the first hole intersecting125.5 meters at 2.56 g/t, including
14.8m at 8.9 g/t. These findings have tipped off a sweeping
geophysical survey program throughout the Mother Lode trend, in
order to unify the company’s existing belt-wide exploration model
and district-scale analysis. This work is part and parcel of the
broader push by operators in the Bullfrog Gold District to
efficiently unlock the significant potential throughout the region.
To this same end, Corvus has amply increased its land position near
AngloGold Ashanti’s new Silicon project and the sizeable claim
block recently staked by Kinross.
AngloGold Ashanti Limited (NYSE: AU) reported a
whopping $2 billion in available liquidity in early May, with Q1
cash flow from operations more than tripling, as key assets from
the company’s geographically diversified portfolio of 14 mines
across 9 countries managed to deliver a showstopping performance.
AngloGold seems to be weathering the COVID-19 storm quite well,
with free cash flow before investments in growth projects up 231
percent year-over-year to $94 million despite stoppages at several
sites during the first and second quarters. All-in sustaining costs
around $1,047 an ounce on average put AngloGold in an enviable
position as the company ramps up production amid ongoing
redevelopment of the Obuasi Gold Mine in Ghana, where output is
expected to double by Q1 of next year.
It certainly appears there is a bit of a land rush going on in
the Bullfrog Gold District, and with share price-accessible
companies like BFGC right at the epicenter on historically proven
acreage, retail investors and big players alike are starting to
take note of the long-term value proposition.
For more information on Bullfrog Gold Corp., visit Bullfrog Gold Corp. (CSE: BFG) (OTCQB: BFGC) (FSE:
11B).
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