Note: For the purposes of this article/interview, all references to historical or prospective mineral resource estimates at the Independence Gold project are on a 100% basis. Management expects to earn a 51% interest in the project by 12/31/21. Management then has the option to acquire (up to) a 75% interest, by spending (up to) US$10 million more over four years (2022–2025).
Golden Independence Mining Corp. (IGLD:CSE; GIDMF:OTCQB) is flying under the radar, with its flagship project in Nevada on property within Nevada Gold Mines' (NGM; a joint venture between Barrick Gold Corp. [ABX:TSX; GOLD:NYSE] and Newmont Corp. [NEM:NYSE]) Environmental Impact Statement and Permitted Plan of Operations footprint. The Independence Gold project is just 0.5 km southwest and adjoins to NGM's Phoenix-Fortitude mining operations in the Battle Mountain-Cortez trend.
Management is proposing an initial low-cost, low-risk, heap leach project that could potentially grow into a bigger operation incorporating already identified, much deeper, higher-grade (6.5 g/t Inferred) sulfide mineralization.
IGLD is earning up to 75% of a brownfields project with an historical (non-NI-43-101 compliant) resource estimate from 2010 of just over 1.0 million gold equivalent ounces—343,000 of which are in a shallow oxide zone. The overall resource comprises oxide epithermal mineralization, plus a deeper sulfide Carlin gold skarn zone. Mineralization remains open along strike and at depth.
The main focus is next year's new mineral resource estimate and a preliminary economic assessment (PEA). Only the near-surface oxide ounces will be considered in the PEA. Over 50 holes were drilled after the 2010 resource was published. Those holes, plus new holes from this year, will be added to the next resource. Some of the best historical drill intersections were reiterated in this recent press release.
Management has ~$3 million (~$3M)in cash to fund its phase 1 drill program, which was recently expanded to ~18,000 feet/20–22 RC (reverse circulation) drill holes and 3–5 diamond core holes. More than $34Mhas been invested, and >200 drill holes logged prior to IGLD starting work on the project. Golden Independence has 31.6M shares outstanding for a market cap of $15.4M.
With zero debt and $3Min cash, the enterprise value is $12.4M = US$10M. Note: Shares outstanding and cash is increasing this month due to an accelerated warrant exercise campaign ending Dec. 28.
Importantly, a new CEO/director was appointed last month, as Tim Henneberry transitioned into the role of president/director, as planned. Christos Doulis has 25 years' direct metals and mining experience in the realms of equity research, capital markets and investment banking, including a significant background in Nevada operations. See his full bio here.
I've had a few conversations and email exchanges with him, he knows exactly what investors and strategic partners are looking for. The following is an interview of CEO Doulis conducted Dec. 8¬–10.
Peter Epstein: Subsequent to the 2010 resource calculation, there have been over 50 new holes, and a 12,000-foot (~3,660 m) phase 1 drill program is currently underway. Do you have a conceptual target of how large your upcoming (Q1/2021) mineral resource estimate could be?
Christos Doulis: We hope to be able to report ~500,000 low-risk, near-surface, high-quality, Measured, Indicated and Inferred oxide-only ounces in our next resource estimate, which should be out in March or April. That's low-hanging fruit. The much deeper, higher-grade material is valuable, but won't be exploited before we throw a lot of tonnage onto our heap leach pads.
We believe that 500,000 ounces could potentially support a seven or eight-year mine life at 50 or 60,000 ounces per year in a PEA, which we hope to deliver in the second half of next year. Ongoing drilling in 2021/22 could add a few hundred thousand shallow, oxide-only ounces.
In addition, we're looking at opportunities to acquire ounces from deposits located within economic trucking distance of our heap leach pads. Once we have established a mine and are generating cash flow, we will look to explore and develop our higher-grade sulfide resources, which currently sit at nearly 800,000 Inferred ounces at 6.5 g/t gold [that's an undiluted, in-situ value of ~US$382/tonne].
PE: In reading your corporate presentation, it seems that the Independence Gold project could potentially be fast-tracked. Please describe the steps that could get you into production sooner.
CD: We're proposing a modest, low-risk project to start. Since our proposed operations would be contained within NGM's Plan of Operations, we believe several permitting, environmental and reclamation steps could potentially be pursued faster than usual.
For example, we're fully permitted for the exploration and development drilling of over 160 drill holes from 80 drill sites. And, we think that we can get our heap leach-related permits, once we start that process, within 24 months, [versus three or four years for less well-positioned juniors in Nevada].
If the gold price remains strong, that would really help us attract project financing. The average gold price in the six-year period from 2014–2019 was $1,267/ ounce (oz). Today it's $1,840/oz, after having touched $2,074/oz in early August. PEA and feasibility studies done during that period used gold price assumptions of $1,200–$1,350/oz. Recent studies are using $1,500–$1,600/oz gold.
PE: Why should readers consider buying shares of Golden Independence Mining (CSE: IGLD) instead of the dozens of other precious metal juniors in Nevada?
CD: There are many companies and projects to choose from, but investors should favor management teams with the experience and good judgement to choose safe, world-class jurisdictions and low-risk projects. In a low-price environment, heap leach operations in Nevada are a different story, but at today's levels — they're printing money.
Readers should look for companies that can raise investment capital, explore, develop and place into production projects within three to four years. Most early-stage projects in Nevada are six to 10 years from production. Finally, we believe that U.S. investors are going to become increasingly interested in investing in U.S.-based precious metal mines.
Based on recent gold junior PEAs, if we can model an initial heap leach mine at $1,550–$1,600/oz gold, and a seven- or eight-year mine life, at 50 or 60,000 ounces/year—that would be a small, but nicely profitable operation with ample room to grow. This is what we hope to achieve in a PEA as soon as the second half of next year, subject, of course, to the analysis of third-party consultants.
There are dozens of heap leach projects at PEA/PFS stage in the U.S. Projects like ours have after-tax NPV (5%)'s of about CA$100M [see above chart of U.S. heap leach projects at PEA stage]. Another way of thinking about our company's low relative valuation is by looking at our enterprise value (EV) divided by resource ounces. We're trading at about $24 per ounce in the ground (assuming sulfide ounces are worth half that of oxide ounces).
Despite having more complex projects, in more challenging jurisdictions that will take twice as long to reach commercial production—many peers trade at two to three times our EV/oz. multiple. Golden Independence Mining is a relatively low-risk, high-quality, near-surface oxide play in a safe, prolific location. Longer-term upside can be found in our higher grade, deep sulfide resources [currently at ~800,000 ounces, with ample room to grow, and grading 6.5 g/t gold].
PE: Thank you Christos. I look forward to continued near-term progress on your near-surface resource expansion, and on your plans to deliver a PEA in H2/2021!
Disclosures / disclaimers: The content of this article/interview is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Golden Independence Mining, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Golden Independence Mining are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.
At the time this article was posted, Peter Epstein owned stock options in Golden Independence Mining, and the Company was an advertiser on [ER].
While the author believes he's diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts and financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover any specific events or news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.
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