Because discovering properties with millions of ounces of gold is very scarce, it makes sense to search for them where other major deposits have already been found. One such attractive region is Nevada, which contributes over 7% of the total world gold production, making it the fourth largest producer in the world behind, China, South Africa, and Australia.
One of the world’s richest gold mining districts, the Carlin Gold trend, is located in Nevada. It’s a belt of gold deposits that is about 5 miles wide and 40 miles long, extending in a north-northwest direction through the town of Carlin, Nevada. Gold was first discovered there in the 1870s and by 2008, mines in the Carlin Trend had produced over 70 million ounces of gold.
Its origin dates back to about 350 million years ago when geologic forces created hot springs, which brought dissolved minerals toward the surface. Among these minerals were fortunes of gold and silver.
Interesting to know is that, next to the Carlin trend, northern Nevada hosts several other mineralized belts, such as the Battle Mountain-Eureka Trend, the Independence Group, the Alligator Ridge Group and the Getchell Trend. Even more interesting to know is that NSGold Corp (NSX – $0.08) has just entered into a Letter of Intent (LOI) to acquire the Silver Hill property, located on the famous Getchell Trend.
In Good Company
The Silver Hill property is ideally located, squeezed between the Turquoise Ridge deposit (approximately 25 miles to the NNE) and Pinson deposit (approximately 20 miles to the NNE), and the Adelaide deposit, approximately 3.5 miles to the SSW (see map below).
The Adelaide deposit has reported historic gold and silver production, while Turquoise Ridge and Pinson are both multi-million ounce gold deposits. Turquoise Ridge, for example, is owned by Barrick Gold (75%) and Newmont Mining (25%). In 2011, Turquoise Ridge’s production totaled 180,000 ounces of gold at total cash costs of $569 per ounce. Proven and probable mineral reserves as of December 31, 2011 was over 7 million ounces of gold.
Although the Silver Hill property is largely undeveloped, sampling by several independent geologists and prior owners established the presence of high-grade silver associated with gold, copper, arsenic and tungsten.
Because Silver Hill is comprised of 72 unpatented claims, NSGold was able to pick up the property relatively cheap. Under the terms of the Letter of Intent, NSGold may, at any time during the ten-year term of the definitive Option Agreement, purchase a 100% interest in the Silver Hill property by making a cash payment of US$1,250,000.
The Letter of Intent also provides that NSGold is required to make a payment of US$50,000 upon execution of the definitive Option Agreement, and to make advance minimum royalty payments as follows:
- US$25,000 on or before the first anniversary of the signing of the definitive Option Agreement;
- US$35,000 on or before the second anniversary of signing; and
- $50,000 on or before the third and subsequent anniversaries.
The advance minimum royalty payments will be credited against a 3% production royalty based on net smelter returns from production or sale of minerals.
The Letter of Intent further provides for certain bonus payments by NSGold in the event that it exercises the purchase option and certain resource thresholds are achieved. A bonus payment of US$1,000,000 will be payable to the optionor if NSGold delineates or publishes a measured or indicated resource on the Silver Hill property compliant with National Instrument 43-101 which includes a contained gold or gold equivalent content in excess of 1 million ounces. An additional bonus payment of US$2,000,000 will be payable by NSGold to the optionor if the contained gold or gold equivalent content is in excess of 2 million ounces.
Although, NSGold obviously has some work ahead with the Silver Hills project, it’s good see the property is located in such a gold rich zone and in mining friendly Nevada. Moreover, Glenn Holmes, the Company’s CEO, mentioned: “Our team continues to review other prospective acquisition opportunities as we work to further enhance NSGold’s property portfolio”, which may indicate that more LOI’s are in the pipeline.
|For important disclosures, please read our disclaimer.|