Historically, there have been two main aspects to building a mining company; property acquisition and development. Vancouver-based exploration and mining company Northern Vertex Mining Corp.'s (NEE: TSXV) success and potential rests not merely on the ability of extremely experienced management to find and develop compelling gold/silver properties such as the Moss Mine near Bullhead City in Arizona. It also includes a deep socio-economic infrastructure as part of its corporate footprint that is equally as integral. And not just at the outset of a project, but throughout each phase. The Company believes and has proven that not only is it good business, but more importantly, the right thing to do.
The Property: Moss Mine, Mohave County, NW Arizona
Upon NEE's completion of the earn-in requirements, it will establish a 70:30 joint venture at Moss Mine with Patriot Gold Corp. (PGOL:OTCBB).
Since 2011, NEE has drilled 455 holes and that, along with 221 historical drill holes, are evidenced in a resource of M&I of 22.6 million tonnes with 0.74grams/tonne gold and 8 grams/tonne silver with a further 3.9 million inferred tonnes averaging 0.52 gram/tonne gold and 6.3 grams/tonne silver.
NEE has completed the 90,000 MT Pilot Plant (Phase 1 of 3) project four months ahead of the PEA forecast. The infrastructure and Pilot Plant focused Phase I is critical as a proof of concept to set up for Phase II, forecast to be open pit, 1.3 km in length and 175 metres deep. Phase II is expected to recover over 145k oz. of gold and 1.1 million ounces of silver. The balance of the global resource minus that to be mined in Phase I and Phase II, 389,000 oz AgEq, is available to possibly be mined after a successful phase II; expected to take approximately 4 years.
Phase I and II are on patented land, with easier permitting as opposed to the more extensive federal permits which will be necessary for Phase III as the footprint expands into contiguous unpatented areas.
Phase I heralds the reactivation of the storied Moss Mine in Mohave County Arizona. Construction and mining operations are 100% complete as is the loading of mineralized material onto the leach pad. Extraction rates are in excess of 61% after less than six weeks with heap leaching still in process. Stripping and gold sales, at 270 oz Au, 588 oz Ag to date with two additional large shipments awaiting analysis, are still underway. As noted, all of these milestones were accomplished four months ahead of the PEA timeline.
With the completion of Phase I, commencement of Phase II will have the following tenets as outlined in the PEA:
Projected 5,000 tpd 42k AuEq oz./yr.IRR of 118% (pre-tax, pre-royalty)Payback 15 months (pre-tax, pre-royalty)NPV @ 5% $110 million (pre-tax, pre-royalty)Capital expenditures $26.6 million Projected cash costs AuEq $490 oz. (including mine capital)
The preceding metrics establish NEE with figures in excellent standing with the averages of the vast majority of its peers. Of particular note are the compelling low cash costs and rapid payback as well as a very high internal rate of return at 118%.
NEE runs a very clean, measured and focused operation. The Moss Mine pit has significant expansion potential, particularly to the west. Phase 4 drill program, results not yet part of the resource, evidences widespread stockwork mineralization to the south on the western section beyond the current resource.
Corporate Philosophy
NEE President and CEO Dick Whittington's 38-year mining management provenance was honed most recently in Mexico as President and CEO of Farallon Mining, which he moved from a market cap of $40 million in 2007 to a sale to Nystar for $409 million in 2011. As then, Dick currently spends 30 percent of his time focused on social issues directly within the community.
"The world has changed. Companies have to make the shift to develop a social license to do business appropriately and effectively,' states Whittington. 'And that social mindset has to come from the top not just with words, but also with heart. We are guests on these lands and we must earn respect and trust every day. Not only do we give back to the community, we listen to all ideas, concerns and comments, whether it is a local official, tribe member or person in the street. Our property has no fences. Anyone is welcome to come and visit and learn about the site at anytime.'
Further, NEE has a resident community-centric Chief Information Officer and has established the Moss Mine Advisory Council, made up primarily of community members. All stakeholders are updated monthly and if there is a major community or safety issue, several onsite employees have been empowered to shut down operations on their own initiative-no need to consult the CEO.
Former Governor General Michelle Jean awarded a Governor General of Canada Special Gold Medal to Mr. Whittington for his work in strengthening ties between Canada and Mexico and his commitment to Corporate Social Responsibility in mining.
The Bottom Line
There are a myriad of component parts to NEE's operation. The keys are a calculated and phased development approach; working genuinely to establish a social license with the local community and delivering peer-leading metrics that should impress investors. NEE houses arguably the best management you'll find and with Whittington at the helm engender confidence that the Company is, and will continue on the right path.
The stock trades at approximately C$0.53, and, as of September 30, 2013, has nearly $8 million in cash and equivalents and no debt. 52 week trading range is C$0.45- C$1.35. Market Cap is just over $30 million.
The interesting part for me is the cohesion of the parts. Proving up Moss Mine through Phase II will allow the Company to step out confidently to the next level and beyond. No huge bets, no massive (but this is a gold mine after all…) risks, good community and government relations and an experienced workforce pool. It just feels right.
Bob Beaty for The Bottom Line Report
Northern Vertex Mining Corp.
Suite 1820, 1055 W Hastings St
Vancouver, BC
V6E 2E9
Toll Free 1-855-NEE-TSXV (1-855-633-8798)
Telephone: 604-601-3656
email: [email protected]
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