Where is Nevada Exploration at now?
I am a long-term investor and I am very optimistic about Nevada Exploration. With that said, investors need to know where this company is at, and where it is coming from.
The best source of information I have found is John Kaiser online. Mr. Kaiser is also an investor. Many of my comments incorporate Mr. Kaiser’s perspective, although I will not quote him directly as his material is subject to copyright.
Nevada Exploration has gone ten years without successfully identifying a mineral anomaly that wasn’t previously identified by another source. Kaiser says that the real test is whether they can use their water tracing technology to find gold in a place that no one else thought to look. Once they have proven the concept, everyone will jump on board.
According to Kaiser, the company has identified a couple dozen anomaly sites. Only five of those properties have been staked. If they can prove the concept and get funding, they could quickly and easily stake out those properties as well. That is the huge upside to this company. They also have not fully explored northern Nevada, and there are more potential sites to be explored.
The downside to the company is that their water sampling technology gets them into the area of an anomaly, but it has not gotten them close enough to specifically identify it for drilling. They have had two notable failures. In 2009, in a joint venture with Enexco, drilling was initiated on HotPot. Before the drilling was completed, Enexco withdrew from the agreement and all interest reverted to Nevada Exploration. In 2013 McEwen entered into a joint venture to drill Grass Valley. One hole was drilled. No gold was found. McEwen withdrew, and Grass Valley reverted to the company. Kaiser refers to this as a failed sniper shot.
The company says that the technology has proven 94% accurate in predicting known deposits, such as Lone Tree. The problem is that the water hydrology technology gets you in the general area, but not close enough to find the particular target to drill. The other problem is that conventional drilling is very, very expensive, which is why Exneco and McEwen gave up so quickly. For example, in their February 6, 2017 news release, they say that at Lone Tree Newmont drilled 80 holes to identify the target. Many of them showed no gold. Water sampling at Lone Tree showed that there was significant gold, and one of the drill holes was even right next to the water sample site, and showed no gold. So that is the problem that this company has had. It can accurately identify ore bodies, but they haven’t been able to pin them down enough to affordably drill.
In 2015, Kaiser describes a successful zombie rescue mission for the company. There was a 10 to 1 reverse stock split. New investors were brought in. And, most significantly, a new strategy was tried. The company purchased its own small diameter reverse circulation drill rig, the Scorpion rig. This will allow them to take water samples in 3D, to hopefully narrow down the targets more. Second, it will allow them to drill 6 to 10 meters into bedrock, allowing them to better assess the situation.
They are currently working on identifying 4 anomalies in Kelly Creek. The Scorpion rig has drilled 48 holes, according to Kaiser. We are all just waiting for the results.
Where do we go from here? If they can identify one or more anomalies with the Scorpion, Kaiser thinks that Newmont mining will negotiate to buy out the Kelly Creek project, which abuts property owned by Newmont. If this happens, Nevada Exploration will have the funds to pursue its other projects more aggressively. Kaiser doesn’t think that Newmont will buy the whole company, because they would have to compensate for the two dozen sites that Nevada Exploration has identified, and that would be too expensive.
The current frustration is that the lab who analyzes the water samples had a break down, and this is causing a delay in the results. This is a temporary setback.
After 10 years, this could be a very, very big year for Nevada Exploration. IF, and only if, they can prove their water hydrology technology and they can successfully narrow down a drilling target. I am personally optimistic, however, no one knows at this point. Again, I am personally long this company, but I am speculating like everyone else.
