Northern Empire (TSXV:NM) is a Canada-based junior exploration company with interests in Alaska and Nevada. In May 2017, Northern Empire announced the completion of a purchase and sale agreement with Sterling Gold Mining, a wholly owned subsidiary of Imperial Metals (TSX:III). The Investing News Network asked Northern Empire CEO Michael Allen to shed some light on this recent acquisition.
The agreement enabled Northern Empire to acquire a 100-percent interest in the Sterling mine project, located 160 kilometers northwest of Las Vegas. The Sterling project features a heap-leachable gold deposit with existing infrastructure in place, conferring Northern Empire a unique position. The company now plans to transition from grassroots exploration to development.
Investing News Network: Please give our audience some background on Northern Empire and your strategy for creating shareholder value.
Northern Empire CEO Michael Allen: When we acquired the Sterling project, we transitioned from being a prospect generator to an advanced asset holder able to create quantifiable value for our shareholders. Post-transaction we’ve had an enterprise value of approximately US$26 per ounce in the ground. Comparables in the Midwesten US where Sterling is located trade for an average of US$54 per ounce in the ground. Our share price is starting to increase already as people recognize the value we’ve acquired, and this creates an immediate upside for our investors.
INN: You mentioned the recent acquisition of the Sterling mine project in Nevada. Can you break down the importance of this acquisition and the value it brings to Northern Empire going forward?
MA: We’ve raised C$25 million since we announced plans to acquire Sterling in February 2017. We now own a 100-percent stake in the project. Going forward, it’ll be our flagship asset — with good reason: Sterling is a premier asset within Nevada, permitted for open-pit mining and has significant exploration upside. And because Sterling features a past-producing mine with last production as recently as 2015, all the necessary infrastructure is in place.
With the Sterling acquisition, we’ve taken discovery and permitting risk out of the picture. The resources are proven to be in the ground, and there’s room to extend them considerably. Plus, the balance of resources on our books are in areas that have been permitted and mined before.
We also anticipate high-grade premiums. Our May 2017 resource estimate includes an inferred 709,000 ounces of gold averaging 2.23 g/t. This compares well against the Midwestern US average of about 0.8 g/t for open-pit, heap-leach gold resources.
INN: Coeur Mining (NYSE:CDE) recently became a strategic investing partner. Can you elaborate on the relationship and how you see this partnership evolving as you move forward?
MA: Coeur Mining is one of the oldest mining companies in the US. It became a strategic partner with an 11.7-percent stake in Northern Empire after investing $4 million in our most recent financing. I think what excited Coeur most was Sterling’s exploration upside. The property contains a significant area of underexplored topography proven to host significant Carlin-type deposits.
After we disclosed Sterling’s potential, Coeur immediately began drafting recommendations to its board to invest in Northern Empire and took several steps hinting at their level of devotion. For instance, Coeur volunteered to fund a grad student to do his Master’s thesis on Sterling’s exploration targets — a two-year commitment. He is currently on the ground mapping the property, and I’m starting to get reports and sample data from him. Coeur also offered operational guidance and volunteered to send production staff from its Rochester mine down to Sterling to help us develop our mine plan. We’re going to be visiting their operations as well. Going forward, I expect this will be a highly collaborative relationship.
INN: The last few months have been an exceptionally busy time for Northern Empire. Can you give us some insight on upcoming catalysts?
MA: Something like Sterling doesn’t come across your desk every day. The company has been busy in technical meetings and in laying out exploration plans. But we’ll also be taking a step back and looking at the property as a whole. We see the same geological framework known to host deposits elsewhere on the property. Our goal will be to get geologists onto these targets and create a project pipeline that will help build the company and generate new value streams for shareholders.
I am excited about how things are shaping up. We’ve acquired an exceptional asset in Nevada. We’ve got a team that has made significant discoveries and created a massive increase in shareholder value. We’re going to unleash our geological team to assess a very productive area that’s been hidden away for decades. And we’re launching a significant drill plan shortly. Expect results in early September.
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