Northern Vertex Up Nearly 20 Percent on Moss Feasibility Study

Northern Vertex Mining (TSXV:NEE,OTCQX:NHVCF) kicked the week off on a positive note with the release of a feasibility study for its Moss gold-silver project in Arizona. 

By the end of the day, the company’s share price was up 18.18 percent, at $0.26, on the TSXV. Northern Vertex is now up 52.94 percent year-to-date, an impressive feat in today’s tough markets.

It’s easy to see what got investors excited about the company’s feasibility study. It indicates that Moss should produce 1,750,000 tonnes per year, or 5,000 tonnes a day, over a five-year lifespan. During that five-year period it will produce a total of 173,490 ounces of gold and 1,530,650 ounces of silver. That breaks down into 42,000 gold equivalent ounces a year.

Moss’ average gold grade is set at 0.826 g/t and its average silver grade is pegged at 9.282 g/t. That equates to an average gold equivalent grade of 0.93 g/t.

In terms of costs, initial capital costs are pegged at US$33 million, while operating costs at the 5,000-tonne-per-day throughput rate mentioned above come in at US$13.19 per tonne. Gold equivalent cash costs are expected to come to US$514.27 per ounce, and life-of-mine all-in sustaining costs are expected to be US$624.01 per gold equivalent ounce. Finally, the feasibility study puts Moss’ NPV at US$55.35 million at a 5-percent discount and its after-tax IRR at 44.3 percent. It will have an after-tax payback period of 2.4 years.

Interestingly, those numbers are based on a gold price of US$1,250 per ounce and a silver price of US$20 per ounce. Both prices are fairly far off from Monday’s closing gold price of $1,173.90 and closing silver price of $15.96, but with so many market watchers calling the bottom of the market, it’s likely that Northern Vertex anticipates a friendlier climate when Moss ultimately reaches production.

In any case, Dick Whittington, Northern Vertex’s president and CEO, sees the feasibility study as positive, and commented in Monday’s release, “the Feasibility Study re-affirms the Moss Mine to be an economically robust, higher margin, lower risk project in one of the world’s premier mining jurisdictions. We look forward to building on this solid foundation to position ourselves as a premier, development stage, junior gold mining company.”

He also expressed positivity about the company’s prospects moving forward, noting that the feasibility study for Moss will double as the bankable feasibility study required as part of Northern Vertex’s 2011 exploration and option to enter joint venture agreement with Patriot Gold (OTCMKTS:PGOL).

“Our attention will now focus on securing the necessary financing to fund our 70% share of the costs to build the mine, as per the joint venture with Patriot. We believe the BFS will demonstrate the eminent financability of the Project as we are already in receipt of a major equipment financing proposal from a major US bank,” Whittington said. He added that Northern Vertex is currently in talks with various financial and institutional lenders and also plans to look at equity and debt financing with them.

All in all, it looks like exciting times may be ahead for Northern Vertex. Investors will no doubt be watching to see how financing progresses for the company.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.