Still Hot at 50: Gold Exploration in Nevada an Attractive Industry

- February 4th, 2019

Gold exploration in Nevada is improving as rising gold prices make the mining-friendly state all the more attractive.

Gold exploration in Nevada has long proven to be a profitable industry, and the state’s latest gold rush which took off with the Carlin discovery more than 50 years ago is still going strong.

The state’s mineral largess and its stable regulatory environment make it one of the best jurisdictions to mine. Just ask global majors like Newmont Mining (NYSE:NEM), Barrick Gold (TSX:ABX) and Kinross Gold (TSX:K,NYSE:KGC) who all hold significant production operations in the state. Although the 2008 recession put the brakes on exploration activity as it did in much of the rest of the world, improving gold prices have led to an improved outlook for gold exploration in Nevada.

Nevada’s well-endowed with metals and minerals

The Great Basin in northern Nevada has a complex tectonic history that has given rise to a widespread landscape of fault-dominated mountain ranges and valleys with nearly every sort of rock known to geologists. Nevada’s mineral endowments are hosted in a variety of deposit types including porphyry, skarn, low-sulphidation epithermal gold and sediment-hosted Carlin-type deposits. It’s this geologically diverse landscape that makes the state an important source of our most essential metals and minerals, including copper, zinc, molybdenum, cobalt, lithium, and precious metals like silver and gold. Some of the world’s most important gold mining districts are found in Nevada’s three major northwest trending belts: the Carlin trend, the Battle Mountain-Eureka-Cortez trend and the Walker Lane trend.

Nevada sits among the top 5 gold producers in the world. Since Newmont’s discovery of the Carlin deposit in 1965, gold production in the state has totaled almost 200 million ounces, according to the Nevada Bureau of Mines and Geology.

Nevada’s top gold producer status is still assured for years to come. Advancements in exploration techniques and mining methods will help sustain Nevada’s mining industry, including open-pit mining, heap leaching and gold cyanidation. According to the Nevada Bureau Mines and Geology (NBMG), the state has enough gold reserves to sustain gold production near current levels for the next 15 years.

Gold exploration in Nevada

Beginning with the 1859 discovery of silver and gold at the Comstock Lode, mining is so interwoven into the fabric of Nevada’s cultural and economic history that it’s hard to imagine the state without it. In 2017, the Fraser Institute Annual Survey of Mining Companies ranked Nevada as the number three most politically stable, mining-friendly jurisdiction on the planet. “Rich mineral reserves, competitive taxes, efficient permitting procedures and certainty around environmental regulations will still attract significant investment — even with slumping commodity prices,” said Kenneth Green, senior director of the Fraser Institute’s energy and natural resource studies.

When it comes to transparent and easy to navigate regulations and permitting processes, few can beat Nevada, which also offers an attractive tax regime with a low net profits tax and no income tax. Nevada Assemblyman Jim Marchant recently introduced legislation proposing to create a Nevada gold bond that offers a yield in physical gold, and allow miners to pay their taxes in physical gold. Nevada also consistently ranks in the top ten lowest cost gold producing regions in the world, due in part to the state’s excellent infrastructure and ease of access to project sites.

“It’s the prolific mineralization in the state combined with easy access that makes Nevada attractive to resource companies,” Gary Billingsley, President and CEO of Aurex Energy (TSXV:AURX), told Investing News Network. “Access to projects in Nevada is generally by all-weather road compared to projects in northern Saskatchewan, for example, which are fly-in/fly-out. This means the mobilization costs for crews and equipment in Nevada are nearly insignificant compared to the costs of mobilizing into northern Canada. Similar to Saskatchewan, though, most counties in Nevada have a rich mining history and can be considered mining-friendly. Those attributes make it a great place to work.”

Aurex Energy has a diverse portfolio of metals projects in North America, including two in Nevada. The company’s Cook Gold land package is in Humboldt County and 2018 survey and sampling work has identified mineralization indicative of a large system with the high potential for low-sulphidation epithermal gold mineralization as well as high-grade gold-copper porphyry-style mineralization. Cook is located within 50 kilometers of the past-producing Sleeper Mine, itself an example of a low-sulphidation epithermal gold deposit. This deposit type accounts for about one-quarter of global gold production are often higher grade, making them excellent targets for the world’s largest miners as well as junior explorers. Hosted in the northern extension of the Battle Mountain-Eureka trend, the Sleeper Mine has a current measured and indicated resource estimate of 294.4 million tonnes containing 3.4 million ounces of gold and 30.7 million ounces of silver.

Nevada mineral industry going strong

Nevada is definitely a mature mining district with very little low-hanging fruit to pick, at least at surface, but that doesn’t mean there aren’t new discoveries to be had. Much potential remains for under-cover gold exploration in Nevada, especially around existing and past-producing gold properties and mines. McEwen Mining’s (TSX:MUX,NYSE:MUX) near-production Gold Bar Mine in the Battle Mountain-Eureka-Cortez gold trend is a great example of this strategy. Scheduled to begin pouring gold in Q1 2019, the Gold Bar Mine is expected to produce approximately 63,000 ounces of gold annually.

In addition to welcoming new production in the area, Nevada is currently a hotbed for exploration activities.

As is the case in much of the world, mineral exploration activity is down in Nevada compared to a decade ago, but a recent NBMG Mineral Industry report there has been an uptick in exploration spending in the state in recent years. Exploration activity increased by 15 percent in 2017 with a total of 19,040 new claims. Even total gold production in the state increased by 3 percent in 2017.

“It’s starting to pick up,” Shaun Fleming, operations manager for drilling and mine services company Major Drilling International Inc., told Elko Daily. “2018, we’re in a boom. It’s here.” Fleming said reservations for reverse circulation drills and core drills for the 2018 season were quickly filled.

Major Drilling has seen its revenues increase for the first time since fiscal year 2012. It’s a clear sign “that the industry has started recovering from a prolonged downturn. We continue to see a gradual increase in activity month by month,” said President and CEO Denis Larocque. Global mineral exploration expenditures have “improved as most senior and intermediate companies have increased their exploration budgets for calendar 2018,” he added.

Looking forward

The long history of gold resources in Nevada does not mean there’s no tread left on the tires. In fact, the state continues to attract investment from both major and juniors alike, and investors can expect rich geological endowments and mining-friendly policies to present plenty of investment opportunities for gold exploration in Nevada for many years to come.

This article was originally published on the Investing News Network in November 2018.

This article was written according to INN editorial standards to educate investors.

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