Usually, when someone heads to Nevada with hopes of striking gold, they're about to be sorely disappointed by the cold, hard mathematics behind the casino industry. However, for those doing so in the context of the mining industry, their prospects are frequently in a much better place. Nevada has long been a state familiar with gold mining, producing nearly 80% of the United States' gold and producing nearly $230 billion in gold since 1835.
For Premier Gold Mines (PG:CA) , the company is in Nevada for the right reasons. Its South Arturo property marks a shift for the company as it begins the move from exploration and into production. It's also a solid property that is located in Nevada and is shifting to production through a partnership with one of the industry's biggest players. While mining for gold, or investing in gold mining stocks, can frequently be an exercise fraught with uncertainty and risk, Premier Gold Mines is stepping into a new phase as a company on some well-established and very firm footing.
Location and Business Partner Help Create Real Opportunity
In South Arturo, Premier Gold Mines is involved with a property that combines two established brands in the gold mining world.
As mentioned above, Nevada is a great place to locate a gold mine for a lot of reasons. For starters, there's a lot of gold in the ground, always the most important aspect for any gold mine. Located on the historic Dee mining claims on the prolific Carlin Trend, the 3,627 acre property with indications of resources in excess of 1 million ounces and a silver to gold ratio of 70:1. And even beyond the quality of the resource, there's a lot of advantages to operating a property in a state with an established relationship with the mining industry.
"Nevada is considered one of the most richly endowed gold districts anywhere in the world and is home to birthplace of many of the major gold mining companies of today," said Ewan Downie, the President and CEO of Premier Gold Mines. "With this incredible mining history comes much of the infrastructure, permitting processes and skilled people required to explore, develop, build and operate mines in the State."
But beyond the inherent advantages of Nevada, Premier is partnered with a company with a long track record of success on the property. South Arturo is 40% owned by Premier Gold Mines, a stake that they purchased from Goldcorp (G:CA) (GG) earlier this year. The other 60% is held by Barrick Gold Corporation ($ABX:CA) (ABX) , one of the largest and most successful gold producers in the world. As such, the partnership brings with it the backing of tremendous resources and a lot of experience as Barrick continues developing the open pit mine on the site.
"Barrick's team running the project on site are very impressive and have many years operating Nevada," continued Downie.
Short-Term and Long-Term Prospects Appear Strong for Premier
Production at South Arturo is currently projected to be under way in the first half of next year and significantly ramp up in the second half of 2016. With that comes a solid position for Premier Gold Mines.
When it comes to mining companies, being able to claim both a producing mine at present along with promising properties that should produce in the future is an enviable position to be in. And Premier appears poised to enter just such a position.
Along with the South Arturo property, Premier Gold Mines can claim four other properties that each hold a great deal of promise as producing mines of the future. They hold a 50% stake in the Trans-Canada property along with Centerra Gold Mines (CG:CA) , a series of claim groups with the significant advantage of being situated near both the Trans-Canada Highway and the Trans-Canada natural gas pipeline. The properties are host to multiple gold deposits, produced some 4 million ounces of gold between 1930 and 1970, and are currently under development.
As far as exploration goes, Premier has another three properties, two in Northwestern Ontario and a third in Nevada. It holds a 44% interest in Rahill-Bonanza in the Red Lake gold mining district with the other 56% held by Goldcorp affiliate Red Lake Gold Mines. The area has a long history of mining and recent discoveries of high-grade gold deposits. Also in the Red Lake mining district is Premier's Hasaga property, a fully-owned site situated near the south margin of the Dome Stock.
Finally, the 100%-owned McCoy-Cove property in the Battle Mountain-Eureka Trend of North-Central Nevada can boast significant historic geological datasets and proximity to a nearby paved highway.
All in all, Premier Gold Mines has the potential to see its value increase in the near future as it starts the completion of its transition into production.
"Our Company is making its transition from explorer to producer, and at the same time, we're a company that is very active with the drill bit," Downie told Equities.com in an August interview. "There are a lot of catalysts coming up in the next 12 months that include production in Nevada. We're looking for a positive feasibility study for the Trans-Canada Project and continued success from drilling in Red Lake…. Given that our company has about $90 million in cash whereas most juniors are almost out of money, we're one of the best-positioned companies from a financial perspective to continue to grow in the resource space…."
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