Pershing Gold Advances Nevada Mine

Pershing Gold released encouraging preliminary testing of prospective gold recoveries... an important de-risking event.

– Pershing Gold released encouraging preliminary testing of prospective gold recoveries… an important de-risking event.

– Pershing management team in talks with the BLM to restart operations within prior pit boundaries.

– Company presented last week at the European Gold Forum, institutional interest in Pershing continues to grow. See link to Gold Forum presentation.

– Company releases upgraded gold resource of 717,000 Measured, Indicated & Inferred ounces.

NOTE:The author has no existing or prior business relationship with Pershing Gold (PGLC). All information contained herein comes from press releases and the brand new corporate presentation. Investors are urged to review the latest corporate presentation, updated this month.

Pershing Gold continues to advance and de-risk its past producing Relief Canyon Mine in a prudent and methodical manner. On May 12th, the company announced encouraging preliminary results on column leach testing. According to Chairman/CEO Steve Alfers,

“The results from the column leach tests are a real game changer for the Relief Canyon deposit because these recoveries are so much higher than what has been reported for the two operators that mined the deposit in the 1980s,”

Another encouraging bit of news can be found in Pershing Gold’s March 31, 2014 press release, see here

“Pershing Gold is discussing with the BLM a plan to reopen the mine within the existing footprint of the pits under the existing Plan of Operations.”

This suggests to me that Pershing is pursuing an opportunity to possibly start mining activities sooner than the second half of 2015 (as stated in the company’s annual 10-k report). In other words, the company could be in production within 12 months. If the company can achieve this goal, Alfers and his team could work out the logistics and optimize production to be in the position to deliver a meaningful amount of gold by 2016.

Also found in the March 31st press release is a summary of the company’s updated resource, in which it’s reported that,

“Pershing Gold is pleased to announce that Mine Development Associates (“MDA”) of Reno, Nevada has completed an updated gold resource estimate that includes the results from the Company’s 2013 drilling program. The updated resource estimate shows a Measured and Indicated Resource of 552,000 ounces of gold and an Inferred Resource of 165,000 ounces of gold…”

The company has made real progress in increasing its resource, from a total of 155,000 Measured, Indicated & Inferred ounces in June, 2010 to 717,000 ounces today. To be clear, back in 2010 there was only Indicated & Inferred ounces. Importantly, the new resource report is based on a much lower gold price than the $1,650/oz used in last year’s report. Therefore, if gold prices rebound, a significant amount of ounces would fall back into the model.

Pershing Gold Invited to Present at the European Gold Forum

Pershing Chairman/CEO/President Steve Alfers was in Switzerland this week where he made a presentation at the European Gold Forum. Please see the video of this presentation here. Institutional investors are increasingly coming across the Pershing name as Alfers attends high profile conferences like this one. In the presentation, he explained that the Relief Canyon Mine project is shaping up to have the capacity to produce up to 80,000 ounces per year. This would be a solid, low-risk open-pit mine with which to grow, and organically fund, the company once in operation.

Importance of Nevada Growing

As many mid-tier and Major gold companies continue to face severe challenges in foreign jurisdictions like Indonesia, Chile, the Dominican Republic, Russia and Kyrgyzstan, even Mexico with its recent tax increase- the importance of doing business in the U.S., and specifically in Nevada, is increasingly clear. Both Barrick Gold (ABX) and Coeur Mining(CDEreiterated that Nevada is front and center of their respective growth plans. Barrick in particular has been stung by a series of problems outside the U.S. including Pascua-Lama on the border of Chile and Argentina and the Pueblo Viejo project in the Dominican Republic.

With gold prices near $1,300/oz, down from $1,900/oz in September, 2011, gold companies ill afford to take on resource nationalism alongside mine development and funding risks. Therefore, dozens of companies with far flung operations in remote corners of the world are anxious to revisit Nevada, (home to about 3/4′s of all U.S. production). Barrick and Newmont Gold (NEM) have been shedding high-cost, high-risk operations in places like Africa and Australia, to double down on Nevada. This trend is certain to continue. Gold producing assets in the State will increase in value as M&A activity escalates. Pershing is expecting to be in production in about 15 months, with a chance of initial activities commencing sooner. As such, Pershing remains a prime takeout candidate.

Conclusion:

Pershing’s recently released resource report with a total of 717,000 Measured, Indicated & Inferred ounces, its fully built, paid for and permitted processing facilities, 25,000 acre land package, highly experienced management / technical team and location in one of the best jurisdictions on the planet, position the company for success for years to come.

By Peter Epstein

In 2011, Peter Epstein, CFA, left a $3 billion hedge fund where he was a senior analyst, to help increase awareness of a number of natural resource companies in which he's invested in. Mr. Epstein formed MockingJay, Inc., a consultancy for companies in the natural resources space and informal (non-licensed) advisor to high net worth investors. Mr. Epstein's areas of expertise include uranium, coal, gold, potash, copper and graphite.
He has published hundreds of articles / blogs on investment sites such as Seekingalpha, Au-Wire.com and the Motley Fool and some articles on Stockhouse.com and CEO.ca

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