Pershing Gold Reports Nothing Short of Game Changing Drill Results

Pershing Gold Relief Canyon Mine.

The following interview of Pershing Gold’s (PGLC) CEO Steve Alfers was conducted by phone and email from February 2-4. I, Peter Epstein have no prior or existing relationship with Pershing Gold.

Q. Please expand upon the significance of Pershing’s February 4th press release regarding new high-grade drill results.

A. We reported an intercept over 39.0 ft./11.9 meters of 10.12 grams per tonne (gpt) gold (Au)/0.295 ounces per ton (opt) Au including an interval over 4.7 feet/1.4 meters of 76.8 gpt Au/2.24 opt Au, by far our highest grade gold intercept at the Relief Canyon project. In the context of our entire 2014 drilling program this core hold RC15-264 is an exclamation point on our 135-hole drill program in the North Target Area. Throughout the 2014 drilling program we have consistently reported a pattern of thick intercepts with gold grades two to five times higher than the average grade of the existing gold resource at Relief Canyon. RC15-264 includes an intercept at a grade an order of magnitude higher than the average grade of the resource. As such, it is a game changer. These results demonstrate once again that our deposit appears to be growing in size and in grade. These results will be included in our upcoming resource report. They should significantly enhance the economics of the project, potentially making Pershing Gold the premier emerging gold producer in Nevada.

Q. There has been a lot of news flow lately, please give readers a description of Pershing Gold.

A. Simply stated, Pershing Gold Corporation is an emerging Nevada gold producer uniquely positioned to create shareholder value by the reopening of the Relief Canyon Mine, as soon as October of this year. Pershing Gold’s strategy to create shareholder value has four elements. First, confirm, expand and upgrade the gold resource. Second, re-commission the existing heap-leach processing facility at Relief Canyon to fast track the company to production. Third, explore strategically located 25,000-acre contiguous land package around Relief Canyon. Fourth, create value through strategic acquisitions. We expect to be the next gold mine to reach production in mining friendly Nevada but we don’t expect to stop there. Pershing Gold is a growth story in the gold mining business.

Q. If Pershing Gold commences production in the fourth quarter, how long might it take to ramp up to nameplate capacity?

A. How long it takes us to obtain nameplate capacity turns on a couple of things, most notably, how quickly we can get to an optimal mine rate.  That turns on how quickly we receive amendments to permits to mine the expansion areas outside the existing pits. As Relief Canyon continues to get bigger and better, there will be opportunities to grow production. As our talented team makes new discoveries on our 25,000 acre land package, some of those discoveries could also become mines. However, we are a few years away from bringing on any new mines after Relief Canyon. Still it’s exciting to have such meaningful exploration upside.

Q. Please explain the importance of your recent news release regarding the purchase from Newmont. [Please see PR here]

A. There are multiple important points with regard to this landmark acquisition.  First, we immediately unlock value by getting full control of the ounces known to exist in the acquired lands. Second, we now have complete control of new discoveries. Third, we acquired considerable surface rights we need to expand our mine dumps and processing facility (which will become very important as we grow). Fourth, we continue to develop our longer-term relationship with Newmont, which is stronger and better now. We amended an agreement where we are still collaborating with Newmont, by renewing our exploration agreement with them. Newmont is a neighbor elsewhere in the district, so it’s good to enhance our relationship with them.

Q. When might you have a new resource report out? Will it incorporate all the drill holes done to date?

A. The new resource report will be out later this quarter, or early Q2. It will include the results of our 2014 drill campaign all the way through January of this year. That upgraded resource will be plugged into our in house scoping study and our geologic model. At that stage we should be ready to commission a third-party Preliminary Economic Assessment, “PEA.”

Q. Do you expect to commission a third-party PEA? If so, when might that be completed?

A. We are just finishing up our 2014 drill program now. Once we get the results of all the holes drilled, we will get them assayed and then work on a new resource report. Once that’s done we will submit all the data required for a third-party PEA to be done. We expect that a PEA could be delivered in the second quarter of this year.

Q. There have been research reports written on Pershing Gold. Do you expect additional sell-side firms to pick up coverage?

A. We periodically have conversations with sell-side firms, but of course we can’t name names. Getting the company up-listed in the near future will better allow additional sell-side shops and, importantly, more institutions to own Pershing’s stock. We have applications pending with exchanges, it’s in their hands. We expect an up-listing over the next few months, perhaps sooner.

Q. Moving south on your property is Pershing Pass, has there been any exploration done there?

A. We’ve been continuing to develop targets down there. We are continuing with systematic mapping of targets. We are conducting early stage soil sampling & geophysics, but we’ve not drilled there yet. Moving closer to our northern boundary with Coeur Mining is Buffalo Mountain. We have drilled there, and there are some holes there that are encouraging.  But, exploration there is at an early stage.

Q. Are you finding more silver the closer you get to Coeur Mining? 

A. Yes, some very high silver grades.

Q. How much remaining capital might be required to get Pershing’s Relief Canyon into production later this year?

A. We haven’t yet made the decision on the timing of the reopening of the mine, so I can’t give you a firm number right now. However, we have enough cash on hand to fund our planned and Board approved activities through 2015.

Q. Pershing currently has zero debt. Would you consider utilizing $5-$10 million of debt capital?

A. We will consider capital alternatives including royalties, equity and debt as we move closer to production. With a debt-free balance sheet we believe the options available to us should be fairly attractive.

Q. Trading volume in your stock has picked up and was already strong compared to peers, are any institutions getting involved?

A. Our trading volume is routinely higher than many of our peers. That’s been the case not just recently, but for quite some time. While we want to get more institutions into our shareholder base, there are already some institutional investors involved. In addition, our largest shareholder continues to demonstrate his conviction by making open market purchases.

Q. Your January, 2015 Corporate Presentation mentions tuck-in acquisitions. Can you elaborate on what you might be looking at?

A. Yes, given the devastation of the junior gold market, we are open to opportunities. Remember, Relief Canyon itself was acquired in a distressed sale. We are looking for gold assets in North America where we can leverage operating synergies with our processing facilities and our talented team. Having said that, our focus is on open-pit, heap-leachable projects in Nevada.

Q. Are there any misconceptions about Pershing Gold that you would like to address? 

A. A key point is that Relief Canyon is a past-producing mine, we are no longer an exploration play, we are an advanced developer with a new open-pit mine and a fully owned and permitted processing facility. We are permitted to start production from within the main disturbance area (the past producing open pits). Relief Canyon was discovered in 1970’s, but last drilled in 1989. Over those years no one could develop a sizable project because the land package around the mine was not consolidated. Within three months of Pershing Gold taking over, we struck deals with nearby landholders including Newmont and we were off to the races.

More to your question, we’ve dispelled many of the unknowns and greatly de-risked our company. For example, we demonstrated that we have established a Carlin-style deposit. These types of projects often have size to them. We’ve proven that the deposit is able to grow, both in grade and in size. We’ve done extensive metallurgy work and have shown that our ore is very amenable to heap leaching. Our recoveries are higher than some nearby mines. Our stated average grade of the deposit is quite attractive when considering the other essential components of a viable mine, including factors such as operating cost, low strip ratio, modest capital needs, recoveries, access to a processing facility and timing of initial production. Our recent press release of February 4, 2015 reports really stunning new high grade results.  They surely show that Relief Canyon is getting bigger, better and, above all, higher grade.

Q. Why should investors buy shares of Pershing Gold vs. the multitude of peer gold companies in Nevada?

A. Pershing is an emerging producer for one thing, largely de-risked. We are much more than an exploration company, but we still maintain substantial exploration upside. We feel that emerging producers is where the leverage is, where the lift is. From development to production we are in the sweet spot of the market and located in one of the most sought after jurisdictions in the world. We have a strong management team and two significant and loyal financial backers. Our asset package separates us from the rest of the pack. We don’t need a great deal of incremental capital to get into production. We have a low-cost, open-pit, heap-leach project, good grade, low remaining cap-ex and zero debt. If all goes well, we could be producing soon at a substantial run-rate at a low all-in  sustaining cost.

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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