By James Kwantes
Published first at

Merlin, the mythical magician of the Middle Ages, was known for prophecy and shapeshifting. He probably inspired J.R.R. Tolkien’s Gandalf and J.K. Rowling’s Dumbledore.

The magic of Merlin, the Nevada gold discovery, is its low profile among retail investors despite impressive size and grade. It’s one of the most exciting gold discoveries globally in recent years. Have you heard of it?

Merlin hosts 983.9 million tonnes grading 0.99 g/t gold, for an initial Inferred resource estimate of 9.05 million ounces, owner AngloGold Ashanti (AU-NYSE) announced on Friday (Feb. 24). That’s in addition to 4.22M oz at the nearby Silicon deposit (0.83 g/t), for a total of 13.27M oz at Silicon-Merlin.

AngloGold now has a total of 16.6 million ounces of gold in Nevada Including the ounces that came with earlier acquisitions of Corvus Gold and Coeur Mining’s claims in the Beatty district. Silicon-Merlin is far from top of mind for retail investors. But you can bet the CEOs of each of the world’s largest gold miners are watching closely as they gather in Florida and Toronto.

Silicon-Merlin’s relative obscurity is partly a function of AngloGold’s secretive approach. The South African-based miner has been both investing millions of dollars in the district (US$73.9M including 129,000m of drilling in 2023) and disclosing precious little. Investability too – the discoveries are housed within a top-10 global gold miner that produced 2.6 million ounces last year.

In addition to plenty of heap-leachable oxide gold, Merlin has large pockets of high-grade gold. Some of the intercepts disclosed Friday are comparable to hits at the world’s hottest gold discoveries, including those by Snowline Gold (SGD-V) and Collective Mining (CNL-T). They include:

  • 236.3 metres of 3.36 g/t gold (794 gram-metres)
  • 103.6m of 7.3 g/t Au (756 gram-metres)
  • 158.8m of 4.07 g/t Au (646 gram-metres)
  • 185m of 2.58 g/t Au (477 gram-metres)

KEEP READING for a few ways to play this emerging world-class gold district. I wrote about Orogen Royalties (at 42c), Altius Minerals and the Silicon-Merlin gold discovery in Portfolio Cleanup Time in the Discount Aisle on October 6, 2022, and have covered Orogen from 33c in Resource Opportunities, my newsletter.

Orogen Royalties (OGN-V, OGNRF-OTC)
Orogen has a 1% NSR on Silicon-Merlin, a legacy of Renaissance Gold’s role in generating the Silicon prospect (Renaissance and Evrim Resources merged to form Orogen Royalties in 2020). Renaissance optioned the Silicon claims to AngloGold for cash and the royalty. Mark Coolbaugh, Renaissance’s chief geoscientist, remains with Orogen as chief geoscientist.

Orogen’s 2% NSR on First Majestic’s Santa Elena/Ermitano gold and silver mine in Mexico provides currency, but Silicon-Merlin represents the company’s future. The royalty gives Orogen exposure to 13.27 million ounces of oxide gold in Nevada. The resource updates do not include any sulphide gold ounces, which is pure upside. Using a conservative value measure of $10 million per 1% for every 1M oz puts a value of $132.7 million on the royalty.

High-quality gold deposits generate a royalty premium, however. When Great Bear Royalties and its 2% Dixie NSR sold for $200 million, Royal Gold paid $20 million per 1%/1Moz. The maiden resource estimate at Dixie was 5 million ounces; the latest resource update was 6.1M ounces.

Kinross’s Great Bear deposit and AngloGold’s Silicon-Merlin have plenty of differences and an important feature in common: outstanding economics. While it’s early to make that claim – AngloGold is still working on a prefeasibility study – heap-leachable oxide gold at 1 g/t in Nevada fits the bill.

Orogen CEO Paddy Nicol had been playing private investigator in recent years as he attempted to determine what AngloGold had on his royalty ground. The veil has now been lifted and the results are impressive. Orogen published an update and the webinar at that link is also worth a watch.

Orogen is trading at 52-week highs, with one of the best charts across the junior mining complex. The stock moved modestly higher on the news. Based on Orogen's direct exposure to this high-quality discovery, OGN shares probably have further room to run from these levels.

Price: 0.80
Shares out: 193.5 million (209M fully diluted)
Market cap: $154.8 million

Altius Minerals (ALS-T, ATUSF-OTC)
Base metals royalty player Altius Minerals owns a 1.5% NSR on Silicon-Merlin as well as 15.2% of Orogen’s outstanding shares. That will increase to 19.9% later this year when Altius exercises Orogen warrants. Effectively, Altius owns the 1.5% NSR and will own 20% of Orogen’s 1% NSR.

Altius secured the royalty through its 2015 acquisition of Callinan Royalties. Callinan got the royalty a year before by funding Renaissance Gold’s exploration at Silicon, during a time of sparse exploration financing.

Back in 2021, while AngloGold was saying little about Silicon-Merlin, Altius spent north of $3.5 million buying OGN shares in the public market. Then, in March 2022, Altius purchased a block of 2.4 million Orogen shares – half of Newmont’s stake (Altius co-founder Roland Butler bought the other half).

There’s a good case to be made that the 1.5% Silicon-Merlin NSR is among Altius’s most valuable assets. It’s getting no love (or precious metals multiple) in the Altius portfolio. CEO Brian Dalton is a smart operator and I expect Merlin’s coming-out party to accelerate the process of capturing the value of this world-class 1.5% royalty. If Royal Gold’s Dixie gold royalty is worth $200 million, what is Altius’s 1.5% royalty on 13.27M ounces of oxide gold in Nevada worth?

Altius and Orogen are friendly and some combination/spinout of the Silicon-Merlin royalties makes a lot of sense. The 1.5% NSR -- or combined 2.5% NSR -- is far too valuable to be invisible for much longer. 

Altius director Andre Gaumond bought another 2,000 Altius shares in the days following the Merlin reveal, and I found the purchases noteworthy. Gaumond knows something of the value of a large gold discovery and valuable gold royalty, as the founder of Virginia Gold Mines (discovered Eleonore, sold to Goldcorp) and Virginia Mines (Eleonore royalty, sold to Osisko Gold Royalties).

Price: 17.21
Shares out: 47.55 million
Market cap: $818.3 million

AngloGold Ashanti (AU-NYSE)
AngloGold’s 9M oz at Merlin and 16.6 million ounces state-wide probably puts a target on the company’s back. The prospect of 500,000 ounces a year of highly profitable gold production must have all the gold mining CEOs salivating. Barrick boss Mark Bristow may be watching events unfold at Silicon-Merlin the most intently.

In 2023 Barrick mined almost half its gold – 1.865 million oz of 4.05M oz – in Nevada. The company also has important development assets in Goldrush and Fourmile (the latter wholly owned) and is drilling projects optioned from juniors (Ridgeline Minerals). For Barrick, Nevada is a key jurisdiction.

Barrick seems like a logical suitor. But Bristow would have to pay up to swallow AngloGold, especially now, and that’s something he’s averse to doing. Barrick tried to acquire Great Bear Resources on the cheap – through “at-market takeovers” – and was rebuffed, losing the asset to Kinross Gold.

AngloGold shares trade at USD$18 after hitting $30 earlier this year. The company produced 2.6M oz of gold last year, much of it from Tier 1 assets in Africa – a jurisdiction Bristow is quite familiar with. Stay tuned.

Price: $18.01 USD
Shares out: 111.12 million
Market cap: $7.56 billion

Finally, another player worth watching in the Beatty gold district is Richard Warke’s Augusta Gold (G-V), which is trading at multi-year lows of 61 cents. Augusta is a quiet company that is developing the Reward and Bullfrog heap-leachable gold deposits, which have combined resources of 1.6 million ounces.

Augusta has a stated goal of being “the first modern-day producer” in the region. Warke’s track record of creating shareholder value and Augusta’s access to capital make the company an intriguing play. Warke owns a 29.5% stake in the company and has been a steady buyer at prices much higher than where the stock is trading.

Price: 0.61
Shares out: 85.96 million (123.66 fully diluted)
Market cap: $52.44 million

Disclosure: I own shares of Altius Minerals and write about Altius and Orogen Royalties in Resource Opportunities, my newsletter. No business relationship with any company mentioned in this article.