Jurisdiction is becoming increasingly important in the COVID-19 world. Precious metals investors will want to increasingly focus on top-tier mining jurisdictions, such as Nevada. For gold mining, jurisdictions don't get better than the US state of Nevada - a state known as the "Silver State" that produced nearly 6 million ounces of gold in 2019 (more than 5% of total global gold production).
Newrange Gold (TSX-V:NRG) is a junior gold explorer that I have loosely followed since 2017. Back in 2017, NRG went on a parabolic ascent from below $.10 per share to nearly $.80 per share over the span of a few months. However, this early success didn’t last long. NRG shareholders suffered through a very challenging period between June 2017 and September 2018 that saw NRG’s share price decline by ~90%:
NRG.V (Weekly)
When I was running technical scans on junior mining stock charts that had put in bottoming patterns in March, NRG came up as a double-bottom at $.07. Since the March 23rd low, NRG shares have jumped more than 80%. A breakout from the two year bottoming pattern (above $.16) would project to $.25 or higher.
The attractive technical setup prompted me to dig deeper into Newrange to better understand what led to the precipitous decline since June 2017. It seems that it was a classic story of high expectations early on that weren’t reached. The challenging markets for precious metals and mining shares in 2017/2018 certainly didn’t help, and it’s no accident that NRG bottomed in September 2018 at the exact same time that the GDX and GDXJ bottomed.
2020 is a year of new possibility for Newrange. The company’s flagship Pamlico Project is located in the Walker Lane Trend of Nevada, one of the most desirable gold mining jurisdictions in the world:
As shown in the above map, Pamlico is on trend from Kinross’ Round Mountain Mine and the Walker Lane is one of the most storied gold producing districts in the world.
When Newrange first burst onto the scene in early 2017, NRG drilled some really high-grade gold intercepts that got the market excited. However, when they stepped outside of that high-grade area, they only managed to get some lower grade sniffs (which might still be bulk-mineable in an open pit scenario). So the question became where is the high-grade coming from?
When I spoke with Newrange Gold CEO Robert Archer last week he told me that Newrange did an IP survey in December/January, which has been very beneficial in helping the company interpret the geology and what they think is happening out there. With the IP survey completed, Newrange thinks they have an answer to that question. It seems that there's a large intrusive body at depth that is perhaps driving this whole system, and has potentially provided the heat source and the fluid for the gold mineralization.
“...a strong anomaly was detected up to 1,000 meters wide and more than 1,000 meters in length with an apparent depth of 150-300 meters and, for this reason, we decided to add more claims to make sure the area was adequately covered. While the broad nature of this anomaly indicates that the source may be lithological, the extremely high chargeability indicates concentrations of sulfide mineralization below the oxide horizon. It is possible that this anomaly may represent a buried intrusive that could be the source of heat and fluids for the gold mineralizing system in the Pamlico District, however, this theory needs to be drill-tested.” ~ Robert Archer, CEO Newrange Gold
In a sense, Newrange has worked backwards from what you would normally do, where you go in and do geophysics and then you drill the anomalies. In this case, Newrange had done some drilling (an area that is about 500 x 100 meters), then they ran a line of geophysics over that and got an anomaly right where they had done the drilling that produced the high-grade intercepts. This proved the association between the gold-sulfide and the IP. Then, it makes it a little easier to extrapolate out to the other IP anomalies that Newrange is seeing and thinking that these could very well represent other zones of sulfide mineralization, which are potentially gold bearing as well.
Newrange is seeing a large anomaly at depth, which was the reason why the company extended the claims to the east. Because when they ran the first line across that area, they were seeing this large anomaly at depth, and it went right to the property boundary. Fortunately, it was open ground to the east. Newrange kept going with the IP until they had closed off the anomaly and then ran a few parallel lines. Having done that, and seeing that this thing is potentially about a kilometer across and more than a kilometer long, Newrange expanded the property to make sure that they had fully covered the area surrounding the IP anomaly.
The other anomalies that Newrange is seeing seem to be bleeding out from the sides, but this big one at depth is our main interest right now. That anomaly, in conjunction with the old district and all the old underground workings that Newrange has already largely defined, put it all together and the whole system now seems to be roughly two kilometers in diameter. It's a very large area, and according to Archer, it’s looking increasingly likely to be a situation where there are a series of high grade pockets within a very large area of lower grade mineralization, such that you could selectively mine this in an open pit type environment.
Preliminary metallurgy work shows that the mineralization responds very well to cyanide leaching. Newrange has done bottle roll tests and gotten recoveries up to 97%. The metallurgy results appear to be excellent. If you consider the open pit potential at Pamlico, combined with low mining costs and low process costs, in addition to the potential for a sizable target, you suddenly have all of the key ingredients for a mine. It's really just a question of getting in there, testing these targets and proving Newrange’s hypothesis of how big Pamlico really is.
The best part is that Newrange is fully funded and ready to get back out to Pamlico to commence the next drill program in May. Newrange received Goldmining Inc. shares for the sale of a Colombian asset, and this will give Newrange about C$1 million in cash over the next couple of months as the company gradually liquidates some of these shares. There are also C$1.5 million worth of options and warrants set to expire in September and October that could be driven in. The company currently has about C$500,000 in the treasury and no debt.
While Pamlico is definitely Newrange’s flagship project, the company also has a project in the Red Lake District of Ontario called the North Birch Gold Project. North Birch is in a similar geological setting to Newmont Goldcorp’s Musselwhite Mine, which has more than 7 million ounces of past production and reserves:
The game plan is to begin drilling as soon as possible at Pamlico, then to reprocess airborne magnetic and electromagnetic data at North Birch before carrying out line cutting and an IP survey. As soon as the COVID restrictions are lifted, Newrange will be moving ahead at both Pamlico and North Birch.
Newrange has ~115 million shares outstanding and roughly another 20 million options and warrants. Considering that roughly 50% of the shares are in the hands of management and close associates, NRG has a fairly tight share structure. This means that the share price could quickly move back above the C$.16 breakout level once catalysts move into investors’ view:
Mark your calendar for July which is when Newrange CEO Bob Archer expects to begin diamond drilling the big anomaly at depth. I have purchased NRG shares on the open market between C$.11 and C$.125 and I find the risk vs. reward extremely attractive at current levels.
Disclosure: The author of this article has been compensated for marketing and promotional services by Newrange Gold Corp. The author is long NRG.V shares at the time of publishing and may choose to buy or sell at any time without notice.
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.
