Gryphon, US Gold See More M&A In Nevada's Jr. Gold Sector (August 1, 2007)
Gryphon, US Gold See More M&A In Nevada's Jr. Gold Sector
August 01, 2007: 05:38 PM EST
VANCOUVER -(Dow Jones)- Nevada, widely viewed as hometown for senior gold miners Barrick Gold Corp. (ABX) and Newmont Mining Corp. (NEM), is also the testing ground for a gaggle of juniors poking and prodding the ground in search of the next big precious metal find.
This elephant-and-mouse landscape includes Gryphon Gold Corp. (GGN.T), one of a number of TSX-listed explorers trying to consolidate the junior end of the gold mining spectrum within the U.S. state.
Why? To one day cobble together a defined and measured resource that's large enough to attract the interest of a Barrick, Newmont or Kinross Gold Corp. (KGC) looking to add inventory, especially as their operations increasingly see excess capacity.
"In Nevada, the majors, like Barrick and Newmont, are mining their reserves faster than they are replacing it," said Gryphon President and Chief Executive Tony Ker. "A lot of the juniors in Nevada are looking to be the company that can provide these majors with their exploration targets."
Rob McEwen - the founder of GoldCorp Inc. (GG) who now heads up U.S. Gold Corp. (USGL) - agrees.
"Nevada is a prolific area, but people still aren't focused on it; we should be consolidating land packages there, because when the dust settles the seniors are going to own a large piece of (the state)," he said. "The whole industry is going into fewer and fewer hands; you're just seeing what's occurring at a higher level happening at the lower levels so that (a junior's portfolio) becomes a more meaningful package."
Nevada-centric U.S. Gold recently finalized the acquisition of three key junior Nevada gold plays: White Knight Resources, Nevada Pacific Gold and Tone Resources.
"We'll continue keeping our eyes peeled for opportunities beyond where we are, " McEwen said. "I want to continue to be in the exploration phase (of the gold production cycle) because that's where the greatest value creation occurs."
So, be it Nevada's Walker Lane, Battle Mountain, Cortez or Carlin trends, it doesn't really matter - the state is awash in gold. In 2005, Nevada accounted for 83% of U.S. gold production - and 9% of global production. At the time, only South Africa, Australia and China rivaled the state in terms of overall production. And the current appetite for all things gold has only fueled speculative activity.
In Gryphon's case, privately-held Nevada Eagle LLC is its latest consolidation target, a US$12 million cash-and-shares deal for 54 prospective gold properties, the bulk of them along Nevada's Walker Lane gold trend. Past operators of these claims - who have drilled hundreds of holes - have reported more than 900,000 non-NI43-101 ounces in the ground, Ker said.
"With this acquisition, we will be in a really good position to have a strong option on gold (assets) in Nevada," he said. "We want to develop these properties to the point where a major can take them over."
Gryphon will now look at its newfound package of properties and decide which ones will be kept, which will be jettisoned and which might be better served in a joint venture deal. At the moment, 20 of the properties are already leased out to other operators, generating $700,000 in cash flow, Ker said.
"These operators have a right to earn in or have a buy out option on each property," he said.
Gryphon Expects More Nevada-Based Deals Soon
The deal also means the Nevada Eagle owner, Jerry Baughman, will join Gryphon as vice-president, corporate development. That's another way of saying: Expect more mergers and acquisitions.
"We're hoping for deals within the next six to nine months - all Nevada based targets," Ker said. (Baughman's) abilty to bring deals to us and acquire more properties, coupled with our talents as geologists and publicly-listed administrators, will leverage his capabilities."
The Nevada Eagle deal complements Gryphon's flagship Nevada play, its Borealis property, which has a measured and indicated resource of 1.2 million ounces of gold as well as an inferred resource of 600,000 ounces. Average grade: 0.025 ounces per ton.
"This is our core business, so will continue to focus on the property and to grow more the value and volume of ounces in the ground," Ker said.
He said AMEC PLC (AMEC) is currently reworking all the resource calculations, including data from a drilling program which ended in July. A report will be released in September, in part to outline the ways and means of adding more oxide-based gold ounces on the property.
"If we can add an additional 100,000 oxide ounces, we would be in a position to go forward, if warranted, with a small oxide mine on that property," Ker said.
Gryphon's M&A overtures are simply part of the larger consolidation picture in Nevada.
Fronteer Development Group Inc. (FRG) is in the process of taking over Denver- based explorer NewWest Gold Corp. (NWG.T) in an all-share deal. And Vista Gold Corp. (VGZ) recently placed its existing gold projects - together with a newly- acquired land package - into a new company called Allied Nevada Gold Corp. (ANV) , which recently tapped the private placement market for US$17 million to develop its Hycroft mine
August 01, 2007: 05:38 PM EST
VANCOUVER -(Dow Jones)- Nevada, widely viewed as hometown for senior gold miners Barrick Gold Corp. (ABX) and Newmont Mining Corp. (NEM), is also the testing ground for a gaggle of juniors poking and prodding the ground in search of the next big precious metal find.
This elephant-and-mouse landscape includes Gryphon Gold Corp. (GGN.T), one of a number of TSX-listed explorers trying to consolidate the junior end of the gold mining spectrum within the U.S. state.
Why? To one day cobble together a defined and measured resource that's large enough to attract the interest of a Barrick, Newmont or Kinross Gold Corp. (KGC) looking to add inventory, especially as their operations increasingly see excess capacity.
"In Nevada, the majors, like Barrick and Newmont, are mining their reserves faster than they are replacing it," said Gryphon President and Chief Executive Tony Ker. "A lot of the juniors in Nevada are looking to be the company that can provide these majors with their exploration targets."
Rob McEwen - the founder of GoldCorp Inc. (GG) who now heads up U.S. Gold Corp. (USGL) - agrees.
"Nevada is a prolific area, but people still aren't focused on it; we should be consolidating land packages there, because when the dust settles the seniors are going to own a large piece of (the state)," he said. "The whole industry is going into fewer and fewer hands; you're just seeing what's occurring at a higher level happening at the lower levels so that (a junior's portfolio) becomes a more meaningful package."
Nevada-centric U.S. Gold recently finalized the acquisition of three key junior Nevada gold plays: White Knight Resources, Nevada Pacific Gold and Tone Resources.
"We'll continue keeping our eyes peeled for opportunities beyond where we are, " McEwen said. "I want to continue to be in the exploration phase (of the gold production cycle) because that's where the greatest value creation occurs."
So, be it Nevada's Walker Lane, Battle Mountain, Cortez or Carlin trends, it doesn't really matter - the state is awash in gold. In 2005, Nevada accounted for 83% of U.S. gold production - and 9% of global production. At the time, only South Africa, Australia and China rivaled the state in terms of overall production. And the current appetite for all things gold has only fueled speculative activity.
In Gryphon's case, privately-held Nevada Eagle LLC is its latest consolidation target, a US$12 million cash-and-shares deal for 54 prospective gold properties, the bulk of them along Nevada's Walker Lane gold trend. Past operators of these claims - who have drilled hundreds of holes - have reported more than 900,000 non-NI43-101 ounces in the ground, Ker said.
"With this acquisition, we will be in a really good position to have a strong option on gold (assets) in Nevada," he said. "We want to develop these properties to the point where a major can take them over."
Gryphon will now look at its newfound package of properties and decide which ones will be kept, which will be jettisoned and which might be better served in a joint venture deal. At the moment, 20 of the properties are already leased out to other operators, generating $700,000 in cash flow, Ker said.
"These operators have a right to earn in or have a buy out option on each property," he said.
Gryphon Expects More Nevada-Based Deals Soon
The deal also means the Nevada Eagle owner, Jerry Baughman, will join Gryphon as vice-president, corporate development. That's another way of saying: Expect more mergers and acquisitions.
"We're hoping for deals within the next six to nine months - all Nevada based targets," Ker said. (Baughman's) abilty to bring deals to us and acquire more properties, coupled with our talents as geologists and publicly-listed administrators, will leverage his capabilities."
The Nevada Eagle deal complements Gryphon's flagship Nevada play, its Borealis property, which has a measured and indicated resource of 1.2 million ounces of gold as well as an inferred resource of 600,000 ounces. Average grade: 0.025 ounces per ton.
"This is our core business, so will continue to focus on the property and to grow more the value and volume of ounces in the ground," Ker said.
He said AMEC PLC (AMEC) is currently reworking all the resource calculations, including data from a drilling program which ended in July. A report will be released in September, in part to outline the ways and means of adding more oxide-based gold ounces on the property.
"If we can add an additional 100,000 oxide ounces, we would be in a position to go forward, if warranted, with a small oxide mine on that property," Ker said.
Gryphon's M&A overtures are simply part of the larger consolidation picture in Nevada.
Fronteer Development Group Inc. (FRG) is in the process of taking over Denver- based explorer NewWest Gold Corp. (NWG.T) in an all-share deal. And Vista Gold Corp. (VGZ) recently placed its existing gold projects - together with a newly- acquired land package - into a new company called Allied Nevada Gold Corp. (ANV) , which recently tapped the private placement market for US$17 million to develop its Hycroft mine
