The last decade has not been an easy period for junior gold explorers listed across global capital markets. The global financial crisis of 2008-09 rattled investor confidence across all industries not just mining, but the resources sector was knocked down once again by an intense bear market that began in 2012, hitting precious metals stocks particularly hard. While many junior explorers saw their stocks collapse in the years after this, often to the point of no return, NuLegacy Gold Corp came into a brief counter-trend rally in 2016 and took this opportunity to raise funds on three occasions for exploration at its Red Hill property in Nevada. Looking back, CEO James Anderson thinks that decision looks like wisdom now.
Anderson pinpoints 2016 as the end of the bear market in the commodities sector and also highlights the year as a crucial turning point in the development of NuLegacy.
In February 2016, he and the company’s chairman (and astute negotiator) Albert Matter secured a 100% working interest in the 98 km² Red Hill Project, located the Cortez Trend – a ‘cousin’ of Nevada’s legendary Carlin Trend, home to the second largest known gold resources in the world.
“There is no other junior company that can boast our land package in the Cortez area of Nevada,” says Anderson. NuLegacy’s corporate leadership duo have been business partners in the mining industry for several years, and in 2016 they were able to capitalise on the bear market with a strategy that Matter affectionately calls ‘rummaging around in the trash can of the majors’.
One such major with a commanding position in the Cortez Trend is Barrick Gold Corp, the world’s largest gold mining company. Barrick owns three enormous deposits in the trend including Goldrush, an enormous 10 million ounces (Moz) resource that Anderson believes is the world’s best gold discovery made in the last decade.
However, Barrick had its own financial problems during the commodity price downturn which led to the miner making the decision not to pursue exploration at the Red Hill deposit. This allowed NuLegacy’s corporate leadership the opportunity to broker a deal for 100% ownership of the project.
“You always have to look at the good parts of a downturn in the market, and the good part is that we’ve managed to secure a 100% interest in this project that I don’t think that could’ve been done in a good market.”
Gold standard shareholders
The other important development for NuLegacy in 2016 was the arrival of OceanaGold as a strategic partner and major shareholder in the company. “OceanaGold have been extremely important shareholders from the get-go.
“They take a very active interest in what we are doing and offer suggestions about where we might want to spend our money.” NuLegacy’s other major shareholder is Barrick, who along with OceanaGold, comprise a world-class ownership base with unrivalled expertise in the gold sector.
Following the successful corporate manoeuvring of 2016, the company has since been able to focus on exploring its land position in the highly mineralised Cortez Trend. The Red Hill Project is located just 8km from the Goldrush development and on strike with two other Barrick deposits in the 10-20 Moz range.
Therefore, NuLegacy’s strategy has always been to try and unearth a Carlin-type elephant deposit in its large land position in the Cortez Trend, which is entirely feasible at Red Hill given its proximity to existing major deposits in the region.
“We are not just close to the Goldrush deposit, we are now drilling holes and finding gold in an area that has the same stratigraphic units, and the same controls of mineralisation,” Anderson reveals.
“Quite frankly, we also have a lot of people embedded in our company that previously worked at the Goldrush deposit with Barrick, either at the directorial level or on a day-to-day exploration basis.”
Three of NuLegacy’s current directors are senior ex-Barrick people including Alex Davidson, who was head of global exploration for many years and is now chairman of American Silver Corp. Davidson is joined by Alan Hill, another well-known former Barrick man who built many of the company’s mines around the world and is currently chairman of West Africa-focused Teranga Gold.
“Edward Cope is a name that market observers might know less than the other two gentlemen. Ed was head of North American exploration for Barrick for many years and joined our board around 18 months ago. He is now also taking a more active managerial role, after we gave him the title of director of evaluations & acquisitions.”
On a day-to-day basis, the exploration team is also stacked with geologists possessing unrivalled experience in the Cortez Trend. Chief geologist Derek Unger is responsible for directing all phases of exploration at Red Hill, having worked in the region with Newmont Mining for many years.
Charles Weakly is another ‘terrific geologist’ who made his name with Barrick at the Goldrush deposit. “Having folks like Charles and Derek working for us is really excellent,” declares Anderson.
With top quality teams in place from corporate level down to the geotechnical staff, NuLegacy commenced a major exploration campaign in 2016 at the Red Hill Project, initially spending time on the central and North zones of the Iceberg deposit.
An Iceberg in Nevada
Initial drilling from Iceberg provided solid results – if not spectacular – in the honest words of Anderson. However, the company’s more recent activity at the newly discovered Serena deposit has provided much more exciting returns.
“The very first drill hole at Serena was 50 metres of 1 g/t, oxidised and fairly near surface. It was about 375 metres out from known mineralisation at the time, so it was a pretty daring step out. We spent most of last year filling in the gaps between the Serena Zone and the North Iceberg Zone.
Since that discovery hole was drilled in 2017, the results from subsequent campaigns have continued to improve, culminating in two outstanding holes that were drilled earlier this year called Serena 18-01 and 18-02.
Serena 18-01 returned 51 metres of 1.5 g/t, but within that was a high grade area of 15 metres at 3.25 g/t. Meanwhile, Serena 18-02 found 22 metres of 6.6 g/t, including an incredibly mineralised zone of 8.7 metres at nearly 17 g/t of gold.
“When you see these results in those Carlin-type systems, its very important. There are many Carlin systems that are big envelopes of low grade mineralisation that never exhibit that kind of grade.
“When you do find this type of grade you know you are in a very powerful, robust system. It also helps us to have confidence that we do have a realistic chance of drilling into another Goldrush deposit, which is the analogy for what we are drilling into here.”
Recent results from the Serena deposit have served to whip up growing excitement amongst the ranks at NuLegacy, particularly when they are likened to exploration results from the nearby Goldrush deposit by a man who played a key role in Barrick’s discovery of the 10Moz resource.
“Ed Cope was part of the team that was given the Thayer Lindsley award at the PDAC convention in 2014 for the discovery of Goldrush. He is an expert in this type of deposit and points out all the time that when you are getting up to 17 g/t of gold over these broader widths, it is very important.”
However, Anderson does point out that this type of geological system is highly complex, and striking mineralisation is by no means assured with every hole. “We just have to keep on going to try and figure out where there is going to be more of those higher grades.
“Through a series of normal and thrust faulting, the stratigraphy is chopped up, so put simply we will get misses in very close proximity to some of the ore.”
One of the challenges of working with Carlin-type systems is simply finding the capital that is necessary to fully scope out these vast deposits. This explains why gold production in Nevada – where 80% of gold in the US is produced – is dominated by highly capitalised majors such as Barrick and Newmont. It also makes NuLegacy’s work at the Red Hill Project all the more impressive.
Throughout the drilling campaigns of the last two years, the company has called on four reliable drilling contractors. Boart Longyear and Envirotech have been the designated RC drillers, while TonaTec and Fred Anderson Drilling have conducted core drilling. Anderson describes the ongoing work of all four companies as ‘excellent’.
Attracting a major
NuLegacy will continue to explore around the Iceberg and Serena zones of the Red Hill Project, with the end goal to attract a major mining company to take it through to production. This potential buyer could well be one of its two major shareholders OceanaGold and Barrick, or a third party that is interested in staking a claim in one of the best gold mining regions in the world.
“As the gold equity market accelerates, we will see more M&A activity. So, there will be triggers for interested companies if we can show them that NuLegacy has done enough exploration to justify them taking these various deposits into production.”
After delivering some of the best drill results that the Red Hill project has ever seen during this year, the NuLegacy team is very excited about the company’s prospects heading into 2019. But, before the year is out, it is hoped that 10 additional drill holes will further build on the feeling that NuLegacy is sitting on another +10Moz gold deposit in the Cortez Trend of Nevada.