We met with Albert Matter (Chairman) and Roger Steininger (COO) of NuLegacy Gold (NUG.V) for the first time at the PDAC conference in March 2012 when we were first introduced to the company’s portfolio of projects and its plans for the future. Whereas NuLegacy had several horses in the stable back then, it’s now committed to make its only project, the Iceberg Gold project in Nevada, a real success.
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Focusing on the Iceberg project
A very good place to start a review of NuLegacy Gold is across the valley from the company’s flagship Iceberg project. The property on the hillside on the opposite side of this valley in Nevada belongs to Barrick Gold (ABX), and hosts the Goldrush project, one of the largest and highest grade gold discoveries of the last decade. Goldrush is located a mere 4km stroll from NuLegacy Gold’s Iceberg project and currently hosts a resource of 10.6M measured and indicated ounces, plus 4.9M ounces in the inferred category.
The Goldrush project is under development in order to complement Barrick Gold’s most profitable operation, the so called Cortez mine complex currently consisting of the Cortez Hills mine and the Pipeline mine. Barrick Gold is mining almost 1M ounces of gold per annum from this operation, at all-in sustaining costs of less than $600/oz. Incidentally, the man credited with the discovery of the 21+M ounces Pipeline mine is called Dr. Roger Steininger, the acting COO of NuLegacy Gold; which is a good point to close this tangent and shift the focus back to NuLegacy Gold and its Iceberg project.
Drilling results for the Iceberg project so far appear highly promising, with mostly oxide mineralisation found in several places in three gold bearing horizons. The geological interpretation is showing remarkable similarities with the other deposits along the Cortez trend, and near-surface grades of around 1g/t combined with excellent metallurgical properties are indicating strong potential for yet another large deposit amenable to heap leaching.
The Iceberg deposit has a strike length of over 3000+ meters so far and is still open in most directions. The newly discovered high-grade North zone underpins the high prospectivity of this land package, and the currently known mineralization is closer to surface, and therefore potentially cheaper to mine than across the valley at Goldrush.
Earning a 70% interest from Barrick Gold
The Iceberg project used to belong to Barrick Gold (ABX), but NuLegacy Gold opportunistically secured an earn-in arrangement in the aftermath of the 2008 crisis.
The agreement requires NuLegacy to spend $5M on exploration costs on the property in order to earn a 70% stake until the end of 2015. As of December 31 2014, expenditures have added up to $3.15M, leaving a remaining portion of just under $2M to be spent this year (of which $700k still needs to be spent as of the end of Q2 2015).
It is the company’s declared goal to complete this requirement and funding has been secured to ensure just that. Once NuLegacy Gold has fulfilled its earn-in obligation and owns 70% of the Iceberg project Barrick Gold has 90 days to choose between (a) earning back a 70% stake by spending $15M on further exploration; or (b) remaining a 30% minority partner. NuLegacy Gold has formulated an exploration target of 90M to 110M tonnes of oxide ore at around 1 g/t, which would translate into a 3M ounces resource. This is an ambitious target, and certainly well in excess of the results needed to get Barrick Gold excited.
The decision to option this prospective landholding to NuLegacy Gold was certainly not made on a whim by Barrick Gold. In fact, the key players of this small exploration company are well known and respected by the world’s largest gold producer.
NuLegacy Gold’s team brims with talent including the aforementioned Dr Steininger (who consulted for Royal Gold when the Pipeline discovery was made), alongside David Mallo who acted as exploration manager for the discovery of Barrick’s Eskay Creek mine whilst working for Calpine Resources, and Alexander Davidson who was part of the team to develop the Lagunas Norte mine. It is therefore no surprise that Barrick Gold has unleashed NuLegacy Gold on the Iceberg property, knowing well that this team has a very high chance of finding whatever there is to be found.
The recent drill results
And found gold this team has, just recently. Drilling results from the ongoing campaign published in May confirmed the North zone high-grade discovery and printed a bonanza 41.2 meters of 3.9 grams/tonne starting at a depth of less than 100 meters from surface. Interestingly this is the very same horizon which also hosts the bulk of the high grade mineralisation at Barrick Gold’s Goldrush project, and importantly the ore at Iceberg is completely oxidised.
In June, a second set of results extended this high grade zone with a step-out hole at 200 meters distance returning 0.78 grams/tonne over 71.6 meters including 2.19 grams/tonne over 9.1 meters starting at less than 40 meters from surface. Other holes from this program also add confidence to the emerging high-grade deposit at this North zone. Drilling for a third set of holes has just begun and drill locations have been selected in order to expand this North zone yet again. The spectacular results for the North zone dominate the recent news releases by NuLegacy Gold, but digging deeper one also notes the latest results for the Central zone which was extended yet again, admittedly at lower grades around 1 gram/tonne but close enough to surface to promise economical potential.
The 2015 drilling program will without doubt expand the footprint of the Iceberg deposit significantly, and results received so far have beaten expectations convincingly. The Cortez trend is one of three great gold mining trends in the state of Nevada, perhaps the most sought after jurisdiction to operate in as a gold miner. So far around 50M ounces of gold have been discovered along the Cortez trend in total between the Pipeline and Cortez Hill mines as well as the Goldrush project. Iceberg might well be next in line, it certainly is the next known deposit along the trend.
NuLegacy has just completed another 8 hole drill program and we expect to see the assay results before the end of July. We are mainly looking forward to see the intercepts at hole 52 (which is a 120 meter stepout hole from drill hole 47)and hole 57 (which is located 140 meters northeast of discovery hole 40 where the 41 meters of almost 4 g/t were intersected. See the drill maps on the next page.
The drill program has currently been halted for a short break, but CEO James Anderson assured us the exploration program will resume from July 10th on.
Who are the company’s largest shareholders?
NuLegacy Gold has close to 160M shares outstanding, plus about 42M warrants and options. Institutions have maintained significant interest over the years and own about 35% of the company’s shares, and principals collectively own an even bigger stake at 45%. This leaves only 20% to the public, a very small stake that should ensure the share price to move quickly when it starts to rally.
The company has just completed a C$2.3M financing at a unit price of C$0.125 and shares are currently trading around the level of this financing, right in the middle of the 52 weeks trading range of 6 to 18 cents per share. The current share price translates into a market capitalisation of just C$23M. NuLegacy Gold’s treasury is sufficiently stoked with C$3.2M in cash to pay for this year’s exploration program which constitutes the final portion of the total investment necessary to earn a 70% stake in the Iceberg project.
Management / Board bio’s
Albert J. Matter – Chairman
Albert has 40 years of diverse experience financing both public and private companies, and structuring and negotiating transactions with particular expertise in the mining industry. He provided corporate finance, strategic planning, mergers and acquisition, and business development assistance to numerous corporations and high net worth individuals, frequently working with leading names in the Western Canadian business and investment communities. He is one of the founding partners of National Gold Corporation – the predecessor of Alamos Gold Inc., and NuLegacy Gold Corporation.
James E. Anderson – CEO
James is responsible for all aspects of the daily management of the company. He is also in charge of presenting the company’s story to both individual and institutional investors. Additionally, he will lead the company’s ongoing efforts to secure the financing necessary to continue to grow shareholder value through the discovery of mineral wealth. A graduate of the University of Alberta, James spent 19 years as an investment banker, then manager, with several boutique-sized Canadian investment firms including First Canada Capital Partners Ltd., Research Capital Corp., and Majendie Securities Ltd
Roger C. Steininger – COO
Roger is responsible for the final selection of properties and drill targets, and successfully delineating a significant gold resource in Nevada. Roger has more than 40 years of experience in exploration, evaluation and development of metal deposits. For the last 25+ years he has focused on Nevada gold geology – he is credited with the discovery of the South Pipeline and Long Valley gold deposits, as well as participating in the discovery or expansion of gold reserves at numerous mining operations. He is a Qualified Person as defined by NI43-101.
Roger was Exploration Manager for Amselco Minerals (part of BP Minerals) for seven years and maintained a consulting practice for the last 21 years. Clients have included major mining companies such as Royal Gold, Phelps Dodge, Amax Gold, Gold Fields Mining and Glamis Gold in addition to a selection of junior development and exploration companies.
Conclusion
The time frame for an investment in NuLegacy Gold is very limited. By the end of this year the earn-in will be completed, and Barrick Gold will need to make its choice by Q1 2016. If Barrick Gold decides to earn back a 70% stake then this would imply that NuLegacy owns a 30% carried interest to production; and if Barrick Gold decides otherwise, then NuLegacy Gold has a 70% stake in the next deposit down the road from Goldrush on the Cortez trend.
Both options are desirable outcomes, and both outcomes can be sold profitably which is the declared intention of NuLegacy Gold. A 30% carried interest in a Cortez trend project would be a valuable addition to any royalty company’s portfolio, and a 70% working interest could be sold profitably to a mid-tier miner seeking exposure to gold production in Nevada. Plus there is a kicker: the land immediately adjacent to the Iceberg project and along trend is controlled by NuLegacy Gold outright. If Iceberg lives up to expectations and can be sold, then NuLegacy Gold already has the next carrot dangling in front of the buyer’s nose.
NuLegacy Gold is looking for the next elephant deposit in Nevada, and the preliminary exploration results at Iceberg are already very encouraging.
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Disclosure: NuLegacy Gold is a sponsoring company. Please see our disclaimer for current positions.
