Gold prices have continued to hold their values amidst the backdrop of a broad market sell-off over this week. Although there is still always a possibility of a slide in gold values, the general bullish sentiment towards bullion was echoed today as analysts from Thomson Reuters GFMS released their gold outlook for 2012 which called for a slide back towards $1500 per troy ounce before rising towards $2,000 an ounce before the end of 2012. Philip Klapwijk, global head of metals analytics with Thomson Reuters GFMS, commented in a statement, “The $2,000 an ounce level being surpassed is probably looking more like a story for the first half of 2013 than something we will see in the second half of this year.”
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Where the next support level will be established if a new all-time high is hit is surely a question, but overall the outlook for the foreseeable future is very optimistic for mineral explorers as gold trudges higher and inflation is kept under control. The news should revitalize the mining sector from majors like Barrick Gold Corp. (TSX:ABX, NYSE:ABX) to mid-tier gold producers such as New Gold Inc. (AMEX:NGD) to developmental miners with a large upside like Northern Vertex Mining Corp. (TSX-Venture:NEE, PINK:NHVCF).
Barrick is an easy choice for many portfolios as the company is the world’s largest gold producer with more than 25 operating mines and numerous exploration projects ongoing worldwide. New Gold has been on a massive climb, rising from 74 cent lows in late 2008 to current levels above $9 per share, but still could perk higher with its cash flow positive operations in the United States, Mexico and Australia. For those with a greater risk appetite, Northern Vertex Mining has plenty to offer with its aggressive growth efforts and the possibility of production in the near term.
The British Columbia-based company has projects in the United States in Arizona and Idaho, as well as an early exploration project in BC (the Copley Project). Northern Vertex is employing a business strategy of acquisition of properties with historic reserves that it can quickly convert into National Instrument 43-101 compliant projects to move towards production. By acquiring properties with historic gold at a rate of less than $20 per ounce and converting them to NI 43-101 compliant resources, the company can catapult values as high as $120 per ounce for the resources.
In the last 12 months, the company has completed the acquisition of its two U.S. properties, the Moss Gold-Silver Project in Arizona and the Lemhi Gold-Silver Project in Idaho. The Moss Property was acquired in March 2011 and has already completed a 27,000-foot drill program, which has resulted in the delineation of a substantial NI 43-101 compliant gold-silver resource. The property has been shown to host nearly 600,000 ounces of gold and Northern is still conducting more drilling on the “Western Extension” to prove-up more reserves.
Northern Vertex’s Lemhi Project was recently assembled from four underlying property holders to form a newly consolidated advanced exploration opportunity. The Lemhi Property includes Yamana Gold’s (TSX:YRI, NYSE:AUY) interest in the Humbug Gold Deposit and has a historical non-compliant 43-101 resource of 32.36 million short tons at a grade of 0.0375 ounces per short ton for 1.21 million contained ounces of gold. The company plans to mirror its aggressive Moss Project drilling program at Lemhi with confirmation drilling already underway.
What’s particularly impressive is the manner in which Northern Vertex is expeditiously acquiring and developing its projects while stockpiling cash at the same time. The company has the right to earn a 70% interest in the Moss Property from Patriot Gold Corp. through a $500,000 payment (which has already been made) and $8 million in exploration (of which nearly $4 million is already done in 9 months). The property still has a fund with nearly $4 million in it for further exploration. The Lemhi Property, which offers the company the right to earn up to a 75.5% interest, has a fund with nearly $8 million in it for exploration. Cash and dilution threats are not an issue for Northern to continue advancing the projects towards production.
The bottom line is that there are a plethora of junior miners in North America and solid companies can often slink by unnoticed amongst the crowds. Such seems to be the case with Northern Vertex. With only 45 million shares outstanding (54 million fully-diluted), the company is well managed with proven talent which includes: David Farrell ($26B in M&A with Endevour Financial), James McDonald (Director/Technical Committee of $2.3B Alamos Gold), Ken Berry (Chairman of Kootenay Silver) and Joe Bardswich (Operating Manager of Drumlummon Gold Mine). Northern Vertex (NEE-TSX.V) is in possession of metal-bearing properties that could move the company from a developmental outfit into a mid-tier producer as gold prices continue to escalate over the next couple years.
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