Northern Vertex Mining (NEE) - High-Grade Gold Exploration Transforms Ordinary Arizonian Story?

Does this CEO have what it takes to turn a safe and stable gold mining operation into something more exciting and rewarding for gold-silver investors?

Northern Vertex Mining is a CVE and NASDAQ-listed gold producer with assets in Arizona. It is primarily focussed on the development of its flagship 100%-owned Moss Mine Gold-Silver project, which is situated in the historic Oatman Mining district in NW Arizona, USA.

Matthew Gordon talks to Ken Berry, August 2020

The Moss Mine, acquired in 2011, is a low cost, open-pit mine with heap leach processing. Gold recoveries are 82% and silver recoveries are 65% based on the 2015 feasibility study. was originally scheduled to commence gold and silver production in Q4/17, but gold-silver production instead commenced in September 2018. The aim was to produce an average of 48,000oz gold eq. pa in the first 4-years of a 10-year mine plan. Allegedly, the project has an 'excellent exploration upside' adjacent to the open pit and within the wider Oatman mining district.

Let's take a look at some of the numbers within the Phase 3 mine expansion PEA based on a base case US$1,250/oz gold price and US$20/oz silver price:

1. 10-Year Life of Mine Life,
2. US$133M NPV
3. 63% After-Tax IRR
4. US$61.6M CAPEX (including US$37.5M already spent)
5. AISC of an Impressively Low US$603/oz.
6. Crushing Throughput Consistently Exceeding 2015 FS: 5,000tpd
7. Favourable Strip Ratio of c. 1.85:1 (Waste to Ore) 

The PEA was a game-changer for Northern Vertex because would add an extension to the mine-life from 5 to 10-years. In the midst of this gold bull rush, this could be massive.

The share price has been falling for most of the last 8-years, but now it is slowly but surely making a recovery. Gold market conditions aside, it is the high-grade drill results that recently came out of the company's multi-phase drilling and resource expansion program underway at the Moss Mine.

1. 15.2M of 9.11g/t gold and 85.99g/t silver including 6.1M of 21.8g/t gold & 211.48g/t silver, and 1.5M of 69.3g/t gold & 716g/t silver. These are some seriously promising grades that are typical of the better projects in the Oatman Mining District.
2. Moreover, another emerging discovery is taking shape at West Oatman, with drilling intercepts of 53.3M of 0.81g/t gold & 14.77g/t silver.

These discoveries have taken place at the Ruth Vein in close proximity to the Moss open pit, the resource expansion programme within the 5.6Km mineralised moss vein, and in the area of emerging discovery intended to consolidate the hub & spoke production model.

These strong results cap off a really positive few months for the gold junior. On August 6th, the company announced record monthly production in July of 4,713oz gold eq. It is the 4th consecutive month that gold and silver production has increased. McCoy & Sons has been awarded a 3-year contract for mining and blasting operations, and the construction of a 6.9-mile powerline and transformer station is 60% complete, which could save around US$20M over the LOM. Just over a week before, the company announced record gold produjction ion July: 4,713oz gold eq. This reinforced the July announcement which detailed Northern Vertex Mining's record revenue, $18.2M, and record gold eq. production, 11,365oz.

As of June 30, the company had $6.8M cash in the treasury, and it plans to utilise this capital to continue driving the share price back up. Some more high-grade numbers could have act as a multiple on the share price, and investor's will likely be watching on in anticipation. A 60,000ft exploration drill programme is on the cards. Having already invested c. US$100M to get Moss Mine into production, the original focus, the next goal is to grow the deposit "well-beyond the 500,000oz," chasing high-grade zones and bringing them to the market.

In reality, there is still plenty of work to do to turn this into something more interesting. While the AISC in the expansion PEA is admirable, the current AISC for Moss Mine is still hovering just under US$1,000oz sold, so some of the company's cash will be deployed to make use of its recently acquired permitting approval for the Phase III expansion. This is one of the keys to unlocking the value of this story. The other is the high-grades. Deliver both, and we could be on to a winner.

Berry continues to purchases shares on the open market, which is admirable given current economic conditions though we didn't quite find out exactly how many shares he or his management team holds.

The introduction of Joel Murphy and David Splett (in January) to this story is very encouraging. Murphy has plenty of experience with more senior-sized companies and he can bring this to the table. Splett is as sharp as a tack, and has an outstanding track record as CFO for GoldCorp (Newmont) in LatAm. He is also very well connected with institutional investors. Barry is a former investment advisor and was one of the founders of the success story that is Kootenay Silver. He has clearly learnt a lot from this experience, and it served as inspiration for him to create a vessel with a path to production.

This is an aggressive team and we see M&A as a large part of their strategy. Don't be surprise to see an acquisition in the next 12-months...if they can find a deal at the right price.

What did you make of Ken Berry and Northern Vertex Mining?

Company Website: https://www.northernvertex.com/