Northern Gold Mining (TSX-V: NGM): Advancing Discovery with Near-Term Production Potential
By: Peter Spina, Founder GoldSeek.com
-- Posted Tuesday, 19 April 2011 | | Source: GoldSeek.com
Finding the right junior gold stock opportunity can be likened to the odds of winning the lottery. One out of a few thousand mining projects goes from early exploration to production. Find the right project with the right management team and the rewards can be significant.
Late last year I was introduced to a relatively new exploration company with two advanced stage gold deposits situated 15km west of St. Andrew Goldfield’s Holloway gold mines and 30km east of Brigus Gold’s Black Fox gold mine. After some months of further research and subsequently meeting with the company on multiple occasions, I believe that Northern Gold Mining (TSX-V: NGM) presents an investment opportunity which stands out from its peers in a packed space of junior exploration companies looking for the next large gold deposit.
In Northern Gold’s case the gold discovery has already been made. The focus is on defining the size of the gold deposits and advancing the project forward towards production. In March, The Northern Miner published an article on Northern Gold Mining. In the piece, Northern Gold’s CEO and President, Martin Shefsky, puts their Garrcon gold deposit into perspective:
"There is a lot of similarities between what Osisko Mining's (OSK-T) Canadian Malartic was finding in its early days and this," Shefsky says as he stands on an outcrop which overlooks the pine green valley overlaying the mineralized rocks of Garrcon. "We've already outlined roughly 700,000 oz. of gold and that's just from 20 million tonnes of a deposit that we believe contains over 125 million tonnes...and that's just going down to the 200 metre level." - March, 2011 interview with The Northern Miner
Before Northern Gold Mining acquired the Garrison property (Garrcon and Jonpol deposits), the prior operator of the property defined the current Garrcon gold resource (674,000 ounces at 0.94 g/t) by outlining the boundaries of the deposit. The boundaries outlined covered an area about 760 x 300 meters which Northern Gold Mining has two active drills focused on completing infill drilling:
"There's lots of open areas," Shefsky says of the deposit. "The 20 million tonnes in the resource estimate is spread out over the whole area, so we have a lot of infill drilling to do. We're not exploring, we're just infilling." – March, 2011 interview with The Northern Miner
These drill results being released continue to show terrific results of long intercepts with consistent grades. Just in the past months the ongoing infill drill program has yielded rather solid gold results:
·285 m of 1.62 grams / tonne
·209 m of 1.44 g/t
·102 m of 1.38 g/t
·190 m of 1.1 g/t
·220 m of 0.69 g/t
·101 m 1.07 g/t
The ongoing 30,000 meter drill program efforts were doubled in December with the addition of a second drill rig. With around $4 million in the treasury and strong market conditions, Northern Gold Mining’s CEO stated that the drill program could again be accelerated with the addition of more drills possibly as soon as the coming few months.
One of the next key milestones in advancing this project towards feasible production is an updated resource calculation. Due out any day, the updated NI 43-101 compliant resource will take into account all drilling done prior to December, 2010 – which is about 10,000 meters. This should move the current total resource well over current 1 million ounces mark.
The completed 2010 drilling, combined with the ongoing 30,000 meter drilling program centering on the Garrcon, is demonstrating that this part of the project should soon host a multi-million ounce gold deposit. This would advance the potential for a bulk-mineable open pit deposit that is sitting near and partly above surface (this could initially translate into a zero strip ratio as there is no overburden to pre-strip).
Northern Gold Mining has recently announced some significant changes to the ownership and size of the Garrison project as well.Just over a week ago, Northern Gold Mining entered into a definitive agreement to consolidate 100% ownership of the Garrison property by means of cash and share payment to ValGold. This was a major step forward in advancing and developing the project. Northern Gold also announced that they increased the size of the Garrison property by 27%.
Investors can be overwhelmed by the multitude of choices, making the task of determining the most attractive risk-reward junior gold stock a careful consideration of many variables including appropriate investment timing. I find Northern Gold Mining to be in an exciting position. The management is very active in advancing the project with the technical and financial resources to do so. On a per ounce valuation metric (EV / Resource), NGM is trading at the lower end of our comparables list, and this summary is without taking into account the updated 43-101 resource due out any day:
Market cap per all resource ounces for gold companies exploring and producing in the vicinity of Northern Gold Mining (Lakeshore Gold, Kirkland Lake and Brigus Gold in production). Northern Gold Mining valued around $57/ounce pre 43-101 resource update; lower end of the comparables list.
I believe that Northern Gold Mining is in an excellent position to attract higher valuations as the ongoing successful drill results turn into compliant resources. This combined with the current market valuations makes Northern Gold Mining a compelling risk-reward opportunity which is why I have included it as one of my top investments in my portfolio.
Peter Spina, GoldSeek.com
Keep Updated on Northern Gold Mining:
We look forward to researching Northern Gold Mining in further depth including a property site visit in the second half of 2011 by a GoldSeek.com mining analyst. To keep updated on Northern Gold Mining please join my e-mail list.
The Garrison property - two advanced exploration projects:
-Jonpol Deposit (high grade underground, late 1990’s mined 13,564 ounces / $20M worth of gold during a bulk sample program)
-Garrcon Deposit (current focus of the ongoing 30,000 meter infill drill program).
Disclosure / Disclaimer:
The author holds a long position in Northern Gold Mining. The company is a paid sponsor on GoldSeek.com. The author is not a registered financial advisor. All views expressed here are opinions of the author and should not be viewed as investment advice. The author highly recommends all investors do their own due diligence before investing. The author will refrain from any selling activity in the company mentioned in this report for a period of one week off a positive analysis. The author will refrain from any buying activity in the company mentioned in this report for a period of one week off a negative analysis.
-- Posted Tuesday, 19 April 2011 | Digg This Article | Source: GoldSeek.com
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Peter Spina's experience with the precious metal markets started back in the mid-1990s, which led to the creation of GoldSeek.com back in 1995. Today GoldSeek.com ranks in the top three most popular global gold websites and its sister site, SilverSeek.com ranks as the most visited silver website in the world. Back at the start of the new secular precious metals bull market, Peter established the technically-focused subscription newsletter, Gold Seeker Report, which at the start of 2005 was merged into the more comprehensive Gold Forecaster (goldforecaster.com) service. In addition to the newsletter and websites, Peter frequently appears in the media including MarketWatch, Reuters, and theStreet.com
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Northern Gold Mining (TSX-V: NGM): Advancing Discovery with Near-Term Production Potential
Before Northern Gold Mining acquired the Garrison property (Garrcon and Jonpol deposits), the prior operator of the property defined the current Garrcon gold resource (674,000 ounces at 0.94 g/t) by outlining the boundaries of the deposit. The boundaries outlined covered an area about 760 x 300 meters which Northern Gold Mining has two active drills focused on completing infill drilling:
I believe that Northern Gold Mining is in an excellent position to attract higher valuations as the ongoing successful drill results turn into compliant resources. This combined with the current market valuations makes Northern Gold Mining a compelling risk-reward opportunity which is why I have included it as one of my top investments in my portfolio.
