Smart people make complicated matters seem simple. Noted geologist Brent Cook of Exploration Insights does an excellent job outlining the investment life cycle of junior mining shares in a chart embedded below. Cook evaluates the economic viability of a mineral discovery, in other words the cold hard truth of ‘turning rocks into money.’
Drill results are great but that means nothing if the mine is not economic and you cannot build a profitable mine. If a company gets past the initial hype around drill results, produces feasibility studies, a period of time Cook calls this the ‘Orphan period’, then there is the move to development and eventual startup which is typically where share price should move up. It is at this point in the life span of a mining share from discovery to production where institutional investors come in with the sufficient financing to turn this mine operational and the stock price starts to move back up towards full value, and a good time to invest.
If you look compare the share price chart for Northern Vertex Mining Corp. (TSX-V: NEE| US-OTC: NHVCF) over its history with Cook’s life cycle of a mining share, the pattern appears to hold true for Northern Vertex and its Moss Mine project with the recent announcement of a $20-million investment from Greenstone Resources LP.
It was back in March 2011, when Northern Vertex entered into an agreement with Patriot Gold to earn a 70% interest in the Moss gold-silver property in Arizona. The company was drilling at its Copley project acquired from Kootenay Silver (TSX-V:
KTN) when it began drilling at Moss. Over the summer, Northern Vertex produced a series of drill results from the Moss project which saw the company’s stock price rise to a high of $1.45 on January 30th, 2012. The company conducted a second phase drilling program in 2012 which provided sufficient results to push the company into producing a feasibility study on the property. From then the stock since languished down to a low of 19 cents in late 2015. During this low tide, the company secured financing, acquired the remaining 30% interest from Patriot Gold.Subsequently its share price strengthened; moving out of the down cycle as it advances to commercial production.
So far, the story on Northern Vertex is holding true to Brent Cook’s life investment cycle. The most recent news is further bolstering this pattern as the stock price has been edging upas it moves into commercial production. We know where this company is in the life span of a mine moving to production. Therefore, we should see in the company’s chart an appreciation in share price with incoming Institutional Investors, according to Brent Cook’s life cycle of junior mining shares.
The company has put its Moss Mine on the fast track with a series of cash infusions from institutional investors and has arranged financing with equipment providers as its moving through the development phase onto the start up phase. On May 26, Greenstone Resources LP participated in a $20 million financing of which the first tranche for $10 million was closed. Northern Vertex is also using $10 million from a $20-million loan facility with Sprott Lending and has entered into a $9 million financing lease agreement with CAT Financial for its equipment needs. As a result of these financings, Greenstone currently owns 19.9 per cent of the company's issued and outstanding common shares. In addition to accelerating the development schedule, the financing also provides critical working capital during ramp up to commercial production at the Moss Mine. Goldseek.com reached out to President and CEO of Northern Vertex Ken Berry for a comment...
“We are delighted to have Greenstone Resources join Northern Vertex as a strategic partner as we advance the Moss Mine Gold/Silver Project through to commercial production later this year. The announced US$25 million financing strengthens our balance sheet and will expedite construction, procurement and staffing initiatives.”
Earlier in the process Northern Vertex took steps to technically de-risked the commercial mining process by conducting a Pilot Plant Test which produced approx. 4,000 oz of gold and 20,000 oz of Silver. The project site has seen a significant transformation in the past few months with the completion of the site civil works for the crusher pad, ROM pad, laydown yard, Merrill Crowe facility, and ancillary roads.
Northern Vertex is currently trading around 50 cents CAD with 140,007,215 outstanding shares; this gives the company a market capitalization of approximately $70 million. Total liabilities and equity are $46,975,199 as indicated in their Third Quarter Fiscal 2017 Financial results released on May 25th.
Ken Berry, President and CEO of Northern Vertex intends to leverage the company’s strong balance sheet, production cashflow, and financial partnerships to pursue a US gold consolidation vision to a become a mid-tier gold producer.
From exploration to discovery, then to production, Northern Vertex is beyond the high-risk discovery stage and has a US gold-silver mine on its way to producing cash flow in the coming months. I made my initial investment into the company late in 2016 and since accumulated additional shares on pullbacks making Northern Vertex my top junior gold mining position. This is an exciting period for Northern Vertex after years of hard work and as we move towards and into mining, I expect the share price to further reflect this success!
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, 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 Investors Business Daily.
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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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