Gold has been one of the most sought after minerals for centuries. From the ancient pyramids, where gold was used to ornate buildings and thrones to today's rapidly growing jewelry markets, gold has held its own over time. The Gold Standard, which began in 1900 and ended in 1971 created a benchmark for world currency because of its consistent values. While world monetary systems no longer rely on the value of gold, its attraction and intrinsic value has not changed or diminished.
Gold pricing is tied to many economic factors. These include inflation, geopolitical environments, and political instability even at the regional level. In times of crisis demand for gold rises as it is still considered a default currency in many world markets. Paper currency is only as valuable as the government that backs the currency. Gold holds value regardless of political stability and this can impact demand significantly. Political instability can also impact production in regions where the mines are located.
The other factor that has a large impact on demand is for jewelry. For example, as markets in China and India are experiencing rapid growth, demand for gold for jewelry and ornamentation is increasing demand as it represents wealth and success.
With instability spreading around the world, there has been an increased focus on American mining companies. They offer seasoned management teams, using modern technology to extract gold from well known, safe, low cost, and high grade gold deposits.
What follows are three promising American gold deposits that are plotting a new course in gold production. Some are operated by major mining companies with a long history of profitable exploration. The others are midsize companies with an established base to provide strong long term growth. The former is safer in terms of performance consistency and predictable returns, whereas the latter may be more volatile but with the most upside potential.
Carlin District - A National Treasure
Nevada holds one of the largest mining deposits of gold in the world and produces nearly 80% of all the gold mined in the United States. The Carlin Trend is a belt of gold deposits that is approximately 5 miles wide and 40 miles long, extending in a north-northwest direction through the town of Carlin, Nevada. By 2008, mines in the Carlin Trend had produced over 70 million ounces of gold, worth around US$85 billion at 2010 prices.
The Carlin Trend is made of "4 Windows." Running from north to south is the Richmond Dome, the Maggie Creek Dome, the Rain District and the Railroad/Pinion district.
The Richmond Dome contains the famous Goldstrike Mine which is controlled and operated by Barrick Gold Corp (NYSE:ABX). The Maggie Creek Dome is controlled and owned by Newmont Mining Corporation (NYSE:NEM). The Rain District is also operated by Newmont Mining Corporation except for the Saddle deposit which is owned by Premier Gold Mines (NASDAQ:PGLC). The mine that is furthest south on the Carlin Trend is the Railroad/Pinion District which is controlled and operated by Gold Standard Ventures (NYSEMKT:GSV).
Gold Standard recently acquired 40 square miles occupying the last window in the Carlin Trend. It is being explored using an experienced exploration team with a track record of success. For the seasoned investor it is important to watch out for near term catalysts as mentioned in the CEO's interview with analyst Peter Epstein:
"We have near-term catalysts in the form of drill results and maiden NI 43-101 compliant resource reports from Pinion by the end of July and North Bullion later this year." - Jon Awde, CEO
Homestake District/Black Hills - A Legend
In terms of total US gold production, the Black Hills ranks second only to the Carlin District of northeast Nevada. The gold production of the Black Hills is concentrated in a 100 square mile area known as the Homestake District. The Homestake Mining Company owned The Homestake Mine through its 125 year production history and produced approximately 40 million ounces of gold and was the largest iron-formation-hosted gold deposit in the world. Barrick Gold Corp, which also runs the Goldstrike Mining operation in Nevada, acquired the Homestake Mining Company and operated the mine until 2002 when it closed.
The Black Hills have come alive again with Dakota Territory Resources (OTCQB:DTRC). They are using modern technology to develop and extract the extensive gold deposits near the historic mine, giving the Homestake District in the Black Hills a new life. Dakota acquired and controls the Blind Gold, City Creek and the Homestake Paleoplacer properties. All of which are located in the heart of the Homestake district and cover a total of 3,057 acres.
"The upper end of the resource we think is 2 million ounces-plus on this particular property and we have good data to indicate this property is a derivative of the Homestake," he said. "It's an erosion of the Homestake lode, where the Homestake orebody outcrops and was discovered in 1876; the first 1,000 feet of that deposit produced 10,000 ounces per vertical foot. So there was 10 million ounces in the first 1,000 feet of that lode." - Richard Bachman, CEO
Relief Canyon Mine - Pershing Gold Corporation
Located in Northwestern Nevada, along the southern edge of the Humboldt Range, lies the Relief Canyon Mine. Gold was first discovered on the Relief Canyon property in 1979 by the Duval Corporation with gold first produced in 1984. The Relief Canyon Mine was acquired by Pershing Gold Corporation in 2011, which operates the mine today.
The Relief Canyon Mine Includes three open-pit mines and a state-of-the-art, fully permitted and constructed heap leach processing facility. The plant has the capacity to treat eight million tons per year. The permitted leach pad can hold 21 million tons and can be readily expanded. The facility is ideally situated to process ore from future discoveries of satellite deposits.
These assets present Pershing Gold with a unique opportunity to capitalize on the synergies of an existing processing facility adjacent to a mine. They offer additional resources to achieve a fast-track path to production at the Relief Canyon Mine.
Pershing recently announced preliminary results of their column leach tests on gold-bearing samples from the Relief Canyon Mine property. This has generated a lot of buzz in the industry and interest from investors. These results show higher gold recoveries than the previous mine operators achieved and also indicate that this mineralized material leaches quickly.
It is important to note that Pershing Gold anticipates that the column leach test results will be finalized this summer (2014) and will be announced in a future news release, according to their May 22, 2014 press release.
Any geologist will tell you the best place to find large deposits of gold are where other major deposits have been discovered. These three mining districts and the companies that operate them seek to benefit from this philosophy. The benefits of drilling in established mining districts includes higher potential for discovery, infrastructure that has already been built out, no political challenges, and potential for buyouts from majors nearby. These companies are using the latest technology to increase production and change the face of mining in the US. Drilling results are expected in the next few months.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.
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