A combination of growing money supply, a mushrooming balance sheet at the Fed, the Federal debt and US deficit, a devalued US dollar and global central bank demand for gold are good reasons to buy gold. Technically speaking, it has now been 80 weeks since Gold (NYSEARCA:GLD) reached a new all-time high price. The correction of 2006 took 71 weeks. The correction in 2008 took 77 weeks. The Gold Bugs Index has reached its downside target of 352 from the Point and Figure chart.
Gold price has also reached its downside target of $1,560 from the Point and Figure chart.
Rick Rule, the CEO of Sprott USA, commented on February 6:
"The other thing that is happening right now is increased merger and acquisition activity, particularly in the mid-tier oil and gas sector. But that will spread down to the junior producers, and I think it will spread laterally across base metals and precious metals miners as well."
According to veteran geologists interviewed on March 3-6 at PDAC 2013, 600 junior exploration companies will disappear from scene by June 2013. These statements inspired me to screen for exploration stage gold companies that meet these three criteria:
1. Insider ownership in excess of 10%.
2. Funding secured for at least the next 12-18 months.
3. Exceptional management team.
In this article, I will feature three such companies. All three of these companies have operations in the State of Nevada, United States.
1. Gold Standard Ventures (NYSEMKT:GSV) is a Canadian-based company focused on the acquisition and exploration of district-scale and other gold-bearing mineral properties exclusively in the State of Nevada, United States. The company's flagship property is the Railroad Project, located in Elko County, Nevada. The Railroad Project is a prospective gold exploration target comprising approximately 15,636 acres (24.4 square miles) as geographically defined in the Railroad NI 43-101 within the Carlin Trend of north-central Nevada.
The company has a 20% insider ownership and the institutions own 50% of the company. There has been more insider buying filed this month by Jonathan Awde, President & CEO, Director of Gold Standard Ventures.
The company reported the third-quarter financial results on November 14 with the following highlights:
|Net loss||$1.6 million|
The company's budget is $5.5 million for January 2013 through June 2013. This budget includes drilling for 12 holes.
The management team has 108 years of combined industry experience. Dave Mathewson, MSc Geology, Vice President, Exploration, Director, has been an exploration geologist for 35 years, including more than 25 years in Nevada. Until May of 2001, Mr. Mathewson was manager of Newmont Mining Company's (NYSE:NEM) Great Basin and Carlin Trend exploration programs.
The company has a 20% insider ownership. FCMI Investment, ranked #1 hedge fund by Fortune in 2011, has a 16.44% stake in the company. The company has enough funds to last for at least this year. The management team is very experienced and the CEO has been buying more shares this month.
2. Klondex Mines (KLNDF.PK) is primarily engaged in the surface and underground exploration and development of its 100% owned Fire Creek gold property in North Central Nevada. Fire Creek is strategically located between the past producing Mule Canyon Mine to the north and the world-class Pipeline and Cortez gold deposits to the south. The property comprises 11,208 acres (17.5 square miles) and is readily accessible via Federal and state roads with close access to the electrical power grid.
Klondex's secondary focus is acquiring, exploring and developing other gold and silver properties in Nevada. Currently Klondex has three other gold exploration properties, and it reviews and considers other projects for inclusion.
On September 12, 2011, Klondex announced an updated Technical report and resource estimation that produced an Indicated Mineral Resource of 1.65 million ounces of gold and an Inferred Mineral Resource of 0.46 million ounces of gold identified via its deep surface drilling program at its Fire Creek Property. The resource figures, which are as of May 21, 2011, reflect a 4 grams per tonne cutoff. In late April 2011, Klondex initiated an underground program at Fire Creek including a 1,113 meter (3,650 foot) decline that will enable underground in-fill exploration drilling.
The company reported the third-quarter financial results on November 8 with the following highlights:
|Net loss||$1.5 million|
On November 1, 2012, Klondex Mines announced a $20 million equity financing and a $7 million debt financing by issuing up to approximately 14,815,000 non-transferable subscription receipts at a price of $1.35 per subscription receipt.
The company anticipates bringing the Fire Creek Project to bulk sampling by year-end 2013 with only $12.7 million investment. A new NI 43-101 resource update is targeted for mid-2013.
The management team has 70 years of combined industry experience. Paul Andre Huet, President, Chief Executive Officer and Director, brings over 25-years of experience in high-grade mining, with particular expertise in narrow vein gold mining and has supervised Mine Operations, Mine Engineering, Geology and Mine Safety in Nevada.
The stock has a 20% insider ownership. With the latest financing, the company has enough cash to last for this year. The management team has the required experience to bring the mine to the production. The resource figures, which are as of May 21, 2011, reflect a 4 grams per tonne cutoff, which is a very high grade.
3. Bullfrog Gold Corp. (OTCQB:BFGC) is a US based gold and silver exploration company with large prospective properties within prolific mining districts of Nevada and Arizona.
All executive officers and directors as a group (2 persons) own 12.8% of the company.
The company reported the full-year 2012 financial results on March 18 with the following highlights:
|Net loss||$1.4 million|
On February 4, 2013, Bullfrog sold an aggregate of 1,800,060 units with gross proceeds to the company of $450,015 to certain accredited investors.
On January 30, 2013, Bullfrog received $316,856 from RMB as part of the debt facility agreement.
On December 12, 2012, Bullfrog announced the execution of a secured $4.2 million debt facility with RMB Australia Holdings Limited. Funds from this facility are specifically for advancing the Newsboy Gold Project located 50 miles NW of Phoenix, Arizona and certain administrative costs. An 18-month budget and program includes drilling 28,000 feet in 69 exploration and development holes and furthering environmental, engineering and economic studies. The balance of funds drawn will be used for project and corporate administration, including property payments, financing fees and debt service.
The company's Phase 3 drill program was completed on March 9, 2013 and included 8,340 feet of drilling in 26 holes. Results on the first five holes in the Queen of Sheba area were released on February 25, 2013. Remaining Phase 3 results will be released upon receipt and study of final assays and drill data. Upon converting all relevant historic drill data in electronic format, the company plans to engage an independent group to update resources before the end of 2013.
David Beling - President, CEO and Director
- 48 years of experience in the base and precious metal and energy mineral sectors.
- Specialized in development, financing and operation of projects and corporations.
- Significantly reviewed or examined 80 underground mines, 120 open pits and 160 process plants.
- Employed by Phelps Dodge, Union Oil, Fluor (NYSE:FLR), United Technologies (NYSE:UTX), Westinghouse and six junior mining companies. Managed AZCO and Hycroft. Consulted for 20 mining companies.
- Director of 13 US and Canadian public and private mining companies since 1981.
- Registered Professional Mining Engineer - Arizona & Nevada.
- Drove approval of an Environmental Impact Statement in 1993, the first for a mine in Arizona.
The company has a 12.8% insider ownership. On December 12, 2012, Bullfrog secured a $4.2 million debt facility with RMB Australia Holdings Limited, which should be used for a 18-month drilling program. David Beling, President, CEO and Director of Bullfrog, has 48 years of experience in the base and precious metal and energy mineral sectors and owns 8.3% of the company. The latest drill results from the company's Newsboy Gold Project are very promising. Bullfrog is particularly excited about a shallow 5-foot intercept that averaged 13.9 ounces gold per short ton (opt), which is bonanza grade.
Disclosure: I am long GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.