Golden Independence Mining — simple, low risk heap leach project in Nevada, with “fast-track” opportunity

NOTE: For the purposes of this article / interview, all references to historical or prospective mineral resource estimates at the Independence Gold project are on a 100% basis. Management expects to earn a 51% interest in the project by 12/31/21. Management then has the option to acquire (up to) a 75% interest, by spending (up to) US$10M more over four-years (2022-2025).

Golden Independence Mining [“IGLD“] (CSE: IGLD) / (OTCQB: GIDMF) is flying under the radar with its flagship project in Nevada on property within Nevada Gold Mines’ [“NGM“] (a JV between Barrick & Newmont) Environmental Impact Statement & Permitted Plan of Operations footprint. The Independence Gold project is just 0.5 km southwest and adjoins to NGM’s Phoenix-Fortitude mining operations in the Battle Mountain-Cortez trend.

Management is proposing an initial low-cost, low risk, heap leach project that could potentially grow into a larger operation incorporating already identified, much deeper higher-grade (6.5 g/t gold / Inferred) sulphide mineralization.

IGLD is earning up to 75% of a brownfields project with an historical (non NI 43-101 compliant) resource estimate from 2010 of just over 1.0M gold equivalent ounces — 343k of which are in a shallow oxide zone. The overall resource comprises oxide epithermal mineralization, plus a deeper sulphide Carlin gold skarn zone.

The main focus is next year’s new mineral resource estimate and a Preliminary Economic Assessment (“PEA“). Only the near-surface oxide ounces will be considered in the PEA. Over 50 holes were drilled after the 2010 resource was published. Those holes, plus new holes from this year, will be included in the next resource. Some of the best historical drill intersections were reiterated in this recent press release.

Management has ~$3M in cash to fund its Phase 1 drill program, that was recently expanded to ~18,000 feet / 20–22 RC drill holes and 3–5 diamond core holes. More than $34M has been invested, and > 200 drill holes logged prior to IGLD starting work on the project. Golden Independence has 31.6M shares outstanding for a market cap of $15.4M.

With zero debt & $3M in cash, the Enterprise Value is $12.4M = US$10M. NOTE: {shares outstanding & cash is increasing this month due to an accelerated warrant exercise campaign ending December 28th}

Importantly, a new CEO / director was appointed last month as Tim Henneberry transitioned into the role of President / director, as planned. Christos Doulis has 25 years’ direct metals / mining experience in the realms of equity research, capital markets & investment banking, including a significant background in Nevada operations. See his full bio here.

I’ve had a few conversations / email exchanges with him, he knows exactly what investors & strategic partners are looking for. The following is an interview of CEO Doulis conducted on Dec. 8-10th.

Subsequent to the 2010 resource calculation, there have been > 50 new holes, and an 18,000 ft. Phase 1 drill program is currently underway. Do you have a conceptual target of how large your upcoming (1Q 2021) mineral resource estimate could be?

We hope to be able to report ~500,000 low-risk, near-surface, high-quality, Measured, Indicated & Inferred oxide-only ounces in our next resource estimate in March or April. That’s low-hanging fruit. The much deeper, higher-grade material is valuable, but won’t be exploited before we throw a lot of tonnage onto our heap leach pads.

We believe that 500,000 ounces could potentially support a 7 or 8-yr. mine life at 50 or 60,000 ounces/yr. in a PEA, which we hope to deliver in the second half of next year. Ongoing drilling in 2021/22 could add a few hundred thousand more shallow, oxide-only ounces.

In addition, we’re looking at opportunities to acquire ounces from deposits located within economic trucking distance of our heap leach pads. Once we have established a mine and are generating cash flow, we will look to explore and develop our higher-grade sulphide resources, which currently sit at nearly 800,000 Inferred ounces at 6.5 g/t gold, {that’s an undiluted, in-situ value of ~US$382/tonne}.

In reading your corporate presentation, it seems that the Independence Gold project could potentially be fast-tracked. Please describe the steps that could get you into production sooner.

We’re proposing a modest, low risk project to start. Since production would be contained within NGM’s Plan of Operations, we believe several permitting, environmental & reclamation steps could potentially be pursued faster than usual.

For example, we’re fully-permitted for the exploration & development drilling of over 160 drill holes from 80 drill sites. And, we think that we can get our heap leach-related permits, once we start that process, within 24 months, (vs. 3 or 4 years for less well positioned juniors in Nevada)

If the gold price remains strong, that would really help us attract project financing. The average gold price in the six-year period from 2014-2019 was $1,267/oz. Today it’s $1,840/oz., and it touched $2,074/oz. in early August. PEA & feasibility studies done during that period used gold price assumptions of ~$1,200-$1,350/oz. Recent studies are using $1,500-$1,600/oz. gold.

Why should readers consider buying shares of Golden Independence (CSE: IGLD) instead of the dozens of other precious metal juniors in Nevada? 

There are many companies and projects to choose from, but investors should favor management teams with the experience and good judgement to choose safe, stable world-class jurisdictions and low-risk projects. In a low-price environment, heap leach operations in Nevada are a different story, but at today’s levels — they’re printing money.

Readers should look for companies that can raise investment capital, explore, develop and place into production projects within 3-4-5 years. Most early-stage projects in Nevada are 6-12 years from production. Finally, we believe that U.S. investors are going to become increasingly interested in investing in U.S.-based precious metal mines.

Based on recent gold junior PEAs, if we can model an initial heap leach mine at $1,550-$1,600/oz. gold, a 7 or 8 year mine life, at 50 or 60,000 ounces/yr. — that would be a small, but nicely profitable operation with ample room to grow. This is what we hope to achieve in a PEA as soon as the second half of next year, subject of course to the analysis of third-party consultants.

There are dozens of heap leach projects at PEA/PFS stage in the U.S. Projects like ours have after-tax NPV(5%)’s of about C$100M (see above chart of U.S. heap leach projects at PEA-stage). Another way of thinking about our Company’s low relative valuation is by looking at Enterprise Value (market cap + debt – cash) divided by resource ounces. We’re trading at about $24 per ounce in the ground (assuming sulphide ounces are worth half that of oxide ounces).

Despite having more complex projects, in more challenging jurisdictions that will take twice as long to reach commercial production — many Nevada, and North American peers for that matter, trade at 2-4x our EV/oz. multiple.

Golden Independence Mining (CSE: IGLD) / (OTCQB: GIDMF) is a relatively low-risk, high-quality, near-surface oxide play in a safe, prolific location. Longer-term upside can be found in our higher grade, deep sulphide resources (currently at ~800k ounces, with ample room to grow, and grading 6.5 g/t gold).

Thank you Christos. I look forward to continued near-term progress on your near-surface resource expansion, and on your plans to deliver a PEA in 2H 2021! 

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