Why Northern Empire is a top exploration pick for 2018

By Peter Kennedy

Toronto investment firm M Partners has named Northern Empire Resources Corp.’s [NM-TSXV, PSPGF-USOTC] as its top exploration pick for 2018.

In a Mining New Year Review that was published on January 9, 2018, M Partners said it is recommending the stock amid expectations that Northern Empire can double the inferred resource at the company’s Sterling Gold property in southwest Nevada.

“Northern Empire presents a unique opportunity, with significant and viable exploration, development and production scenarios in an excellent jurisdiction,” said M Partners analyst Steve King.

In keeping with that view, M Partners set a 12-month target of $1.60 for Northern Empire shares, which were trading at $1.08 on January 11, 20, 2018. The 52-week range is 42 cents and $1.14.

The Sterling Gold Property became Northern Empire’s flagship asset when it acquired the former heap leaching mining operations from Imperial Metals Corp. [III-TSX] in April, 2017.

The project is comprised of two claim blocks – Sterling and Daisy – which together host three former open pit mines that produced 194,996 ounces of gold from 853,984 tonnes of ore between 1980 and 2000. The average grade was 7.44 g/t gold. The company said the Daisy claim block has indications of a large Carlin-style system, which has seen very little exploration since the late 1990s.

Carlin-style gold deposits are sediment-hosted disseminated gold deposits. The first of their kind – known as the Carlin Mine – went into production in 1965. Carlin-style deposits are characterized by invisible (typically microscopic and/or dissolved) gold in pyrite or arsenopyrite. The gold is referred to as “Invisible Gold” as it can only be found through chemical analysis.

Northern Empire holds the four permits required to restart and operate the Sterling Gold Mine, which hosts an inferred gold resource of 709,000 ounces, grading 2.23 g/t gold.

The company is also exploring on the Crown Gold Project, a land package that adjoins the Sterling Gold Project to the north and for the first time has been consolidated with the Sterling Gold Mine under one owner. The Crown Gold Project hosts four primary targets – Daisy, Secret Pass, SNA and Shear Zone. The company has said mineralization on the Crown Gold Project follows the same detachment fault structure that hosted Barrick Gold Corp.’s [ABX-TSX, ABX-NYSE] Bullfrog Mine. Bullfrog produced 2.3 million ounces of gold.

Northern Empire recently said it plans to drill approximately 50 holes, (totaling 15,000 metres) in a program that will be completed in early summer, 2018. Drilling will be focused on infill and expansion of the Sterling Mine, Daisy, Secret Pass and SNA deposits, as well as other high priority exploration targets. The Daisy Mine was in production from 1997 to 2001 and yielded 104,000 ounces of gold. Secret Pass has been interpreted as a volcanic-hosted deposit and was previously mined in the 1990s.

“We believe that the company is sufficiently capitalized to complete the drilling required to realize the resource growth potential envisaged in our standalone EV/ounce valuation and should be able to double the current inferred gold resource base of 709,000 ounces before the end of 2018,” M Partners said.

For a preview of what could happen at Sterling one only has to take a look at what is happening at Corvus Gold Inc. [KOR-TSX] Mother Lode project which Corvus acquired from Goldcorp [G-TSX, GG-NYSE] in mid-2017.

“Mother Lode is a historic open pit resource located on a small land package within the Northern Empire property and historic resources are partially constrained by the permit boundary,” M Partners said. Mother Lode is one of several historic gold deposits located along a major regional structure that also hosts the deposits that were found on the Northern Empire property.

Corvus drilling has intersected multiple shallow-dipping stacked zones of gold mineralization, including a new “deep zone,” which may reflect a much larger “Carlin-style” target that was never tested by the shallow drill programs of previous operators. Mother Lode hosts a former open pit, heap leach operation, which produced 34,000 ounces of gold in the late 1980s. It was closed due to fluctuating gold prices.

It may be worth noting that M Partners has Northern Empire on its buy list even though it is not particularly bullish on the outlook for gold.

The long term outlook for the yellow metal remains unchanged at US$1,300 an ounce, it said.