Gold stocks have seen a change of fortunes in the face of rising gold prices. The sector along with precious few appears to be the only one that is weathering the European debt related storms that have engulfed markets. Companies with exposure to gold, particularly those with safe jurisdictions, are likely to find favour amongst investors.
An interesting observation emerges when one takes a closer look at gold companies with assets in Idaho. Despite its rich mineral potential and very mining friendly regulatory environment, gold companies with assets in Idaho appear to be trading at steep discounts to its peers. For instance, the average market capitalization per ounce of gold or gold equivalent for Idaho based gold companies is just $32.47 per Oz compared to $163.3 per Oz for companies listed elsewhere.
While the company universe we have highlighted elsewhere are indeed good stories with excellent projects, it is not conceivable that Idaho companies should trade at such discounts.
Idaho has a rich mining history that is epitomized by the Coeur d’Alene Mining District that produced more than 1.2 billion ounces of silver, 8.5 million tons of lead, and 3.2 million tons of zinc, along with significant quantities of gold, copper, antimony and cadmium, and ranked Coeur d’Alene in the top ten mining districts of the world.
Hecla Mining (NYSE:HL) retains top producer status in the district, delivering 3 million ounces of silver per year from the Lucky Friday Mine, and is scaling up production to 5 million ounces from silver reserves of 42.3 million ounces, and resources of 157.5 million ounces. Hecla holds a dominant land position in the Silver Valley, which remains largely unexplored.
The other major miner in the district is U.S. Silver Corp (CVE:USA, OTC:USSIF), producing an annualized 2.5 million ounces of silver from the Galena Mine. The Company purchased Galena, along with the Coeur Mine and Mill, and Caladay Project from Coeur d’Alene Mines (NYSE:CDE). Galena hosts a NI 43-101 Proven and Probable Reserve of 21.9 million ounces of silver with lead and copper credits. The Company is planning to re-open the historic Coeur Mine, after it can prove up a resource of 5.9 million ounces of silver.
The Central Idaho gold belt, follows a shear line of approximately 80 kilometres from the Stibnite and Yellow Pine gold district in the south, to Elk City in the north, and reported prolific historic production of at least 8 million ounces of gold, along with silver, antimony and tungsten credits, and is now the center of a new gold rush.
Midas Gold (TSE:MAX) consolidated a number of claims with Vista Gold (NYSE:VGZ, TSE:VGZ), and recently raised $40 million via an IPO on the TSX, to fund advanced exploration of properties in the Stibnite and Yellow Pine gold district. The venture is now called the Golden Meadows Project, covers 4300 hectares and hosts NI-43-101 compliant Indicated Gold Resources of 2.1 million ounces, and Inferred Gold Resources of 3.7 million ounces.
These resources are located at Hanger Flats with Indicated Resources of 624,600 ounces at 2.00g/t Au, and Inferred Resources of 1,261,500 ounces at 2.29 g/t Au, West End with Indicated Resources of 1,121,000 ounces at 1.35 g/t Au, and Inferred Resources of 379,000 ounces at 1.33 g/t Au, and Yellow Pine with Indicated Resources of 333,000 ounces at 1.94 g/t Au, and Inferred Resources of 2,101,000 ounces at 2.32 g/t Au.
Midas will deliver a 30,000 metre infill and extensional drilling program at Hanger Flats, West End, and Yellow Pine, where all resources are open, and sees additional upside in new target zones along strike. The Company believes that the project will develop into a world class gold mining operation. Additional credits for by products such as silver, antimony and tungsten will also be targeted for recovery.
Premium Exploration (CVE:PEM) is developing the less advanced 172 km2 Idaho Gold Project in the vicinity of Elk City, at the northern end of the same shear system as Golden Meadows. This project carries over 30 kilometres of potentially mineralized faults and hosts a NI 43-101 compliant Indicated Resource of 343,000 ounces at 0.90 g/t Au in 11.8 Mt (0.5 g/t Au cut-off), and an Inferred Resource of 879,000 ounces at 1.04 g/t Au in (26.4 Mt (0.5 g/t Au cut-off), in just 1.4 km of mineralized fault at the Friday Zone.
Historic placer mining occurred along 18 kilometres of strike, with numerous small scale workings and containing a historic Indicated Resource at Buffalo Gulch of 111,000 ounces at 0.08 g/t Au in 4.8 Mt (0.4 g/t Au cut-off), and the historic Deadwood Resource of 38,940 Indicated oz Au in 1.6 Mt at 0.75 g/t Au (0.4 g/t Au cut-off) and 18,480 Inferred oz Au in 0.7 Mt at 0.75 g/t Au (0.4 g/t Au cut-off).
Premium has encountered gold mineralization in 100 % of drilling, targeting faults with correlating gold-in-soil anomalies (+14,000 meters to date). All gold deposits open along strike and at depth and the Company has substantial exploration potential; geophysics has identified over 30 kilometres of potential faults with 18 kilometres of correlating gold-in-soil anomalies. The Company is currently engaged in a 25,000 metre drill program and district wide exploration, aimed at developing this emerging gold district by demonstrating the size potential of its existing resource and making new discoveries.
Otis Gold (CVE:OOO, OTCQX:OGLDF) is developing the advanced stage Kilgore Gold Project, that is located along the northeastern extremity of the Trans Challis fault system within Idaho, that abuts the southwestern corner of Montana. This year, Otis is drilling 10,000 metres in an ongoing drill program that is stepping out on existing mineralization as well as testing several new targets.
Kilgore was originally developed by Echo Mines, who were planning an open pit bulk mining operation at Mine Ridge for an annualized production rate of 45,000 ounces for 6.6 years to produce 297,000 ounces of gold. Conceptual studies at the time envisioned a potential of 2 to 3 million ounces of gold on the property. One of the key features of the Kilgore deposit is its strong metallurgy; almost all of the deposit is hosted in oxides, and recoveries to date based on column leach tests on ½” crush ore are as high as 94%.
Otis Gold has identified significant extensions and higher grades at Mine Ridge, and is also mounting a well funded effort to unlock the multi million ounce potential at Gold Ridge, Prospect Ridge and Dog Bone Ridge. The Company is initially seeking at least 1 million ounces of gold at Mine Ridge for commencement of open pit mining. A revised NI 43-101 resource estimate on the Kilgore deposit is in process, and the company plans to accelerate development of the project by initiating 12 month environmental baseline studies later this year.
Atlanta Gold (CVE:ATG) is focusing on the Atlanta Gold Project, which is located northeast of Boise, and contains a NI 43-101 compliant Indicated Resource of 466,000 gold equivalent ounces and an Inferred Resource of 290,000 gold equivalent ounces.
The Company is undertaking 25,710 metres of drilling in 2011 and 2012 with the aim of increasing the resource to 1.4 million ounces by the end of 2012. The company intends to complete pre feasibility studies by the end of this year, and has a relationship with Newmont (NYSE: NEM), that will assist with ore processing and production of a gold and silver concentrate for refining.
Terraco Gold Corp. (CVE:TEN, PINK:TCEGF) is aggressively drilling its 100% owned Almaden Project, located 12 miles east of Weiser and 78 miles north of Boise. The project hosts a NI 43-101 compliant Measured plus Indicated Resource of 864,000 ounces of gold and an Inferred Resource of 84,000 ounces of gold within 300 ft of surface. The advanced-stage Almaden Project has excellent access and infrastructure and includes over 199,000 ft of historic drilling in 887 drill holes. Terraco has iniated a drill program to explore the extension of the near-surface mineralization that is open to the north and south, as well as test for high-grade, bonanza-style structurally-controlled gold mineralization at depth. The first two drill holes released in July 2011 returned grades better than the average grade of the deposit and included 53m of 1.08 gpt gold (including 27m of 1.56 gpt gold and 12.2m of 2.23 gpt gold).
Musgrove Minerals (CVE:MGS) is developing two projects in Idaho, the Musgrove Creek Gold project and the past producing Empire Mine Copper, Gold and silver project. Located in a historic gold mining district, Musgrove Creek is an advanced gold exploration project covering nearly 1,500 acres in Lemhi County, Idaho, approximately 15 miles (24 km) southwest of the recently mined Beartrack gold deposit. In 2006 Musgrove Minerals reported 8,000,000 tonnes at 1.22 g/t Au at 0.8 g/t (0.023 ounces/ton) cut off for 313,822 ounces of contained gold.
The Empire mine project, which consists of 26 patented mining claims, six mill-site claims and 21 unpatented mining claims, is a polymetallic skarn deposit containing copper, zinc, gold and silver. Empire mine produced 765,000 tons grading 3.64% copper, 0.048 oz/t gold and 1.57 oz/t Ag from 1901 to 1942. Mineralization has been encountered over a strike length of 1,200 metres, thickness of 6 m to 73 m, and a depth of more than 300 m. Musgrove is currently drilling 32 holes to complete the 65 hole infill drill program to take the Cambior resource to 43-101 standards
Idaho also produces molybdenum, phosphate and phosphorus, and will shortly commence production of cobalt.
Formation Metals (TSE:FCO), is constructing a new cobalt mine at the Idaho Cobalt Project in Salmon. The mine will process 800 tons per day of ore, to produce up to 52 tons/day of cobalt concentrate for shipment to the Company owned Big Creek Hydrometallurgical Complex in Kellogg, Idaho. The Project will produce an annualized 1,500 tons of high purity cobalt metal and 1,360 tons of copper cathode from NI 43-101 Proven and Probable Reserves of 2.64 million tons at 0.56% cobalt, 0.60% copper and 0.014 oz/t gold, with an additional Inferred Resource of 1.12 million tons at 0.585% cobalt, 0.79% copper and 0.017 oz/t gold.
Thompson Creek Metals (NYSE:TC) owns the Thompson Creek Mine, near Challis, Idaho, which is an open pit producer of primary molybdenum, with an annual output of 15 to 20 million pounds of molybdenum, representing about 6% of the world supply. Thompson Creek is a world-class ore deposit with over 215 million pounds of molybdenum.
Mosquito Consolidated Gold Mines (CVE:MSQ, OTCQX:MQCMF) owns the CuMo Molybdenum Project in central Idaho, which is the largest un-mined open pit molybdenum deposit in the world. The deposit has only been 60% drilled and hosts an NI 43-101 compliant Indicated Resource 2.14 billion pounds of molybdenum, and an Inferred Resource of 2.34 billion ponds of molybdenum, along with significant credits of copper, silver, and tungsten.
Most attention will obviously be directed at the gold explorers, where potential for a number of multi million ounce deposits is clearly achievable, but investors would be wise to look at other metals too, including molybdenum, cobalt, phosphate and phosphorus.