Gold Standard Ventures Corp. (TSE:GSV) (NYSEAMERICAN:GSV) briefly touched a bottom of CAD$0.97 on October 7, 2019, has already managed to bounce back to CAD$1.10/share on October 15 as this chart shows.
Gold Standard Ventures (GSV) owns the Railroad and Lewis near-term resources on Nevada’s Carlin and Battle Mountain Trends respectively. Railroad is its flagship (hosting NI 43-101 compliant, near-surface, oxide gold resources at the Pinion Deposit and the Dark Star Deposits) where GSV has secured the second largest contiguous land package (208 sq.km) on the famous Carlin Trend. Moreover, GSV has made significant discoveries at: North Bullion, Bald Mountain and North Dark Star. Gold Standard Ventures is a gold explorer, engaged in the Railroad-Pinion Project, comprising of the Pinion and Dark Star fields, located within the Carlin Trend in Nevada, boasting measured and Indicated Mineral Resources of 28.93 million tonnes at a grade of 0.58 g/t Au, totaling 544,000 ounces of gold (and 3,929,000 ounces of silver) and 32.72 million tonnes at a grade of 0.88 g/t Au, totaling 921,000 ounces of gold respectively. (Source: Gold Standard Ventures).
While resource inferences, measures and exploration grades and are important to investors, they are mere details, when a project is located in Nevada’s Carlin area. That’s because due to the randomness of geological events, some 350 million years ago, a regional crustal block, known as a terrane (a tectonic crustal block), rammed against the North American plate. That collision pulled millions of tons of precious metals and other materials from the depths of the earth toward the surface, creating a 40-mile long geological anomaly, able to produce billions of dollars’ worth of wealth. Simply put, the Carlin is one of the single richest geological zones in the world and perhaps the most prolific gold source in all of the United States. It’s no wonder that some of the world’s largest gold producers have established mines in the Carlin. Barrick Gold has extracted some 42 million ounces of gold from its Goldstrike mine over the past four decades. (Source: Mining.com). Across all mines, production from the Carlin trend is likely to break the 100 million ounce mark this year. Thanks to the Carlin trend, more than 80 percent of US gold production today comes from Nevada.
Because of lower resource prices, mining – and gold reserves in particular – have started to drop since 2011-2012. It was in that period, when many resources reached their peaks only to reverse course into a descent that may have only started to find a valley now. In the past seven or eight years, almost all major miners have scaled back investments. And that has caused the amount of reserves to drop – making gold reserves even more precious. The key aspect about ‘reserves’ is that they are the component of a resource deposit that is most economically viable. Moreover, since the 1990’s fewer deposits of any significant scale have been discovered (Source: Forbes.) In other words, new exploration has become essential to start filling the gap in reserves and also to achieve higher grades, which the largely open-pit deposits producing today, cannot achieve. But new exploration has become more expensive than ever, partly explaining why two giants such as Barrick Gold and Newmont Goldcorp have formed a joint venture, combining their operations in Nevada in April 2019 (Source: Mining.com). Together they are estimated to hold some 48 million ounces of gold, which at current rates of production of about three million ounces a year (Source: CBC), should last until 2022 under the best case scenario. Without further investment, therefore, the project is over.
Newmont, Barrick and other major producers are under pressure. More exploration is needed; they need to expand to keep up with demand, which has already leapt to a three-year high. And, given the geopolitical prospects of an ever more prosperous and ambitious China, the next decade is bound to be anything but ‘stable’. Rather, there will be fewer certainties; and the first certainty to perish is that the United States is the world’s top superpower. In that context gold exploration will become ever more necessary as miners will need to establish new reserves. And this one of the key strategic aspects about GSV. It’s developing at least four large deposits in the same, abundant, geological zone and it would make for an excellent acquisition target for major mining companies, seeking quality exploration opportunities.
Indeed, 2019 has seen important mergers in the gold sector: Barrick Gold with Randgold and Newmont Mining with Goldcorp as two of the most noteworthy examples. That consolidation trend could continue and encourage investment in exploration and development; particularly, in jurisdictions as prolific and mining friendly as Nevada. And GSV is running projects at such an advanced stage as to be ideally suited for takeover. Still, the same qualities that make GSV an attractive acquisition targets, make it an excellent Project in its own right. Its technical team includes exploration geologists such as Mac Jackson, the Chief Geologist, who as accumulated more than 20 years as an exploration geologist, and – interestingly, in view of aforementioned takeover prospects – eight of them with Newmont. He’s also an expert in the Carlin Trend. General Manager, Don Harris, spent 17 years at Newmont and he too has extensive experience working on gold and silver projects in Nevada, as does Steven Koehler, the Manager of Projects and Senior Geologist, who has accumulated 28 years of experience exploring the Carlin and Cortez Trends of northern Nevada.
Interestingly, Gold Ventures has performed rather independently of the gold price. When the gold price hit its highest prices of 2019, starting the week of September 9, Gold Ventures did not mirror the move – as the chart below suggests – and that’s a point in its favor; because, the gold price, for all of the expectations and optimism, has behaved capriciously. When negative factors such as intensified geopolitical risk (and even then, only the kind of risk that affects the United States) or central banking woes and falling interest rates, gold sustains its value or moves higher. But, the investment mood now is such that investors are all but demanding a resumption of interest rate hikes, which have resumed favor as the barometer of healthy financial markets. In other words, President Trump has a ‘popular mandate’ from Wall Street to stop putting pressure on the Federal Reserve in order to give the so-called free hand of the markets a chance. Still, the prospects for the gold price are bullish.
While investors are still groggy, after waking up from their evident Sleeping Beauty like slumber over the past few years, failing to question the viability of the markets’ performance and the constant injections of liquidity, some market actors have started to notice that volatility has started to become a problem. Some are even seeing parallels between 2019 and October 1929…(Source: CNBC). Meanwhile, these circumstances could become merciless when the risks of the financial world are juxtaposed against those of geopolitics – characterized, as of the time of writing, the potential break of NATO’s second largest army. In such circumstances, equities could suffer, leaving only what’s beneath the surface of the Earth as the only real holder of value; and gold remains the most valuable from a general perspective. And that’s where companies such as Gold Standard Ventures can benefit from this context.
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