Flush With Cash, Northern Lights Buying Secret Pass Gold Project

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Tuesday, July 23, 2019

Americans have been panning and digging for gold since the precious yellow metal was first discovered on Reed Farm, North Carolina in 1799.  The land has not disappointed, keeping the U.S. in third place on the list of top gold producing countries behind only South Africa and Australia.  The lion’s share of gold production comes from Nevada, with Colorado, Arizona, Utah, Washington, New Mexico and other western states stepping up production while some of the oldest gold-producing states in the east have dried up.

In Nevada, most of the mining and exploration have been conducted in the upper half of the state, leaving a lot of greenfield and brownfield opportunities in the southern part and in neighboring states available for riches to be made.

That’s what Northern Lights Exploration (CSE:NLR) is hoping for as it adds to its project portfolio, which already includes the Medicine Springs Project in Elko County, Nevada.  On July 12, Northern Lights penned a definitive agreement to acquire 100% of the Secret Pass Gold Project in Mohave County in northwestern Arizona.  The project is situated just off the southern tip of Nevada at the convergence of Nevada, California and Arizona.

Secret Pass consists of 84 unpatented lode mining claims covering a total of 868 hectares (2,145 acres).

Northern Lights will take full ownership of the project by mid-October through scheduled payments totaling $350,000 in cash and 2.0 million common shares of NLR.  Management struck a good deal with the private owner, negotiating the acquisition without giving up any royalties on future sales, a rarity in today’s mining business.

The cash certainly isn’t an issue after Northern Lights this month completed a $171,000 raise and announced a much larger and more substantial raising of $3.25 million including $2.75 million from a single strategic investor that has already been committed.

“The Secret Pass Gold Project Transaction represents an excellent opportunity for Northern Lights to acquire a high value exploration gold project at a very attractive price,” said NLR CEO Jason Bahnsen in a news release.  He added, “There are over 13 kilometers of gold bearing structures offering significant exploration potential for the project. Management believes this acquisition will generate significant value for Northern Lights shareholders.”

Secret Pass is part of the famous Oatman-Katherine Gold District that is historically Arizona’s third largest gold producing area.  In about a century through 1980, the district produced more than 2.0 million ounces of gold and 1.0 million ounces of silver across more than 80 mines.

To this day, the area is still actively mined, including Northern Vertex’s Moss gold/silver mine reaching commercial production in September 2018 and Para Resources starting underground production at its Gold Roads project in February.

The part that gets geologist’s juices going is the fact that the epithermal gold vein systems in the region are controlled by a system of steeply dipping faults that have been tracked for 65 kilometers from the Oatman District through the Secret Pass north to the Katherine Gold District. 

The Secret Pass property is transected by two major gold bearing regional structures called the Frisco Mine and Union Pass faults.  These faults have combined strike length in excess of 13 kilometers on the property.

Furthermore, records show 10 historic mine workings in the Secret Pass boundaries.  Of the bunch, the Tin Cup and FM gold prospects underwent extensive exploration late in the 20th century, with 126 drill holes totaling more than 14,000 meters helping to define high-grade gold mineralization that is mostly known to be open at strike and depth.

During the 1930’s Tin Cup was being mined at a small scale.  Through open pit and a 70-feet-deep inclined shaft for underground workings, several hundred tons of mineralized material were mined grading 15 grams per tonne (g/t) to 31 g/t gold.

The drilling in the 1980s and 1990s supported the thesis of high-grade gold, with assays ranging up to 40 g/t gold across significant widths and depths.

While this information is certainly enough to get investors excited.  The fact is that all of the historic mining and exploration covers less than 10% of the Secret Pass property, leaving plenty of room for future expansion.

Against this backdrop, shares of NLR are steadily chugging higher over the last month.  After touching 2 cents on June 21, shares have more than doubled to reach 5 cents in Friday trading, which represents the highest for the stock since printing 7 cents in January.  Blowing through technical resistance at 4 cents, this new uptrend could be building the momentum that takes NLR back to those January levels or higher, considering the 52-week high is 14 cents.

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