Coup in Nevada
Nevada Sunrise had been pretty much of a roach motel for investor money for a dozen or so years. Founded as a private company in 2000 by Bill Henderson with a few small investors, the business model seemed to be picking up abandoned mining projects and sitting on them until they hatched. They never hatched. The private company went public for the first time in 2007.
The company was one of our first advertisers at 321gold even while private. I took a weeklong tour of Nevada with Henderson and his chief geologist in 2001, visiting the whole flock of projects. Time went by and little by little the company shrunk. Henderson kept paying himself but rarely spent a dime advancing projects. One of the interesting projects was the Kinsley Mountain Gold Mine in Northeast Nevada. The mine had been in production from 1994 until a drop in the price of gold put Alta Gold into bankruptcy in 1999.
Animas Resources did a JV with NEV on the Kinsley Mine in 2010 but failed to do much with it. They sold their 65% option to Pilot Gold in 2011. Pilot Gold could obtain 65% of Kinsley for spending just under $5 million. They did and owned 65% as of early 2013.
Pilot announced a $3.4 million dollar program for 2013 and it was time to belly up to the bar for NEV to contribute their 35%. The company couldn’t raise money and Henderson was promptly sacked. By the end of 2013, Pilot was up to 79% ownership and Nevada Sunrise down to 21%.
I first visited the property as an abandoned gold mine in 2001. There wasn’t very much you could say about it from a technical point of view. I didn’t know enough about types of gold mines to say if it looked good or not. But by 2013 Pilot Gold could and their technical team led by the “Rock Whisperer” Moira Smith thought they had another Long Canyon on their hands. Newmont Mining bought Fronteer for $2.3 billion in early 2011 just to get their hands on Long Canyon.
I wrote about Kinsley in late 2013, her theory sounded pretty good but needed to be drill tested. Nevada Sunrise was literally caught between a rock and a hard place. The company didn’t have any other projects that impressed the market and with a 2.5-year bear market, few investors were willing to come up with the money to allow NEV to participate in the Pilot Gold drill program. Henderson managed to keep the NSR on the project for himself all the while letting the investors in NEV carry the cost of keeping the project.
A group of savvy investors who had been associated with the Animas deal came to Nevada Sunrise President Warren Stanyer with a proposal. If he would roll the stock back 10-1, they would put up enough money to ensure NEV could fund their 21% part of the JV.
It was a deal made in heaven and a giant coup. Pilot had already been coming up with giant hits on their drill program. Just because Nevada Sunrise couldn’t fund their portion didn’t mean they didn’t understand what they were losing by not being able to fund their portion.
The high-net worth investors came in and funded the 2014 exploration program for NEV and made it clear that they were good for any money NEV needed to come up with to maintain their 21%. It’s been a very good return for them as the first private placement done in January was at $.10. The 2nd private placement done in March was at $.35.
Pilot Gold has done more than carry their weight, as drill results released to date seem to prove up the theory of Moira Smith. On February 27, Pilot released a hole of 41.7 meters at 6.85 g/t gold. A few days later they released results showing 42.7 meters at 10.5 g/t gold.
The early shareholders of Nevada Sunrise who were brave enough to stay the course have watched with glee as their shares have gone from $.10 a share in December to a high of $1.05 in March. Pilot Gold shares have gone from $.80 in the same time frame to $1.75.
I really like the project and based on my conversations with Dr. Smith, I think she has it exactly right. I hope she and the rest of the Pilot Gold team discover another Long Canyon. This time the investors in Nevada Sunrise will come along for the ride. With a just over $17 million dollar market cap, that 21% of Kinsley could be another ten bagger from here.
Nevada Sunrise is an advertiser and as such, I am biased. I wasn’t smart enough to buy shares or participate in the PP when I could have. The company is reachable so all investors are reminded that they alone are responsible for their own due diligence.
Nevada Sunrise Gold Corp