Idaho Gold Mines: 2020 Exploration And Development Prospects

The Idaho gold mining industry is just down the road from Nevada, which happens to be the number one gold-producing state in the United States. Part of Idaho lies in the Great Basin, which is the same geological structure where the largest Nevada gold discoveries have been found.

Some people would say Idaho today is where Nevada was 30 years ago when it comes to gold mining. Idaho, at the moment, seems to be a very business-friendly place for the mining industry. That is demonstrated by the number of exciting exploration and development projects being advanced in the state.

There are currently six (seven if you count Hecla Mining’s (NYSE:HL) silver mine) public companies that either operate gold mines in Idaho or are in the development phase. If I am missing any from the list, please let me know in the comments so I can include them next year.

  1. Excellon Resources (OTCPK:EXLLF)
  2. Idaho Champion (OTCPK:GLDRF)
  3. Liberty Gold (OTCPK:LGDTF)
  4. Midas Gold (OTCQX:MDRPF)
  5. BeMetals (OTCQB:BMTLF)
  6. Integra Resources (OTCQX:IRRZD)

Source: Created by the Author

Excellon Resources

Excellon Resources is a small gold and silver mining company with one silver mining operation in Mexico. They currently have a market cap of $113 million. In Idaho, they currently have one development phase project and one exploration phase project.

  1. Kilgore ProjectThe Kilgore Project is located in Clark County, Idaho. The company describes the project as “a high-quality gold development in Idaho with strong economics and significant growth and discovery potential.” In Excellon’s presentation for June 2020, they believe the Kilgore project could be the next Round Mountain, which is a nice producing mine in Nevada, owned by Kinross Gold (KGC). To put it in perspective, the projected NPV of the Kilgore project is much larger than the current market cap of the company, which may present an opportunity.
  2. Oakley Project – The Oakley Project is in the exploration phase and is located near Oakley, Idaho.

Source: Excellon Resources

Source: Excellon Resources

Idaho Champion

Idaho Champion is a company that is solely focused on projects in Idaho. Their flagship project is the Baner project, but they also have the Champagne Project and the Cobalt project in Idaho. They currently have a market cap of only $13 million.

  1. Baner Project – Key information in Idaho Champion’s annual financial statement seems to be missing, such as reserve and resource estimates. Their website appears to be not well kept, but I will leave you with the results from the 2018 exploration program. Source: Idaho Champion Website
  2. Champagne Project – Rights to the Champagne Project were recently purchased by Idaho Champion. The Champagne Project used to be operated by Bema Gold into the early 1990s as a heap leach operation. It is located in Butte county.

Midas Gold

Midas Gold is solely focused on the Stibnite Gold Project located 10 miles east of Yellow Pine, Idaho. Midas currently has a market cap of about $250 million. The Stibnite Project is a gold, silver, and antimony resource project. Antimony is an element on the periodic table that is commonly used in batteries.

The project claims proven and probable gold reserves of 4.6 million ounces with some very high-grade ore. It claims that those 4.6 million ounces are the largest gold reserves in the lower 48 states from an independent producer. The project currently has a net asset value of over $1.7 billion at today’s gold prices.

The project is currently stuck in the permitting phase.

Source: Midas presentation

Liberty Gold

Liberty Gold is the operator of the Black Pine Project in Cassia County, Idaho, which it acquired in June 2016 from Western Pacific Resource Corporation. Liberty Gold currently has a market cap of about $350 million. The Black Pine project is a former producing heap leach mine that is currently in the exploration phase for Liberty Gold. Their exploratory program budget for the Black Pine Project in 2019 is $6.8 million. In 2019, they experienced some encouraging drill results. Here are some of the highlights from Liberty Gold’s 2019 financial report.

Source: Liberty Gold 2019 Annual Report

BeMetals

BeMetals is the operator of the polymetallic South Mountain Project, which is 70 miles southwest of Boise, Idaho. The project has been mined for decades leading up to 1960. Since then, its infrastructure and “underground workings” have been well-maintained. Historical records indicate about 53 thousand tons have been mined with average grades of “14.5 percent zinc, 363.42 g/t silver, 1.98 g/t gold, 2.4 percent lead, and 1.4 percent copper.” Granted, this was only for 53 thousand tons, but in today’s terms, those are very attractive average grades. The project is currently in the pre-development phase.

Source: BeMetals

Even though BeMetals has what appears to be a good project, one of the best things about the company is that one of its founding members and current directors is Clive Johnson. Mr. Johnson also founded B2Gold (BTG), which today is valued at over a $5 billion market cap.

Here are some of the highlights from the South Mountain 2019 drilling program results.

Source: BeMetals 2019 MD&A

Integra Resources

Integra Resources is the operator of the DeLamar project, 100 miles from Boise in southwestern Idaho. Integra currently has a market cap of $72 million. Historically, the mine was owned by Kinross Gold (NYSE:KGC) until it was closed in 1998 thanks to low precious metals prices. During its years in production, it “produced 1.6 million ounces of gold and 100 million ounces of silver.”

Below is a table showing the reserves and resources at the DeLamar project (and next door Florida Mountain project).

Source: Integra Resources

During 2020, the company’s plan is to continue to implement further exploration and development. This includes environmental studies and engineering work. By the second half of 2021, they hope to have completed the pre-feasibility study and have a plan of operations in place.

I thought this slide from their most recent presentation demonstrated well the path that Integra is potentially on.

Source: Integra Resources

Conclusion

It is an exciting time to be investing in Idaho’s potential gold and silver production. Although there were no producing gold mines in this list, there are some exciting prospects. I think the thing that strikes me is that there are a few names in this list that will potentially create a substantial amount of value for shareholders in the coming years.

The challenge of investing in these companies is that their timelines are unknown. To the extent that they are “known,” there’s plenty that can go wrong or that can delay the project. In the investment world, having certainty around the time until cash flows begin, is valuable. However, for patient investors, several companies in this list have the potential to grow into the net present value of their projects.

There were four in particular that grabbed my attention.

  1. First, there’s Integra Resources. According to a preliminary economic analysis, the project has a net present value of USD$358 million at a gold price of $1,350 per ounce. I wonder what the NPV would be with a $1,900 gold price. It’s also very likely that as they expand the resource, they will discover additional deposits of economic grade. With Integra trading at a market value of $186 million, there’s potential for it to grow into its net present value.
  2. Second, there’s BeMetals, which hasn’t finished a preliminary economic analysis but will hopefully have one by the end of this year. With a market cap of only $34 million, the odds are that the South Mountain Project will have an NPV that is much higher than that. As we’ve already discussed, Mr. Johnson, their director, is a proven leader as he was the founder and CEO of B2Gold.
  3. Third, there’s Midas Gold, which is trading at a market cap of $254 million. According to their preliminary economic analysis, the Stibnite project will have over a $1.7 billion net present value. The project faces significant environmental challenges, but as an investor, I’m confident they will see it to completion.
  4. Fourth, there’s Excellon Resources trading at a market cap of $113 million. Excellon has the Kilgore Project, whose NPV at $1,700 gold is $259 million. Excellon also has a producing silver mine in Mexico and a strong mining prospect in Germany. There are a lot of potential catalysts for Excellon Resources going forward.
  5. Liberty Gold is also a strong company. Their shares have made quite a run as of late, so I wouldn’t be as comfortable buying their shares at the moment. However, it’s likely even after the run that they will also continue to grow into their projects as they move them along the project timeline.

The beautiful thing about each of these companies is that they are either single project companies or have multiple small projects that make the company easy to value. When you invest in these companies, you can invest knowing what you are getting. For the four companies in the bullet points above, it’s likely only a matter of time before they grow into their respective projects’ net present values.

We’ve covered Idaho, Nevada, and Alaska in our trip around the United States, examining each state’s gold mining industry. Idaho, although not as developed as Nevada or Alaska, promises to be an up and comer in the industry in the years ahead.

If I left any company off of the list, please let me know in the comments.

Disclosure: I am/we are long BTG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The author of this article is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. The author of this article expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Be the first to comment

Leave a Reply

Your email address will not be published.


*