Liberty Gold LGDTF CEO Calvin Everett recently spoke to Benzinga about the state of the commodities market and the Canadian junior miner’s future plans in Utah and Idaho.
BZ: How would you describe your company to our readers?
Everett: We are a pre-production junior miner specializing in developing Carlin-type gold deposits. These deposits don't require a mill or tailings, avoid significant environmental issues, and, despite being low-grade, have high margins.
Our deposits are sedimentary-hosted heap leach systems. After blasting, the ore is placed on a heap leach pad with plastic liners and treated with cyanide. The process involves careful management of lime and water to ensure efficient gold extraction over time. Residual gold can be recovered even after the primary mine life of 15-20 years, extending profitability.
Nine consulting groups conducted our first major economic study, which is expected by mid-to-late September. The study includes an assessment of our project costs and potential profits and a tax assessment.
See Also: Gold Miners Hit 27-Month Peak, Bullion Breaks Record
BZ: What is the biggest challenge when developing a mine?
Everett: The fluctuating gold price is our biggest challenge. While some companies use conservative estimates, current high prices suggest adjusting our projections to ensure a realistic profitability assessment. Ideally, we aim for a mine life exceeding ten years to ride multiple gold price cycles, optimizing long-term earnings. A robust mine life ensures sustained profits, especially during high gold price periods.
BZ: You’ve been prospecting in Idaho and exploring the Black Pine project for about eight years. Can you walk us through the latest developments and numbers?
Everett: Last year, we didn’t conduct any drilling. Instead, we focused on some essential geotechnical holes for the Preliminary Feasibility Study (PFS). This year, we’re working on hydrology holes for the PFS to check the water flows around the area. So far, we’ve drilled over 214,000 meters on this property, while the previous operators drilled 191,500. Covering an area of 15-20 square kilometers requires extensive drilling to move from inferred ounces to measured and indicated (M&I) ounces. To achieve M&I, we have to drill the entire mountain at 30 to 50-meter centers, which is a lot of drilling.
We just announced another 20,000 meters of drilling. Our goal at Black Pine is to build the resource to the 5 million ounce range. We’re looking for more mine life because having a larger resource base is advantageous when dealing with heap leach operations.
It’s more economical than milling sulfide ores, which involves tailings ponds, dams, reclamation sites, milling, more power, and more steel—all factors that can erode profit margins. The state of Idaho has the strictest regulations for heap leach pads in the United States, which is beneficial for environmental protection. We will meet or exceed all these requirements, including the amount of plastic used, retaining walls, and other specifications.
BZ: How do you see the current commodity market, with a surge in demand and anticipation of metals shortages?
Everett: One effect of this current commodity run is that countries with high debt loads, especially smaller ones, are all trying to get a piece of the mining action due to rising metal prices. For instance, you may have seen Kazakhstan’s new royalty structure for uranium.
If gold prices were to skyrocket, we’d likely see small countries attempting to impose royalties on gold mines to capitalize on the boom. This trend is already visible in Africa, where companies like Barrick negotiate royalties. Mark Bristow, Barrick‘s CEO, is a very smart and strategic guy. I’ve met him several times, and he's incredibly outgoing and an excellent problem solver. Whether in Papua New Guinea or Tanzania, he addresses issues head-on, often flying in with his team to resolve problems directly.
BZ: What’s your opinion on the rumors that the industry is pushing to revive the Bureau of Mines to become the principal regulatory point?
Everett: I don't know all the details about this push to revive it, but I would like to see it happen. Historically, it's difficult to change politicians’ or bureaucrats’ ways. If they could speed up the permitting process, we could see more mines being developed, more jobs created, and more taxes paid.
However, they operate on their own schedules. Often, environmental groups come in with concerns, such as the presence of endangered species like grizzly bears, which can halt operations. Then, we have to go through a mitigation process, which might include measures like building fences to prevent deer from falling into open pits. These are costly but necessary steps.
For instance, we hired a helicopter company to tag mule deer from the air to follow their winter migration patterns to see if they were wintering on Black Pine, which they weren't due to the lack of water.
Even if you reach the final permitting stage, the Bureau of Land Management (BLM) might come out and require a multi-year study. We preemptively conducted a three-year mule deer study to avoid delays. Additionally, we worked with the BLM on a sage grouse study and provided sage plants for habitat restoration. Despite finding only six birds, addressing the presumption that sage presence implies sage grouse habitat was important.
BZ: Where do you see opportunities for the fastest domestic commodity production development?
Everett: For gold, the Great Basin is always a promising area, especially in Utah and Idaho. Nevada has been extensively explored and is controlled by many companies, making it more competitive. Utah and Idaho offer excellent gold and silver potential, particularly in the Coeur d’Alene area. Many producers in that region have significant tax loss carryforwards, so pursuing acquisitions within their jurisdictions is in their best interest.
I’d look at New Mexico and Arizona for copper in the United States. If it’s nickel, then Michigan is the place to be. Rare earth elements are less abundant, but there are some deposits in California. However, California is a notoriously difficult state for mining due to stringent regulations. Montana also presents challenges, often due to control by local ranchers who can oppose mining projects.
Alaska is another interesting case. It has potential but is full of rivers, so any mining project needs to consider the environmental impact, especially on spawning streams.
BZ: What do you recommend investors look for when considering junior miners?
Everett: As a geologist, I focus on royalty structures because they impact cash flow, even in production. I examine the size of the alteration zones and the scale of the target area. In about three hours, I can analyze a company’s data to determine if I’m dealing with narrow structures or a bulk tonnage situation. I create three-dimensional calculations and make internal ore estimates, predicting specific gravity based on rock types.
One valuable tip is to look for companies that provide photographs of their drill core on their website. This allows a detailed examination of the core, where you can identify key minerals like pentlandite, which contains high-grade nickel. When I see clear signs of valuable minerals, I recognize the potential of a mine and consider investing.
For those less experienced, it’s crucial to verify information. Don’t just believe the hype from companies, especially since explorers often have limited cash. Look for a 43-101 report on the project, which provides comprehensive details on geology, history, royalties, and involved personnel. These reports, sometimes 150 pages long, are essential reading for making informed decisions.
In uranium investments, focus not only on grade but also extraction feasibility and transportation logistics. If regulations prohibit transporting the material, it’s a red flag.
BZ: Do you have any final messages for our readers about your current work and what to watch for?
Everett: We’re working on an economic study, which should be ready for Q3. This study will provide insights into the potential of the Black Pine project. However, economic studies are snapshots in time and may change as market conditions evolve. We will include sensitivity tables to show potential outcomes at various gold prices, from $1,800 to $3,500 per ounce, which helps analyze the project’s upside potential.
With the ongoing political and economic shifts, such as efforts to combat inflation and potential changes in corporate tax rates, the gold market is poised for a bull run over the next six months. After that, political developments will influence the market’s direction. I remain bullish on gold, especially with emerging factors like India’s potential gold purchasing policies, which could drive significant demand. The landscape constantly changes, but these insights should help guide investment decisions.
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