Discovery of new gold deposits in Nevada has been declining dramatically over the last decade. Conventional exploration techniques have been thoroughly applied around the world, but do not work well when the rocks are hidden from view. 50% of Nevada that has never been systematically explored – the areas covered by a thin veneer of sand & gravel between alternating mountain ranges. However, the sand & gravel also contains groundwater that interacts with bedrock hidden from the view and picks up a kind of chemical scent that can be used to track down a hidden gold deposit. The groundwater chemistry exploration technology is specifically used to explore covered geologic settings in the best place on earth and Nevada is particularly suited for the use of this technology.
One such company that is using groundwater chemistry exploration technology is Nevada Exploration Inc. (TSXV: NGE). It is a junior exploration company which controls several prospective and drill ready gold exploration properties in Nevada. The company also has several other prospective targets in which it has identified but do not control (in order to minimize annual holding costs) and thus keep such projects secret.
Through exhaustive public research and own sampling programs, the company has consolidated a proprietary ground water database, water sampling technical and exploration model which can identify anomalous gold targets throughout the state of Nevada in locations which are unsuitable for exploration (too high risk). Gold exploration success in Nevada has shown to be progressively deteriorated in recent times (+10 years).
Even with increased funding the quantity of new discovered gold oz's has dramatically decreased (the cost of discovered oz's skyrocketing). This is largely believed to be a function of the scarcity of new targets in ground showing good surface expression (outcrop). Therefore the opportunity is to find a technique which will identify exploration targets in ground in which has poor or no surface rock expression and are thus buried and hidden to normal detection techniques.
The management of NGE believe that they have developed a reliable technique in which to explore previous unexplored virgin gold regions in the state of Nevada. They believe that their technique will eventually alter the way gold exploration is conducted in Nevada and thus could spark a rebirth in ground acquisition and exploration in regions that are currently ignored by even the largest gold mining companies (possessing deep exploration pockets!).
It must be understood that NGE technique is only a tool like other forms of broad exploration reconnaissance techniques such as standard airborne/ground gravity, mag. or EM geophysics. But this technique will give valuable information about the possible location of anomalies that was never previously available to geologists. This new ground water information (very low metals assays) coupled with other traditional sources of information can be used together to filter and thus define high risk-reward targets.
NGE is strong technically and is focused solely on gold exploration in Nevada. The company is led by president and CEO Wade Hodges, a exploration geologist of over 30 years in gold exploration in the western U.S.A.. Mr. Hodges is very strong technically and his knowledge is key to the success of the organization. Management believe strongly in what they have created, funding the company in recent times using their own financial resources. They are dedicated to staying the course until they have demonstrated the commercial value of their exploration model, proprietary database and sampling technical etc.
The type of deposit that NGE is targeting is very expensive and high risk to discover, however the reward is equally great. Therefore due to the high cost of discovery the company have decided that most practical means of developing their technique (without diluting ownership) at this stage in the company's development is in the form of farm-in or standard exploration options, earn-in and joint ventures with intermediate and large gold mining companies.
My sense is that if one such exploration option were to be successful (demonstrate the technical and exploration model) that the interest in other NGE properties and proprietary database would change in their favor very quickly. The current drilling by Northgate Minerals (TSX: NGX) (AMEX: NXG) in joint venture with NGE at one of its properties can result in exactly such catalyst.
Heenan Blaikie has provided and may in the future provide legal and consulting advice to Nevada Exploration Inc.
Except for the historical information presented herein, matters discussed in this document contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements.
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