Wednesday 26th October 2016

Resource Clips

Cash-Cow Potential

Golden Reign Advances Low-Cost, High-Grade Nicaragua Gold and Silver

By Ted Niles

Nicaragua has had a stable democracy for 20 years, but the Communist mayhem that saw its gold mines nationalized in 1979 was long remembered by the industry. Free elections in 1990 removed the Sandinistas from power, but a weak gold price kept the industry in eclipse. Now that the gold price has surged, Nicaragua promises an almost singular potential. It is “virtually untapped because of its history of conflict,” says Kim Evans, President and CEO of Golden Reign Resources TSXV:GRR.

Evans reports, “Nicaragua’s just starting to emerge as a major area for mining exploration and development.” Indeed, 2011 gold exports from Nicaragua were up 60% from 2010. Gold is now its third-leading export, and the country’s largest producer, B2Gold Corp TSX:BTO, has committed $100 million for further development of its La Libertad and Limon mines.

Golden Reign Advances Low-Cost, High-Grade Nicaragua Gold and Silver

“It is considered a developing Third World nation, and so there is a wide pool of available talent,” Evans says. “We’ve had nothing but great experiences and work very closely with the mining ministry and all the different mining groups. It is a very pro-mining country and a very good place to be doing business.” She adds, “It is the safest country by far in Central America. It is actually ranked as being much safer than a number of the big US cities, such as New York and Boston.”

Golden Reign‘s 8,700-hectare San Albino-Murra gold property is located in the Nueva Segovia Department. Its ongoing 25,000-metre drill program has focused on a two-square-kilometre area of the property, including the San Albino and Arras zones. February 22 results from the Las Conchitas area, located just south of the historic San Albino Mine, include

  • 62.96 grams per tonne gold and 61.7 g/t silver over 3 metres
  • 12.01 g/t gold and 13.1 g/t silver over 3 metres
  • 14.96 g/t gold and 25.4 g/t silver over 2.5 metres
  • 9.44 g/t gold and 17.3 g/t silver over 1.5 metres
  • 8.63 g/t gold over 5 metres

February 15 results from the San Albino Mine area include

  • 85.86 g/t gold and 35.1 g/t silver over 2 metres
  • 4.48 g/t gold and 12.3 g/t silver over 4 metres
  • 4.22 g/t gold and 9.1 g/t silver over 1 metre

“The [assays] are quite spectacular, as you can tell,” Evans comments. “It is rare nowadays for projects to see multi-ounce material as prevalent as this. It’s open in all directions and at depth at this point, and our program will finish likely with it open in all directions and at depth.”

The [assays] are quite spectacular, as you can tell. It is rare nowadays for projects to see multi-ounce material as prevalent as this —Kim Evans

The company expects San Albino-Murra’s maiden resource estimate in July 2012. “What I would like to do [after that],” Evans says, “is start spacing the drill holes tighter so we can take it from what will likely be an inferred category—with the possibility of some indicated—to more of a reserve level. Then we’ll start stepping out as well to try to define the outer boundaries of the San Albino area.”

Evans doesn’t think Golden Reign likely to take the project to production but notes that the probable capital expenditure (which she estimates at $50 million to $100 million) wouldn’t require the financial resources of a major. “This isn’t elephant country, where you’re going to see one big deposit of five million ounces. What we think we have the potential for is a number of small, one million (give or take) ounce deposits. It has very nice little cash-cow potential.”

The project is accessible by all-weather roads and has power and water, so the company’s biggest expense is drilling. “Everything else is very inexpensive to run,” Evans says. “Working in a country that is a developing nation, your costs are considerably lower.” Golden Reign has $3 million cash on hand.

“We’re a very aggressive company, so in the last year we’ve progressed significantly,” Evans concludes. “I think we’re going to see another big step up this year with the initial resource and then with opening up other areas. We believe we can replicate what we’re seeing in each of the [three] blocks we have within the property boundary and also with the new property [the El Jicaro Concession] that I’ve just added south of us. We think there is huge potential.”

At press time, Golden Reign had 59.1 million shares trading at $0.99 for a market cap of $58.5 million.

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