U.S. President Barack Obama’s decision to protect an 84.7 sq. km land parcel — surrounded on three sides by the Mojave National Preserve — as a National Monument under the 1906 Antiquities Act, presents no threat to NewCastle Gold’s (TSXV: NCA) Castle Mountain project in California’s San Bernardino County, the company says.
The designated Monument lands on the border between California and Nevada near the company’s gold project, but do not include the 33.8 sq. km land parcel referred to as the “Castle Mountain” mine area, which includes the company’s private claims, Bureau of Land Management federal and state land, and an area where NewCastle Gold intends to draw its water. The company’s road access also remains intact.
The proclamation clears up long-standing land designation uncertainty in the area.
“It looks like we’re going to get what we need to move forward, and there’s some clarity here,” vice-president of business development Martin Tunney says.
Tunney adds that a map shows part of the company’s northwest placer claims could be impacted, but not the operating area.
“None of our mill site and lode claims are impacted … and we’ve got access to the property. Those are the key things.”
The proclamation states that after mining and reclamation — or after 10 years, during which time no mining takes place — the federal land in the Castle Mountain mine area will be transferred to the National Park Service.
Oliver Turner of GMP Securities said in a research note that the proclamation is “positive news” for the mine’s development. “This issue has been an overhang on the company [and equity] since it surfaced last August, and the designation of mining areas in today’s proclamation should serve to resolve this issue.”
The news follows the December 2015 release of an updated resource estimate for the project, which is hosted in a disseminated low sulphidation epithermal system.
Measured and indicated resources stand at 219.9 million tonnes grading 0.59 gram gold per tonne for 4.2 million contained oz. gold. Inferred resources tack on 40.8 million tonnes grading 0.58 gram gold for 0.76 million contained oz. gold. The resource was calculated at a cut-off grade of 0.20 gram gold per tonne.
“It is a spectacular resource,” Tunney says. “If you look at the open-pit heap leach projects in North America that are greater than 4 million oz., we’re one of two that isn’t owned by a major or a mid-tier company, so we really are one of the best out there.”
The Castle Mountain heap-leach gold mine produced over 1 million oz. gold from 1992 to 2001, when mining was suspended due to low gold prices. The mine and reclamation plan — under which the mine operated — was authorized by the County of San Bernardino as the lead agency, and remains in effect. Water for the drill programs was accessed from patented wells on the project.
Tara Hassan of Haywood Securities said in a research note that “permitting risk is partly mitigated, since the company has current mining permits in place that are valid until the end of 2025.”
While the company has its main mining permit, there are still ancillary permits that it will need before start-up, such as those for construction and explosives. “We apply for these once we have an engineering study and plan of operations,” Tunney says.
The gold at Castle Mountain is mostly hosted by late-stage rhyolite volcanic units within silicification and brecciation zones associated with northeast- to southwest-trending and southeast-dipping fault structures, which are interpreted to have developed within a collapsed caldera environment. Eleven gold domains are represented by both steep and shallow-dipping orientations.
At press time NewCastle Gold traded at 31¢ per share, within a 52-week trading range of 18¢ to 58¢.
GMP’s Turner maintains a 50¢-per-share target price for the company.
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