Pilot Gold’s new CEO Everett drawn to upside at Goldstrike

VANCOUVER — Pilot Gold (TSX: PLG; US-OTC: PLGTF) has a new look after a management change and a sharpened focus on sediment-hosted gold systems in the mining heartlands of the United States.

Cal Everett joined Pilot as president and CEO in February, and his name is likely familiar. Everett is an economic geologist who spent 19 years at BMO Nesbitt Burns and PI Financial before cofounding Vancouver-based Axeman Capital.

“There are a few reasons behind the career change, and the first is a macro view on gold: we’re looking at a prolonged — and hopefully steady — strength in the market,” Everett says during an interview at Pilot’s Vancouver offices. “We’ve gone through low interest rates for eight years, and I don’t see hikes coming any time soon. To put people back to work you’re going to have to print more money, and gold will be affected.

“Number two: well, I didn’t have any hobbies. After 25 years on the sell side, I realized I missed it, and running a public company was one of the things I hadn’t done in this business,” he adds with a grin.

The third item that sold Everett on Pilot was the past-producing Goldstrike gold property, 50 km northwest of St. George, Utah. The company picked up the asset two years ago in an all-share deal valued at $7 million. There hasn’t been much news from the property since.

But Pilot has a lot going on elsewhere. It is advancing a pair of copper-porphyry projects in Turkey, namely the TV Tower joint venture with Teck Resources (TSX: TCK.B; NYSE: TCK), and the nearby Halilaga project. Pilot is also drilling the Kinsley Mountain prospect in southeast Elko County, Nev., 90 km from Newmont Mining’s (NYSE: NEM) Long Canyon deposit.

“When Goldstrike changed hands I was representing another party who was interested in the property,” Everett says. “I have done a lot of due diligence on the project, and I really like it. There’s quite simply a ton of drilling in the database, and when you have that many pierce points you’ve effectively de-risked the asset. In this case, there were implications of a district-scale gold system, and the grades were good. Goldstrike really brought me here.”

The sediment-hosted gold prospect sits in southwest Utah’s Washington County, and had been an oxide heap-leach operation between 1988 and 1994. The mine generated 209,000 oz. gold at a grade of 1.2 grams gold per tonne.

“The Turkish assets are great, but you have to strategically handle the projects from a practical and political standpoint. They have great potential, but if your shareholders would prefer you put risk capital into Utah and Nevada, that’s what you should do,” Everett says.

Regional geology is headlined by Tertiary volcanic and sedimentary rocks that rest unconformably on a basement of deformed middle and late-Paleozoic carbonate and siliciclastics.

The sequence is cut by steep, arcuate, oblique-slip faults that form horsts and grabens. Gold mineralization on surface and in shallow drill holes has been found where the basal unconformity of the Tertiary sequence is exposed at surface, and particularly where it is cut by faults.

Over the past year Pilot’s technical team — guided by vice-president of exploration and geoscience Moira Smith — have built a geological model that incorporates over 1,500 historic drill holes and 100,000 blast-hole samples.

In March the company announced a $2.2-million infill and step-out program.

Pilot is hunting around the historic pits. The company will also drill-test down-dip north and laterally beyond the historic mine trend into areas where gold has been confirmed but “not systematically drilled off.”

Everett says that “there are 12 linear pits along a 7 km strike. Previous drilling has established that mineralization is present, but to nail down grades, we’ll have to drill it off,” Everett says. “For that budget we can punch 100 holes. You could drill it quickly, and it’s all reverse-circulation work. We’re in a mineralized system, so naturally we’ll start from the middle and work out, and since we’re dealing with historic work, we have context in terms of grade.”

The company tabled assays from the first eight holes at Goldstrike on April 12, with  highlights of: 35 metres at 2.1 grams gold per tonne from 55 metres deep in drill hole 19; 30.5 metres of 1.07 grams gold from 143 metres deep in hole 20; and 58 metres at 1.19 grams gold from 107 metres deep in hole 26.

Pilot intends to release a resource estimate by year-end, and the exploration budget is relatively fluid.

And the company isn’t hurting for capital, after closing a $4.5-million private placement on March 4, wherein it issued 18 million units at 25¢ each. The units consisted of one share and one-half warrant exercisable at 40¢ for 24 months. The financing gives the company just shy of $14 million in working capital.

Pilot shares have traded in a 52-week range of 22¢ to 82¢, and have jumped 103%, or 32¢, this year en route to a 63¢ close at press time. The company has 125.3 million shares outstanding for a $78-million market capitalization.

“You could say that the business model at Pilot has shifted, because we’re aggressively looking for more deposits in North America, with a minimum potential 1.5 million oz. gold,” Everett says.

“When you look at capital markets there is definitely interest in exploration in certain locations, and there’s a scarcity of product because nobody has explored that much for the past four or five years. It’s also been pretty busy on the mergers and acquisitions side for advanced-stage deposits and producers … it tells us that the majors are flexing their financial muscles.”