Stephen Alfers advances Pershing’s Relief Canyon

Barry Honig and Phillip Frost are not names that immediately come to mind when one thinks of strategic investors in the mining industry.

Honig, an Internet millionaire who as co-chairman of Interclick helped sell the online-advertising technology company to Yahoo for US$270 million in 2011, has made investments in a number of other high-tech companies, like ChromaDex, which develops and markets phytochemical and botanical products.

Frost, a physician, inventor and investor who made his first $100 million in 1986 when he and a partner sold Key Pharmaceuticals to Schering-Plough, is now worth an estimated US$4.8 billion. Among some of the other feathers in his hat: selling Miami-based pharmaceutical company Ivax Corp. to Israel-based Teva Pharmaceuticals for US$7.4 billion in 2006, and the billions he has given away as a philanthropist.

But for one reason or another, in August 2011, Honig and Frost turned their attention to a past-producing gold mine in Nevada called Relief Canyon, picking it up out of bankruptcy for US$19 million. The property, 180 km northeast of Reno, came with three open pits, which produced gold under various owners between 1983 and 1993. It also came with a relatively new — and never used — processing plant built in 2008.

The private investors put Relief Canyon into a company called Sagebrush and recapitalized it. In February 2012 they hired Stephen Alfers as CEO. It was an astute choice. Alfers made a name for himself as president and CEO of NewWest Gold Corp., where he developed a large portfolio of gold properties, including Long Canyon, Sandman and Northumberland. In 2007, Alfers orchestrated NewWest’s sale to Fronteer Gold for $186.9 million. Newmont Mining (TSX: NMC; NYSE: NEM) acquired Fronteer in April 2011 for $2.3 billion.

After selling NewWest, Alfers joined Franco-Nevada (TSX: FNV; NYSE: FNV) as chief of U.S. operations until the end of 2011, when Honig and Frost lured him to Sagebrush. One of the first things Alfers did was change the name of the company to Pershing Gold (US-OTC: PGLC).

Since getting on the property in March 2012, Alfers has focused on increasing the land holding, which he has grown from the original 1,100 acres (4.5 sq. km) to 25,000 acres (101.2 sq. km), and expanding the resource, which he has done from the historic 100,000 oz. from reverse-circulation drilling that came with the project, to 550,000 oz. in 2012, and to 717,000 oz. in the 2013 drill program.

A resource estimate released in March 2014 put measured and indicated resources at 24.4 million tonnes grading 0.69 gram per tonne for 552,000 contained oz. gold, and inferred resources at 9.3 million tonnes grading 0.55 gram per tonne for 165,000 contained oz. gold.

“We’ve dramatically increased the gold inventory,” Alfers says in an interview. “And the story of 2014 has been consistently drilling much higher-grade material … which could indicate this is a project that is likely to also have high-grade zones of mineralization throughout the deposit, so to that extent it’s obvious that the project is getting bigger and better.”

On Feb. 4, assays from drill holes north of the North Pit returned an intercept of 76.8 grams gold per tonne over 1.4 metres, within a much wider high-grade zone measuring 10.12 grams gold per tonne over 11.9 metres. Some of the thicker high-grade intercepts include 23.7 metres of 3.03 grams gold and 34.9 metres of 2.19 grams gold.

Pershing Gold has released more high-grade intercepts from its 2014 drill program, including 0.9 metre of 87.91 grams gold and 3.1 metres of 9 grams gold.

In the next two months, the company expects to release an updated resource estimate incorporating all of the drilling it has done to the end of 2014, and Alfers says Pershing Gold is on track to complete a preliminary economic assessment by mid-May.

The three open-pit mines and the heap-leach processing facility are fully permitted. The plant has the capacity to treat 8 million tons per year and the permitted leach pad can hold 21 million tons (19 million tonnes), and can be expanded. The facility is also ideal to process ore from future discoveries of satellite deposits.

“We’re permitted to open the mine, we’re completing the mine planning, we’re planning ahead for permitting our first major expansion of the mine, and all of this is coming in just the next three months or so … this is a project that has exciting news, and I guess all I can say is: ‘Stay tuned, because it looks like it’s going to get better.’”

Alfers adds that the higher-grade material Pershing Gold has found in the last year is yet another example of why Nevada is such a great place to hunt for gold.

“As you often find in Nevada deposits, these projects have a lot of surprise for you, and continue to get larger, and that’s the way we think Relief Canyon is going to shape up. So as we open the mine, we’re going to continue to aggressively drill and expand.”

Honig and Frost are big believers in Relief Canyon’s future. Management and insiders own 48% of Pershing Gold’s outstanding common shares, and of that, Honig owns 18% and Frost 15%.