Indeed, a number of core properties sit in the heart of the world’s two most prolific gold belts – the awe-inspiring Carlin Trend and its less developed prodigy, the Battle Mountain/Cortez Trend.

 

Value-sensitive investors will also appreciate the fact that a number of the Company’s key Nevada properties were acquired very inexpensively during an industry-wide slump in the mining sector in the early 2000’s. This was when gold’s spot price bottomed-out in 2001 at a cyclical 22-year low. (Now it’s at a 25-year high). Significantly, several of these projects are situated in the immediate vicinity of prolific gold mines, which statistically and logistically tends to greatly enhance the odds of exploration success.

 

Management then followed a shrewd strategy of farming-out three of these properties to Placer Dome U.S., the ‘stateside’ exploration arm of the world’s fifth largest mining multinational, Placer Dome Inc. This allows the Company (www.nevadapacificgold.com) to mitigate exploration risks by committing a deep-pocketed major to foot the costs of advancing these projects.  

 

All told, Nevada Pacific benefits from about a dozen active projects in Nevada covering over 100 square miles of mineral rights that include some of the more prized hotspots of the famed Battle Mountain/Cortez and Carlin ‘trends’ or gold belts.

 

Other high-impact projects elsewhere include the open pittable bulk tonnage Bat Ridge gold-silver-copper deposit in Utah which will be discussed later in this article. However, let’s first consider the Company’s inaugural profitable venture, a recently-refurbished gold-silver mine in Mexico.

 

The Magistral Mine, Mexico

Located in Mexico’s Sinaloa State, this 100%-owned mine was acquired from Queenstake Resources in early 2004. With a mine life of at least seven years, it is regarded as a valuable strategic asset that will provide meaningful cash flow to help finance Nevada Pacific’s exploration various projects in Nevada, as well as one in Utah. Following completion of a US $2 million revitalization program, the mine entered a new phase of commercial production in January 2005. Encouragingly, it yielded 21,000 ounces of gold at a cash cost of US $280 per ounce within the first six months of operation.

 

The purpose of the mine upgrading was to increase long-term operating efficiencies and boost annual gold and silver production. However, a short-term hike in operating costs led the Company to put the mine into a “heap-leach only” mode as of August, 2005. In other words, only the existing above-ground ore is being processed at the present, which involves the profitable recovery of approximately 10,000 ounces of existing gold inventory at the mine’s heap leach pad. Full production is expected to recommence in the near future.

 

At present, the mine has reserves and resources totaling 505,078 ounces. However, an exploratory drill program has been initiated in order to demonstrate the potential to significantly increase the known reserves, and with the further goal of defining higher-grade resources.

 

By current estimates, the mine is expected to realize a production peak of 56,000 ounces by 2010 – a number that could even be improved upon over a longer mine life, assuming that ongoing drilling proves up new resources. Additional ore could even be generated by the future discovery of new deposits in the historic ‘mining camp’ or territory where the mine is located. That is why Nevada Pacific now owns exploration rights to 400 square kilometres of very prospective land surrounding the mine.

 

Nevada: Land of ‘Elephant Deposits’ and Untapped Gold Riches

In early 2002, the mines of the Carlin Trend reached a milestone 50 million ounces of gold production for a 2005 valuation that exceeds US $20 billion. Though only 40 miles long and five miles wide, this prolific mineral belt produces nearly four million ounces of gold annually.

 

This represents half of Nevada’s annual output of eight million ounces (with this one state accounting for three quarters of the United States’ total production). Of particular importance is the fact that seven of the world’s largest gold mines that boast collective historic inventories of 80 million ounces, were discovered as recently as 1985 to 1990, all in Nevada.

 

Significantly, the Battle Mountain/Cortez Trend is believed to be the most geologically prospective mineralized corridor in all of North America. Many believe that this underdeveloped, gold-rich mining camp has as much potential to one day rival the adjacent lustrous Carlin Trend – the richest gold belt on the planet.

 

Nevada Pacific has been systematically advancing projects in both trends and thereby steadily building shareholder value. During 2006, exploration and drilling will be conducted on up to seven Nevada properties, including two of which that are being both operated and funded by mining major Placer Dome U.S.

 

Cornerstone Project: Battle Mountain/Cortez Gold Belt, Nevada

The 100%-owned Cornerstone property covers 4.8 square miles located immediately adjacent to the 1.4-million-ounce Tonkin Springs Gold Mine owned by U.S. Gold (the flagship company of Robert McEwen, a recently appointed Nevada Pacific director and now the company’s largest private investor/shareholder). Importantly, the property is on the Cortez Trend about 12 miles south of Placer Dome’s 10-million-ounce-plus Cortez Hills and Pediment discoveries.

 

Surface sampling conducted on the property in 2004 identified four key zones of mineralization. They include the Flag Zone, covering some 3,000 feet by 800 feet, which features impressive gold grades at surface, including chip samples that run as high as 0.317 oz/ton.

 

Similarly, the TR and BuTr zones have also yielded encouraging results from surface sampling programs. All of these zones are in close proximity to one another, as well at the CSZ Zone, which is where the most encouraging results to date have been uncovered.

 

The CSZ Zone includes a surface discovery zone known as Trench #1, which is located a mere 2,500 feet north of the boundary of U.S. Gold’s Rooster Deposit. This trench has now been expanded to 180 linear feet of exposed bedrock averaging 0.041 oz/ton of gold. Notably, grades improve towards the eastern edge of the trench, where an especially rich section containing 30 feet of 0.204 oz/ton has been outlined.

 

Of equal significance, a summer 2005 drill program indicated the likely presence of a halo of low-grade gold mineralization – one that encompasses the eastern margins of Trench #1, as well as other high-grade sections along its axis. Meanwhile, Trench #6 also returned very promising values.

 

Located only 200 feet south of Trench #1, it contains 205 feet of 0.012 oz/ton of gold, including 75 feet of 0.021 oz/ton gold. Currently, Nevada Pacific’s savvy exploration team presently believes the CSZ Zone involves three potentially stacked mineralized zones spanning a known surface area of approximately 12,500 feet by 1,200 feet.

 

Nevada Pacific has therefore decided to test the vertical extent and other parameters of the CSZ Zone’s emerging mineralized system by way of a high-priority early 2006 drill program. Its main objective will be to test for favorable host rock at or near the intersections of the structures that appear to control the higher gold grades.

 

Keystone Project: Battle Mountain/Cortez Gold Belt, Nevada

This property is 11 square miles in size and lies at the heart of the Battle Mountain/Cortez Trend within about 20 miles of ten rich gold deposits, all of which are on-trend with the Keystone Project. Among them are Placer Dome’s 10-million-ounce-plus Cortez Hills and Pediment discoveries, as well as the 15-million-ounce Pipeline Deposit, which is joint owned by Placer Dome and Rio Tinto.

 

Placer Dome U.S. has the right to earn a 60% interest by spending US $5 million on exploration over a five-year period and may earn a further 15% stake by completing a full feasibility study (mine blueprint). Meanwhile, Nevada Pacific retains the rights to all silver and base metals resources.

 

Historic drilling has already revealed strong indications of Carlin-style mineralization at Keystone with assays returning grades of up to 0.151 oz/ton of gold. In 2005 Placer Dome undertook a comprehensive field program which included airborne geophysical surveying and a drill program comprised of seven holes totaling 3,254 feet.

 

The drilling encountered disseminated semi-massive and massive sulfides in several zones of varying widths. This is a very prospective development that attests to the likely presence of a robust mineralized system. Hence, Placer Dome has mobilized two drill rigs and has begun the first phase of the drilling of up to 20 holes this winter.

 

Nevada Pacific will also be conducting its own drill program this exploration season to test the property’s potential for silver and base metals discoveries – which as previously mentioned, the Company has exclusive rights to.

 

This drilling is aimed at following-up on a 2004 geophysical survey that outlined a number of anomalous targets. Corroborative surface sampling identified one particular target zone that measures 4,000 feet by 1,000 feet, where rock chip samples have assayed up to 10.8 oz/ton of silver, 5.14% copper, 1.83% lead and 1.21% zinc.

 

Bat Ridge Project, Utah

The seven-square-mile 100%-owned Bat Ridge property is located eleven miles northwest of Milford, Utah. This project holds the potential to be a large tonnage, open pit style copper-gold deposit, along with significant concentrations of silver, lead and zinc.

 

Historical exploration activities include several 100-foot-deep drill holes spaced 75 feet apart. Hole 2A returned impressive values of up to 3.4% copper, 0.11 oz/ton of gold and 2.8 oz/ton of silver over 35 feet.

 

Hole 3B also encountered similarly eye-catching grades of 2.85% copper, 0.22 oz/ton of gold and 1.77 oz/ton of silver over 60 feet. Last but not least, Hole 4C came up with 95 feet of an equally attention-grabbing 2.3% copper, 0.36 oz/ton of gold and 1.66 oz/ton of silver.

 

Needless to say, Nevada Pacific’s geologists are very enthusiastic about these historic results which strongly suggest the presence of a large, high-grade mineralized system. They therefore embarked upon a thorough field program including airborne geophysics and extensive sampling in 2005 soon after acquiring the property.

 

Highlights of the program include values running as high as 8.76% copper, 5.4 oz/ton of silver and 0.07 oz/ton of gold. A 10,000-foot drill program is scheduled for the 2006 winter drill season, which is expected to produce some pretty attention-grabbing results.

 

BMX Project: Battle Mountain/Cortez Gold Belt, Nevada

The two-square-mile BMX property is located in the northern Battle Mountain/Cortez Trend. A 10-hole drill program conducted in 2004 encountered significant gold and base metals mineralization, thereby confirming the presence of a major copper-gold structure. Follow-up rock chip sampling to the north and to the south of these drill holes has also confirmed the presence of significant gold, silver and copper values.

 

Notably, historic output from past-producing small mines and prospects on the BMX project area contained values up to 0.85 oz/ton of gold and 16.5 oz/ton of silver. And existing mines within a seven-mile radius of BMX’s property boundary have produced or have resources totaling more than 25 million ounces of gold. The BMX property is also scheduled for drilling in 2006.

 

Similarly, Nevada Pacific also owns three other strategic land positions in this northern district of the Battle Mountain/Cortez trend which together amount to 33 square miles.

 

Buffalo Canyon Project: Round Mountain Mining Camp, Nevada

Other projects include the 100%-owned 1.5-square-mile Buffalo Canyon Project some 60 miles southwest of the known margins of the Battle Mountain-Eureka Trend. However, this project is anything but a long shot as it is situated a mere five miles distance from the site of the historic Round Mountain Gold Mine, where no less than 10 million ounces of gold were produced.

 

Previous drilling at Buffalo Canyon by a past operator discovered widespread low-grade mineralization totaling an historic open-pittable, bulk tonnage resource estimate of 9.6 million tons grading 0.017 oz/ton, representing an estimated 160,000 ounces of gold.

 

(Please note that this figure is not compliant with National Instrument (NI) 43-101, meaning that these estimates do not meet the exacting criteria of the Canadian federal government’s recognized standard for a ‘measured resource’).

 

In 2004, Nevada Pacific discovered a zone of high-grade surface mineralization where rock chip samples have assayed as high as 0.492 oz/ton. A subsequent 2005 drill program confirmed the presence of disseminated low-grade mineralization over an area measuring approximately 500 feet by 300 feet with thickness of up to 525 feet of 0.01 oz/ton of gold and 500 feet of 0.012 oz/ton of gold.   

 

Limousine Butte Project: Golden Butte Mining Camp, Nevada

This 30-square-mile property is located along the projected southern extension of the Carlin Trend. Placer Dome U.S. has the right to earn a 60% interest by spending US $4 million on exploration over a five-year period and may earn a further 15% interest by completing a full feasibility study.

 

The property covers a large hydrothermal gold system that exhibits geologically similar features to the large gold deposits found in the Carlin Trend. Exploration has identified a distinct mineralized strike length spanning at least nine miles. This is where an estimated resource of 620,000 ounces of gold (which is not NI 43-101 compliant) is believed to be hosted by five key target zones.

 

Placer Dome has now generated a 3-D geological model of the known gold mineralization at Resurrection Ridge (at the centre of the strike length) and will use the model to help guide a winter 2006 drill program. The Resurrection Ridge target area sits on the site of the now-decommissioned Golden Butte Mine. This is where approximately 130,000 ounces of gold were mined in the 1980’s by another operator. Past drill results from several holes at Resurrection Ridge include gold grades of 0.176 oz/ton over 90 feet, 0.137 oz/ton over 70 feet and 0.162 oz/ton over 50 feet.

 

Stellar Management: The True Key to Success

The Company Chairman and CEO, David Hottman, is a very adept financier whose distinguished career includes being part of the Bema Gold management team, as well as co-founding Eldorado Gold – both companies that have developed grass-roots exploration properties into a number of gold mines, while handsomely rewarding their shareholders with exceptional profits.

 

Mr. Hottman has also teamed up with several other renowned veterans of the many exploration successes of Bema Gold and Eldorado. By way of background, this dynamic management team has been instrumental in the discovery and/or development of some 75 million ounces of gold and ten operating gold mines. They have also raised as much as $300 million in venture capital financing.

 

Nevada Pacific’s field exploration team is managed by Company co-founder and fellow director Curt Everson, who benefits from an accomplished background as an exploration manager. Most notably, he made a name for himself with such longstanding North American mining mainstays as Gold Fields Mining Company and Santa Fe Mining Pacific Gold Corporation (now part of one of the world’s largest mining companies, Newmont Mining Corporation).

 

All told, the field team includes geologists who collectively benefit from over half a century’s worth of experience in finding gold deposits and developing them into mines in Nevada – ones with collective inventories exceeding a jaw-dropping 30 million ounces of gold.

 

Drawing upon such a strong multi-disciplinary team of ‘company building’ experts,   Nevada Pacific’s management has a clear mandate to implement a proven business model; one that involves generating strong cash flow from gold production to finance the development of potentially world class discoveries in Nevada and Utah. 

 

Additionally, another powerful catalyst for Nevada Pacific’s steady emergence as a mining success story is the role that mining magnate Robert McEwen is now taking in the Company. Renowned for having the ‘Midas Touch’, McEwen made his fortune by taking over the helm of industry standout Goldcorp Inc. as CEO when it had a market capitalization of about $50 million and building it into a $7 billion-dollar-plus company.

 

In late 2005, he threw his weight behind Nevada Pacific by becoming a director and investing $5 million of his own money in the Company to earn an 18.2% interest. This sizeable stake may yet be bolstered to 30.8% if he opts to exercise all of his warrants.

 

Investment Summary

The Company has approximately 68.2 million shares outstanding (about 85.58 million shares fully diluted), which makes for good liquidity in daily trading volumes. And with $5.5 million in the treasury ($16.27 million in cash on a fully diluted basis), Nevada Pacific has ample funding to advance its various projects. Moreover, Placer Dome U.S. has committed up to U.S. $9 million to the development of two core projects over the next several years.

 

In fact, Placer Dome’s high level of confidence in these projects is also underscored by the fact that the mining powerhouse has purchased over U.S. $1 million worth of Nevada Pacific’s common shares. Additionally, with about 95% of Nevada Pacific’s projects being wholly-owned, investors are therefore offered substantial undiluted leverage to potentially world-class exploration successes.

 

Indeed, let us reiterate that this Company has plenty of ‘blue sky’ opportunities, matched with existing gold production and an envied portfolio of emerging mineral discoveries. Nevada Pacific is thus poised within the next several years to rise through the ranks of North America’s select few emerging gold miners to become a highly profitable success story.

 

SmallCapMedia therefore views this intrepid mining junior as a solid investment, as well as a ‘home run’ prospect for anyone looking for a very affordable, yet priceless gold stock.