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Home » UK Shares » Great Western Mining Corp to start producing bullion

Great Western Mining Corp to start producing bullion

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Great Western Mining Corporation [AIM:GWMO], is going for gold (and silver and bronze – well at least the copper content of it) at its Olympic Mine and other properties in Nevada. And quite refreshingly the AIM-listed mining company intends to generate revenue quickly, as opposed to spending years and millions of dollars in shareholders’ equity ‘exploring prospects’, by horizontally-diversifying and building a milling plant to process spoils and tailing from its own tenements, and perhaps buying in wastes from other prospectors.

Great Western has a reasonably new management team, Brian Hall, the company’s executive chairman has been on the board in various capacities for 10 years, but stepped up to an active, executive role in 2019. Max Williams, the group’s finance director joined in 2019

Hall said: “I have been involved with the company for some time, but the company got a little bit bogged down, so I stepped up to try to help us regain our momentum and explore a new strategic direction.”

And the strategic direction that the company is taking is quite fascinating for a junior miner, as Great Western, as well as looking down is looking to the horizon and wanting to get cash-generative, as opposed to cash-depletive in short order.

“We had copper deposits on our sites, and don’t get me wrong, copper is a vital and strategic metal. However, to get a fully-blown copper project up and running will take a lot of time and a lot of money. We decided that whilst continuing our copper exploration – we would also start looking for gold and silver – which is what the company originally set-up to do,” said Hall.

The company has a number of sites which it believes will allow it to quickly start producing metal, but also has a significant inventory of spoil heaps, tailings and old mine workings on the properties it owns, which likely contain plenty of metal yet to be reclaimed.

‘She’s a miner 49er’

Nevada has a history of mining, Although the song about the ‘Miner49er’ was about the Californian Gold Rush in 1849, it could quite conceivably be about the Nevada ‘Miner59er’ as there was a significant gold and silver rush in Nevada ten years later. In fact, the Nevada gold and silver rush, and the multitude of camps that sprung up in the wasteland, eventually became settlements, which became cities and was fundamental to the foundation of Nevada as a US state.

And although California is possibly better known now for alternative lifestyles, Hollywood and tech entrepreneurs, Nevada has remained true to its history and is still a significant mining jurisdiction in the 2020s. California retains the moniker of ‘The Golden State’, with Nevada’s nickname ‘The Silver State’ being a bit inferior, but given the minerology and potential of some of the seams discovered in Nevada, arguably the title should pass to 36th State of the Union.

It is some of these artisanal mines worked by nineteenth century prospectors that Great Western is now rediscovering and bringing a 21st Century perspective to. Quite literally: ‘There’s gold in them thar hills,” as well as silver copper, lithium, barite, gypsum, diatomite, and aggregates, with geothermic energy potential.

To which Great Western has innovatively decided to start processing and pouring its own gold. “We wanted to do something to take the company in a different direction,” said Hall. “Not just being an explorer, living on shareholders’ funds, but becoming a [bullion] producer.”

Great Western Mining utlising backyard metallurgy

The company decided to set up a “very amateur” processing rig and managed, using little more than bits of second-hand equipment found on a lot and backyard metallurgy, managed to pour a silver bar from its own spoil heaps. “I’ve got it in my desk at work,” said Hall, “it looks more like gold, and I tried to use photoshop to make it look like a gold bar, but that didn’t work as I turned the entire background gold.”

Despite the hobbyist nature of Great Western’s first venture into processing, Great Western’s first silver bar provided a proof-of-concept and in July, Great Western signed a Memorandum of Understanding to create a Joint Venture with a local Nevadan contractor to develop a milling and processing plant for gold and silver.

The plant will be on private land, owned by the contractor, and will pay Great Western and its partner on a 50:50 basis from the sales of bullion produced from Great Western’s existing waste resources on its concessions. The miner has at least 20,000 tonnes of spoil on just one of its sites, Olympic Gold. At Olympic Gold, three sources of waste material have been identified and are being extensively tested for reprocessing, close to the high-yielding OMCO gold mine where operations ceased during WWII.

At Mineral Jackpot, one of Great Western’s properties, it has over 50 spoil heaps left from five adjacent and connected historical mines which produced gold and silver in the late 19th and early 20th century.  The recently upgraded 14 km road to the site will enable a 20-ton dumper truck to load spoil material from this mountainous area.

The contractor has around 200 acres of property and two derelict mill sites on his land, which could be quickly brought back into use. The new plant will process material using both gravity separation and a contained flotation system. The JV plans to assemble a self-enclosed leaching plant, to comply with local regulations, and has already approached the relevant State and County authorities to get permitting.

Great Western has already committed USD100,000 (GBP87,700) to the processing plant project, and has allocated up to USD600,000. “We could set up the plant in a few months,” said Hall, “but the thing that will take time is the permitting. We have started the process [with the Nevada Department of Environmental Protection], but that’s out of our hands. However, we hope for a positive update by the end of the year.”

Should the plant get up and running, Great Western would look to start processing other miner’s wastes. However, to avoid complications the cleanest way that the JV could move forward on this venture is to buy for cash and ship other miners spoil heaps, as opposed to pay the miners in bullion.

Great Western Mining exploiting quick wins

Great Western is still a miner, and so has been exploring its sites with a view to start mining operations. The company’s plan is to strike for short-term gold and silver production, and as that tails down, develop long-term copper production, whilst maintaining its processing line of revenue.

The company has six claim groups, all quite close together in geographic terms. Its flagship is Olympic Gold, 16,400 acres in south-west Mineral County, lying within the Walker Lane Fault Belt, a major metallogenic belt host to all the ‘medals metal’ deposits of gold, silver and copper. The company has conducted test drilling on the tenement, with a focus on the OMCO, an historic mineworks and Trafalgar Hill. This project has significant tailings deposits extant.

At Mineral Jackpot, five adjoining historic gold and silver mines, with high-grade vein mineralisation visible in open shafts and adits, further drilling was completed this season and Great Western is waiting on lab results back from this and other exploration, something that has been causing “a frustrating delay” to the miner’s plans. Hall hopes that results will become available this quarter.

The mines were last worked in the 1890s, and access was via a mule track “which caused problems in getting a drilling rig up there,” said Hall. Subsequently Great Western spent USD100,000 upgrading the mule track to a road that could accommodate trucks. Once the company got a rig up there and did a test drill it discovered a shallow, commercially-viable silver deposit, which it is prioritising for quick exploitation.

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“At six metres [depth] you could almost do the mining with a yellow digger,” said Hall, “add this to the spoil heaps we [re]discovered, and Mineral Jackpot is an exciting venture for next year.”

The company is also exploring its other properties: Huntoon, where the group is aiming at gold and copper production, with a potential target range of 10,000 ounces (oz) to 50,000oz of gold; Jack Springs, also gold and copper with potential for 10,000oz to 50,000oz of gold; Eastside Mine, a copper project; Rock House, gold, silver and copper with a target range of 25,000oz to 75,000oz of gold and Tun a gold and silver deposit with prospective production of 5,000oz to 25,000oz of gold. The company is also exploring Black House for copper.

Great Western has been on AIM since August 2011 and opened trading on 16th September at 13p, has offered a year-to-date return of 7.69%, a one-year return of 2.2% and its shares have ranged between 10p and 17p over a 52-week period giving the company a market capitalisation of GBP5m.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

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