President’s Letter (2-12-19)

At New Jersey, the business dictates the narrative… therefore we take a decidedly different approach to the junior mining industry, one that is unique to our team and asset base.  The opportunity to start small and scale into a growing producer in a largely forgotten gold district is very rare and fully embraced by our team.

The details of New Jersey’s “from there to here” are fairly well documented and largely in the rear-view mirror.  On a daily basis we endeavor to identify operational and corporate inflection points along the theoretical production and valuation curve (basically, we are on the job).  And while progress is never linear, in broad terms we would like to provide additional perspective on how we “get from here to there”.

As industry veterans, while we support the lofty goals of fellow Idaho and Montana firms, our firsthand “small company” experience of “going into production” cannot be overstated.  Recognizing how disparate ownership(s) become whole, identifying how the potential of individuals can become the team, and the drive of management to personally invest in a journey that relies entirely on its own ability for success – is a scarce commodity in any industry or business.  We recognize that many junior exploration companies never go into production and/or end up being “utilized” by the majors to de-risk a property until the time and price are right for their respective companies.  Business is business, and while we make a conscious effort toward win-win transactions and working with our partners, we are careful to “not make their business plan, our business plan.”

While many of the long-lived mines of today started as small mines, organically growing production on a small scale is nearly impossible if a company has to first raise $20 million+/- and then; identify the district, acquire the land, conduct successful exploration, drill 180+/- holes, prove up a deposit, permit a mine, permit a mill, design/build/operate a mill, develop the mine site improvements and infrastructure, operate drill rigs, build the teams, etc., etc.  Simply put, the economics, time frames, and industry cycles are not kind to such an approach, therefore the benefit/value of specific knowledge, timing, prior investment and calculated risk also cannot be overstated.  We are driven by the home run potential of discovery, however we recognize that runs are more commonly scored with the compounding of base hits – and that active participation (production) is a necessary and elusive pre-requisite when developing both methods of scoring for our shareholders.

Mining is a commodity business and volatility is to be expected.  To advance toward a mid-tier producer and build upon the challenges outlined above, we first successfully de-levered and reduced tail risk as much as possible.  We believe the focus on building/protecting the base will provide a certain value regardless of market cycles.  While our energy is now largely aimed at production and the virtuous cycle of additional resources, project’s and assets, the New Jersey of today is better-situated to weather a downturn and retain the components for early leverage into the next upturn, should those conditions become reality.

Additionally, we believe the many-faceted characteristics of the “base” mentioned above, along with having infrastructure in place, moves ounces at the upper end of the scale closer to reality while adding value to our other properties in the MGB.  Furthermore, we believe our production-based approach will be viewed favorably by fellow industry participants – including Hecla in the MGB, Endomines in Elk City and our JV partner in Montana.

Setting aside the big picture discussion of our other assets in the MGB, Elk City and Butte Highlands – at the Golden Chest here’s how we see it…. at one end of the scale is “The Chest” – currently a roughly 5,000+/- ounce per year gold producer – AND – at the other end of the scale is “The Chest” – with a roughly 400,000 ounce open pit gold resource (254,000 ounces measured/indicated and 223,000 ounces inferred) in a high level open pit mine plan leveraged to higher gold prices.

Our strategy at the Golden Chest includes a combination of surface and underground production.  Evaluation of different size surface operations and the underground beyond current production in the Skookum Shoot is ongoing (including the yet-to-be-tested down-dip extent/vertical continuity of all the shoots).  Also, at some point along the gold price/deposit size/optimization and confidence curve, the facts might dictate we consider a larger mill near the mine.  This is an active discussion.

As a small company looking to grow, we don’t have the luxury of overly complex plans or endless science projects.  Our team combines a tremendous amount of science with (we like to think) an abundance of common sense.  In short, while we can’t put gold in the ground, we are going to get it if it’s there (and economic).  In addition to our well-seasoned business and operational teams, we actively identify and work alongside our next generation of managers and operators.  We know firsthand the incredible effort required to keep things simple and promote a culture worth fostering.

New Jersey’s press releases largely reflect our overall belief in the potential of the Golden Chest and the MGB, not to mention our projects in Elk City and Montana.  An update of our website content is planned over the coming weeks to further reflect the narrative.  Please stay tuned

John Swallow
President and Chief Executive Officer
February 2019

2019-02-12T15:21:44-07:00 February 12th, 2019|