Submitted by Morgan Smith as part of our contributors program.
Bullfrog Gold Corporation (BFGC) has invested in its third major gold and silver project. The startup has taken out an option to purchase the Klondike Project, which isn’t located in Canada or Alaska. Instead, the Klondike Project is located in the Alpha Mining District in Eureka County, Nevada.
This could be a very good move for Bullfrog because the Klondike Project is very close to the Cortez Mine that is operated by Barrick Gold (ABX). Barrick dug 1.42 million ounces of gold out of the Cortez in 2011. Canadian-based Barrick Gold believes that there is 14.5 million ounces of gold remaining at Cortez.
The Klondike Project consists of a mineral structure that is five miles long and one mile wide. Bullfrog’s geologists reported that the mineral structures on the Klondike are similar to those in the rich Carlin gold region in Nevada. A Bullfrog press release indicates that there could be two potentially rich deposits on the land.
Indications of a Large Molybdenum Strike
Interestingly enough, some of the geology at the Klondike indicates that there could be a large deposit of molybdenum there. The land contains silver and zinc deposits similar to those at the Mount Hope Molybdenum Project that General Molybdenum (GMO) is developing with the Korean steel company POSCO (PKX). General estimates that the Mount Hope project, which is located just 10 miles from Klondike, contains 1.3 billion pounds of molybdenum.
Unfortunately for Bullfrog, there are good estimates of the potential mineral reserves at the Klondike. The potential there is rich, and the company is planning to explore for gold, copper, gallium, lead, molybdenum, silver, and zinc. There is limited drill data available at the Klondike, even though prospectors have been working there since the 1870s. During the early 20th century, small amounts of high grade copper, silver, and lead ores were excavated in the area and shipped to smelters in Salt Lake City, Utah.
Even though the Klondike, which is located on the side of the Sulfur Spring Mountains, is in one of the remotest locations in the Western U.S., it is close to major transportation arteries. U.S. Highway 278, which runs along the Silver Spring Mountains, provides a direct connection to Interstate 80, which is about 40 miles to the north. The nearest town to the deposit is Eureka, which is about 40 miles to the south. Eureka is on another major transportation route, U.S. Highway 50.
Similarity to Large Silver Discoveries in Latin America
The option at Klondike will give Bullfrog possession of 164 mining claims on the property. The company plans to commence the exploration of drilling there in the near future. Around 156 surface rock samples taken from the land could indicate the presence of a major silver and lead deposit similar to that in San Cristobal, Bolivia. The San Cristobal mine is the world’s third largest producer of silver. San Cristobal could contain up 450 million ounces of silver, eight billion pounds of zinc, and three billion pounds of lead.
The geology is also similar to the Penasquito and Cordero discoveries in Mexico. Operator Goldcorp (GG) expects the Pensaquito mine in Zacatecas to produce 500,000 ounces of gold, 28 million ounces of silver, 450 million pounds of zinc, and 200 million pounds of lead. The Pensquito could become Mexico’s largest open pit mine when it goes into production.
The Cordero is a potential discovery that is being developed by Levon Resources (LVN) of Canada in Chihuahua. Levon hasn’t determined the extent of the mineral resources at the Cordero, but Bullfrog’s experts think they could rival those at the Penasquito.
What this means is that Bullfrog could have just purchased an option on what could be one of the biggest heavy metals deposits in North America. Unfortunately, it has no hard evidence to the extent of the deposits, but the geology seems to indicate that large deposits are present. That means Bullfrog could become one of the fastest growing small cap gold stocks.
A Company with a Sense of History and Experienced Management
The exciting thing about Bullfrog is that it already has two interesting projects in the works. It is named for the Bullfrog Gold Project in the historic Bullfrog Mining District in Rhyolite, Nev. in the Bullfrog Hills located between Beaty, Nev. and Death Valley. The company is exploring for gold on lands next to the Montgomery-Shoshone open pit mine that is owned by Barrick Gold. The Montgomery-Shoshone produced 220,000 ounces of gold when it was in operation.
Bullfrog is also trying to resurrect the Newsboy, a historic mine that is 45 miles southwest of Phoenix. The Newsboy is located within 25 miles of the Vulture Mine, which produced 1.2 million ounces of gold and one million ounces of silver during its 80 years of operation.
This could make Bullfrog the most interesting little gold company you’ve never heard. Bullfrog is a brand new company formed in 2011, but it seems to have some very attractive features. The company reported that it has $1.4 million in cash and no debt.
The management team Bullfrog has assembled in its headquarters in Grand Junction on Colorado’s Western slope also has a lot going for it. David Beling, who serves as president, CEO, and director, worked as a manager and engineer at 12 open pit mines, nine underground mines, and 14 process mines in a 48-year mining career. Among other things, Mr. Beling has consulted for 20 mining companies and worked for several major miners, including Phelps Dodge, which is now Freeport-McMoRan (FCX). He was also the first person to get an environmental impact statement for a mine approved in Arizona in 1993, so he is familiar with U.S. mining law and regulation.
Bullfrog has contracted with three qualified geologists, Clive Bailey, Chip Allender, and Joe Wilkins, to oversee the exploration and development of projects, so it certainly has the expertise it needs to begin the development of these projects.
Risk, but Potential for Growth
Bullfrog is certainly an interesting little company with some very exciting assets and prospects. It certainly has the potential, but may not have the cash to develop those projects. Still, if the mineral resources it has located live up to their potential, Bullfrog should have no trouble in securing capital for their development.
The company would also be in a good position to sell those assets to a major mining company or enter into a partnership with a larger company. If such a deal develops, Bullfrog’s stock value should increase dramatically. After all, the company has demonstrated an ability to locate historic gold projects that can be easily and fairly cheaply developed or redeveloped.
It has also developed a strategy of minimizing costs and risks by concentrating its exploration and development efforts in established U.S. mining regions. This should keep costs fairly low because transportation and utility infrastructure is already available in those areas.
The company has kept its risks low by exploring in regions where established mining companies have already discovered substantial deposits. The company has also demonstrated a capacity for discovering promising mineral formations that should attract investments and possible partnerships with larger mining companies.
If you are looking for a cheap, but speculative gold stock, Bullfrog could be an interesting buy. It is cheap, but it has great potential, even though it still has not discovered proven gold resources. For those who want to take a little risk in their mining stock purchases, Bullfrog looks like a fun little company with a great sense of history.
Transparency/Disclosure: I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research. I am a consultant to a third-party and have received one hundred fifty dollars for independent research. Always discuss investments with a licensed professional advisor before making any financial decisions. Statements made herein are often “forward-looking statements” as stipulated under Section 27A of the Securities Act of 1933, Section 21E of the Securities Act of 1934, and the Private Securities Litigation Reform Act of 1995. While I have researched this company thoroughly, my due diligence is not a substitute for your own.
