Northern Vertex (NEE.V) has announced a merger with Eclipse Gold Mining Corporation (EGLD.V). “Our goal has been organic growth but also growth through consolidation. This merger offers the shareholders of Eclipse an opportunity to be part of a producing mine, a mine that has been actively developed and has transitioned from exploration through the production of the last half a dozen years,” said Ken Berry, CEO of Northern Vertex.
Ken Berry CEO of Northern Vertex is here to give us some exciting news about consolidation in the sector and in particular with his company. Ken, welcome back to the show. It's a pleasure speaking with you today. David. Thank you very much for having me on and allowing me the opportunity to talk about Northern Vertex and the Moss mine.
You have a very exciting piece of news to share with us, but before we get into that, I don't want to keep the audience, uh, uh, hanging for too long. Before we get into that exciting news, let's talk about Northern Vertex. What is your company all about? Well, Northern Merritt, Texas, a company that was founded in 2012.
Uh, we are the largest pure gold and silver producer in Arizona. We have 150 men and women working on our site. We're located about an hour and a half South of Las Vegas. And we've just come off our strongest quarter to date, we produced, uh, nearly 15,000 ounces of gold and silver and with a revenue of 27 million for the quarter.
So very pleased that our activities and we've just recently announced a merger with eclipse mine. So excited about that as well. Okay. So, uh, open pit and heap leach mining, is that, uh, that's, that's what your company does. Can you tell us a bit about that process? Sure. We're, we're an open pit eat leads project we're located in the district of Oak men.
This is a historic mining district that has produced over two and a half million ounces. Uh, we are the first open pit deeply operation in the district. We're located in the Walker lane gold trend. Uh, we are mining moving about 25 to 30,000 tons a day, uh, processing about eight to 10,000 tons through our crushers and the heap leach pad.
Uh, it's a, uh, about a one gram material, bulk tonnage mining. So, uh, we have a Merrill-Crowe facility onsite, which recovers the gold and silver Dory, and we ship it off. Uh, to, uh, saw you in salt Lake city on a weekly basis. Okay. Let's talk about the merger now. So a eclipse gold mining. Why, why specifically this company, why have you decided to make this partnership right now?
Well, David, uh, our goal has always been twofold. One is organic growth, uh, exploration and development of the Moss mine. And the second is consolidation of us gold projects. So eclipse offers us an excellent opportunity. They have the Hercules project, which is located in the Walker lane, gold trend, same trend as a Moss mine, uh, they're up in the Northwest area of this Walker lane, gold trend in Nevada, not far from Marino.
Uh, and this is a project called the Hercules project. It has about a half, a million ounce historic resource, but a tremendous potential to increase the resource. Uh, they've got Mike Allen and Warwick board two excellent geologists, uh, very successful in their own. Right. And they feel this project can be a million ounces or more so that exploration program is underweight.
So it gives us two assets. Why not development projects with the Hercules. And then we also have the Moss mine, which has producing cash flowing, coming off, but most successful quarter to date. And we also have blue sky expiration potential. With the project at the Moss mine. Uh, we we've been thrilling since about may.
Uh, we've been active with three drill rigs. We're planning on drilling 32,000 meters, and then coming up with a resource calculation, we're very optimistic that we're going to see us increase from the current half a million ounce resource. Uh, so we, uh, we believe this is going to see, uh, really changed the, the, uh, Moss mine from a small.
Uh, 50,000 ounce producer to a mind that could be perhaps a hundred thousand ounce per annum or more. So I work cited about the potential and excited about this transaction, which has just been announced. I guess if I were an investor, I would ask you why, why go through with a merger? Why not just expand yourself and look for another deposit to expand your portfolio?
What's the benefit here of a merger? Well, as I mentioned, our goal has been organic growth, but also grow through consolidation. So this merger offers the shareholders of eclipse, an opportunity to be part of a producing mine, a mine that has been actively developed. And has transitioned from expiration through to production in the last half a dozen years.
Uh, so, you know, for eclipse shareholders, it's a tremendous opportunity to diversify and become part of a producer for Northern Vertex. It gives us a second asset, uh, The Hercules properties reminds me very much of the Moss early stages. When we were developing the Moss, it was, it was in that half a million ounce range.
Uh, but we've been exploring and we feel that we're going to see a significant increase in that resource. So I think it gives both parties an opportunity to participate in a multi-asset. Uh, development in the Walker lane, gold trend, what it also brings to the table, which is probably one of the most important aspects is it strengthens our board.
We're bringing on some very successful people. Uh, we've got Doug Hearst as part of eclipse. He was one of the founders of international royalties. Uh, he sold that company off for over 700 million who was also a founder of Newmarket. And that company was sold for over a billion dollars. So Doug has a tremendous amount of experience that he will bring to our board.
Uh, we, we also have Marcel the group as part of eclipse and he'll be joining the Northern Vertex board. Marcel is one of the founders of pathway capital. He's also been part of the development of over five companies that have reached beyond a billion dollars in their market caps. Um, most notably would be Equinox and, uh, Marcel played a major role in the development of Equinox.
So we're pleased to have. Doug and Marcel joined our board. And as you know, or, or your listeners may know, Northern Vertex has a strong board in its own, right? We've got Jeff Burns. The former CEO of Pan-American. We have Jim McDonald, one of the founders of Alamo school. We have Farrell who was with endeavor financial did over $26 billion in M and a transactions.
And we have Mike power who was head of metals and mining. For JP Morgan. And in addition to that, we have an advisor Roman Yolie, who has been, uh, instrumental in funding for Northern Vertex. So we've got a strong board, strong group of people, and now it's just gotten stronger with the eclipse. Do you anticipate any challenges to realizing synergies during the merger?
Uh, Arizona and Nevada they're close together, but are there differences in their jurisdictions? Now we're in that Walker lane, gold trend, both projects are epi thermal in nature. They offer the investors and the shareholders of Northern Vertex and eclipse, a bulk tonnage mining opportunity. So I see, uh, uh, you know, just a very cohesive development of these two projects.
Uh, so I, I think this is going to be very successful. Uh, Northern Vertex is a name you are going to hear more about your as time goes on and this transaction is completed, we just created, and we will have created a platform for growth. So we're excited about that. We have access to capital. We've been increased in strengthened our board.
And in addition, uh, this merger will bring about 25 million in financings. From eclipse. So our current treasury sits at about 10 million. We're going to be in a strong position, excellent platform for growth in a consolidator. How are you, how are you financing this merger? Well, both companies are sitting on cash currently, uh, but eclipse has announced a $20 million financing, uh, as part of this transaction.
Uh, and that is going very well from what I hear has been sponsored by five brokerage firms. So that's a very important point. Uh, Northern Vertex, we finance about 125 million to date to develop the Moss mine, this a hundred and twenty-five million has all been non brokered financing. So the eclipse transaction, what that brings is a new $20 million financing with five brokerage firms sponsoring that.
Uh, so I expect, you'll see analyst coverage. You'll start to hear about Northern Vertex and eclipse. And, uh, we're definitely, uh, one of our goals is be the lead consolidator of us projects. Yeah. Let's talk about your balance sheet. Now, here are your statements. I'm just looking at your financials here.
2020 was a great year for you compared to 2019. Now this is, this is, uh, not the case for all miners considering COVID had a severe impact on operations across the industry. Yet you were able to realize a substantial growth in revenues. From, uh, from the previous year, can you explain this growth where it came from?
Was it primarily from the increase in gold price? Where did you ramp our production as well? Well, um, Northern Vertex is, is not unlike many other mining companies that take a project through that construction, commissioning and production phase. When you first move into that production, there's many speed bumps obstacles that you encounter when you're a single asset company like Northern Vertex.
Uh, sometimes you, you struggle with that working capital, uh, in the initial phases of production and we were no different than many other mining companies. I think the difference was that we survived and, and now we're flourishing. We've really hit our stride here in the last three or four quarters. Uh, so our production has continued to ramp up and in conjunction with that, we've been able to clean up our balance sheet in the last six months.
We paid off more than 12 million in debt. We've minimized dilution by 63 million shares. That's almost 25% for our shareholders and we're sitting on 10 million in cash right now. That's us. So, uh, you know, it, it has been an exceptional year for Northern Vertex. And in addition to that, as I mentioned earlier, we've got the blue sky of expiration.
We started expiration in may. The drill rigs have been turning for the last seven months. And we expect to be thrilling right through to next may, June, and then coming out with a resource sometime between now and may or June. And I would expect that resource is going to see a substantial increase. We're very optimistic.
I would encourage your listeners to review some of our news releases. If you visit our website. You'll see some of the expiration results that we're receiving and they're very supportive, widespread mineralization we've even we've even encountered a high grade bank called the Ruth vein, which intersects the Moss vein.
Uh, so we're optimistic about this resourcing. And looking forward to that. I'm curious as to how you major budgeting priorities as you received an increase in your cash balance, what did you think? Like what was the first thing that came to your mind as you want to pay off your debt? First? Did you want to expand your operations?
Put the money back into the ground. Yeah. Walk us through the thought process for your budgeting priorities. Well, it was two or three falls. Firstly is we wanted to clean up that balance sheet. We accomplished that by paying down 12 million in debt here. Most recently we paid off eight and a half million on December 1st.
That was a convertible debenture, uh, which was convertible at 30 cents. We're currently trading in the 50 to 60 cent range. Uh, so that minimize dilution by about 15%, that was a priority. Uh, and secondly is investing in long-term, uh, investments within the Moss mine, uh, that will lower our operational costs.
So first, uh, within the last two months, what we did is we ran a power line to the site that eliminated eight diesel burning generators, and that has saved us over $2 million. Per year will save us over $2 million per year. This was an exceptional investment, and we're seeing returns in that immediately, uh, as we speak month over month.
So that was positive. We also invested in testing in increasing our crush size from a quarter inch to three eights. And this is another area that can be a significant cost savings up to 30%. Uh, so this is something that we've been doing testing for the last year, and we're implementing that as we speak.
Uh, we'll also be expanding our leach pad in 2021. Uh, so again, we're investing back into the Moss mine, uh, and as I mentioned earlier, expiration is a priority. Uh, we are drilling this property. It currently sits at just under half a million ounce global resource. We believe that this will be a multi-million ounce deposit.
We've got groups like Mavericks, metals that invested in, in the Moss, mine and Northern Vertex expecting that this mine. We'll be producing for decades to come. So we're very excited about the future. Just out of curiosity, if you're building something like a power line, does the government subsidize that at all?
Does the state provide you with any, uh, any, uh, compensation for building infrastructure, whereas that all from Northern Vertex? That's a good question. Our borrowing costs have lowered from about 12% down to about six and a half percent. And part of the reason is because the financing that we arranged for that power line is a 1.6% financing for 15 years.
So the, and that's a $3 million financing to build that power line, implement it. And as I mentioned, it's about a $2 million savings per year. So it was an exceptional return on our investment and a very low cost loan. Yeah. Well, when you're talking about cost of financing, district cost of financing, go down as the company expands in size, how does that, how does that work for Jr.
Well, certainly the, the more success you have and the more experience and the longer you're producing the track record allows you to borrow it at lower rates. Uh, as I mentioned, we've lowered our financing costs from about 12 and a half percent down to six and a half percent. Uh, but that's primarily due to us paying down that high cost debt.
And retiring that. So I know that your company focus right now is to produce gold and you also produce some silver as well, though. Do you plan to, uh, produce more silver relative to gold in the future? Is that part of your plan or not? Well, our, our ratio of gold to silver is about a nine ounces of silver to every ounce of gold.
Of course the value is in the gold, uh, but we are S a gold and a silver producer. Uh, part of our recovery system is a Merrill CRO facility. And that the system allows you to maximize your recoveries of silver. So with the Merrill-Crowe facility and our processing plant, we produce Dory on a weekly basis.
And Dory is basically. Uh, silver and gold bars, which are shipped to the refineries. So would that, uh, ratio change? It's it's just part of our mining process. Uh, the ratio is, is pretty much fixed with the, or, and, and the geology of the property some analysts have used. And then we talked about this briefly outline the analysts have used a natural law, golden silver ratio, a mind out of the ground, a benchmark for what the gold silver ratio should be.
So nine to one. According to speculators nine to one should be in there. And their theory, the actual golden silver racial, uh, given how much are mining out of the ground. Can you see that happening at all? Well, I certainly see that ratio closing between gold and silver, uh, like many investors, but, but that's purely speculative right now.
That ratio of course, is, is that, uh, the spread is quite significant. And I think that you see many investors. Uh, participate in silver companies and or companies such as ours that offer gold and silver. Uh, for that very reason that they see that ratio closing historically in the medieval times, it was down in the single digits.
Uh, the ratio, uh, was much lower, obviously. So, uh, that that's, that's an area that many investors are speculating. Uh, right now we have, as I mentioned, just under half a million ounces of gold. Uh, and a resource and we have 5.8 million ounces of silver. So with our expiration growth, I expect to see that silver, uh, those silver ounces grow significantly.
Uh, we currently, uh, have a deal with Mavericks metals. Uh, to deliver three and a half million ounces of silver, they pass 20% of the spot price and we deliver up the three and a half billion ounces of silver after which we will split the silver, uh, 50 50 from that point going on, they'll still pay for the 20% in expenses.
Uh, but we'll share in that silver produced. In a 50 50 arrangement. So we're excited about the future of silver as, as golden. And of course, many investors are looking at, uh, looking at gold and silver as a store. And I hedge against difficult times ahead. Well suppose silver price runs up much faster than gold in the foreseeable future.
Let's say in the next two years, would that change your priorities for production? No, our production, I we're mining. Uh, we're basically a bulk mining tonnage operation, open pit IE bleach. Uh, when we're mining, uh, th the, the ratio of gold and silver is, is been very consistent. Uh, reconciliation has been exceptional for this property.
I wouldn't see that changing much between that nine, nine to one in ratio of silver to gold. I think this merger is. Is consistent with a lot of analyst expectations, which is that consolidation in this space is likely to pick up into the new year and beyond. Uh, do you agree with this statement, do you see even more consolidation in gold mining as a whole?
I definitely see consolidation ahead. Uh, you've got companies like Northern Vertex and eclipse. Uh, which I think will be leading the way in this consolidation effort. Uh, we just, uh, sprained, and as I mentioned, we will be strengthening our board. Uh, we strengthened our, uh, access to capital a capital markets.
Um, and of course we have 150 men and women on site. Uh, and we built a tremendous operational team. And really this is the heartbeat of our operation. Uh, our, it starts with our mining team and that's led by Joel Murphy. Uh, and then it's supported by board of directors and management. So I believe that Northern Vertex will be a platform for growth, and you're going to see many more acquisitions and consolidation ahead here.
Finally, what's the timeline on your merger with eclipse? It should be complete sometime in late January. Uh, currently there's a financing underway and we've got very strong demand. Eclipse is leading that as part of the transaction. That's part of the transaction. Is there. Bringing over, uh, some very strong individuals to join our board.
Uh, they have the Hercules property as a development property that half million ounce historic resource, and then, uh, financing, uh, which will bring over about 25 million in cash to Northern Vertex and really strengthen our ability to be that platform for growth in the consolidator within the U S marketplace.
Well, thanks again for coming on the show today and giving us an update on your company. So fantastic hearing from you as always. David, thank you very much for having us on. And I'm really pleased to be talking about this merger and the development of the Moss mine and the Hercules project. Great. Well, you have yourself, a Merry Christmas and a happy holiday and a happy new year.
I look forward to catching up with you in the new year as do I, David. Thank you. Thank you for watching. Kick on you. Stay tuned. .