Nevada miners seek gold, silver in Yavapai County

NEAR BAGDAD — Robert Dultz doesn’t have gold fever. Not yet, at least.

“As an investor, I have seen a number of people get gold fever, and they get really crazy,” says Dultz, a 66-year-old retired financial consultant and current CEO of USCorp, a newly minted mining corporation based in Las Vegas. “Once we start piling up bars of gold, I don’t know, maybe I’ll get it. I’ve seen it in the ground, but seeing those bars all polished up, who knows?”

As the principal owner of USCorp, Dultz controls the mineral rights to claims in Arizona and California, which he hopes to soon turn into operational gold mines. The company’s claims just south of Bagdad in Yavapai County may hold as much as 600,000 ounces of gold and 2.2 million ounces of silver, according to a company geologist’s preliminary report filed in January. Subsequent press releases from the company suggest there may be more.

“It’s a terrific property, and it’s a shame it isn’t already in production,” Dultz says. “It really is a treasure chest.”

Dultz belongs to a growing number of independent operators flocking to Arizona with dreams of turning promising mining claims into lucrative working mines. With everything from gold and silver to uranium and copper making major price jumps in recent years, mining claims in Arizona are on the rise, many of them staked by small firms and outsiders to the state’s increasingly consolidated mining industry.

The U.S. Bureau of Land Management does not track mining claims by commodity, but BLM geologist Ralph Costa says that “without a doubt” the price of gold – which spiked from $250 an ounce in 1999 to a high of $1,020 an ounce in March 2008 – has played a role in the rise.

“We have seen a marked increase in the number of mining claims filed, and I’m sure that the price of gold is in part responsible for that increase,” says Costa, who works out of the BLM’s state office in Phoenix. “It’s bringing in all kinds of people, small people, first timers, small companies, freelance mining engineers, geologists. I think you can see why.”

While fresh faces may be moving in, the boom in mining claims has yet to translate into a large number of new operating mines. A complex and time-consuming government permitting process represents one hurdle. Today’s industrial mining techniques, like the cyanide heap-leach process USCorp envisions using at its Yavapai County claims, present another. Both require large investments for even relatively small operations.

USCorp, for instance, is seeking $20 million in financing to “unlock the treasure in the ground,” and begin mining their Arizona claim, as the company’s 2007 annual report tells prospective investors.

But before the company can solicit U.S. investors in earnest, it must complete an ambitious drilling program to meet strict federal securities guidelines. With permits now in hand, USCorp has plans for about 13,000 feet of test drilling at its Yavapai County claims, starting in early August. At present, the company is traded on the more loosely regulated U.S. Over The Counter Bulletin Board (USCS) and Berlin stock exchange.

“We’re going to have microscopic information on every foot of dirt or rock that comes out of there,” Dultz says. “We’re going to have so much detail that nobody can deny what we have.”

Hard geological data is critical in sorting out a legitimate operation from a potential scam, according to Paul Misiaszek, a geologist with the BLM’s Kingman field office. “Resource and reserve estimates take a lot of work, and they have to be performed in a certain manner accepted by securities regulators,” he says. “There are a lot of companies who would rather mine the investor than the earth. We see a lot of that.”

Consumers should be wary of companies touting mining investments that appear too good to be true, says Nyal Niemuth, an analyst with the Arizona Department of Mines and Mineral Resources.

“Why aren’t the sophisticated investors seeing that overlooked value and scooping them up?” Niemuth says of these ventures. “There’s often a good reason for that.”

Unlike more unscrupulous firms, US Corp appears to be doing the hard work of verifying its claims.

“US Corp is doing everything by the book, in my eyes,” Misiaszek says. “They have approval for their drilling program, and that seems like what they’re going to do.”

Once US Corp completes its test drilling – and if its preliminary gold and silver reserve estimates hold up – it still must complete a final mining plan of operations and an engineering plan. Only then will its claims of “buried treasure” hold up to the scrutiny of federal regulators.

At that point, the company’s holdings may finally prove attractive to one of the major corporations that dominate the state’s mining industry, a prospect Dultz welcomes. “I’m open to being acquired, or being a joint venture,” he says.

Until that happens, US Corp will continue working toward opening the mine on its own terms.
“If this were football, I’d say we were on the five-yard line,” Dultz says. “I am confident that we will get financed and go into production, if we’re not acquired before then.”

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