Nevada’s gold-exploration companies preparing for a long downturn

Gold-exploration companies in Northern Nevada are buttoning up for what they expect will be one of the coldest periods they’ve seen in recent memory.

Exploration companies — which scout prospects and raise investor money to undertake drilling and collect data in hopes of selling a promising project to a big gold-producing company — are cutting back their land holdings, trimming their staffs and hoarding their cash.

Many of those companies are either headquartered in the Reno area or have their operational bases in Northern Nevada while they maintain their corporate headquarters closer to their investors in Vancouver or Toronto.

One of them, Reno-based Wolfpack Gold Corp., headed by longtime exploration professional William Sheriff, decided last month to pull in the reins on its exploration program. The company froze its hiring, reduced staff by more than one-third and cut salaries by 20 percent. It’s in talks, too, with suppliers about further cuts.

And it’s cutting back its claim holdings — currently than 40 properties, most of them in Nevada — by 40 percent to save on the costs of holding them.

Instead, Wolfpack will focus on a handful of projects such as its Adelaide prospect 20 miles southeast of Winnemucca and its Fourmile project in Nye County.

The company has about $6 million in cash, but Sheriff isn’t confident about the ability of Wolfpack Gold — or other exploration companies, for that matter — to raise more money from investors. The company’s current plan is based on the expectation of no new money from equity investors for a good while.

“The mining industry has zero credibility on Wall Street,” he said.

Investors jumped onto the mining industry bandwagon as gold prices moved to record-high levels in recent years, he said, but mining companies focused on production numbers and failed to convert high prices into bottom-line returns.

“Investors don’t care how big your trucks are; they care about how big the profits are,” Sheriff said.