Golden Phoenix Minerals Inc., a Sparks company that's made a couple of so-so stabs at becoming an operator of mines in Nevada, now sees its future in following the middle way.
The publicly held company is carving out a new role for itself in an industry that's dominated by numerous small exploration companies on one end of the spectrum and a handful of larger companies that operate mines on the other end.
The executive team of Golden Phoenix thinks the company can establish a position in which it identifies promising discoveries by exploration companies, completes the permitting to get the mines ready, then sells them off to operating companies. Golden Phoenix would retain a royalty interest in the properties.
Investors got a look at the template for the strategy with the deal the company put together this spring and summer for its Mineral Ridge gold property in Esmeralda County.
Golden Phoenix bought the property 32 miles west of Tonopah in 2000, mined about $2.3 million of gold and silver out of it, then idled the mine in 2005.
"We didn't have the capacity to operate it," says Thomas Klein, who was named president of the company in February.
Instead, Golden Phoenix sold off a majority interest in the property in March to Scorpio Gold Corp. of Vancouver for $3.75 million in cash and more than 7 million shares of Scorpio's common stock.
A couple of weeks ago, Golden Phoenix sold the Scorpio stock for $3.58 million and used some of the money to pay off $1 million it owed to Crestview Master Capital LLC.
With the cash that's left over, the company is ready to go shopping.
Golden Phoenix is talking, Klein says, with cash-strapped exploration companies that have identified promising prospects in Nevada, Canada and South America.
The company looks to acquire those properties maybe through outright acquisition, maybe through joint ventures and apply its financial, permitting and geological skills to get them ready to sell to a mining operator.
Golden Phoenix will look to retain a 30-percent interest in the projects, allowing it to tap into a stream of royalties while it brings more projects on line.
That's a strategy that plays to the strengths and experience of the company's four-person staff and its board of directors, Klein says.
"It makes sense to accentuate the company's positives and eliminate the negatives," he says.
Along with its experience at the Mineral Ridge gold property, Golden Phoenix once was operator of Ashdown Project LLC, a molybdenum mine north of Winnemucca. After bringing the mine back into operation in 2006 with Win-Eldrich Mines Ltd., a Canadian company, Golden Phoenix shuttered the property in 2008 and sold its interest to Win-Eldrich for $5.3 million last year.
