Thibaut Lepouttre of Caesars Report profiles an explorer with a substantial gold asset portfolio and some well-known backers.
Contact Gold Corp. (C:TSX.V) was able to acquire a substantial Nevada gold asset portfolio from Waterton in 2017, and used this purchase to go public right before the summer. Not “just another” gold exploration company, as the IPO was backed by, for instance Goldcorp Inc. (G:TSX; GG:NYSE), which invested C$7.5M at a price of C$1 per share.
It looks like Goldcorp didn’t want to miss out on the opportunity to secure a pole position in this Nevada-focused exploration company, whose flagship asset already contains a historic resource estimate of 1.4 million ounces of gold at an average grade of 1.5 g/t.
Pony Creek: Contact’s flagship property
Pony Creek, is located just 20 miles south of Newmont Mining’s Emigrant gold mine in the Piñon range in Elko County, Nevada. And Contact Gold is in good company as its Pony Creek claims are actually bordering the land package of Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE), which contains the Dark Star gold discovery. This discovery actually heated up this part of Nevada.
As you can see on the previous map, there appears to be a structural mineralized north-south trend in with five established gold deposits (Emigrant, Rain, Dark Star, Pinion, North Bullion). It also looks like the Bowl Zone (which hosts the 1.4Moz historical estimate) is located on the same trend.
This Bowl zone was actually discovered by Newmont Mining in the 1980s, and was subsequently owned by Vista Gold and Allied Nevada. Allied Nevada entered bankruptcy proceedings, and Waterton scooped up the exploration assets. After looking at several offers from other companies to acquire and explore the claims, Waterton accepted an offer from Contact Gold, which offered a combination of cash, stock and preferred stock.
Contact Gold has issued 18.55M shares, 11.111M preferred shares and made a C$7M cash payment, giving Waterton an initial 37% stake in Contact Gold, allowing it to participate in the exploration upside at Pony Creek.
As the properties were pretty much drill ready, Contact immediately started a 10,000 meter drill program in the summer of last year, as well as some more basic exploration activities to define and generate more (new) drill targets.
A large part of last year’s drill program was focusing on the Bowl zone of the Pony Creek project, where the historical resource is located as Contact Gold wanted to verify the historical data on this zone. On top of that, an RC drill rig was used to expand the mineralized zones before being redirected to the Pony Creek North zone, which is located halfway the Bowl zone and Gold Standard Ventures’ Jasperoid Wash.
Pony Creek North was originally discovered in the 1980s but it looks like Barrick Gold/Homestake were drilling too far up north and while their main interval of 43 meters at 0.47 g/t gold definitely yielded an interesting result, it never followed up on that hole.
This old intercept caught Contact’s interest and the company completed 2,500 meters of drilling before the end of the exploration season. 11 holes were drilled, and assay results of 44 meters at 0.34 g/t gold, 15 meters at 0.33 g/t gold and 14 meters at 0.32-0.33 g/t gold are decent results for a first drill program.
OK, 0.3-0.35 g/t isn’t anything to get really excited about (yet), but remember this was a so-called “first pass” drill program. These were the first 11 holes drilled on the property in almost 30 years and a lot more work needs to be done to determine the high priority targets. The company did a good job by defining a mineralized corridor of 1000 by 200 meters has now been identified, and Contact will very likely include a few more Pony Creek North holes in its 2018 exploration plan.
On top of that, the majority of the gold intercepts at Pony Creek North are very shallow. That’s important, as this means the strip ratio could be very low and the required tonnage could remain low as well, as PCN could be seen as a satellite deposit to the main Bowl zone.
At the Bowl zone, a total of 8,000 meters of drilling was completed. As mentioned before, the 2017 drill program wasn’t meant to result in an updated resource estimate, but was meant to form a basis for this year’s drill program. Virtually every hole drilled at Pony Creek as part of the 2017 exploration program has encountered anomalous gold values. Some holes contained low-grade material while other holes returned very respectable gold grades for oxidized material. But again, the 2017 drill program was just designed to be some sort of “pathfinder” exploration program to design the 2018 drill program as efficient as possible.
On top of the 10,400 meters of drilling, Contact also collected 3,500 soil samples, completed several geophysical surveys (including a 33 kilometer CSAMT survey) and ran an extensive mapping program, resulting in the discovery of a new mineralized target; the ‘West Target.’ This target is pretty close to the Bowl Zone, and as you can see in the next image, the soil sampling program seems to indicate there’s a huge surface anomaly of approximately 2,000 by 3-400 meters. A similar target was defined further to the north where the Moleen target is a 1.5-kilometer-long soil anomaly target literally bordering the GSV claims (and although it’s still early days, it appears to be an extension of Gold Standard Ventures’ Jasperoid Wash anomaly).
And finally, Contact Gold also increased its land position by approximately 40% during 2017 to ensure it has the majority of the gold-bearing trend pretty much locked up.
All four zones of the southern part of the Pony Creek target (Moleen, West, North and Bowl) will be drilled this year, and the main focus will be on …read more
From:: The Gold Report