Contact Gold (C.V) has entered into an agreement with Ely Gold Royalties (ELY.V) to acquire the Green Springs gold project from the latter. Green Springs is a past-producing project approximately 60 kilometers southwest of Ely and just 10 kilometers east and 20 kilometers southeast from Fiore Gold’s (F.V) Gold Rock and Pan projects.
The total historical production at Green Springs is estimated to be approximately 72,000 ounces of gold that were leached in the 80’s from a series of pits with an average grade of in excess of 2 g/t gold, which is very high for an oxide gold system.
But Contact Gold’s team consists of explorers and the company doesn’t care too much about production (either historical or near-term) and is mainly interested in the historical drill results that seem to indicate a relatively rich gold system. The gold mineralization in original pits was contained in the Mississippian Chainman formation but a 2017 drill program completed by Colorado Resources (CXO.V) identified more gold in the Pilot-Guilemette contact zone and that will be the main focus for Contact Gold going forward as that specific layer has never been thoroughly explored.
Those historical drill results include for instance 47 meters containing 1.18 g/t gold, 38 meters containing 1.37 g/t gold, and some thick and higher grade intervals such as 41 meters of 4.57 g/t gold and 41 meters of 3.23 g/t gold, strengthening Contact Gold’s belief it hosts a Carlin-type gold system.
The acquisition is quite cheap as well: Contact has the right to purchase full ownership of the project by issuing 2 million shares and making US$275,000 in payments (of which US$250,000 could be settled in stock rather than cash).