JV launches 2018 Peak Gold evaluation

Contango ORE Inc. April 4 announced that Peak Gold LLC, a joint venture between Contango and Royal Gold Inc., has budgeted US$9.1 million for an initial phase of exploration at the Peak Gold (formerly Tetlin) project near the town of Tok in eastern Alaska.

Contango ORE discovered the metals potential of Peak Gold while surveying the area for natural gas in 2008 and by 2014 had outlined a high-grade skarn deposit at the Peak zone with more than 1 million gold-equivalent ounces, which includes the value of the copper and silver also found there.

Under an agreement struck late in 2014, Royal Gold is earning a 40 percent joint venture interest in Peak Gold by investing US$30 million on exploration.

As of the end of 2017, Royal Gold had invested US$29.3 million towards this earn in.

The work under this partnership has expanded Peak and outlined North Peak, a parallel deposit of gold-rich skarn mineralization.

Together, the Peak and adjacent North Peak deposits host a global resource – measured, indicated and inferred – of 15.65 million metric tons averaging 2.98 grams per metric ton (1.5 million ounces) gold, 14.68 g/t (7.39 million oz) silver and 0.16 percent (55 million pounds) copper, according to a calculation published last June.

"We are very pleased with the progress made by the joint venture team both on the exploration front and in the effort to assess the economic viability of our known resource base," said Contango ORE CEO Brad Juneau.

Once Royal Gold invests the roughly US$700,000 balance to earn its JV interest, Contango ORE will be responsible for 60 percent of the Peak Gold expenditures. This comes to about US$5.1 million towards the phase-1 exploration approved by the partners.

This budget is designed to define a path to commercialization of its current resource; explore for a third skarn orebody close to the Peak and North Peak deposits; and to acquire data that would help evaluate the potential for porphyry or epithermal deposits across the wider joint venture property.

This initial phase of 2018 exploration is expected to include roughly 6,900 meters of exploration drilling and geophysical survey, both slated to begin this month.

The partners have also allotted funds to evaluate the potential developing the Peak and North Peak orebodies. The results from this economic assessment are expected to be completed by the end of September.

"This 2018 phase I budget will provide the funds necessary to explore for new skarn mineralization on four separate defined targets, as well as an evaluation of the potential for porphyry type deposits in three prospect areas which have not been explored to date," Juneau said. "We are expecting results from the program in late summer/fall of this year, which will determine the next steps in the joint venture's activity."

Contango ORE said it has US$16.6 million in the bank. With less than US$900,000 in annual general and administrative expense, this cash is more than sufficient to fund its share of the phase 1 exploration and any second phase of exploration considered by the Peak Gold partners.

–SHANE LASLEY