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Some market bargains are more obvious than others.
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In Contact Gold’s (C.V; CGOLF.OTC) case, the company’s tiny C$7 million market cap in no way captures the amount of innate value the Nevada gold explorer possesses.
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Consider that Contact Gold owns not one but two oxide gold projects in some of the most prolific gold trends in the state.
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The first was recently joint ventured to Centerra Gold and will see US$10 million in exploration over the next four years.
The second — located on the edge of the famed Carlin Trend — boasts an initial, 433,000-ounce oxide gold resource that seems ripe for significant expansion.
Why is all this so compelling?
Because near-surface oxide gold in Nevada typically gets mined...which explains Centerra’s interest in Contact’s Green Springs project and why the market is keeping an eye on Pony Creek.
As you’re about to see, with the Centerra-funded drills about to start turning on Green Springs, now is the time to consider positioning yourself in Contact Gold.
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Green Springs:
Oxide Gold In Perhaps The World’s Best Mining Location
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Oxide gold in Nevada has cachet with gold bugs because the state is one of the world’s most productive gold districts.
Nevada has produced more than 224.0 million ounces of gold in its history and, at 4.47 million ounces of gold in 2021, accounts for 77% of U.S. gold production.
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As companies in Nevada drill and dig deeper to find more gold along the state’s Carlin and Cortez Trends, they’re always on the lookout for deposits of near surface gold.
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That’s exactly what Contact Gold’s Green Springs project, on the southern edge of the Cortez Trend, offers potential miners.
In 2022, the project’s X-Ray and Tango zones produced several wide intervals of near surface oxide gold, including:
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• 1.95 g/t gold over 41.2 meters
• 1.66 g/t gold over 29.0 meters
• 0.82 g/t gold over 35.1 meters
• 0.58 g/t gold over 51.8 meters
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These assays compare favorably with the nearby Pan gold mine (21.3 million tonnes of 0.42 g/t gold) and Gold Rock development project (19 million tonnes of 0.66 g/t gold).
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Centerra Gold Putting $10 Million Toward Exploration
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The prospect of outlining an easily mineable resource at Green Springs attracted Centerra Gold to the project.
The mid-major can earn a 70% interest in the project by spending US$10 million on exploration on the project in the next four years.
Contact Gold will remain operator of the project and will receive cumulative cash payments of US$1 million over the life of the deal.
It will also receive a management fee as project operator, which should more than cover the G&A expenses of operating in Nevada.
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But the most exciting news is this: Centerra has already committed US$1.85 million to this year’s drill program at Green Springs...and drills will start turning next month.
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The partners will focus on expanding X-Ray and Tango and testing some of the project’s high-profile, undrilled targets.
It boils down to this: Contact Gold will get paid to drill its flagship project, one that has shown very real potential to host the kind of near-surface, oxide gold the market wants to see.
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Pony Creek:
An Established Gold Resource
Essentially For Free
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And, at Contact Gold’s current C$7 million valuation, that means you get the 433,000 ounces of 0.52 g/t gold at Pony Creek essentially for free.
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The company’s hit rate at Pony Creek has been phenomenal, with 108 of 118 holes drilled on the project hitting anomalous gold.
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The project’s three resource-hosting zones — Bowl, Appaloosa and Stallion — are all open for expansion.
In addition, Pony Creek has large-scale undrilled targets like Mustang and Elliot Dome that promise to add to the resource total.
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According to Contact Gold’s management team, the only limits on the expansion of the resource at Pony Creek are time and money.
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The company should have both in the back half of the year when it plans to return to Pony Creek.
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The Drills Are About To Turn
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But first up will be the drilling with Centerra at Green Springs.
Given the abundant intervals of mineable-grade oxide gold this project has produced in the past few years, that will be the program to watch closely.
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If the partners turn up more near-surface oxide gold with this program, it could provide a big jolt to Contact Gold’s market value.
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Add in the established and growing gold resource at Pony Creek...and a gold market that looks primed to take off from here...and you have the makings what could be the next Nevada success story.
With the drills about to start turning at Green Springs, the time to look into Contact Gold is now.
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