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Contact Gold begins drilling at Pony Creek

2018-04-24 09:07 ET - News Release

Mr. John Glanville reports

CONTACT GOLD ANNOUNCES START OF 16,000 METRE DRILL PROGRAM AT PONY CREEK, NEVADA

Contact Gold Inc. has started its 2018 exploration program at the Pony Creek gold property, located on the Carlin trend in Elko county, Nevada, immediately south of Gold Standard Venture's Railroad project.

Key points:

  • The drill program comprises 16,000 metres and is expected to run through November.
  • One core drill rig and one RC (reverse circulation) drill rig will be mobilized to drill 70 holes on newly generated, high-priority, previously undrilled targets and to expand existing gold zones.
  • The program will be 25 per cent core and 75 per cent reverse circulation drilling, designed to advance four priority areas (the Bowl zone, the North zone, the West target and the Moleen target).
  • Drill metres are allocated on a 50/50 basis on expanding existing zones versus testing new targets.
  • Drilling will start at the Bowl zone, with drilling at the Moleen and West targets expected to begin in May.
  • The 2018 program is designed to:
    • Add additional oxidized gold mineralization at the Bowl zone and North zone;
    • Discover new zones of gold mineralization at the newly generated Moleen and West targets;
    • Generate and drill test other targets in the district.

In addition to drilling, the 2018 exploration program at Pony Creek will include the collection of 3,000 new soil samples, detailed geological mapping and geophysical surveys with the objective of enhancing the geological model for Pony Creek and the generation of new drill targets across the property.

2018 target zones at Pony Creek

Bowl zone

Host to a historical mineral resource estimate, the one-kilometre-long-by-0.5-kilometre-wide Bowl zone is defined by more than 50 gold-mineralized drill holes with a significant oxide gold component and remains open for expansion in multiple directions. The 2018 drill program is built to test high-potential and open areas based upon prior oxidized drill intercepts, mapped structures, 3-D modelling of gravity and CSAMT (controlled-source audio-frequency magnetotelluric) data, and untested gold-in-soil values up to 0.28 gram per tonne gold.

Select oxide intervals from 2017 are as follows:

  • 2.12 grams per tonne gold over 22.86 metres from 64.01 metres to 86.87 metres in drill hole PC17-040;
  • 0.65 gram per tonne gold over 65.53 metres from 62.48 metres to 128.02 metres in drill hole PC17-08;
  • 0.59 gram per tonne gold over 32.00 metres from 25.91 metres to 57.91 metres in drill hole PC17-41.

West target

The two-kilometre-long target, which has seen no drilling on the northern half, extends north from the Bowl zone and is defined by north-south structurally controlled gravity, CSAMT and gold-in-soil anomalies cutting Penn-Perm Strathearn formation clastic and carbonate rocks with gold-in-soil values as high as 0.160 gram per tonne gold. The southern half of the target includes gold mineralization encountered in four of five very widely spaced historical drill holes. Limited rock sampling in 2017 returned up to 0.35 gram per tonne gold.

North zone

The one-kilometre-by-300-metre zone is defined by 30 gold-mineralized drill holes with localized drill intercepts up to 1.31 grams per tonne gold (historical drill hole PC-129), including a significant oxide component. The North zone target remains open for expansion in multiple directions. The drill holes planned for 2018 have been designed with reference to mapped structures, 3-D modelling of gravity data and CSAMT anomalies, gold-in-soil values as high as 0.76 gram per tonne gold, and rock-chip samples as high as 2.7 grams per tonne gold.

Select oxidized drill intervals from the North zone are as follows:

  • 0.34 gram per tonne gold over 44.20 metres from 25.91 metres to 70.10 metres in PC17-21;
  • 0.33 gram per tonne gold over 15.24 metres from 4.57 metres to 19.81 metres in PC17-43;
  • 0.32 gram per tonne gold over 13.72 metres from 30.48 metres to 44.20 metres in PC17-23;
  • 0.33 gram per tonne gold over 13.72 metres from 71.63 metres to 85.35 metres in PC17-25;
  • 0.47 gram per tonne gold over 43 metres from 25.9 metres to 68.6 metres -- Barrick Gold drill hole from 1989.

Moleen target

The 1.5-kilometre-long target, which has never been drilled, extends west-northwest from the North zone target; is defined by west-northwest structurally controlled gravity and gold-in-soil anomalies cutting Penn-Perm Moleen and Strathearn formation clastic and carbonate rocks; and contains gold-in-soil values as high as 0.173 gram per tonne gold. The Moleen target projects to the adjacent Jasperoid Wash target on Gold Standard's project.

Drill intercepts reported at the North zone and Bowl zone were calculated using a minimum thickness of 3.05 metres averaging 0.14 part per million gold and allowing inclusion of up to 4.57 metres of material averaging less than 0.14 part per million gold for low-grade intervals, and higher-grade intervals were calculated using a minimum thickness of 3.05 metres averaging 1.00 part per million gold and allowing inclusion of up to 4.57 metres of assays averaging less than 1.00 part per million gold. True width of drilled mineralization varies, but owing to the apparent flat-lying nature of mineralization, it is estimated to generally be at least 70 per cent of drilled thickness. Quality assurance and quality control consist of regular insertion of certified reference standards, blanks and duplicates. All failures are followed up with additional investigation whenever such an event occurs. Multielement geochemical assays are completed on composites using the MEMS 61 method. All assays are completed at ALS Chemex, an ISO 17025:2005-accredited lab. Check assays are assayed for gold by Bureau Veritas.

Some of the data presented herein include historical data developed by previous operators of the Pony Creek property. Historical drill intersections are reported as drilled thicknesses. True widths of individual mineralized intervals are unknown at this time, although trends in mineralization suggest that true thicknesses range between 70 per cent and 100 per cent of drilled thicknesses owing to the generally flat-lying nature of mineralization at Pony Creek. Vance Spalding, CPG No. 10739, vice-president, exploration, of Contact Gold, who is a qualified person within the meaning of National Instrument 43-101, Standards of Disclosure for Mineral Projects, has, to the extent possible, verified that the historical data herein, including the results of drilling, sampling and assaying by previous operators, are reliable. Historical data largely predate the introduction of NI 43-101 and modern quality assurance/quality control protocols, and, therefore, there are limitations on the level of verification that can be achieved.

North Star project

Contact Gold also expects to complete a separate program at the North Star property, which is immediately north of Gold Standard Ventures' North Dark Star deposit.

Options award and investor relations appointments

The company also announces that it has entered into investor relations advisory agreements with O&M Partners LLC. Pursuant to the agreement, O&M will provide marketing services for Contact Gold. The services will include collaborating with management on corporate communications strategies, communicating with potential institutional investors, and developing and maintaining active communications networks with private investors across Canada, the United States and Europe.

The agreement provides for a total monthly retainer of $3,000 (U.S.) for an initial six-month period, and O&M has been granted an option to purchase 100,000 common shares of Contact Gold at an option price of 41.5 cents, which will vest in equal instalments over a three-year period and will expire in accordance with the plan and not later than April 17, 2023, subject to the applicable policies of the TSX Venture Exchange. The agreement is on a monthly basis until terminated by either party.

The company has also awarded an aggregate of 380,000 stock options at an exercise price of 41.5 cents per share for a period of five years to certain employees and consultants to the company. The incentive stock options will vest one-third on each successive anniversary of the date of grant and will expire in accordance with the plan and not later than April 17, 2023.

About Pony Creek

Pony Creek is an early-stage exploration property and does not contain any mineral resource estimates as defined by NI 43-101. There has been insufficient exploration to define a mineral resource estimate at Pony Creek. Additional information about Pony Creek is summarized in a technical report entitled "Technical Report on the Pony Creek Gold Project, Elko County, Nevada, USA," dated April 18, 2017, and effective March 15, 2017, prepared by Michael M. Gustin, CPG, of Mine Development Associates of Reno, Nev., which can be viewed under Contact Gold's issuer profile on SEDAR.

The scientific and technical information contained in this news release has been reviewed and approved by Mr. Spalding, who is a qualified person within the meaning of NI 43-101.

About Contact Gold Corp.

Contact Gold is a gold exploration company focused on leveraging its properties, people, technology and capital to produce district-scale gold discoveries in Nevada. Contact Gold's extensive landholdings are on the prolific Carlin, Independence and Northern Nevada Rift gold trends, which host numerous gold deposits and mines. Contact Gold's land position comprises approximately 265 square kilometres of target-rich mineral tenure hosting numerous known gold occurrences, ranging from early to advanced exploration and resource definition stage.

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