Power Metal Resources (LON:POW | FRA: 2M5) announced Tuesday it has executed an agreement and can now earn a100% interest in central Nevada’s Golconda Summit Gold Property.
Golconda Summit is an early-stage exploration project comprising 44 Bureau of Land Management Lode Claims. The project is ideally located only 15 kilometres east of the town of Winnemucca.
Additionally, Golconda Summit is approximately 35 km southwest from the open-pit and underground mines of the Turquoise Ridge Complex, a joint venture between Barrick Gold (NYSE: GOLD) and Newmont (NYSE: NEM). These mines have compliant resources of 130 million tonnes at 4.30 grams per ton (“g/t”) of gold, including total reserves of 83 million tons at 5.02g/t gold.
Other nearby mines include Nevada Gold’s Phoenix Operation Lone Tree open pit, which reportedly produced 4.2 million ounces of gold at 2.06g/t until its 2006 closure, and SSR Mining’s Marigold open-pit project, which has a current total compliant resource of 5.11 million ounces. On top of that, the gold mineralisation on the Golconda Summit Property is found within the same host rocks of these nearby gold deposits.
Encouraging for Power Metal, historical work on the Property has already identified “significant gold mineralisation”. Trenching in 1989 returned extremely impressive assay results of 7.6 metres at 24.0 g/t gold and 15.2 metres at 8.6g/t gold.
Power Metal chief executive Paul Johnson described Golconda Summit as “an exciting Carlin-type gold project”. Carlin-type gold deposits contain so-called ‘invisible gold’ – which is fine-grained gold hosted in sedimentary rocks that eluded early prospectors.
The firstCarlin deposit was found in Nevada in 1961. These deposits can be huge and are often able to be mined using open-pit methods instead of more expensive underground mining.
Golconda is well situated, as Johnson noted, “in the highly gold endowed Great Basin district at the confluence of the prolific Battle Mountain-Eureka and Getchell gold trends”.
In addition to the impressive historic results, and proximity to other successful multi-million-ounce projects, the Property also benefits from Nevada’s favourable jurisdiction and great nearby mining infrastructure. The project is also large, spanning 10,000 acres.
The assignment and assumption agreement on Golconda Summit gives Golden Metal, a wholly-owned Power Metal subsidiary, an option to earn in to 100% of the US project.
The deal was signed by Golden Metal and GR Silver Mining. The agreement signing fee will be satisfied through a $60,000 cash payment to GR Silver using Power Metal’s existing cash resources.
GR Silver has had an option agreement with private Nevada-based firm Eureka Resources Conversion for 100% of Golconda Summit since August 2017. This is the underlying option agreement, which Golden Metal assumes unchanged.
GR Silver has already paid $10,000 on the execution of the underlying option, along with two $15,000 payments due on or before the second and third anniversaries of the effective date. Still to come are $20,000 due on or before the fourth anniversary, $25,000 due on or before the fifth anniversary, and another $50,000 due and payable on or before the sixth, seventh, eighth, ninth, and tenth anniversaries.
Once the earn-in is complete, Eureka will be granted a 1% net smelter return royalty. This can be brought back for $1 million within a year after the production of any materials from the property begins.
“I look forward to updating the market with further information on the Property in the coming weeks,” Johnson concluded.
Author: Anna Farley
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