Paramount has acquired the Frost project from a subsidiary of Ely Gold Royalties as a low-cost way to expand the mine life of the miner’s profitable Grassy Mountain project.
Paramount Gold Nevada (NYSE:PZG) has acquired the Frost project near its Grassy Mountain project in eastern Oregon from Nevada Select, a subsidiary of Ely Gold Royalties (TSXV:ELY, OTCQB:ELYGF), the company announced on Wednesday (November 14).
The project encompasses approximately 360 hectares and Paramount believes it will be a low-cost way of expanding the mine life of the Grassy Mountain project. According to a preliminary economic assessment, Grassy Mountain has an initial 7.25-year mine life, with the ability to produce 47,000 ounces of gold a year and 50,000 ounces a year of silver.
“The Frost gold occurrence is in a favorable geological setting which is strikingly similar to the Grassy Mountain Deposit and located within trucking distance to our proposed mine and mill operation,” stated Glen Van Treek, CEO of Paramount.
“We are very encouraged by the historical drill intercepts at Frost, although it has not been systematically explored. We believe that there is excellent potential to find a deposit similar to Grassy Mountain using the expertise we have developed in the area and at other epithermal deposits,” he added.
According to the company, drilling at Frost was conducted in 1989 through 1990, which revealed promising gold intercepts, including 1.5 meters grading 20 grams per tonne of gold at a relatively shallow depth.
Additionally, as part of its due diligence process, Paramount extended the Grassy Mountain helicopter magnetic and radiometric surveys over the entire Frost project.
“Data from the recently completed magnetic survey reveals a large magnetic low. This suggests the existence of a favourable structural corridor which could have transported precious metal-bearing fluids,” noted Van Treek.
“The historic drill holes yielding high grade gold intercepts correlate with this magnetic low and represent an excellent drill target that we expect to include in our 2019 exploration program,” he added.
As per the agreement with Nevada Select, Paramount can acquire a 100-percent stake in the Frost claims for a total consideration of US$250,000.00.
Nevada Select will keep a 2 percent net smelter royalty, which Paramount has the option to reduce to 1 percent for a payment of US$1-million.
As of 12:30 p.m. EST on Wednesday (November 15), Paramount was up 0.95 percent, trading at US$1.06.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.