Contact Gold (C.V) is one of the newest gold exploration companies on the Venture Exchange after completing its IPO in June, raising C$18.5M in cash at C$1 per share. Goldcorp (G.TO, GG) was the biggest participant in that raise and is now the company’s second largest shareholder after Waterton (the property vendor) with a 15% stake in Contact Gold.
Right now, Contact Gold still has approximately C$10M in cash (after making a C$7M cash payment to Waterton), resulting in an enterprise value of just C$2930M (ignoring the preferred shares for now). That’s actually pretty low considering Contact acquired no less than 13 gold properties in Nevada, of which Pony Creek is most definitely the most advanced project.
Pony Creek currently hosts a (shallow, as you can see on the previous image) historical resource estimate containing 1.5 million ounces of gold at an average grade of 1.2 g/t. Unfortunately no metallurgical test work has been completed yet (according to the technical report) so it will be interesting to see some preliminary indications of how much of the gold could be recovered. The excellent recovery results from neighbour Gold Standard Ventures (GSV.TO, GSV) with a recovery rate of 88-89% could bode well for Pony Creek as well.
Contact Gold appears to be quite aggressive, as the company has just started a 9,000 meter drill program at Pony Creek which will focus on confirming, delineating and expanding the current mineralized zones. This should allow Contact Gold to update (and perhaps increase) the historical resource.
Go to Contact Gold’s website
The author has a long position in Contact Gold. Please read the disclaimer
