US gold company Paramount Gold has entered into an agreement to acquire a high-grade prospect near its Grassy Mountain project, in eastern Oregon, from a subsidiary of Ely Gold Royalties.
The Frost project totals about 360 ha and is seen as a low-cost way of expanding the mine life of the Grassy Mountain project, which in terms of a May 2018 preliminary economic assessment has an initial 7.25-year mine life, producing 47 000 oz/y of gold and 50 000 oz/y of silver.
“The Frost gold occurrence is in a favourable geological setting which is strikingly similar to the Grassy Mountain deposit and located within trucking distance to our proposed mine and mill operation. 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,” said Paramount CEO Glen Van Treek.
The historical drilling conducted in 1989 through 1990 intersected promising gold intercepts, including 1.5 m grading 20 g/t gold at a relatively shallow depth (between 18 m to 93 m).
Further, 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. 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 programme. If an economic deposit is found at Frost, we expect to truck the ore to the proposed Grassy Mountain mill for processing”, Van Treek added.
“We see this as a potentially low-cost option to increase the life of the proposed Grassy Mountain mine.”
In terms of the transaction with Ely subsidiary Nevada Select, Paramount can acquire 100% interest in the Frost claims for a total consideration of $250 000.
Nevada Select will retain a 2% net smelter royalty, which Paramount could reduce to 1% for a payment of $1-million.