Peak Gold discovers new zone at Tetlin; extends 2017 drilling

Contango ORE Inc. Sep. 8 announced the discovery of West Peak Extension, a new zone of gold mineralization northwest of the Main Peak deposit, during the second phase of 2017 drilling at the Tetlin project near Tok, Alaska.

Tetlin is being explored by Peak Gold, a joint venture between Contango ORE and Royal Gold Inc. In June, the Peak Gold partners published an updated global resource for Main and North Peak – measured, indicated and inferred – of 15.65 million metric tons averaging 2.98 g/t (1.5 million oz) gold, 14.68 g/t (7.39 million oz) silver and 0.16 percent (55 million lb) copper.

With a substantial resource established, the JV partners turned their summer 2017 exploration efforts to testing six priority prospects over a 2,500-acre-area in the immediate vicinity of the Peak zones.

The best results of this exploration drilling came in the 14 holes drilled at West Peak Extension.

The best hole drilled at West Peak Extension, 17379, cut 8.1 meters averaging 5.22 g/t gold from 103 meters; and 29 meters of 2.53 g/t gold from 117 meters. The new mineralization tapped in this new zone is open up-dip to the southwest as well as down-dip to the southeast along the undrilled north side of the Main Peak deposit.

"We are very pleased to have identified a new mineralized area at West Peak Extension, and we look forward to further delineation of this mineralized area. While the other areas drilled did not return material amounts of gold, we encountered significant thickness of oxidized iron-rich skarn in some surface exposures that may warrant further exploration," said Contango ORE CEO Brad Juneau.

In addition to exploration drilling, Peak Gold drilled three holes to collect material from Main Peak for metallurgical testing. All three holes cut the high-grades of skarn mineralization that has become expected from this zone. One of these holes cut four mineralized intercepts, including 140.9 meters of 13.27 g/t gold; and another cut three mineralized intercepts, including 65.8 meters of 20.14 g/t gold.

While these intercepts do not represent the width of the skarn deposit, these high grades over such long widths are still impressive. Results from the Main Peak metallurgical work is pending, however, 19 composite samples from North Peak averaged 97.5 percent gold recoveries during recent 48-hour cyanide leach bottle roll metallurgical testing.

Peak Gold also carried out reconnaissance work at the Noah block of state mining claims west of the main Tetlin property. Contango Ore reported multiple gold bearing samples from streams draining the Hona prospect, and visible gold was reported in pan concentrate samples from elsewhere on the Noah block. Assays are pending from much of the work carried out in this area and Peak Gold will make decisions about follow-up activities after all the data is received and interpreted.

No drilling is planned for the Noah block in 2017. Peak Gold, however, will be carrying out additional drilling around the Peak zones this year.

"A phase III drilling program has been approved for the remainder of calendar year 2017, and will begin before the end of September," said Juneau. "This drilling will further explore the West Peak Extension, as well as, drill additional holes on two other prospects."

Peak Gold has budgeted US$1.5 million for this third phase of 2017 exploration, which will result in roughly US$11.8 million of exploration at Tetlin this year. By the end of the program, Royal Gold will be very close to investing the US$30 million required to earn a 40 percent interest in the Peak Gold JV. Once Royal Gold has funded the full US$30 million, Contango ORE will be required to begin funding its 60 percent share of future capital costs.

"The company currently has approximately US$5 million in cash and no debt, and we are very encouraged by our drilling, metallurgical and recon results," said Juneau.

–SHANE LASLEY