VANCOUVER — Columbus Gold (TSX: CGT; US-OTC: CBGDF) hopes to unlock unrecognized value within its extensive portfolio of U.S. precious metal prospects.
The company recently announced dates for the pending spin-out of Allegiant Gold, which will inherit 14 drill-ready properties across Nevada, Arizona, New Mexico and Utah.
Columbus shareholders can receive one Allegiant share for every five shares held. The spin-out is expected by Dec. 11.
A map of assets Columbus Gold would spin-out into Allegiant Gold. The deal is expected to close in early December. Credit: Columbus Gold.
Furthermore, Columbus is pursuing a $12-million private placement to underpin the deal. Allegiant reportedly wants to drill 10 projects within 12 months of listing under the leadership of president and CEO Andy Wallace.
“We’re naturally very focused on Latin America and the Guiana Shield,” Columbus CEO and chairman Robert Giustra (who will also serve as chairman on Allegiant’s board of directors) says during an interview. “And we don’t believe the U.S. assets are being recognized by the market. Given that’s not particularly unusual when you have a 5 million oz. gold deposit advancing toward production, but there’s clearly a history of success across our business in terms of unlocking that value through this type of deal.”
Columbus has a 45% interest in the Montagne d’Or deposit in French Guiana alongside Nordgold (LON: NORD), which holds the rest. The companies released a feasibility study on the project in May that outlines an open-pit mining operation that would produce 2.57 million oz. gold over 12 years.
Meanwhile, Columbus has been advancing the Eastside and Bolo gold discoveries in Nevada, which will become Allegiant’s flagship projects.
The 67 sq. km Eastside property sits 32 km west of Tonopah and hosts pit-constrained, inferred resources of 35.8 million tonnes of 0.63-gram-per-tonne gold equivalent for 721,000 contained ounces.
Gold mineralization at the project reportedly displays many classic, low-sulphidation epithermal features. It occurs near — and is associated with — the contact of an altered Tertiary rhyolite dome and the surrounding tuffs and intruded volcaniclastic rocks.
Drill rigs at the Eastside gold project in Nevada earlier this year. Credit: Columbus Gold.
Bolo is a Carlin-style target, 60 km northeast of Tonopah. The property made headlines in 2013 when Columbus cut 132 metres of 1.3 grams gold from surface in hole 38.
The company recently drilled 14 reverse-circulation holes at the site, and expects to release assays after the Allegiant spin out.
“The unique situation here is that you have two advanced projects that are much closer to potential mine scenarios. The remainder of the portfolio is ‘discovery opportunities’ assembled by Andy and his team,” Giustra says. “We’ve been in a relationship with him for over a decade and he’s led our U.S. exploration group. The major difference is that Andy has agreed to become the president of Allegiant, which I think is a major endorsement, based on his track record.”
Wallace is the principal of Cordex Exploration, which he joined in 1974. The private exploration group is credited with a number of major discoveries in Nevada, including: SSR Mining’s (TSX: SSRM; NASDAQ: SSRM) Marigold mine, and Newmont Mining’s (NYSE: NEM) Stonehouse-Lone Tree mine.
Allegiant would spend $9.25 million on core and RC drilling programs over the next year.
The company is earmarking $5 million for 20,000 metres at Eastside, $1.25 million for 4,000 metres at Bolo and $3 million for 16,000 metres of RC drilling across eight properties in its portfolio.
“Our favourite project in the discovery portfolio is called ‘North Brown’ along the Battle Mountain trend, but we won’t be able to get to it until later in the spring, due to snow fall,” Giustra says.
“I can’t emphasize enough just how important continuous prospecting will be to Allegiant’s strategy. Andy and his team have worked on eight projects that have become gold mines in Nevada. In order to make discoveries you have to drill, and our team will specialize in finding those grassroots opportunities others may have overlooked.”
Columbus has scheduled a shareholder meeting on Nov. 27, which would permit Allegiant to begin trading on the TSX Venture Exchange by December pending regulatory approvals.
The company’s shares have traded in a 52-week range of 42¢ to $1.09 per share, and closed at 73¢ at press time. Columbus has 153 million shares outstanding for a $112-million market capitalization.
Awesome their geology and deposits look like a snapshot of what my deposit seems to be in eastern Oregon along the 117 longitude…
Like they said though it needs to be drilled…
Investment money is a must for small time miner to become the next Newmont Gold.
Interested parties are welcome.