In March 2017 Viva Gold acquired 100% of the Tonopah Project from Midway Gold following its bankruptcy and liquidation of assets. The property is located approximately 20 miles northeast of the town of Tonopah in Nye County, Nevada. The project consists of 444 unpatented mineral claims, 185 of which are subject to a royalty interest.
The Company entered into a Royalty Deed Modification and Waiver of Claims Agreement with underlying royalty holders on the Tonopah Project to waive certain claims by the royalty holders against Midway, eliminate advance royalty payments, and restructuring an onerous sliding scale Net Smelter Royalty (“NSR”) into a flat 2% NSR structure.
The property is an advanced stage exploration/evaluation Project located on the prolific Walker Lane Trend of Western Nevada. Historic drilling programs from 1980 through 2011 on the Property and Project area by a number of companies that completed a total of 284,469 feet on drilling in 637 reverse circulation and core holes. Two sets of historical resource estimates have been produced for the Project, one focused on the low-angle lower-grade contact zone mineralization for the system, and the other focused on higher grades found within high angle veins and structural zones.
Viva Gold's initial work program will include reconsideration of the Project on the basis of the combined mineral systems. It appears that mineralization occurs primarily within a low-angle contact zone, with the highest grades localized around high angle vein and feeder structures that both cross and are comingled with the low-angle contact zones. Viva Gold's renegotiation of the underlying royalty agreement for the property (from a 7% royalty rate at gold prices in excess of $700 to a 2% gold NSR) should allow for consideration of a much broader set of mining and processing scenarios and is a significant positive impact to the Project.
Alteration and mineralization at the Tonopah property are typical of low-sulfidation, volcanic-hosted epithermal gold deposits found elsewhere in Nevada and around the world. The deposit type is characterized by overall low original sulfide content, and quartz-adularia and clay-sericite alteration assemblages, among others. Vein textures are indicative of high level, near surface emplacement and include void fills, crustiform coatings, colloform banding, and comb structures. Similar deposits in Nevada have proven to be economic, including the Midas and Bullfrog deposits.
Gold mineralization and associated alteration have been outlined in a west-northwest trending series of zones, including the Dauntless and Discovery Zones. Gold mineralization in the Dauntless and Discovery occurs in zones of massive quartz-adularia alteration in volcanic and volcaniclastic rocks of the Tombstone Formation and in veins, breccias, and silicified faults in both the Tombstone Formation and the underlying Palmetto Formation. Quartz-adularia alteration in the Discovery Zone tends to extend laterally in the Tombstone Formation immediately above and parallel to non-conformable contact with the Palmetto Formation and may have associated low grade disseminated gold mineralization.. In the Dauntless Zone, the quartz-adularia forms a funnel-shaped zone that expands upward into the Tombstone Formation above the moderately dipping nonconformity.
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