Allegiant Gold advances on Kinross news

Allegiant Gold Ltd. [AUAU-TSXV] shares rallied Monday after the company announced a $4 million financing and strategic investment by Kinross Gold Corp. (K-TSX, KGC-NYSE).

On closing, Kinross will hold a 9.9% stake in Allegiant, a company that was spun out in 2019 to contain what were previously the Western U.S. exploration assets of Columbus Gold Corp. (CGT-TSX, CBGDF-OTCQX).

The shares jumped 9.7% or $0.035 to 39.5 cents on volume of 328,510. The shares are currently trading in a 52-week range of 56 cents and 23 cents.

Allegiant said the funds will be used to accelerate exploration and development activities at the company’s 100%-owned Eastside project in Nevada, where drilling has previously hit bonanza gold and silver grades.

Drilling highlights released last year include Hole 243, which returned 2.55 g/t gold over 147.8 metres (3.17 g/t gold over 117.3 metres).

The Original Pit Zone at the Eastside hosts a NI-43-101 compliant pit-constrained resource of 996,000 ounces of gold and 7.8 million ounces of silver, according to a January, 2020 resource estimate. The zone is open in all directions.

Allegiant said Kinross has entered into a $4 million subscription agreement to acquire 10.04 million units in a non-binding brokered private placement at 40 cents per unit. Each unit consists of one common share and one half of a common share purchase warrant. Each warrant entitles the holder to buy one common share for 70 cents. That option can be exercised for two years after the closing date, which is expected to be March 18, 2022.

Allegiant has pledged to allocate at least 80% of the Kinross investment to a work program specifically designed for the high-grade zone within the Original Pit Zone at Eastside.

“We are very excited to have Kinross as a strategic partner, given their experience and prominent presence in Nevada, and the relative close proximity of their flagship Round Mountain Mine, which shares many similar geological characteristics to Eastside,” said Allegiant CEO Peter Gianulis.

Round Mountain ranks as one of the largest open pit mines in the United States.

Allegiant owns 10 projects in the Western U.S., including seven in Nevada. All were handpicked by Andy Wallace, a successful and highly experienced geologist.

His track record of success includes multi-million-ounce gold discoveries including the Marigold, Pinson and Dee mines in Nevada. Wallace is currently working as the company’s technical adviser.

The district-scale Eastside project hosts a large and expanding gold resource and is located in an area of excellent infrastructure.

Preliminary metallurgical testing indicates that both oxide and sulphide mineralization at the Original Zone is amenable to heap leaching.

The strategic investment by Kinross calls for the formation of a four-person technical advisory committee consisting of two members from each company. It will offer guidance for the upcoming core drilling program at the high grade zone within the Original Pit Zone.