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Contact Gold Corp. (TSXV: C): Advanced District Scale Gold Exploration on the Carlin Trend Nevada, Interview with Matthew Lennox-King, President and CEO

on 2/2/2018
Contact Gold Corp. (TSXV: C) is a gold exploration company, focused on leveraging its properties, people, technology and capital to produce district scale gold discoveries in Nevada. Contact Gold’s extensive land holdings are on the prolific Carlin, Independence and Northern Nevada Rift gold trends, which host numerous gold deposits and mines. Contact Gold’s land position comprises 28,082 hectares (281 square kilometres) of target-rich mineral tenure, hosting numerous known gold occurrences, ranging from early- to advanced-exploration and resource definition stage. We learned from Matthew Lennox-King, President and CEO of Contact Gold, that they have three advanced exploration projects on the southern Carlin Trend: Pony Creek, North Star, and Dixie Flats, and they sit immediately to the east and to the south of Gold Standard Ventures' Railroad-Pinion Project. Contact Gold's major shareholders are Waterton Global Resource Management out of Toronto, a large mining-focused private equity fund, and Goldcorp, who owns 15% of the company. According to Mr. Lennox-King, 2018 is going to be very good year for gold, and Contact Gold is poised for a year of discovery.


Advanced gold exploration in the Carlin Trend, Nevada

Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Matthew Lennox-King, President and CEO of Contact Gold. Could you give our readers/investors an overview of your company, your focus and current activities?

Mr. Matthew Lennox-King: Of course. Contact Gold, is a relatively new company. We've been around for just over six months. We started trading on the Toronto Venture Stock Exchange in mid-June of last year. We are exclusively focused on gold exploration in Nevada. We have a portfolio of 13 advanced exploration projects in Nevada. Our “big three” projects, Pony Creek, North Star, and Dixie Flats are all on the southern Carlin Trend, the main gold producing area or trend in Nevada. They sit immediately to the east and to the south of Gold Standard Ventures' Railroad-Pinion project.



Our major shareholders are Waterton Global Resource Management out of Toronto, a large mining-focused, private equity fund, and Goldcorp. Goldcorp owns 15%. They invested in the company roughly 10 months ago, as a strategic investment, to gain exposure both to our team and our assets, but also to the great state of Nevada.

Dr. Allen Alper: Well, that sounds like an excellent location, and an excellent group of investors, so that's really fantastic.

M Lennox-King: Thank you.

Dr. Allen Alper: Could you tell us more about your properties?

M Lennox-King: Of course. I'll start with Pony Creek. Pony Creek is located on the southern Carlin Trend. We'll call this our flagship project. In metric terms, we're just shy of a hundred square kilometers of claims. That equals about 1,200 claims. In US terms, it'd be just over 38 square miles. There is a historical (non 43-101) resource estimate there, dating from 2006. It's roughly 32.5 million tons, at an average grade of .04 ounces per ton gold. Gives us roughly 1.4 million ounces! That is very much historic. What we particularly like about Pony Creek, is we are after Carlin type gold, that's the dominant type of gold system in Nevada. We have pretty good proof, based on our historical resource, that there is, a robust Carlin system there.



But what really got us excited, was the geology in the area. On our website, the map on slide nine of our presentation really lays out the district and why Pony Creek and these other two projects are particularly exciting. In this part of the southern Carlin Trend, Newmont has two mines. One is the Rain Mine. The other is the Emigrant Mine. Considerable amount of gold in the ground! A solid production profile! Immediately to the south, is Gold Standard Ventures, and over the last two to three years they've defined well in excess of three and a half million ounces, across three deposits, in North Bullion, Dark Star, and Pinion. To the south of Gold Standard, you have Pony Creek, and our base at North Star property sits to the east.

This whole belt of gold occurrences, gold deposits, measures about 25 miles, north to south. It would be about 15 to 20 miles in the east-west direction, and what you see through the area is pretty consistent geology. There are two big structures that control all the gold deposits and showings, occurrences in the area, being the Rain Fault and the Emigrant Fault, and those cut through Pony Creek. They cut through Pony Creek in areas of really interesting geology, and in areas where we've demonstrated in 2017 that we can produce the types of grades that you see in operating, open pit mines in Nevada. For example, 1.3 grams per ton over 44 meters, 2.8 grams per ton overall almost 46 meters, and then some broad lower grade intervals as well, like .65 grams per ton over 65 meters. We view that really as the starting point.



A lot of the work we did in 2017 involved acquiring more land at Pony Creek. To that already large property we added to the land position by over 30%, really focusing on geology, making sure we had all of the necessary ground. We did a huge amount of geophysical work to help us image the subsurface and generate new targets. Then we also collected well over 3,500 soil samples, which when combined with the drilling we did, the geophysics, the mapping, really helped to define some very exciting new target areas. Two of those targets measure in excess of a mile in the north-south direction with pretty significant gold values at the surface.

We really think Pony Creek is at a tipping point, going from an interesting earlier stage project to one where we think we'll have a pretty steep discovery curve.

Dr. Allen Alper: That sounds exciting. That's really great. That must be fun exploring that.

M Lennox-King: It is. It is. It's really neat to see how it's evolving. When we acquired the projects, they'd essentially been dormant. No work had been done for the last 10 years. There are historical databases that we acquired, but essentially we almost had a blank canvas, to get out there, do really good science, drill aggressively, and ultimately we think we'll be very successful.

Dr. Allen Alper: That sounds very good. Could you tell our readers/investors a bit about your background, Matt, your team’s and your board’s?



M Lennox-King: Absolutely, happy to! I'm a geologist by training. I did my geology degree out here at UBC in Vancouver. I've been active in the industry since 1996. Really worked, I wouldn't say all over the world, but all over Canada, extensively in Nevada as a geologist, and as well as in Turkey. For a large part of my career from 2001 to 2011, I was with a company called Fronteer Gold. They were acquired by Newmont in April of 2011 for $2.3 billion based on a Nevada deposit that we had. After that I was the President and CEO at Pilot Gold, again another TSX-listed explorer focused in Nevada. Since January of last year, I've been Co-Founder, President and CEO of Contact Gold. Pretty varied experience on the technical side, but certainly this advanced exploration through feasibility really is the sweet spot that I like to focus on!

On the management team, let's start with John Wenger, our CFO, again plus 20 years in the sector. Immediately prior to joining Contact Gold, he was CFO and Corporate Secretary of Pilot Gold, our prior company, and really was much more than just a CFO. Certainly he looked after the finances, but there was also a big M & A and strategic piece there as well. He is a very well rounded CFO and brings more than simple accounting and finance skills to the company.

My Co-Founder at Contact Gold is Andrew Farncomb. He comes to us from the investment banking side of the street, so we'll call it corporate finance. In prior years, he was with an independent brokerage in Toronto called Paradigm Capital, principally in corporate finance and M & A. For the last four years he's been running a boutique advisory firm in Toronto called Cairn Merchant Partners. So he completes the strategic piece and the corporate finance, which is very important.

Finally, the last member of the management team is Vance Spalding. He's our Vice-President of Exploration. He is based in Nevada in Elko. He has extensive Nevada experience. He's been involved in some pretty major discoveries like Long Canyon that we had at Fronteer Gold, but also the REN deposit that he discovered when he was with Centerra Gold. On top of the Nevada experience, what we really like about Vance is that he has all his technical skills and global experience. He's worked in central Asia, Turkey, and Canada. He has a really well rounded holistic approach to exploration.

We have a top-notch board of directors. Our Chairman is John Dorward. His day job is as President and CEO of Roxgold. They're an underground, high-grade gold producer in Burkina Faso, and John has taken them from pre-feasibility through permitting, to construction over the last 4 years.

George Salamis is one of our independent directors. George is also President and CEO of Integra Resources. Prior to that he was Chairman of Integra Gold, which was sold to Eldorado, mid-last-year, for $590 million Canadian.

We have Mark Wellings, from the investment banking side of things. He was one of the lead mining bankers at GMP Securities, both in Toronto and London, and then raised hundreds of billions of dollars for both exploration and development companies over the last 20 years.

Charlie Davies, he is Principal of Exploration at Waterton Global Resource Management and our largest shareholder. He's a PhD in Economic Geology, and has that global experience. He brings a very strong technical background at the board level.

Finally, we have Riyaz Lalani. He's CEO of Bayfield Strategy, a communications firm. They have a number of mining clients, but also a number of other corporate and political clients up here in Canada. So he really brings another skill set to the board.

What we set out to do with both the management team and the board of directors, when we were putting the company together, was to focus on addressing all the different skill sets that you need to build an exploration and gold development company. This board, the way it's constituted now, will allow us to grow as a company without having to scramble to add new directors over time.

Dr. Allen Alper: You have a fantastic, outstanding background, as does your team and board. That's excellent!

M Lennox-King: Thank you.

Dr. Allen Alper: Could you tell our readers/investors a little bit about your share and capital structure?

M Lennox-King: As you know, we trade on the TSX Venture Exchange. We have just over 50 million shares outstanding. We're currently trading between 50 and 64 cents Canadian, giving us roughly a $25 Canadian market cap. We have just over eight million Canadian in the treasury right now. It certainly has us well-financed through 2018.

If we look at our major shareholders, Waterton owns 37%, Goldcorp is at 15%, institutions own 21% of our equity, with two institutions making up the bulk of that, 14% represents our float, and then board and management, i.e. insiders, we own 13% of the outstanding shares.

One thing that your reader/investors might find interesting is that the 50% of the shares represented by the Waterton position and the insider position are locked up for the next 18 months, so there will be no selling into the market by the major shareholders.



Dr. Allen Alper: Well that sounds very good. What are the primary reasons our high-net-worth readers/investors should consider investing in Contact Gold?

M Lennox-King: When we were putting together Contact Gold, we had the opportunity to review many assets. We understand the importance of jurisdiction. We only wanted the best jurisdictions. They are very limited. You're probably looking at Ontario and Quebec in Canada, maybe Finland, Western Australia, and certainly Nevada, the key one for us. We judged them by production track record, prospectivity, the ability to do work, and security.

The senior producers all have a decline in production profile. In order to bolster that production profile, they’re going to need to make acquisitions. I think those acquisitions will be made in stable jurisdictions like Nevada, like Canada.

At a $25 million valuation, currently in Canadian terms, our valuation's quite low. Given the proximity we have to major gold deposits and gold discoveries, operating gold mines and the gold that we do have in the ground and a number of factors, the principal one being we are poised for a year of discovery. We're funded to do it and we certainly have the team to do it.



Dr. Allen Alper: That sounds excellent!

M Lennox-King: I think that 2018's going to be a very good year for gold, and, for the gold equities. I think 2017 was a sneakily good year for the gold price. There are fluctuations throughout the year, but certainly over the course of the year we definitely saw a big run-up in gold price. I think this year we'll start to see that translate into the equities, so we're optimistic.

Dr. Allen Alper: Well that's great. I just recently interviewed Rob McEwen. He feels very strongly and he presented very convincing charts that indicate why this coming year should be a very good year for the gold equity market. We’ll be publishing those soon.

M Lennox-King: Excellent!

http://www.contactgold.com/

John Glanville
Director, Investor Relations
E-mail: Glanville@ContactGold.com
Telephone: +1 (604) 359-4756




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