Canada-based K2 Gold has entered into an option agreement to buy a 100% stake in the Si2 gold project in Nevada, US, from Orogen Royalties .

To earn the stake in the Si2 project, K2 Gold is required to pay $2.5m in cash over a five-year period, starting with $50,000 on the date of the deal’s signing.

K2 Gold will also have to pay set amounts of cumulative incurred expenditures over the period as well as grant Orogen a 2% net smelter return (NSR) royalty.

K2 president and CEO Steve Swatton said: “We are excited to add the Si2 Gold Project to K2’s portfolio and to be working in Nevada’s prolific Walker Lane Trend. 

“Our review of the project data suggests the potential for a buried epithermal gold deposit that lies below the historic drilling with strong similarities to AngloGold Ashanti’s recently discovered Silicon project.”

K2 Gold is planning to accelerate the development of the Si2 Gold Project in the first half of this year.

Located 60km northwest of Tonopah in Esmeralda County, the Si2 gold project is anticipated to host a buried low-sulphidation epithermal gold deposit.

Formerly called the Elba project, it comprises a large steam heated alteration cell hosted by a rhyolite dome complex.

Three shallow holes drilled at the main Si2 target have encountered opalite alteration with strongly anomalous mercury and locally anomalous gold.

Orogen CEO Paddy Nicol said: “Si2 is an underexplored steam heated alteration cell with no drilling that has targeted the appropriate depth for gold mineralisation.

“The project shares many similarities with AngloGold Ashanti NA’s Silicon project in the growing Beatty gold district, where Orogen holds a 1.0% NSR royalty.”

Last year, K2 Gold signed an option agreement to acquire a 100% interest in the Cerro Gordo Gold Project in California.