Tonogold Resources has signed an agreement to earn a 51% controlling interest in 1,162 acres of claims owned by Comstock Mining in the Comstock Lode region in Virginia City, Nevada, US.

Under the agreement, Tonogold needs to spend $20m over the next 42 months towards work programmes on the Lucerne properties.

The objective of the programme is to develop a commercially and technically robust mine plan.

In addition, the company needs to complete a feasibility study to enable the start of mining on the properties.

Tonogold Resources president and CEO Mark Ashley said: “We commenced our negotiations with Comstock over 15-months ago. The positive, constructive and open dialogue that has been nurtured by both companies over this period has ensured that the resultant agreement provides a structure that’s not only workable but importantly provides a strong foundation for a successful strategic partnership for the benefit of both companies.

“Comstock reported that the area has 79.8 million tonnes at 0.027oz of gold per tonne for 2.14 million ounces of contained resources.”

“Tonogold has also gained a significant and detailed understanding of the opportunities and potential that the Lucerne properties provide over this period.”

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Comstock reported that the area has 79.8 million tonnes at 0.027oz of gold per tonne for 2.14 million ounces of contained resources.

Over the next three years, Tonogold plans to undertake work programmes to target annual production of more than 100,000oz of gold per annum with cash costs of around $750 an ounce.

The scope of work for the first six months is expected to comprise a detailed independent review of the Lucerne resource, as well as possible infill drilling.