Queenston cuts new gold

Two of the first three diamond drill holes sunk by Queenston Mining (QMI-T) at its Kirkland Lake gold project in northeastern Ontario have cut a new zone of gold mineralization. The program is expected to span 22 holes, or 12,000 metres.

Dubbed Anoki South, the new zone lies 250 metres south. It runs parallel with the Anoki deposit, which hosts measured and indicated resources of 1.1 million tonnes averaging 4.1 grams per tonne gold. The new zone is also 1 km southwest of the McBean deposit, and its measured and indicated resources total 835,520 tonnes grading 5.1 grams gold per tonne. Inferred resources there amount to 1.8 million tonnes averaging 6.5 grams gold.

The Anoki South zone represents a 20-metre thick, gold-bearing unit of altered inter-flow sediments and mafic volcanic flows. The lower 5 metres of the unit contain elevated gold values adjacent to a shear zone.

Hole AN02-20 cut 4.5 metres (beginning at 300 metres below surface) running 6.7 grams gold, including a 0.95-metre section of 23.86 grams.

Hole AN02-21, collared 60 metres to the south, was designed to test beneath the discovery hole. It cut the zone at 350 metres below surface and returned 3 metres grading 18.92 grams gold, including 0.5 metre of 103.85 grams.

The ASZ zone remains open to surface, at depth and 600 metres along strike. Queenston plans to add a second drill, to help delineate the new zone. Drilling will then move on to test nine other targets on the property.

Earlier this summer, Queenston assumed full ownership of the Kirkland Lake property after paying Newmont Mining (NEM-N) $3 million in cash and issuing 1 million Queenston shares and warrants for a further 543,000 shares exercisable at 95 per share over 18 months.

Newmont retains a sliding-scale net smelter return royalty that varies from 1% at gold prices below or equal to US$300 per oz., up to 2% when prices are above US$400 per oz.

The property hosts five gold deposits with measured and indicated resources of 4.1 million tonnes grading 5.6 grams gold per tonne, plus inferred resources of 4.5 million tonnes averaging 5.3 grams gold, for a total of 1.5 million contained ounces.

At the nearby Lake Abitibi property, Queenston recently completed 10 holes for 3,635 metres. The holes encountered three altered structural corridors in favourable geology but failed to return any significant mineralization. Queenston plans further geophysical and soil geochemical surveys in anticipation of a second phase of drilling next year.

Queenston has $12 million in working capital, with an exploration budget of $2.6 million through 2003.