Queenstake cuts Jerritt Canyon high-grade (May 22, 2006)

Vancouver — Underground drilling by mid-tier gold producer Queenstake Resources (QRL-T, QEE-X) at its Jerritt Canyon mining complex, in northeastern Nevada, has returned significant intervals of high-grade gold mineralization.

At the SSX mine, in the southern section of Jerritt Canyon, reverse-circulation (RC) drilling on Zone 4 intersected up to 39.6 metres grading 19 grams gold per tonne in hole Z50734. Another hole, Z41199, returned 9 metres of 41 grams gold. Recent drilling at SSX comprises almost 5,400 metres in 118 RC holes and eight core holes.

Meanwhile, eastwards at the Smith mine, Queenstake’s core hole LX-628 encountered 16.8 metres of 23 grams gold along northwest extensions at the R4 dyke trend. On the Mahala deposit, underground drilling returned up to 10.7 metres grading 25 grams gold in RC hole C40384. Over 2,200 metres in 31 RC holes and 13 core holes were recently completed on the Smith mine area.

Also, an electrical line access hole drilled from an underground drift to surface on the mine’s West Dash deposit tied into unexpected gold mineralization (6 metres of 13 grams gold). Production from West Dash is expected to come on-stream in the second half of 2006.

“Encouraging results from the Smith mine reinforce expectations its mine life can be extended beyond 2008,” says Queenstake president and CEO Dorian (Dusty) Nicol.

At the Murray mine, on the western edge of Jerritt Canyon, drilling returned positive results (9.1 metres of 32 grams gold) in the Zone 5W area. The newly identified high-grade material will be mined, adding life to the operation, which was expected to cease at the end of the first quarter.

The Denver, Colo.-based company recently posted first-quarter production of almost 30,000 oz. gold, well below the 50,000 oz. anticipated due to wet weather conditions and mechanical issues at its mill. About 22,000 contained ounces gold was in stockpiled ore waiting processing at the end of the first quarter. Queenstake maintains it is on track to produce 200,000-220,000 oz. for 2006.

Following repairs, the mill is expected to operate at full capacity for the rest of the year, processing both Jerritt Canyon mined ore and concentrates and ore purchased from some of Newmont Mining’s (NMC-T, NEM-N) Nevada mines.

The company recently closed its US$10-million private placement with Newmont, giving the major a 4.9% shareholding.