Svetloye Gold-Silver Target Grows For Fortress

VANCOUVER — The Svetloye gold-silver project in Russia keeps returning well-mineralized intercepts for Fortress Minerals (FTS-V, FTMNF-O).

After hauling a season’s worth of supplies into the project along its 310-km winter road, Fortress began its 2009 summer drill program at Svetloye, in Russia’s Far East in early May. The first area of work was the Amy prospect, where an updated estimate recently pegged resources at 6 million inferred tonnes averaging 2.43 grams gold per tonne.

The first holes have already expanded the mineralized zone significantly. Hole 243, collared 160 metres south of previously defined mineralization, hit 40 metres grading 3.68 grams gold and 8 grams silver per tonne, starting 20 metres down-hole and including 7.9 metres of 9.57 grams gold and 25.8 grams silver. Hole 245, collared 100 metres east of 243, confirmed a good width of mineralization by hitting 19.8 metres grading 2.15 grams gold from 44 metres depth.

Hole 244, drilled halfway between the zone and hole 243, returned three mineralized intercepts over its 220-metre length. From just 6 metres depth, the drill cut 30 metres of 1.54 grams gold; from 43 metres down-hole, it returned 99.4 metres of 1.03 grams gold; and from 205 metres, the drill hit 15.5 metres of 1.45 grams gold.

And in the biggest stepout, hole 242 was collared 320 metres south of the Amy deposit and returned 17.1 metres grading 0.7 gram gold and 2.9 grams silver from surface, followed by 10.2 metres grading 1.4 grams gold and 1.4 grams silver from 73 metres.

Amy is one of nine prospects at Svetloye that occur along an 8-kmlong zone of epithermal gold mineralization. Two other prospects host defined resources: Elena is home to 12.2 million inferred tonnes grading 2.1 grams gold and Tamara hosts 1.9 million inferred tonnes averaging 2.22 grams gold. Along the trend, gold mineralization is associated with extensive zones of vuggy silica and alunite, a type of mineralization common to highsulphidation epithermal systems. Most of the mineralization defined to date occurs on hilltops, with roughly 70% of the above cutoff-grade resource blocks within 50 metres of surface.

The Tamara and Elena resource estimates were calculated in early 2008. The ensuing 2008 drill program focused primarily on Amy but the few holes into the other zones provided some strong results. For example, at Tamara, hole 135 cut 46.4 metres grading 8.66 grams gold from 11 metres depth. At Elena, hole 156 returned 91.8 metres averaging 1.82 grams gold from surface.

The Amy resource was updated in early 2009. Fortress has now encountered mineralization along 700 metres of strike at Amy and the deposit remains open for expansion to the south and east. In addition, Fortress conducted an induced-polarization survey of the area in late 2008 and the results indicate the presence of a zone of high chargeability to the east, under extensive soil cover. The zone extends for 1.5 km along strike and stretches across 300 metres width. The survey also delineated a second target to the southeast that is similarly buried by soil cover. Fortress plans to sample, trench, and drill both targets in 2009.

During February and March, Fortress used 18 trucks to haul 700 tonnes of fuel and 400 tonnes of supplies along the winter road into Svetloye in preparation for the summer exploration program. Fortress plans to complete 8,000 metres of drilling, as well as sampling and trenching. At first the focus will remain at Amy.

Svetloye is roughly 80 km from the Pacific coast, close to the port of Okhotsk. Fortress acquired an option to purchase an 80% interest in Svetloye from Phelps Dodge in 2005 (before Freeport-McMoRan Copper & Gold [FCX-N] acquired the company in 2007). By early 2008, Fortress had increased its interest to 100% for a total price of around $14 million.

By mid-2008, Fortress had entered into an option agreement giving the Russian bank Gazprombank an option to earn a 51% interest in Svetloye. To complete its commitments for the interest, Gazprombank agreed to pay roughly US$48 million towards project-related costs, reimburse Fortress for 51% of all costs incurred at Svetloye in 2008 and potentially issue a bonus to Fortress if the project reaches the prefeasibility stage.

But at the end of 2008, Gazprombank let its option expire. In the management discussion and analysis for its first-quarter results, Fortress said it “continues to negotiate with Gazprombank regarding future opportunities for the two companies.”

In May, the company completed a $3.5-million private placement, of which Kinross Gold (K-T, KGC-N) provided $2.5 million. The major now holds 6% of Fortress’s outstanding shares and holds the right to participate in any future financings to maintain its equity interest. Fortress had $2.9 million in the bank at the end of March; with the recent financing, its treasury holds roughly $6 million. The company has no outstanding debt.

On news of the latest drill results out of Svetloye, Fortress’s share price gained 3¢ to close at 35¢. The company has a 52-week trading range of 12¢-$1.10 and 164 million shares outstanding.