Gold at Rice Lake JV

Vancouver — Partners San Gold Resources (SGR-V) and Gold City Industries (GC-V) have intersected high-grade gold mineralization at the San Gold 3 zone, 6 km east of the Rice Lake mine, near Bissett, Man.

The latest drilling tested an eastern extension along the 15-km east-west-trending shear structure that hosts the “mine” horizon the Rice Lake greenstone belt. Results are as follows:

– hole 5 — 1.5 metres (from 128 metres) grading 4 grams gold per tonne, followed slightly farther down-hole by a 1.3-metre intercept of 4.9 grams gold.

– hole 7 — 1.5 metres (from 92.5 metres) of 12.4 grams gold.

– hole 12 — 3.5 metres (from 196 metres) grading 22 grams gold, including a 1.1-metre section of 68.2 grams gold.

Gold mineralization encountered in the San Gold 3 zone occurs over widths similar to those previously mined at the Rice Lake operation.

Four major zones have so far been identified along 6 km of the 15-km-long east-west trend: the Rice Lake mine, the San Gold 1 deposit (currently undergoing a resource calculation), and the San Gold 2 and 3 zones.

The Rice Lake mine, previously known as both Bissett and San Antonio, first produced in the early 1930s; the mine operated continuously until 1968, by which time it had produced 1.4 million oz. at an average grade of 9.6 grams gold.

In the mid-1990s, a few companies had a look at restarting the underground operation, with Rea Gold finally investing about $60 million in upgrading underground workings and constructing new surface infrastructure, including a mill and hoist. However, Rea fell into bankruptcy prior to any significant production, and the project was sold by creditors.

South African producer Harmony Gold Mining (hmy-n) acquired the project in mid-1998 for $14 million. Harmony produced 110,000 oz., until late-2001, when low metal prices pushed the company to cease output and mothball the operation.

San Gold and Gold City reached an agreement with Harmony in early 2004 to buy the operation and infrastructure for $7.6 million.

Harmony had tabled a NI 43-101-compliant measured and indicated resource of 1.15 million tonnes grading 8.9 grams gold. Within that resource is a proven and probable reserve of 818,000 tonnes grading 9.3 grams gold. The resources are accessible from existing underground workings.

The Rice Lake greenstone belt is part of the regional Uchi sub-province, which also contains the Red Lake, Pickle Lake and Musselwhite gold camps.

San Gold and Gold City are in the midst of being merged into a single entity, to be called Rice Lake Gold.