Laurentian and AngloGold on the hunt for new gold in Canada

Vancouver – Laurentian Goldfields (LGF-V) wants to find new gold deposits in Canada and thinks new exploration concepts and improved technology can lead the way. Now a $5.8-million exploration alliance with AngloGold Ashanti (AU-N, ANGJ-J) is giving the junior the confidence and funding it needs to prove it is right.

Laurentian and AngloGold inked a deal that could see the major funding up to $5.8 million worth of exploration aimed at generating new, grassroots gold exploration projects in Quebec, Ontario, and Saskatchewan. In the first year AngloGold will provide Laurentian with $500,000 to explore completely new areas and another $200,000 to continue work on its grassroots Grenville gold project in Quebec.

If Laurentian finds anything of interest in that first year, AngloGold has the option to provide the junior with another $1.7 million in year two and $3 million in year three to continue its work. Spending the entire $5.4 million over three years would then give AngloGold a 60% interest in each exploration project; Laurentian would retain the other 40%. AngloGold could then increase its stake in any project to 75% by funding enough additional exploration to calculate an inferred resource.

If AngloGold does not fulfill the $5.4-million requirement, Laurentian retains ownership of any properties it acquired or staked during the process. And on top of the exploration funding AngloGold is investing $400,000 in Laurentian through a private placement.

In the grand scheme of joint venture deals, this AngloGold-Laurentian agreement is fairly small. But it is nevertheless significant because it shows that AngloGold has confidence in Laurentian’s exploration model.

It’s a model the junior has used just once before and while only time, and further exploration, will determine its lasting success the early signs are good. Laurentian’s Grenville project is near Chicoutimi, in southern Quebec, on the eastern side of what’s known as the Grenville Front. On the west side of the Grenville Front sits the Abitibi Greenstone belt, made up of old, Archean rocks known for hosting gold deposits.

Prevailing thinking held that the younger rocks on the eastern side of the Grenville Front were barren of precious metals. But Laurentian’s geologists realized a new gold discovery in Western Australia indicated that assumptions might be wrong.

AngloGold came across the Tropicana gold deposit while exploring for nickel. Tropicana sits on the eastern side of the Albany-Fraser Front, which runs northeast from the south coast of Western Australia. On the west side of the front are Archean-aged Yilgarn rocks, which like the Abitibi belt are known for hosting gold deposits. Again, geologists generally thought the younger rocks on the eastern side of the front were barren.

But Tropicana is far from barren – AngloGold has to date proven up 3.6 million measured and indicated gold oz. as well as 1.4 million inferred oz., and the deposit remains open in all directions. Now considered the first discovery in an entirely new gold province, the key geologic factor is that Tropicana sits in the deformation zone, close to the Front, where the younger and older rocks are essentially mashed together. As Andrew Brown, president and CEO of Laurentian, explains it, the old systems are still active enough to push gold into the new systems.

As soon as Laurentian’s geologists realized the Grenville front is in many ways identical to the Albany-Fraser Front half a world away, they started a massive lakewater sampling program on the unexplored side looking for sniffs of gold. The 2007 program covered 190,000 sq. km and left Laurentian with eight significant hydrogeochemical gold anomalies. The company staked 1,200 sq. km of land.

In 2008 the company completed two surface exploration programs focused on rock geochemistry. The work defined a series of fault arrays with anomalous gold, copper, and pathfinder elements in four different areas, refining the anomalies, and led Laurentian to stake another 90 sq. km of ground.

The Grenville project is clearly still in the early stages of exploration. But AngloGold found gold where it was not expected in Australia and is now willing to bet several million dollars that Laurentian can do the same in Canada.

Laurentian’s share price currently sits near 11¢. The company has a 52-week trading range of 2.5¢ to 50¢ and has 22 million shares outstanding, 27 million fully diluted. Kinross Gold (K-T, KGC-N) holds 8% of the junior.