Vancouver — Beleaguered gold producer Queenstake Resources (QRL-T, QEE-X) enjoyed some positive news recently, with underground exploration drilling on its Mahala deposit returning further high-grade values over significant widths.
The drill program on Mahala, in its Smith mine and part of the Jerritt Canyon mining complex in northeastern Nevada, intercepted up to 12.2 metres grading 28 grams gold per tonne in the Mahala Dike trend in Zone 4, and 7.6 metres of 25 grams gold in the Mahala extension in Zone 8.
The mineralized zones are located close to the Smith mine development drift.
More than 24,000 tons of ore grading 19 grams gold per tonne was mined from the Mahala deposit in the fourth quarter of 2006. The grade was higher than expected for the deposit, which lies above the water table at the Smith mine.
“The production results confirmed continuity of the Mahala mineralization and indicate the potential to grow the high-grade Mahala deposit,” said Queenstake president and CEO Dorian (Dusty) Nicol.
Queenstake recently reported fourth-quarter gold production of about 45,700 oz. from its Jerritt Canyon operations, including 8,700 oz. from ore purchased under an agreement with Newmont Mining (NMC-T, NEM-N).
The tally gives Queenstake 2006 full-year production of 169,700 oz., on par with its revised forecast.
Shares of the Denver, Colo.-based gold producer have recently risen off a 1-year low of 20.5 apiece, inching up to 24. The stock traded at a 52-week high of 60 as recently as May. With 583.7 million shares outstanding, Queenstake posts a $140-million market capitalization.
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