Partners hit hot hole at Gold Eagle (September 21, 2005)

Drilling by partners Exall Resources (EXL-T) and Southern Star Resources (SSR-V) has returned more high-grade gold values from the Bruce Channel discovery on the Gold Eagle project in the Red Lake mining camp of Ontario.

Hole 10-3 cut 2.9 metres (beginning 1,217 metes below surface) grading 4.2 grams gold per tonne, and 11.1 metres (from 1,268.32 m) of 21.7 grams. Several other high-grade intervals were also encountered down to a depth of just shy of 1,600 metres. Included is a 3-metre section (from 1,498.6 m) running 32.7 grams gold. The hole also yielded visible gold.

The latest hole was collared off a wedge at a depth of 1,134.5 metres in previously sunk hole 10-2. That hole was highlighted by 10.2 metres (from (starting 1,250.4 m) averaging 6.6 grams and 2.6 metres (from 1,459.6 m) of 42.4 grams. Hole 10-3 bottomed out at a depth of 1,584 metres, some 150 metres away from the bottom of hole 10-2.

In late August, the discovery hole at Bruce Channel, no. 10-1, encountered a 516-metre structure with multiple high-grade zones between 1,980 metres and 1,596 metres, within rocks hosting other gold mines in the camp. The best interval runs 28.5 grams gold over 11.7 metres (from 1,234 m), including 3.8 metres of 10.7 grams, and 3 metres of 99 grams.

The companies caution that reported lengths are core intersections and do not represent true widths.

Diamond drilling continues with an infill hole between holes 10-1 and 10-3 restarted after problems with the drill rods. Results are expected in mid-October. Plans call for a second drill rig to be added at the end of October, with drilling to continue during the freeze-up period.

The past-producing Gold Eagle mine poured some 40,000 oz. gold from 1937 to 1941. Exall and Southern Star each own 50% of the project, and jointly operate the exploration programs.

In other news, Exall has agreed to a non-brokered private placement of 2.5 million units at 40 for proceeds of $1 million. Each unit includes one share accompanied by half a share purchase warrant, with one warrant exercisable for one share at 50 apiece for one year. Proceeds will go to fund ongoing drilling at Gold Eagle, and to the company’s oil and gas activities.

Exall also recently completed a $4 million bought deal through Dundee Securities and Dominick & Dominick Securities. Each of those units includes a share plus half a one-year warrant exercisable at 50 per share.

Meanwhile, Southern Star recently added FNX Mining (FNX-T) CEO Terry MacGibbon to its board of directors. MacGibbon has been granted 350,000 options to acquire Southern Star shares.

Southern Star also recently raised $1.4 million via a non-brokered financing involving the issuance of 2.8 million flow-through units at 50 apiece. Each unit comprises a flow-through share plus half a flow-through warrant, with each warrant good for one common share at 60 per share for one year.

All of the securities issued under the financings are subject to a four-month hold period.

The latest hole form Golden Eagle saw shares in Exall 16, or 22%, higher at 90 in afternoon trading in Toronto on Sept. 21; shares in Venture Exchange-listed Southern Star were 17 better at $1.27.