QGX cuts gold in Mongolia

Vancouver – The first two drill holes into the Central Valley zone on the Golden Hill prospect in Mongolia has returned encouraging values for owner QGX (QGX-V).

Both holes cut wide zones of oxide gold mineralization. Hole 1 intersected 48 metres grading 3.79 grams gold per tonne, while hole 2 yielded 71.4 metres grading 2.1 grams gold.

“We are very excited by these results,” says QGX’s President, David Anderson. “While it is still early in the exploration process these results indicate that we could be on to a significant gold deposit with very attractive economics.”

So far, the junior has punched seven holes covering a 500-metre portion of the 3-km long target. The program was designed to test a series of geologic and geophysical targets. Based on the intercept cut the company believes that the mineralization is a low-sulphidation style.

Holes 1, 2 and 4 were drilled on the same site in the central portion of a geophysical target below an area of gold bearing quartz chalcedony boulders. Assay results from the remaining holes are expected within two weeks.

“We have a lot of drilling to do not only in the oxide zone but also below the oxides,” adds Anderson. “Further drilling will also need to be completed to better understand the significance of the massive sulphides that have been intersected in the footwall.”

QGX has also completed 3 holes some 2-km northeast at the Limestone Ridge target, where trenching returned up to 15.6 grams gold over 6 metres. All three holes intersected inter bedded limestone, shales and intrusive rocks some of which were altered and mineralized.

The company can earn an 80% interest in the property by spending US$450,000 by 2005. QGX can also increase its interest to 100% by paying US$1 million after completion of the earn-in.

In order to fund further work, QGX has arranged a “bought deal” financing agreement with Octagon Capital and McFarlane Gordon. The new financing has the junior issuing up to four million shares priced at $1.15 each, with a minimum purchase by the underwriters of two million shares. Closing is slated for Dec. 30.

“This financing will allow QGX to continue drilling on our Golden Hills prospect throughout the winter months,” says the company’s Chief Financial Officer. “We have now raised approximately $16 million for mineral exploration in Mongolia over the past years and our investment in the country will likely become much higher given the encouraging results achieved to date and the multitude of opportunities that we have already assembled.”

Once the deal is complete, QGX will have about 23.5 million shares outstanding, 27.8 million fully diluted.