Q-Gold adds to gold properties in Mine Centre

Q-Gold (QAU-V) is trying to boost its portfolio of historic gold properties in Mine Centre, between Fort Francis and Atikokan in northwestern Ontario, by acquiring additional gold veins surrounding three sides of its existing property.

Q-Gold has signed an agreement with the private company Nipigon Gold Resources to acquire the McKenzie Gray and Jolly Roger gold veins and the Finger Lake Fault — a total of 240 acres bringing the company’s Mine Centre claims to 27,260 acres.

Q-Gold acquired the Foley and Golden Star mines in Mine Centre from a private Ontario company in 2005. They were mined off and on between 1893 and 1941 producing about 16,000 oz. of gold. The company says the area is one of the last known Canadian Archean-age granite/greenstone lode gold camps yet to be widely explored by modern methods.

This February, Q-Gold will start a 5,000-metre drill program on the most prospective targets. The company completed a 1,516 line-kilometre airborne survey in 2006 and is about to finish up some additional ground geophysical surveys before drilling.

Included with the new property is a small mill, which Q-Gold plans to refurbish to provide limited ore processing and pilot testing of bulk samples from the gold/quartz vein system in Mine Centre. There is also a tailings pond with an inactive permit that Q-Gold plans to have reinstated.

The company will acquire geological, geophysical, drilling logs and assay data from past exploration efforts by Nipigon and other companies.

Results from a 1990 Nipigon report from trenching, sampling and assaying programs on the McKenzie Gray vein by operators between 1938 and 1946 show grades between 9.3 grams gold per tonne about a metre wide over strike lengths of 53.4 metres to 91.5 metres.

Exploratory drilling done by Nipigon revealed gold-sulfide mineralization in a lens plunging to the 100-metre level, with the vein remaining open at depth. A 1992 report (not National Instrument 43-101 compliant) showed 98,702 tons grading 0.3 gold equivalent oz. per ton (9.38 grams per tonne) in all ore categories totaling 29,611 oz.

The Jolly Roger vein is 2 to 3 metres in width and is hosted by a mafic dike within a highly sheared, altered and folded zone accompanying the Finger Lake Fault. The fault is believed to be the primary conduit for hydrothermal fluids common in gold bearing veins in the area.

If the agreement is approved, Q-Gold will pay Nipigon $25,000 in cash and issue one million Q-Gold common shares at 25 each to Nipigon shareholders. Q-Gold will also pay Nipigon a series of cash production payments totaling $500,000 when gold production reaches 50,000 oz. in 10,000 oz. increments. As well, Nipigon will receive a 3% net smelter return royalty.

Q-Gold’s original mines, Foley and Golden Star, are estimated to have 238,000 oz. of gold.

Diamond core drilling and underground work at Foley mine from 1923 to 1927 were the basis for a 1999 Ontario Geologic Survey report called Mineral Desposits Not Being Mined in the Kenora Mining District in 1997. The report found Foley to have a proven and probable reserve of 40,000 tons grading 0.5 oz. gold per ton (15.63 grams gold per tonne) and “speculative reserves” of 400,000 oz. of ore grading 0.5 oz. gold per ton as well. The report found Golden Star’s weighted average of the tailings dump to have 65,000 oz. of ore grading 0.28 oz. gold per ton (8.75 grams gold per tonne).

None of these grades are NI 43-101 compliant but Q-Gold hopes to confirm them with its upcoming drill programs.