Victoria Gold drills keep hitting gold in Nevada

Vancouver – Victoria Gold (VIT-V) is delineating a sizeable high-grade gold deposit at its Cover project in north-central Nevada.

The Helen zone has now seen 14 drill holes, the latest of which returned over 400 metres of alteration including several significant intercepts. Hole 14 was designed to test the Helen zone plunge below 150 metres, for the first time, and it found the zone consistently mineralized at depth.

The first intercept came 392 metres down hole 14, where the drill hit 42.7 metres grading 1.26 grams gold per tonne. Just over 100 metres later the drill intercepted 25.9 metres grading 3.9 grams gold. And over the ensuing 150 metres of alteration the core produced several more intercepts, including 7.2 grams gold over 1.5 metres, 13.74 grams gold over 10.4 metres, 2.67 grams gold over 9.5 metres, and 1 gram gold over 4.9 metres.

Hole 14 hit the Helen zone roughly 65 metres below and 20 metres to the east of hole 13, which returned 11.85 grams gold over 35.6 metres from 566 metres depth followed closely by 16.75 grams gold over 29.6 metres. Other strong Helen zones intercepts include 12.57 grams gold over 61.9 metres, 11.8 grams gold over 39.6 metres, 15.7 grams gold over 19.8 metres, and 11.48 grams gold over 33.5 metres.

Victoria Gold plans to start drilling hole 15 soon. Recent drilling success, however, is prompting the company to push ahead with plans to drive an adit from surface into the zone to allow for underground drilling. An adit would speed exploration of the steeply plunging zone, which Victoria Gold discovered in early 2007 when hole 1 hit 38.4 metres grading 10.95 grams gold.

The Helen zone is 600 metres northwest of the historic Cove open pit, which produced 2.3 million oz. gold and 100 million oz. silver. Victoria Gold believes the Helen zone is not an extension of the zones mined in the Cove pit but is an entirely new discovery because it occurs within the Favret formation, which was previously thought to be barren. The company plans to complete a preliminary economic assessment of Helen this year.

Victoria Gold signed an agreement to earn a 100% interest in the Cove project from Newmont Mining (NMC-T, NEM-N) in 2006. Having spent more than US$8.5 million on exploration at the site, Victoria Gold has now completed its work commitments and holds the project outright. Newmont, however, retains the right to back in for a 51% interest within 90 days of Victoria producing a positive feasibility study for at least 500,000 oz. gold. If Newmont elects to back in, it is then obligated to solely fund all joint venture expenditures up to 250% of the expenses incurred by Victoria Gold. If the major decides against backing in, Victoria Gold retains ownership but has to give Newmont US$1.5 million and a net smelter royalty between 3.5 and 5%.

In other Victoria Gold news, the company is still planning to proceed with its friendly takeover of StrataGold (SGV-T). Closing the deal is taking longer than originally anticipated but the basis of the takeover remains the same: Victoria will issue 0.1249 shares in exchange for each StrataGold share.

Partly to finance the StrataGold acquisition and partly to fund further exploration in Nevada, in mid-March Victoria Gold closed a $10.3-million private placement. The company sold 15.8 million units and 6.8 million subscription receipts for 45¢ a piece. Each unit comprised a share and half a warrant, exercisable at 55¢ until March 2012; each subscription receipt will convert into one share and half a warrant exercisable at 55¢ until March 2011.

The company plans to spend $2.5 million in 2009, focusing on advancing its five core Nevada projects towards gold production. Cove is one of those five core projects. The others are Santa Fe, a former gold-silver mine northeast of Hawthorne; Big Springs, a former gold mine that hosts a 1.2-million oz. inferred gold resource north of Elko; the Mill Canyon gold target, which is adjacent to Barrick Gold‘s (ABX-T, ABX-N) 15-million oz. Cortez mine and Cortez Hills development project southeast of Battle Mountain; and the Summit project, an early-stage gold exploration project that is also northeast of Hawthorne.