Goldsource sees more coal potential at Border

It’s been a while since Goldsource Mines (GXS-V) enjoyed the title of market darling.

The Vancouver-based company’s share price made one of the most dramatic moves on the Venture exchange back in 2008, but has been languishing since.

The ball got rolling for the then-diamond explorer after it announced it had struck thick coal seams while exploring for kimberlites at its Border project in Saskatchewan.

The unexpected discovery sent Goldsource shares from 17¢ all the way to $17 in two months.

The market crash later that year, however, took away much of that glory, and by October of that same year its share price was all the way down to $1.17. Since then, its shares have moved in a consolidation pattern, unable to get above the $2.50 mark.

But that may change.

On April 9, the company released results from its winter drilling program that offered some encouraging results for investors.

A total of 27 holes were drilled at Border, and amongst those holes several thick coal zones were struck including highlight intersections from its Niska deposit of 126.5 metres of coal in one hole and 64.3 metres in another.

So far, Goldsource has discovered 17 coal deposits at Border and it is optimistic that still more will come.

The property currently has an indicated resource of 63.5 million tonnes of coal while inferred stands at 89.6 million tonnes.

Beyond the wide new intercepts drilled at Niska, the company was also drilling to upgrade those inferred tonnes into the indicated category. The company says the majority of the tonnage will be upgraded.

Beyond Niska, Goldsource drilled at the Chemong 03 and Pasquia 02 deposits — which are also on the Border property. Drilling there confirmed true thickness of 74 metres and 53 metres of coal respectively.

In all, 27 drill holes totaling 3,768 metres were drilled with 14 of those holes hitting coal zones. Those that didn’t, Goldsource says, stood on the periphery of the known deposits.

A preliminary economic assessment of the project should be ready for the third quarter of 2010.

Goldsource was also busy at its Ballantyne project in Saskatchewan where it drilled five drill holes for 569 metres. The holes were drilled to test airborne geophysical targets but no coal was intersected.

Better results were achieved at the Pine River property in Manitoba where eight holes were drilled and two coal intercepts were made from 1 to 3 metres thick. Drilling, however, was halted to allow for a consultation process between the provincial government of Manitoba and First Nations groups.

Outside of its own properties the company is set to receive 1 million shares of Westcore Energy (WTR-V) and a 25% working interest in the company’s coal lands in Saskatchewan and Manitoba.

Adjacent to the Border property, Westcore has recently announced the discovery of several significant coal deposits in which Goldsource now has a 25% interest.

“The success of Westcore Energy in the area is important to us in growing our resource base as we have now earned a 25% interest in any resources that may develop as a result of their new discoveries,” Goldsource’s president Scott Drever said in a statement.

Goldsource is getting the interest thanks to a deal in which it let Westcore use its proprietary geophysical tools.