Buffalo Gold drilling expands Mount Kare

Vancouver — Drilling by Buffalo Gold (BUF.U-V, BYBUF-O) is expanding known mineralized zones on the Mount Kare project in Papua New Guinea.

Hole MK06-09A in the Western Roscoelite zone intersected an 18.3-metre section (from 17.8 metres down-hole) grading 4.8 grams gold per tonne followed by a lower 33.4-metre interval (from 44.7 metres) of 15.7 grams gold that included 19.3 metres at 24.3 grams gold.

Recent drilling also intercepted 86 metres averaging 4.2 grams gold, including 58.3 metres of 5.8 grams gold in hole MK06-43, and 122 metres grading 2.4 grams gold, including 69 metres of 3.1 grams gold in hole MK06-49.

The structural block hosting gold mineralization at the Western Roscoelite zone indicates increased cohesiveness and higher grades towards the north. Results have led the company to subdivide the zone into north and south components, named the North-Western and South-Western Roscoelite zone, respectively.

Buffalo Gold is adding a third drill rig to the property to accelerate testing of the new northern zone, which, previously, was only sparsely drilled.

The company will incorporate results from this year’s US$3.5-million, 6,500-metre drill program (consisting of 50-60 holes) into a prefeasibility study expected by mid-2007. A resource estimate conducted in 2000 reviewed an indicated resource of 14.68 million tonnes grading 2.36 grams gold and 33.7 grams silver per tonne plus an additional 10.85 million inferred tonnes at 1.98 grams gold and 22.7 grams silver using a 1-gram gold-equivalent cutoff and cutting all high-grade assays to 30 grams gold.

Gold mineralization was first discovered at Mount Kare by CRA Exploration, now part of Rio Tinto (RTP-N), in 1986 by a stream-sediment sampling program. Exploration activity attracted the attention of locals who swarmed the project, extracting an estimated 1 million oz. gold from alluvial and colluvial deposits. The gold rush, with up to 10,000 people working the ground, led CRA to abandon the property in 1993 due to a poor working relationship with the landholders.

Madison Minerals (MMR-V, MMRSF-O) acquired an option for 90% of the project in 1996 and subsequently conducted about 37,000 metres of core drilling plus extensive geophysics, geochemistry and sampling. In mid-2005, the option was acquired by offshore company Longview Capital Partners, which in turn, passed the 90% interest rights to Buffalo Gold for completion of a prefeasibility study by 2007, staged payments and a bankable feasibility study by mid-2008. In addition, upon attaining a 49% interest in the Papua New Guinea holding company, Buffalo will issue 17 million shares to acquire Longview.

Mount Kare is adjacent to the Porgera mine, owned 75% and operated by Barrick Gold (ABX-T, ABX-N), which produced about 850,000 oz. gold in 2005 from both open-pit and underground operations.

Shares of Buffalo Gold rallied 21% on the Aug. 16 drill results to close up 24 at $1.40 apiece on volume of over 950,000 shares. The company posts a market capitalization of $46 million based on its 33 million shares outstanding. The stock has a 52-week trading range of 24-$1.57.