Drill results boost potential of La Libertad

Exploration drilling by Greenstone Resources (GRE-T) has confirmed mineralization at four gold zones on La Libertad, the company’s wholly owned gold concession in Nicaragua.

Drilling in each of the zones returned wide intervals of low-grade gold mineralization. Values ranged from 1 to 3.8 grams per tonne over widths of 6 to 36 metres.

At the Northeast Chamarro zone, which was discovered earlier this year, four widely spaced holes intersected mineralization at the northeastern end of the 4-km-long structure. The best result came from hole 236, which intersected 21.3 metres (from 35.1 to 56.4 metres) averaging 2.4 grams gold.

The lowest value — 1 gram gold over 12.2 metres (from 67.1 to 79.2 metres) — came from the deeper of two zones intersected in hole 235. The other interval averaged 1.5 grams gold over 18.3 metres (from 33.5 to 51.8 metres).

The zone lies 4 km northeast of the currently producing Cerro Mojon mine.

Drilling at the Cerro Volcan zone, which lies 6 km southwest of Cerro Mojon, yielded the best overall result in the program. Hole 225 intersected 36 metres (from 93 to 129 metres) averaging 3.8 grams gold. A second hole intersected 12 metres (from 54 to 66 metres) of 1.6 grams gold.

Cerro Volcan was discovered in 1996, when a reconnaissance program identified several closely spaced parallel veins with a minimum strike length of 2.5 km. The recent drilling was centred on the central portion of the zone, after previous drilling at the northeastern end failed to intersect promising mineralization.

>From the Esmeralda zone, which lies 800 metres south of Cerro Mojon, results are available from 12 drill holes. Each was drilled to follow up earlier trenching results, and each intersected mineralization similar to that now being mined at the Cerro Mojon deposit.

Hole 288 hit two separate zones of 15.2 metres (starting from surface) of 2 grams gold and 27.4 metres (from 62.5 to 89.9 metres) of 1.1 grams gold.

Hole 293 also intersected two separate zones of 27.4 metres (starting from surface) of 1.6 grams gold and 18.3 metres (from 208.8 to 227.1 metres) of 1.7 grams gold. Hole 255 hit 9.1 metres (from 27.4 to 36.6 metres) of 1.2 grams gold. And hole 271 returned 18.3 metres (from 51.8 to 70.1 metres) of 1.2 grams gold.

Based on the recent results, Greenstone believes the Esmeralda zone to be the southwestern extension of the Crimea zone, situated to the northeast.

Future results will dictate whether the zone will be incorporated into the Cerro Mojon pit or the proposed new Crimea-Santa Maria mine.

At the Antonio zone, six holes intersected mineralization. Results ranged from 1 gram gold over 15 metres (from 49.5 to 64.5 metres) in hole 264 to 3.5 grams over 9 metres (from 46.5 to 55.5 metres) in hole 279. The widest interval came from hole 278, which intersected 36 metres (from 36 to 72 metres) averaging 2.4 grams gold, whereas the narrowest came from hole 265, which returned 6 metres (from 42 to 48 metres) of 1.4 grams gold.

The Antonio zone lies 5 km south of the Crimea zone. Gold mineralization is structurally controlled and disseminated in a silicified andesite unit.

In related news, Greenstone has arranged a financing with a conglomerate of investment firms. The placement calls for 4 million shares priced at $13.50 per share; and the underwriters retain the right to buy an additional 1 million shares at an equivalent price.

Proceeds from the financing, which has yet to be approved by regulators, will be used to buy one of several undisclosed Latin American projects the company is evaluating. Funds from the deal will also be used to expand the 1998 exploration program at La Libertad and other Latin American projects.

Greenstone expects to close the deal by Oct 21.