Drilling tests gold target near Red Mountain

After waiting more than two months for drill results from the Red Mountain area gold property near Stewart, B.C., partners Teuton Resources (VSE) and Minvita Enterprises (VSE) learned that initial reaction from the markets was less than enthusiastic.

Last summer, the joint owners carried out extensive trenching and identified high-grade gold mineralization in a series of sub-parallel, shear-controlled veins and stockworks within a core area measuring 250 by 1,000 ft.

The values were encouraging enough for Homestake Mining (NYSE) and Prime Resources Group (TSE) to purchase, on a respective 51%-49% basis, 500,000 common shares of Teuton at a price of $2.64 per share (450,000 flow-through and 50,000 non-flow-through shares), as well as 350,000 common shares of Minvita at $3.79 per share (315,000 flow-through and 35,000 non flow-through). A minimum of 90% of the $2.6 million in proceeds is being used to explore the property.

Teuton and Minvita followed up with preliminary drilling in early November, completing 13 holes totalling 3,500 ft. before shutting down during severe weather conditions. The holes were drilled from a single pad east of trenches 47 (14.1 ft. of 0.09 oz.) and 12 (22 ft. of 0.56 oz.), and tested a 131-ft. strike length of the H-1 zone at various angles along four different azimuths. Trenching on the H-1 zone averaged a grade of 0.84 oz. gold per ton over a strike length of 626 ft. at an average width of 14.8 ft.

The most significant intersections were returned from the two southeastern drill sections, C and D, which tested the downdip extent of mineralization exposed in trenches 4 (18 ft. of 3.59 oz.), 14 (10.2 ft. of 3.77 oz.) and 15 (24.6 ft. of 0.76 oz.).

Hole 95-8, on section C, intersected 5.6 ft. true width grading 1.67 oz. at a 45.9-ft. drilled depth, while hole 95-10, on section D, intersected 13.8 ft. true width grading 1.85 oz. at a 49.2-ft. depth. Preliminary interpretation suggests the H-1 zone pinches out at a depth of about 131 ft. on section D, although Dino Cremonese, president of both Teuton and Minvita, said a change in direction of the structureOs dip would account for the fact that the zone was not intersected.

To the northwest, drilling on sections A and B indicates the zone thins at depth, returning values of 0.52 oz. over a true width of 2 ft. at a drilled depth of 40.2 ft. for hole 95-1, on section A; and 1.41 oz. over a true width of 2 ft. at depth of 51.6 ft. for hole 95-2, also on section A.

The H-1 zone appears to be a

series of sub-vertical, en echelon structures hosting stockworks and breccias, mineralized with hematite, magnetite and locally native gold.

A steeply dipping, sub-parallel zone southwest of H-1 was intersected by several holes, returning consistent values of 0.08 oz. over true widths of 2.6-4.3 ft. The zone is thought to be the downdip extension of the S-2B zone.

With only 20% of the known strike length of the H-1 zone tested, Cremonese emphasizes the results are from a single drill station and that exploration of the property is still at an early stage.

Additional airborne and ground geophysics are planned, and a major drill program is expected to begin in late May or early June. The southeastern extension of the H zone, as well as the S-1 and S-2A structures, will be tested.

Trenching on the S-1 zone averaged a grade of 0.69 oz. over a strike length of 466 ft. at an average width of 9.8 ft., while the S-2A zone averaged 0.78 oz. over a length of 1,075 ft. at an average width of 7.2 ft.

Results from preliminary drilling are shown below:

HoleDipSectionZoneIntervalWidthGold

(ft.)(ft.)(oz./t)

95-1-45AH-140.16-43.443.280.52

95-2-55AH-151.61-54.893.281.41

95-3-45BS-2B132.78-142.629.840.08

95-4-55BH-136.07-52.5916.520.61

S-2B159.02-168.859.830.08

95-5-65BH-175.41-85.259.840.15

H-1101.64-114.7513.110.11

277.05-281.974.920.35

95-6-75BH-152.46-59.026.560.48

S-2B259.02-268.859.830.08

95-7-45CH-142.62-45.903.280.60

H-149.18-59.029.840.20

95-8-55CH-145.90-55.749.841.67

95-9-70CH-159.02-68.859.830.20

95-10-45DH-149.18-75.4126.231.85

H-178.69-85.256.560.13

95-11-55DH-149.18-72.1322.950.64

H-188.52-96.668.140.29

H-1121.31-134.4313.120.89

95-12-65Dno significant intercepts

95-13-75Dno significant intercepts