Ketza River hits lift Yukon-Nevada (August 30, 2010)

VANCOUVER — Yukon-Nevada Gold’s (YNG-T) problems at the Jerritt Canyon gold mine in Nevada have left its share price struggling for two years but it seems better times are on the horizon: the mine is almost back on track and the company recently sparked a nice share price rally when drill results from the Ketza River gold project in Yukon pushed its shares up 16% to reach a new 52-week high of 59¢.

Ketza River is a past-producing property located near the town of Ross River. Yukon-Nevada has been exploring the project on and off since 1994. Its efforts of late have focused on the Bluff zone, one of the project’s manto-type deposits. A manto is a zone of sulphide replacement within a limestone host rock.

At Bluff, the manto is a structurally controlled, steeply dipping body that carries strong gold grades in places. Drilling at Bluff in 2008 returned such intercepts as 11.2 metres grading 9.7 grams gold per tonne and 4.8 metres of 11.5 grams gold.

In early 2010, Yukon-Nevada followed up on those hits with a series of holes stepping downdip. Hole 1471 returned 2.4 metres of 20.8 grams gold from 17 metres down-hole while hole 1473 hit 3.2 metres averaging 12.2 grams gold. Hole 1474 cut 2.2 metres of 9.9 grams gold.

The new intercepts sit outside of the defined resource at Bluff, which also does not include the results from Yukon-Nevada’s 2008 drilling. Resources at Ketza River’s three zones together stand at 4 million measured and indicated tonnes of 4.93 grams gold plus 1.1 million inferred tonnes of 3.26 grams gold.

The company has advanced slowly at Ketza River over the last two years because it has been forced to focus on Jerritt Canyon. Yukon- Nevada shuttered the operation in mid-2008 because of escalating mining and milling costs at the site, which involves both underground mining and roasting of refractory sulphide ore. The mine was restarted in April 2009 but just two months later the company was forced to shut it down again because of its failure to reduce mercury emissions.

Jerritt Canyon did not regain steady state production until recently. In early August, Yukon- Nevada announced that upgrades to the mill had been commissioned and it was operating at a rate enabling production of 150,000 oz. gold annually.

On the back of that news, the company was able to close a US$25-million financing. Yukon- Nevada issued $25-million worth of senior secured notes as well as 25 million warrants, with each warrants exercisable for one share at 40¢ for three years. The notes will mature at the end of 2012 but will be repaid through monthly cash installments starting in September. Yukon-Nevada says it will use the funds to develop and re-open other parts of Jerritt Canyon, which is home to two underground mine complexes.

On news of the Ketza River results, the company gained 8¢ to close at a high of 59¢ a share. In the last year, its shares have dipped as low as 7¢. Yukon-Nevada has 661 million shares outstanding.