Madsen Gold on fast track to re-enter production

After 20 years of inactivity, the Madsen gold mine in the Red Lake camp of northwestern Ontario is showing definite signs of life. The former producer, now wholly owned by Madsen Gold (MGF-T), is expected to be re-activated in April.

Over the past two years, the junior has been rehabilitating old workings and defining new reserves in the upper levels of the mine. During the third quarter, definition drilling on the second and third levels outlined additional reserves of 42,298 tons grading 0.215 oz. gold per tonne. Combined with previous additions, the new reserves increase the total proven and probable reserves to 1.1 million tons grading 0.28 oz. gold, representing a 20% increase since underground drilling began in February 1995.

Reserves are based on a minimum mining width of 4 ft. plus dilution of 25%, and all values, where applicable, are cut to 1 oz. Current figures will provide for a mine life of 5-6 years.

It is expected that in the first year of production, 179,500 tons of ore averaging 0.24 oz. gold will be mined from the upper three levels of the mine. A milling rate of 400 tons per day is expected to yield 40,000 oz.

gold, and, by the second year of production, the rate will be increased to 500 tons per day, yielding 50,000 oz. annually.

Production estimates are based on a gold recovery rate of 95% and operating costs of US$250 per oz. An independent audit is reviewing the new reserve calculations and mining costs.

Highlights from third-quarter drilling in the 2-30 FW lens include 7 ft. of true width grading 0.446 oz. gold for hole 2MD-84 and 4 ft. of true width grading 0.420 oz. gold for hole 2MD-86.

Within the recently discovered 2-11 North lens, hole 2MD-117 returned a true width of 10 ft. grading 0.419 oz. gold, including three 1-ft. visible gold intercepts with uncut values of 3.182, 0.371 and 2.183 oz. The best results obtained from holes intersecting the 3-1 West area are 12 ft. of true width grading 0.315 oz. gold for hole 3MD-38 and 10 ft. of true width grading 0.149 oz. for hole 3MD-36.

Drilling in the 3-1 West area also outlined three minable vein structures: FW, Midwall and HW.

Madsen continues to test the area, and mining and development of the 2-30 FW lens are in progress, with ore being stockpiled at surface.

Rehabilitation of the fourth level will allow for the continued delineation of the North Tuff Horizon, about 300 ft. north of the main Austin structure, which produced 8.5 million tons before the mine’s closure in 1976. The horizon is host to the North zone, and to the 2-11 lens to the west.

Currently, two subparallel structures have been outlined on the second level of the North zone, indicating a reserve of 32,300 tons grading 0.313 oz.

gold. With the recent discovery of the 2-11 north

lens, the company believes the North Tuff Horizon may extend up to 5,000 ft.

to the west and downdip.

In addition to the Madsen mine, the company owns 10,000 acres of the surrounding area.