Meadow Bay doubles Atlanta gold resource

VANCOUVER — Shareholders of Meadow Bay Gold (MAY-T) enjoyed a share price jump after the Vancouver-based explorer doubled resources at its wholly owned Atlanta gold-silver project in Lincoln County, Nev.

Atlanta’s updated resource marks the first time Meadow Bay has compiled results from the 10,300 metres of drilling it completed through 2011 and 2012, with an initial resource released in July relying solely on confirmation holes punched to validate a historic resource delineated by Kinross Gold (K-T, KGC-N) in the late 1990s.

Meadow Bay paid US$6 million for 100% ownership in the past-producing Atlanta mine in 2011. It has since been working to confirm mineralization in the historic pit, as well as expand the resource footprint by drilling a target to the northwest where unusually thick widths were encountered in the Atlanta shear zone during 2011 exploration.

Atlanta’s updated resource is 15.5 million measured and indicated tonnes grading 1.05 grams gold per tonne and 10.8 grams silver per tonne, for 683,600 contained oz. gold and 5.9 million contained oz. silver at a 0.4 gram gold cut-off. Further inferred resources total 18.5 million tonnes averaging 0.8 gram gold and 6 grams silver for 618,700 contained oz. gold and 3.96 million contained oz. silver.

Meadow Bay CEO Robert Dinning said the company’s discovery costs were running below US$10 per oz. gold, and that “based on [the model], we are confident that we can build upon this resource through additional cost-effective exploration.”

Past mining focused on shallow, higher-grade portions of the Atlanta fault zone, which separates Tertiary volcanic rocks from Paleozoic sedimentary rocks, strikes to the north and dips steeply to the west.

From 1975 through 1985 the mine produced 110,000 oz. gold and 800,000 oz. silver through an 800-tonne-per-day mill.
Meadow Bay will continue infill drilling around the old Atlanta mine, while pursuing two exploration targets it identified over the past two field seasons.

The first target is a newly discovered intrusive porphyry southwest of the historic pit, with gold and silver mineralization increasing in thickness around the margins of the intrusive.

Highlights from 2011 drilling at the porphyry target include: 62 metres grading 1.58 grams gold and 2.8 grams silver from 198 metres depth in hole 11-04C, and 35 metres of 2.86 grams gold and 35 grams silver from 196 metres depth in hole 11-09C.

The second, earlier-stage target, named Western Knolls, sits west of the historic mine. Chip sampling returned anomalous gold values and pathfinder elements. In addition, Meadow Bay completed induced polarization (IP) and magnetic surveys that revealed a large area of silicified and mineralized volcanic rocks underlain by shallow zones of IP chargeability.

In mid-January the company completed its plan of operations for an upcoming exploration program with the Bureau of Land Management. This plan includes an additional 69 exploration drill pads, with many focused on the Western Knolls target. Infill drilling at the porphyry is also expected to continue, with a preliminary economic assessment on the horizon.

Meadow Bay reported $530,000 in cash to end the third quarter of 2012, and closed a private placement for an additional $584,000, when it issued 1.9 million units at 30¢ each.

Future capital raises could come in at a higher share price, however, as Meadow Bay shot up 27%, or 11.5¢, following news of the resource doubling. The company closed at 54¢ at press time, and with 45 million shares outstanding, has a $24.6-million market capitalization.