Merc International bullish on Damoti gold project, NWT

Sudbury-based junior Merc International Minerals (MRK-V) saw its shares rise 11.5% to 14.5¢ today on drill results from its high-grade, near-surface, Damoti Lake gold project, 200 km north of Yellowknife in Canada’s Northwest Territories.

Intersections from its 2010 winter drill program represent the best widths and grades ever reported for the project, where gold mineralization is hosted in a folded iron-formation associated with fold-related fracturing and hydrothermal alteration.

Highlights from seven drill holes include 16.12 grams gold per tonne over 8 metres, including 60.25 grams gold over 1.5 metres and 8.50 grams gold over 4 metres, including 18.12 grams gold over 1.5 metres in drillhole 416B. (The hole returned a composite grade of 1.64 grams gold over 151.40 metres.)

Other highlights were hole 418, which returned 7.93 grams gold over 3 metres, including 12.40 grams gold over 1.80 metres, and 2.60 grams gold over 16.25 metres, including 6.84 grams gold over 4.25 metres, and 17.90 grams gold over 1.25 metres.

Two holes (417 and 417B) drilled 40 metres to the south of hole 418, intersected mineralized zones at similar depths to those in hole 418, as well as a new zone at depth.

Two other holes further to the south of the Red Mountain-Horseshoe corridor (holes 423 and 423B) intersected the targeted iron formation but did not return significant assay results.

All of the holes were collared within the eastern limb of the Red Mountain syncline, 125 metres west of the Horseshoe syncline, and the drilling extended by up to 75 metres, two of the five mineralized zones within the east limb of the Red Mountain syncline. The results also confirm the presence of two new zones at depth, the company noted.

Collectively the results better define a recently identified southeast/northwest trending mineralized corridor that includes the high-grade Horseshoe Zone (125 metres to the east) and a high magnetic feature in association with an induced polarization anomaly 250 metres further east of Horseshoe.

Historic work in this area has returned several anomalous gold values in iron formation from surface samples and this portion of the property is still largely unexplored.

Merc believes that Damoti hosts over 10 km of underexplored gold-bearing Archean iron formation and its goal, outlined on its website is to define a resource of 6-10 million tonnes grading 9-15 grams gold per tonne for contained gold of about 3 million oz. Such a resource would make Damoti comparable to other iron formation hosted gold mines and deposits in northern Canada.

In its 2009 summer drill program, Merc drilled 27 holes in a 5,600 metre drill program in the Horseshoe and Red Mountain zones and reported that 95% of them intersected gold mineralization.

In March, the company mobilized a 10,000-12,000 metre drill program focused on the Horseshoe, Red Mountain and BIF Island zones.

Over the last year the junior has traded between a low of 11.5¢ per share (July 2, 2010) and 59¢ per share (Aug. 8, 2009). The company has 28.7 shares outstanding.