Midway drilling pushes Spring Valley north

Vancouver — Drilling by Midway Gold (MDW-V, MDWGF-O) on the North Hill target at its Spring Valley project in northwestern Nevada has hit a new zone of gold mineralization.

The 18-hole program at North Hill returned up to 10.7 metres grading 7.3 grams gold per tonne in hole SV06-200, including a 1.5-metre high-grade intercept of 55.4 grams gold associated with rhyolite dykes and sills intruding the northeast edge of the Spring Valley diatreme. Mineralization was encountered in 14 of the holes, with several cutting longer intercepts of lower-grade gold.

Results from the North Hill drill program extend gold mineralization beyond the modelled resource, over an area of 450 by 300 metres. With the initial program comprised mostly of vertical holes, Midway has moved to angle-hole infill drilling to test a number of near-surface, high-angle dykes and faults that may host higher-grade gold.

Additionally, deep drilling on the main diatreme zone encountered further gold mineralization. Intercepts of 1 gram gold over 55 metres (from 290 metres depth) and 9 metres of 2.6 grams gold were reported from the program. A trio of deep holes indicates mineralization extends at least 200 metres beneath the modelled resource.

A preliminary estimate conducted earlier this year at Spring Valley reviews measured and indicated resources of 9.1 million tonnes at 0.82 gram gold, containing about 239,000 oz. gold. The calculation, based on 164 drill holes, uses a US$450-per-oz. gold price and a 0.35-gram gold cutoff. An additional 7 million tonnes of inferred resource averaging 0.84 gram gold (195,000 contained ounces) was also estimated within a potential pit shell.

Gold mineralization at Spring Valley is hosted along the margin of a large diatreme-porphyry intrusive complex. Through drilling, Midway has merged a number of previously defined zones into a single larger zone about 1 km long by 500 metres wide and extending to a depth of 300 metres. Mineralization at Spring Valley remains open to the north, south, west and at depth.

Midway president and CEO Alan Branham said current infill drilling is aimed at expanding the resource and testing new targets discovered during the summer.

Midway also recently announced a planned $5-million private-placement financing consisting of 2 million units at $2.50 apiece. Barrick Gold (abx-t, abx-n) has agreed to purchase half the offering, boosting its holding in Midway to 8.9%.

Earlier this year the gold major bought 2 million units of the explorer at $1.80 per unit, giving it an initial 6% stake in the junior.

The company posts a $97-million market capitalization given its 32.9 million shares outstanding.