Mountain Lake buys into Valentine Lake

Mountain Lake Resources (MOA-V) is earning a half-interest in the Valentine Lake project in central Newfoundland.

In return, the junior has agreed to spend $750,000 on exploration over four years, of which $150,000 must be used up before 1999.

The vendor, Noranda (NOR-T), retains the right to back in to a 60% interest on any deposit exceeding

1 million oz. gold. In return, the major must conduct a feasibility study, buy 1 million shares of Mountain Lake and finance development costs. Noranda would recoup the junior’s share of production costs by capturing 80% of initial production revenues until repayment is complete.

BP Minerals explored for gold on the property from 1986 to 1991. No work has been carried out since 1992, when Noranda’s acquired the project from BP as part of a larger transaction to buy large tracts underlain by stratigraphy with volcanogenic massive sulphide potential.

BP’s work involved grid surveys, mapping, geophysics and geochemical surveys, and well as a 51-hole drill program. These efforts helped define a strong geochemical anomaly along several kilometres of strike length and resulted in the discovery of the Valentine Lake gold occurrences, where drilling tested to depths of less than 100 metres.

The deposit accounts for less than 10% of the area underlain by the strong, multi-element geochemical anomaly (including several hundred soil samples with values ranging from 0.02 to 8.99 grams gold per tonne), and little if any trenching or drilling has been carried out on the remainder of the anomaly.

Initial drilling will focus on the main Valentine Lake deposit area, where the best intersection graded 9.1 grams gold over 9.6 metres. Follow-up work will be performed on numerous mineralized intercepts, including 4.3 grams gold over 4 metres. Additional drilling is planned for untested, coincident induced-polarization and geochemical anomalies along strike from the mineralized zones.

In preparation for the drilling, Mountain Lake will launch a field program of mapping plus geophysical and geochemical surveys.