QGX confirms oxide gold in Mongolia

Vancouver — A 7-hole drill program centred on the Central Valley zone of the Golden Hill prospect in Mongolia has returned encouraging values for owner QGX (QGX-V).

The first two holes proved to be the best, with hole 1 intersecting 48 metres grading 3.79 grams gold per tonne and hole 2 cutting 71.4 metres grading 2.1 grams gold.

“We’re excited by these results,” says QGX President David Anderson. “While it’s still early in the exploration process, these results indicate we could be on to a significant gold deposit with attractive economics.”

So far, the junior has sunk seven holes covering a 500-metre portion of the 3-km-long target. The program was designed to test a series of geologic and geophysical targets. Based on drill results, the company believes the mineralization is low-sulphidation style.

Holes 1, 2 and 4 were drilled on the same site in the central portion of a geophysical target below an area of gold-bearing quartz chalcedony boulders. Hole 4 tested the depth extension of the mineralization cut in hole 1 and 2, hitting 1.04 grams gold over 11 metres.

Another 80 metres east, hole 3 intersected two zones grading 1.79 grams gold over 7.9 metres and 1.4 grams gold over 7 metres.

Hole 7 was drilled a further 100 metres east and returned 24 metres grading 1.37 grams gold.

Hole 5 tested for mineralization below a trench (2.84 grams gold over 5 metres) some 220 metres west of the first holes. This hole returned 1.47 grams gold over 10 metres from 38 metres down-hole.

Hole 6 was abandoned after 30 metres of drilling.

QGX has also completed three holes some 2 km northeast at the Limestone Ridge target, where trenching returned up to 15.6 grams gold over 6 metres. All three holes intersected interbedded limestone, shales and intrusions, some of which were altered and mineralized.

The company can earn an 80% interest in the property by spending US$450,000 by 2005. It can increase this to 100% by paying US$1 million after completion of the earn-in.

In order to fund further work, QGX has arranged a “bought deal” financing agreement with Octagon Capital and McFarlane Gordon. The new financing has the junior issuing up to 4 million shares priced at $1.15 each, with a minimum purchase by the underwriters of 2 million shares. Closing was slated for Dec. 30, 2002.

“This financing will allow QGX to continue drilling on our Golden Hills prospect throughout the winter months,” says Chief Financial Officer Mark Wayne. “We have raised approximately $16 million for mineral exploration in Mongolia over the past years, and our investment in the country will likely become much higher given the encouraging results achieved to date and the multitude of opportunities we have already assembled.”