Queenston begins drilling at Kirkland Lake

On the heels of last week’s $5-million financing, Queenston Mining (QMI-T) has closed the buying-out of Newmont Mining‘s (NEM-N) half interest in the Kirkland Lake joint venture in Ontario, and launched a new round of exploration drilling there.

Queenston paid Newmont $3 million in cash and issued the major 1,085,625 Queenston shares, as well as warrants for a further 542,812 shares, exercisable at 95 cents per share over 18 months.

While Queenston now has a 100% interest in the property, Newmont does retain a sliding-scale, net-smelter return royalty that varies from 1% at gold prices below US$301 per oz., up to 2% when gold prices exceed US$400 per oz.

Newmont now holds 3,590,625 Queenston shares plus 542,812 warrants, representing 10.05% of the junior’s currently outstanding shares, or a fully diluted 11.4% interest.

To raise money for the purchase, Queenston last week placed 6.25 million units priced at 80 cents apiece. Half the units can be exchanged for common shares, and the other half, for flow-through shares. Each unit comes with a half purchase warrant, whereby a full warrant entitles the holder to acquire, at 95 cents, a common share within 18 months.

With the corporate business completed, Queenston is now kicking off a 22-hole, 12,000-metre diamond-drill program that will test 10 targets on the 11,500-ha property.

During the program’s first phase, at least ten holes will probe the Anoki Deep, 180 Splay, Biroco and Esker gold zones, considered by Queenston to be advanced exploration targets that “hold potential for the discovery of new deposits.”

The Kirkland Lake property hosts five gold deposits with measured and indicated resources of 4.1 million tonnes grading 5.6 grams gold per tonnes and inferred resources of 4.5 million tonnes averaging 5.3 grams gold, for a total of 1.5 million contained ounces.

Also located on the property are warehouse facilities and a former mill and tailings complex.

Following the Newmont deal, Queenston has 35.7 million shares outstanding, is debt-free, and holds $13 million in working capital, comprising $9.7 million in cash and $3.3 million in investments.