Tower Hill ups resources at Livengood

VANCOUVER — The Livengood project just got better for International Tower Hill Mines (ITH-T, THM-X): a new resource estimate has increased both the tonnage and average grade of the Money Knob deposit in advance of a preliminary economic assessment due out in the third quarter.

Tower Hill has now completed 420 drill holes at Livengood totaling more than 120,000 metres. The effort has defined a sizable gold resource, which now includes the higher-grade Southwest zone.

Using a cutoff grade of 0.7 gram gold per tonne, which Tower Hill says is a possible cutoff grade for a Livengood milling operation, Money Knob is now home to 201.7 million indicated tonnes grading 1.07 grams gold plus 39.9 million inferred tonnes averaging 1.06 grams gold. Together, the indicated and inferred resources contain 8.3 million oz. gold.

Compared to the previous resource estimate, completed in January, the indicated grade has increased by 9% and the contained gold count within the indicated resource has climbed by almost 19%.

Using a cutoff grade of just 0.3 gram gold instead, which is a reasonable cutoff grade for a heap-leach operation, the resource comes in at 788.9 million indicated tonnes grading 0.62 gram gold for 15.7 million oz. gold. Inferred resources add 229.1 million tonnes averaging 0.55 gram gold for an additional 4 million oz. gold.

The deposit remains open in several directions. Five drill rigs are onsite for a summer drill program aimed at expanding the resource, improving confidence in the higher-grade areas, and gathering data for metallurgical, hydrological and geotechnical studies.

Tower Hill also plans to conduct a major soil survey covering the northeast extension of the Money Knob mineralized trend to identify new drill targets. The general gold-in- soil anomaly at Livengood covers an area 6-km long by 2-km wide, of which roughly half has been drill-tested to date.

At Livengood, gold is hosted in an interleaved sequence of sedimentary and volcanic rocks. Mineralization is related to a 90-million-year- old dyke swarm that cuts through the volcanic thrust stack; within the primary structural corridor, all lithologies can be pervasively altered and mineralized while in areas distal to the main structures disseminated mineralization developed selectively, in the more favourable host rocks.

The net result is broad, flat-lying zones of strata-bound mineralization in the Core and Southwest zones beside the more vertically continuous, higher-grade Sunshine zone. Overall the deposit should carry a relatively low strip ratio.

Metallurgical testwork focused on the use of milling to increase recoveries compared to using cyanide heap leaching alone, is returning promising results. In combined gravity-flotation tests, an average of 89% of the gold contained in milled ore reported to a concentrate. Simple carbon-in-leach extraction tests show recoveries ranging from 57% to 93%.

The Livengood project is located 110 km north of Fairbanks, Alaska, along the paved Elliott Highway. The terminus of the Alaska State power grid lies 80 km to the south, along the same path as that for the proposed Alaska natural gas pipeline. The 151-sq.-km Livengood land package consists primarily of fee land leased from the Alaska Mental Health Trust.

Tower Hill is preparing a preliminary economic assessment for Livengood assessing the potential to develop a combined milling and heap-leach operation. The company expects to complete the study before the end of September.

Along with the Livengood study, Tower Hill will be completing a spinout transaction to create a new public company. In mid-May, the company announced plans to segregate its assets into two separate companies: Tower Hill will retain the Livengood project and roughly $41 million in working capital while Corvus Gold will hold all of Tower Hill’s other Alaska and Nevada projects as well as some $3 million in cash.

Four of the five projects that will be in Corvus’ portfolio are optioned to joint-venture partners, which provides a good starting point for the new company’s end goal to become a non-operator gold producer with significant carried interests and royalty exposure. The four optioned Alaskan properties, for example, should together see more than $8 million worth of partner-financed work in 2010 while Corvus should receive about $1 million in cash as well as share issuances in option payments and fees.

News of the increased resource at Livengood lifted Tower Hill’s share price 12¢ to close at $6.82. The company has a 52-week trading range of $2.81-$8.35 and 66 million shares outstanding.