Mountain Lake Resources (CVE:MOA) announced Thursday drilling results that include the best intersection of high grade mineralization to date at its Leprechaun deposit, part of the joint venture Valentine Lake gold property in central Newfoundland.
Hole VL-11-352 intersected 13.95 grams per tonne (g/t) of gold over 26.1 metres, including a whopping 37.01 g/t gold over 4.5 metres.
Investors cheered the news, with the junior explorer's stock rising 8.7% to trade at $0.5 as of 10:46am EDT Thursday.
This new high grade mineralization suggests there is potential for intersecting additional high grade ore shoots within the Leprechaun deposit, and will have a "very positive effect" on the open pit resource estimation, which begins later this month, Mountain Lake said.
The Valentine Lake gold property is a 50/50 split joint venture project between Marathon Gold (TSE:MOZ) and Mountain Lake, with the Leprechaun deposit situated at the south-western end of a 23 kilometre long gold-bearing mineralized corridor.
The two partners, with Marathon as the operator of the project, are jointly funding a $7.1 million resource expansion and exploration budget for 2011.
Additional notable results reported today include hole VL-11-339, with 2.42 g/t gold over 18.0 metres, including 12.35 g/t gold over 2.7 metres; hole VL-11-348, with 33.42 g/t gold over 3.4 metres; and hole VL-11-341, with 6.97 g/t gold over 2.7 metres, including 20.80 g/t gold over 0.9 metres.
These high grade zones occur within a wider main zone mineralized envelope that extends along strike for more than 100 metres, the companies said.
Meanwhile, hanging wall zones, intersected in VL-11-338 with 1.80 g/t gold over 5.0 metre, in VL-11-340 with 0.92 g/t gold over 3.0 metres and in hole VL-11-342 with 2.84 g/t gold over 2.25 metres, show along strike continuity of the new hanging wall zone developed in previous drill holes located immediately to the south, Mountain Lake added.
Infill drilling at the deposit has continued to show high grade mineralization is focused within three lenses: the southwest "heart of gold" zone, the central new high grade area, and the northeast target, which are all being defined along the current over 750 metres strike length of the Leprechaun deposit.
So far this year, a total of 23,372 metres of the planned 25,000 metre drilling campaign have been completed in 135 drill holes. The remainder of drilling is expected to be done this month, with assay results to be released as available into the fall. An updated resource estimate for Leprechaun is due before year-end.
Currently, the Leprechaun deposit has an NI 43-101 compliant measured and indicated resource of 3.28 million tonnes grading 2.62 g/t gold for a total estimated 277,000 ounces of gold, and an additional inferred resource of 4.4 million tonnes grading 2.01 g/t gold for an estimated 285,000 ounces of gold. The deposit remains open at depth and along strike.
The resource estimate from December 2010 was done using a 0.5 g/t gold minimum cut-off, over a 3 metre minimum width.
Aside from Valentine Lake, junior explorer Mountain Lake also holds a 100% interest in the Glover Island gold property, an option to earn a 100% stake in the Little River gold-antimony project, and a 100% interest in the Bobby's Pond base metals property.