Mountain Lake Resources (CVE:MOA)(OTC:MLKRF) Tuesday announced high-grade gold mineralization from the initial results of its spring/summer drilling program at the joint venture Valentine Lake project in central Newfoundland.
Valentine Lake, including the Leprechaun deposit, is a 50:50 joint venture between Mountain Lake and Marathon Gold (TSE:MOZ), which is the operator of the project.
In May, Mountain Lake agreed to be acquired by Marathon Gold in a $15.1 million deal. The deal involves the consolidation of Mountain Lake and Marathon's respective 50 per cent interests in the Valentine Lake project, resulting in Marathon becoming the 100 per cent owner of the project.
Mountain Lake said its remaining projects will be transferred to Mountain Lake Minerals Inc., its newly incorporated exploration company.
Under the terms of the arrangement, Mountain Lake shareholders will receive 0.40 of a Marathon common share and 0.40 of a common share in the new company for every Mountain Lake share held.
The company said that step-out drilling at the Leprechaun deposit has intersected new high-grade gold mineralization up to 110 meters down-dip from previously defined Main Zone mineralization.
Mountain Lake noted that current drilling continues to define an expanding high-grade down-dip auriferous shoot in the central part of the Leprechaun deposit, which remains open both along-strike and down dip.
Highlights from the Leprechaun deposit include the intersection of new high-grade Main and Footwall zone mineralization that add to the development of down-dip underground mining targets with 3.81 grams per tonne (g/t) gold (Au) over 21.6 meters, including 10.16 g/t Au over 2.4 metres, 10.41 g/t Au over 2.4 metres, and 11.37 g/t Au over 1.6 metres in hole VL-12-440.
Hole VL-12-437 returned 6.1 g/t Au over 10.2 metres, including 13.33 g/t Au over 3.4 metres and 1.57 g/t Au over 12.75 metres including 3.43 g/t Au over 3.4 metres.
Mountain Lake said that initial results also showed growth of the high-grade, down-dip Main zone and Footwall zone mineralization in the northeast end of the Leprechaun deposit, with hole VL-12-439 returning 4.42 g/t Au over 9.0 metres including 39.36 g/t Au over 0.90 metres and 4.40 g/t Au over 2.55 metres including 12.79 g/t Au over 0.85 metres.
Additionally, hole VL-12-436 returned 4.79 g/t Au over 2.4 metres including 13.43 g/t Au over 0.8 metres and 5.17 g/t Au over 4.0 metres including 10.98 g/t Au over 0.8 metres.
The company said that it has also discovered significant new Main zone intersections southwest of the current Leprechaun deposit boundary, with 6.24 g/t Au over 2.85 metres including 18.70 g/t Au over 0.95 metres and 3.70 g/t Au over 2.85 metres including 11.08 g/t Au over 0.95 metres in hole VL-12-435.
The Valentine Lake property has a 30 kilometre strike length with the J. Frank zone and Leprechaun deposit situated at the southwestern end of a gold-bearing mineralized corridor that extends for at least 23 kilometres in a northeasterly strike.
Mountain Lake noted that as of March, the Leprechaun deposit has a NI 43-101 compliant measured and indicated resource of 6.45 million tonnes grading 2.05 g/t gold, for a total estimated 424,000 ounces of gold; and inferred resource of 5.74 million tonnes grading 1.65 g/t gold for an estimated 305,000 ounces of gold.
The company said that the mineral resource was estimated using a 0.5 g/t gold minimum cut-off over a three-metre minimum width.
Mountain Lake said a total of 74 drill holes amounting to 20,292 metres (50.7 per cent) of the planned 40,000 meter 2012 program have been completed, which is ahead of schedule.
Looking ahead, the company said that drilling will slow down for the summer as a result of the acquisition agreement between Marathon and Mountain Lake, which includes a suspension of Mountain Lake's funding contributions to the budgeted 2012 program at Valentine Lake since the end of March.
Mountain Lake said the summer-fall 2012 program at the Valentine Lake property will consist of prospecting, geological mapping and trenching along the 23 kilometer strike length outside of the current boundary of the Leprechaun deposit.
The summer-fall program is currently underway with the purpose of finding new gold zones along the belt, said the company, adding that some of the future drilling is planned for follow-up.
Mountain Lake's current projects include a 50 percent interest in the Valentine Lake gold property under the joint venture with Marathon Gold, a 100 percent interest in the Glover Island gold exploration property, an option to earn a 100 percent interest in the Little River gold-antimony exploration property and a 100 percent interest in the Bobby's Pond base metals property.