Xmet seeks million ounces of gold at Duquesne-Ottoman project

Xmet (CVE:XME) is a junior gold explorer that is developing its 929 hectare Duquesne-Ottoman property located on a seven kilometre stretch of the Porcupine-Destor Fault near the historic mining town of Duparquet, Quebec.. The property is located along a major strike line of historic gold mines that are being re-developed by Clifton Star (CVE:CFO).
The Duquesne-Ottoman property initially hosted a historic gold resource of about 250,000 ounces that was upgraded by Xmet to a NI 43-101 compliant Inferred Resource of 525,000 ounces in September of 2010, after the Company completed its IPO on the TSX Venture Exchange.  In October of 2011 Xmet again upgraded the Duquesne-Ottoman asset by filing a new NI 43-101 compliant resource of 853,000 inferred gold ounces following a 13,000 metre diamond drilling program.
The resource is extremely well located close to infrastructure that includes nearby electric power, paved roads, and nearby milling facilities.  The most recent report upgraded the project to a NI 43-101 compliant Inferred Resource of 4,171,000 tonnes at an uncut grade of 6.36 g/t Au, for 853,000 ounces of gold; or 727,000 ounces at a grade of 5.42 g/t Au, applying a cut-off of 30.0 g/t Au.
Xmet is currently in the midst of its Phase Two 7,000 metre drill campaign aimed at identifying shallow ounces on the Duquesne-Ottoman’s Shaft Zone along with expansion of resources along the Fox and Liz longitudinal sections designed to  bring the total resource beyond the 1 million ounce mark.
Xmet’s property is surrounded by significant gold resources that include the Beattie, Central Duparquet and Donchester Mines, which lie along strike reporting historical production of 1.5 million ounces where Clifton Star is currently drilling and evaluating additional multi million ounce resources. To the southeast end of the strike line lies the historic Duquesne Mine that reported historical production and resources of 269,000 ounces and has a current comliant resource of 479,000 ounces; and the open pittable Pitt Zone that hosts almost 250,000 ounces of gold and straddles the southwestern  boundary of the property.
The Phase One drill program of 13,000 metres was completed at a cost of $1.3 million and added 328,000 ounces of gold, at a discovery cost of less than $4.00 per ounce. This was incorporated into a total of 22,749 samples from 135 drill holes, representing approximately 66,750 metes of drilling and represents the current resource status at Duquesne-Ottoman. Xmet confirms that many of the resource targets remain open and new targets have been identified for further drilling.
Quebec is ranked as one of the top ten jurisdictions in the world for exploration and development, with streamlined permitting and reporting procedures that produce the lowest drilling rates in Canada,averaging of $75 per metre, allowing smaller explorers like Xmet the opportunity to develop high quality resources at lower cost.
The ore at Duquesne-Ottoman has been subjected to preliminary evaluation that confirms  the gold is free milling and is associated with a low percentage of pyrite, and contains no arsenopyrite or graphite, which will significantly reduce processing costs.
The current resources are contained within the southeast end of the property and cover a strike length of 3.2 kilometres and width of 1.1 kilometres and are estimated at a NI 43-101 compliant Inferred Resource standard at:
Liz of 1,343,000 tonnes at 4.64 g/t Au for 200,000 ounces
Fox of 921,000 tonnes at 7.43 g/t Au for 282,000 ounces
Nip-Nord of 361,000 tonnes at 5.92 g/t Au for 71,000 ounces
Nip-Sud of 129,000 tonnes at 6.51 g/t Au for 88,000 ounces
South Shaft of 162,000 tonnes at 6.08 g/t Au for 33,000 ounces
Shaft of 468,000 tonnes at 4.51 g/t Au for 68,000 ounces
Stinger of 365,000 tonnes at 3.9 g/t Au for 46,000 ounces
20-20 of 422,000 tonnes at 4.8 g/t Au for 65,000 ounces
All head grades are cut to 30 g/t Au, but total ounces uncut. The horizontal width of mineralization within these structures is from 2.8 to 7.3 metres and averages 5.7 metres.
Xmet has identified new potential for open pittable resources at the Shaft Zone, which is in the middle of the strike zone, and has outlined the mineralized surface expression of a shear zone that extends for at least 150 metres and is open in both directions.
Trenching along the Shaft Zone included 4.61 g/t Au over 2.9 metres, 13.38 g/t Au over 3 metres, 5.58 g/t Au over 2.8 metres, 4.88 g/t Au over 3.1 metres, 3.18 metres over 4.2 metres and 12.25 g/t Au over 1.3 metres. Xmet believes that this mineralization could develop into an open pittable resource or could be accessed by a shallow ramp.  
The Duquesne-Ottoman’s Phase Two drilling program, which commenced in September, is targeting shallow open pittable mineralization along the Shaft Zone. Drilling highlights include DO 11-38, which intersected 5.10 metres at 8.77 g/t Au at a depth of 16.90 metres, DO 11-41 intersected 2.75 metres at 7.84 g/t Au at a depth of 72.0 metres; and DO 11-40 intersected 6.9 metres at 4.13 g/t Au at depth of 43.50 metres.
Shallow drilling continues to show good continuity of previously reported high grade gold mineralization identified by surface trenching, and closely spaced step out drilling continues to expand the strike length of the same mineralized strike zone.
A second rig is targeting resource expansion on the Liz and Fox Zones, and currently represents 57% of the Inferred Resource of 853,000 ounces, with Liz reporting a horizontal width of mineralization averaging 7.26 metres, and Fox Zone averaging 5.43 metres, over a strike length of 400 metres and carrying a persistent average grade of 7.43 g/t Au. This drilling may provide the additional ore to push total resources above one million ounces of gold.
Other excellent targets on the property include three new discovery areas where current resources have potential for further resource expansion, and will be drilled during the winter months.
The Company has staked new properties that include the Lac Grasset area that covers 11 kilometres of the Detour and Sunday Lake deformation which has the Detour Mine, and lies along strike from the recent gold strike announced by Balmoral Resources (TSE:BAR) at Grasset Township; and the Authier property which is located 50 kilometres to the northeast of Duquesne-Ottoman, and lies along a major northwest fault structure and along strike from identified gold mineralization.
Xmet has an option to acquire a 75% interest in Duquesne-Ottoman from Globex Mining (TSE:GMX) by investing $8.19 million in payments to be made to Globex over the next 6 years, and about $7 million in work commitments remaining on the property over a period of 6 years.
Globex will also retain a sliding 2-3% GMR Royalty, plus a 1% NSR on the Duquesne West claims, and has the option of converting its remaining 25% interest into an additional 1% GMR, which will allow Xmet to secure a 100% interest in the project.
Xmet holds cash of $1.5 million, which is sufficient to maintain current drilling and exploration efforts for two years. Xmet is doing a financing now of $1 million to $1.5 million to accelerate development of the DOM project through the first half of 2012. The Company carries an Enterprise Valuation of less than $10 per resource ounce, and is the lowest priced gold explorer in its peer group.