Klondex Mines (TSE:KDX) (OTCQX:KLNDF) has announced the discovery of mineralization in the new West Zone at its Fire Creek gold project in Nevada Thursday, saying that significant mineralization has been intercepted in five exploratory drill holes.
The longest interpreted vein now extends at least 97.5 metres (320ft) to the south from an earlier discovery. It was this earlier discovery that prompted a shifting of focus in the company’s drill program.
"In response to the vent-raise access discovery earlier this year, we interrupted the infill drill program in the east and turned the drills around to test for an extension of the new-found mineralization,” said chief geologist Steve McMillin in a company statement issued with the announcement.
“We are extremely pleased we hit multiple intercepts in three of five drill holes and shown additional continuity in a previously unexplored area of Fire Creek. The new zone supports our thesis that the exploration upside at Fire Creek extends well-beyond our current mineral resource borders and the project is underexplored at the current time."
All five holes drilled to test for an extension of the vent-raise access discovery returned mineralization from the drilling program, which totalled more than 1,071.37metres (3,515ft) in length. Three of the five holes returned several intercepts.
One hole that reported a gold intercept of 67.4 grams per tonne (g/t) gold over 0.3 metres (1.0ft) was deemed by the company “a likely candidate for an extension of vent raise mineralization located 320 feet southeast from the vent raise.”
Two of the holes, FC13-063U and FC13-065U, contain intercepts that are at least 60.96 metres (200ft) west of the mineralization discovered earlier and have the potential to represent new zones, dependent on the findings of further exploration drilling, the company said.
These holes returned intercepts of 77.8 g/t gold over 0.7 metres (2.3ft) and 23.4 g/t gold over 1.4 metres (4.5ft).
It is another piece of good news for the company less than a week after the advanced-stage developer was touted in an analyst’s note from influential natural resources investment bank Casimir Capital as having a high grade resource in a strategic location with potential for a "number of upside opportunities.”
In that note, the analyst, Eric Winmill, gave Klondex a speculative buy rating and a target price of $2.50 per share, a figure which at the time was twice the company’s trading price. The analyst noted that the company benefits from a fortuitous location – the property is situated at the intersection of the Battle Mountain trend and Northern Nevada Rift, which also hosts the Midas and Hollister narrow-vein epithermal gold deposits. Aside from being surrounded by major producers, it is also proximate to power, transportation, infrastructure and a milling facility in the heart of the U.S. state’s gold trend.
An initial bulk sampling program from the property is scheduled for the third quarter with the aim of extracting approximately 10,000 tons of material in the remainder of 2013 with targets for next year to be announced with the completion of an updated mineral resource estimate – expected in June.
Klondex Mines and its subsidiary, Klondex Gold and Silver Mining Co., have a focus on exploration and development of mineral properties in Nevada, primarily on gold and silver deposits. The 1,235 acre Fire Creek property in north central Nevada is 100 per owned by the Vancouver-based company and is its principal property.
Stock in the developer was trading up on the TSX the day of the announcement, adding 13 cents to the company’s share price, a bump of 10 per cent, to hit $1.43 per share in intraday trading.
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