Martin Shefsky, President and CEO of Northern Gold Mining Inc., reports that the company has entered into a letter of Intent with ValGold Resources Ltd. The agreement covers the Garrison gold property, consisting of thirty-five patented claims in Garrison Township, approximately 40 kilometres north of Kirkland Lake and 100 kilometres east of Timmins, Ontario. According to Mr. Shefsky: “This property strengthens our holdings in Northern Ontario and immediately provides Northern Gold with an advanced exploration project that has the potential for a large gold deposit”.
The Garrison gold property is located in Garrison Township, Ontario, immediately south of Highway 101. The property is comprised of 35 patented mining claims that cover an area of about 374.5 hectares and approximately 2.5 kilometres of the Destor-Porcupine regional fault system. The Destor-Porcupine is spatially related to major gold deposits in an area from Timmins, Ontario to Normetal, Quebec, including St. Andrew Goldfields Holt-McDermott and Holloway gold mines eight kilometres to the east. Numerous zones of gold mineralization have been found on the property to date. Four mineralized zones (JP, JD, RD and East) have been identified along a 1.5 kilometre strike length within the Munro Fault, a northerly splay off the Destor-Porcupine Fault. A NI 43-101 technical report on the property (filed on SEDAR 13 May 2008 by Valgold) concludes that the four Munro Fault mineralized zones contain an indicated resource of 253,100 tonnes grading 7.77 grams per tonne gold (63,200 ounces) and an inferred resource of 1,555,800 tonnes grading 4.93 grams per tonne gold (246,540 ounces). All four zones require additional in-fill and step-out drilling. All zones are open down-dip with the JD and RD zones only being tested currently to a 250 metre depth. The two deepest holes intersecting the main JP zone at a depth of 600 metres both returned intersections confirming down-dip continuation of the gold mineralization. During 1996-97 Hillsborough Resources extracted a 50,477 tonnes bulk sample from the main JP zone which returned a recovered grade of 8.3 grams per tonne. A smaller bulk sample of 3,160 tonnes was extracted by Jonpol Exploration on the JP zone in 1990 and returned calculated assays of 10.9 grams per tonne and 18.5 grams per tonne. A fifth zone, the Garrcon Zone, situated on the immediate north side of the Destor-Porcupine Fault approximately 500 metres south of the Munro Fault, is described in the NI 43-101 technical report as having the potential to host a bulk tonnage, open-pit operation with the potential of up to 30 million tonnes ranging in grade from 1 to 3 grams per tonne gold. There has been insufficient exploration to define a mineral resource on the Garrcon Zone and the potential quantity and grade is conceptual in nature and as a result it is uncertain if further exploration will result in the discovery of a mineral resource.
Under the terms of the agreement, Northern Gold may earn up to an undivided 80 percent interest in the Garrison gold property.
Northern Gold may acquire a 50 percent undivided interest in the property by making cash payments to ValGold of $1,000,000 over four years, with all or part of the payments being made in Northern Gold stock at Northern Gold’s option, using a 20 day value weighted average price, upon regulatory approval. To earn the 50 percent interest Northern Gold must also complete work on the property in the amount of $4,000,000 over four years, with $500,000 being spent on the property in the first year of the agreement.
After earning the 50 percent interest, Northern Gold can then acquire an 80 percent interest by making additional cash payments of $1,000,000 over four years (again with all or part of the payments being made in Northern Gold stock equivalent, using a 20 day value weighted average price) and completing additional work on the property in the amount of $4,000,000 over four years. All payments and work may be made or done at the sole discretion of Northern Gold.