Vancouver – Initial drilling by Victoria Resource (VIT-V, VTSRF-O) on its Cove-McCoy project in north-central Nevada’s Lander Cty has cut deep, high-grade gold intervals.
Collared about 550 metres northwest of the past producing Cove open pit, hole NW-1 intersected numerous mineralized zones including a 38.4-metre interval (from 605 metres downhole depth) averaging 10.95 grams gold per tonne. Within the intercept there was a 10.4-metre higher-grade section of 22 grams gold (using a 3.42 grams gold cut-off grade).
Structurally controlled, high-grade mineralization encountered in the initial hole occurs about 150 metres below the deepest drilling of any previous companies.
Gold-rich intervals are hosted in strongly decalcified limestone within the Favret Formation. The unit has been cut by north-west striking, south-west and north-east dipping structural systems.
Victoria’s main target, northwest of the Cove open pit, is where the Favret Formation is cut by these gold-bearing structural systems. Initial drilling was designed to identify the structural environment and test potential deeper zones of convergence.
The company plans further drilling to test the favourable alteration zone in the Northwest Cove target area.
The Cove and McCoy mines were operated by Echo Bay Mines, now part of Kinross Gold (K-T, KGC-N), from the mid-1980s through to 2004 producing a total of about 3.5 million ozs. of gold and 115 million ozs. of silver from both open pit and underground mining.
Echo Bay transferred its Cove-McCoy complex to Newmont Mining (NMC-T, NEM-N) in early-2003 for assumption of all closure and reclamation obligations.
Victoria holds the project under a lease-agreement from Newmont and is required to conduct US$8 million in expenditures over 7 years. If a positive feasibility study reviews a minimum of 500,000 ozs. of gold resource, the major retains a one-time back-in right for 51% interest by spending 2.5-times that what Victoria spent. Should Newmont elect to not back-in, Victoria will pay US$1.5 million for remaining rights and grant a sliding-scale net smelter return royalty (5% when gold is above US$500 per oz.). Areas of past mining, currently undergoing reclamation by Newmont, are not included under the lease.
Victoria holds more than 480-sq. km of mineral projects in northern Nevada and is a 29.7%-owned affiliate of Bema Gold (BGO-T, BGO-N, BAU-L), which is currently a takeover target of Kinross.
Shares of Victoria rallied 26% on the January 9th high-grade results, closing up 15 at 72 apiece on strong volume.