Manitou Gold Inc. (TSX VENTURE:MTU) has announced that it has signed a binding letter agreement wherein Manitou Gold has been granted the exclusive right to a 100% interest in an exploration property located in the Kenora Mining District, known as the Gaffney Extension project.
The Gaffney Extension is located in the Lower Manitou Lake Area approximately 60 km southwest of Dryden, Ontario. The property hosts a prominent, underexplored gold bearing shear zone which has been traced over a strike length of 440 meters and to a vertical depth of 243 metres. Diamond drilling by previous operators (1984, 1988) intersected multiple zones of gold mineralization including 5.0 g/t Au over 21.9 m (TN-10), 5.3 g/t Au over 21.8 m (TN-29), and 6.0 g/t Au over 7.1 m (TN-23).
"The Gaffney Extension is a significant acquisition for Manitou Gold. The impressive gold grades and widths reinforce our concept that the Manitou Straits Deformation Zone displays characteristics comparable to major gold camps of the Abitibi subprovince, which indicate the potential to host multiple gold deposits." stated Manitou Gold CEO Richard Murphy. The Kenwest Project, which is a past gold producer, is situated 28 km to the northeast of the Gaffney Extension, along this same structure, and is currently being drilled (see press release dated January 12, 2011). Both the historical results on the Gaffney Extension and results from Manitou's recent drilling emphasize the exceptional exploration potential of this area.
The Gaffney Extension gold bearing zone has been tested (previous operator) with only 4,042 m of diamond drilling (1984, 1988), to a maximum vertical depth of 243 meters. The zone remains open along strike to the northeast and the southwest and is open at depth. Historical drill intersections on the Gaffney Extension include a number of lower grade wide intersections, including 1.7 / g/t Au over 25.9 metres (TN-30). The average prices for gold in 1984 and 1988 were $361/oz and $447/oz respectively, and may have been considered sub-economic at the time the drilling was completed. Many of these lower grade areas were not fully sampled into barren material.
Under the terms of the letter agreement, Manitou Gold can acquire a 100% interest in the Gaffney Extension Project in exchange for the payment of $70,000 in cash and the issuance of 700,000 common shares of the Company, over a three year period.
Upon Manitou Gold earning its 100% interest in the Gaffney Extension project, the optionors will be entitled to a net smelter royalty ("NSR") of 2.5% on production generated on the project. Manitou Gold may at any time purchase up to 1.25% of the NSR from the optionors (resulting in the Optionors holding a 1.25% NSR) by making a cash payment of $1,250,000.
Securities issued pursuant to the definitive option agreement are subject to a four month hold period from the date of issuance. Completion of the transaction is subject to approval of the TSX Venture Exchange.
The Company has not verified the exploration results reported herein and has confirmed neither grades nor widths described. Detailed descriptions of these historic exploration programs were included in assessment work filed by Teck Exploration Ltd. with the Ontario Ministry of Northern Development and Mines in 1984 and 1992.
The Qualified Person responsible for the technical content of this news release is Todd Keast, P. Geo., Vice President, Exploration of Manitou Gold Inc. Mr. Keast has verified all of the technical data contained in this release.
Source: Manitou Gold Inc.