TORONTO, Dec. 16, 2010 (GLOBE NEWSWIRE) -- Marathon Gold Corporation (TSX:MOZ) ("MGC") and New Jersey Mining Company (OTCBB:NJMC) ("NJMC") jointly announced the formation of Golden Chest LLC ("GC"). GC is owned 50% by MGC through its wholly owned US subsidiary Marathon Gold USA Corp. ("MUSA") and 50% by NJMC, with NJMC being the operator.
Highlights:
- the Golden Chest Mine is the largest historical producer of gold in the Coeur d'Alene Mining District, is fully permitted and sits on private land
- a 1,050 meter long main level allows ideal access for exploration
- historic production came from a network of high-grade veins which averaged 17 grams per tonne
- the Golden Chest Mine has a mineable underground reserve totaling 39,659 gold ounces, which is SEC compliant
- 2011 plans include over 10,000 m of underground and surface drilling and over 400 m of underground development to explore the surface and underground mining potential
Phillip Walford, President and Chief Executive Officer of Marathon Gold, commented, "The Golden Chest Mine gives Marathon Gold a rare opportunity to explore and rapidly develop open pit potential resources as well as underground resources and reserves. Newmont intersected up to 20 meters of gold mineralization grading better than a gram per tonne near surface and the accessible 1,050 meter long main level is an ideal drilling platform for exploring and defining the vein systems. It is remarkable that there is very little surface and underground drilling on the property."
Fred Brackebusch, President of New Jersey Mining Company, also commented, "The Golden Chest has a long and colorful history but it has not been explored adequately, especially at depth. We look forward to this joint venture arrangement that will allow the potential of the mine to finally be realized."
The Golden Chest Mine is located two miles east of Murray, Idaho within the gold belt of the Coeur d'Alene Mining District. The mine has over 3,900 meters of underground workings and has the permits necessary to drill and operate on the deposit. The property includes 21 patented mining claims and 21 unpatented mining claims covering 206 hectares.
The Golden Chest Mine
Placer gold was discovered in the streams near Murray in 1882 and led to a gold rush that was the birth of the Coeur d'Alene Mining District. Past gold production for the Murray area is estimated at 300,000 ounces, including of 200,000 ounces from placers. The Golden Chest was the location of one of the first lode claims in the district, and is the largest historic lode producer of gold in the district with production estimated at approximately 65,000 ounces mostly from shallow underground mining of the Katie and Dora high grade veins. Most of this historic mining took place in the late 1890's and 1900's. In the late 1980's Newmont Exploration Limited (NEL) explored the Golden Chest with 35 shallow reverse circulation and 5 core holes and estimated an "inferred geologic resource" of 231,000 ounces at 1.66 grams per tonne (gpt). This historic resource was primarily contained to a large quartz vein system known as the Idaho vein on the southern end of the property.
NJMC has leased the property since 2003 and conducted small scale underground mining totaling 8,400 tonnes grading 6.90 gpt. A 500 meter ramp was driven to connect the the No. 3 level. NJMC also completed about 3,500 meters of core drilling on the property and was successful at extending the Idaho vein at depth, which was successful. Highlights from this period of drilling include: DDH04-6, which intercepted 15.5 meters grading 5.50 gpt gold and DDH05-3, which intercepted 7.1 meters assaying 10.32 gpt gold. NJMC has also estimated the SEC-compliant reserve of 242,000 tonnes grading 5.10 gpt gold along the Idaho vein.
Geology
Gold mineralization at the Golden Chest is related to a thrust fault known as the Idaho fault and the property is located on the west limb of the Trout Creek anticline, a major north-trending fold in the Prichard formation. The Idaho fault occurs at the contact of Prichard formation units G and H. Unit G, a quartzitic unit, is the host for most of the veins while the overlying Unit H is an argillite-siltite sequence of rocks. Though, near the fault, Unit H has been found to host narrow, high-grade vein structures.
In the southern part of the mine, gold mineralization is found near and parallel to the north-trending Idaho fault, while the northern part of the mine hosts the higher grade Katie and Dora veins, which splay off the Idaho fault in a northeasterly direction. Gold mineralization can be found along at least 1,500 meters of strike length. The lowest level of the Golden Chest mine is the No. 3 level, which is at the valley bottom elevation. Here drilling has only probed the Idaho vein about 120 meters below this level in a district known for hosting orebodies that outcrop on surface and continue at depth for 2,500 meters.
Exploration and Development Plan
The exploration and development plan for the Golden Chest will consist of both surface and underground core drilling as well as underground development. About 7,200 meters of surface drilling and 3,600 meters of underground drilling are planned for 2011. The goals of the drilling program will be to increase the density of drilling on the surface for a NI 43-101 compliant resource estimate and also to extend the mineralization down dip. An underground mapping and sampling program will also be undertaken.
Additionally, a new No. 3 adit will be driven to provide a secondary escape for potential future production which could be processed at NJMC's processing facility in Kellogg, Idaho. A down ramp will be driven from this new adit to investigate a higher grade portion of the Idaho vein sampled in the 1920's that reportedly averaged 11.8 gpt gold. New crosscuts will also be driven in the southern and northern parts of the mine. The northern crosscuts will provide drilling platforms targeting potential high-grade Katie-Dora type veins at depth.
Venture Terms
GC has purchased the Golden Chest Mine near Murray Idaho, a past gold producer, for US$3,750,000. GC has paid the sellers US$500,000 in cash on closing the transaction and has agreed to pay to the sellers US$500,000 each year for the next six years and a final payment of US$250,000 on the seventh anniversary. The sellers have a first mortgage on the mine as security for the future payments owing.
NJMC has contributed to GC certain mining claims it owned, all geological data and certain mining equipment. Also in consideration for its interest in GC, NJMC has terminated, for the benefit of GC, two operating leases it held on the mine. MUSA has contributed US$1,000,000 cash and has agreed to contribute i) US$500,000 by March 31, 2011, ii) US$500,000 by June 30, 2011, iii) US$1,000,000 by September 30, 2011 and vi) US$1,000,000 by November 30, 2011 for a total cash contribution of US$4 million. If MUSA does not make all of the US$4M payments to GC, its 50% ownership interest will be reduced. MUSA has the right to contribute an additional US$3.5 million by November 30, 2012 to take its ownership interest to 60% of GC. MUSA also has the option to accelerate any of these contributions.
After the earlier to occur of completion of the initial contribution of US$4M or a default in paying any remaining amount of the initial contribution, a joint funding program will commence. If MUSA chooses not to contribute to required funding and NJMC contributes such funding, MUSA's ownership interest will be reduced.
MGC has also agreed to purchase from NJMC 2 million units for US$0.20 per unit, each unit comprised of one share of NJMC and one warrant to purchase an additional share of NJMC at US$0.30 per share for two years.
Phillip Walford, P.Geo., President and CEO, is Marathon's Qualified Person in compliance with National Instrument 43-101 with respect to this release. Mr. Walford has reviewed the contents for accuracy and has approved this press release on behalf of Marathon.
About Marathon Gold Corporation:
Marathon Gold Corporation is one of Canada's newest gold resource development companies, with projects located in the mining friendly province of Newfoundland and Labrador and now a project in the prolific Coeur d'Alene Mining District. Marathon has a tiered project pipeline consisting of early stage exploration to advanced resource development projects which can be built into mineable reserves. Marathon is continually evaluating new gold resource development projects of merit that are located within the Americas. Marathon's focused and low-cost approach to resource development and exploration has an established record of delivering rapid growth. Marathon Gold Corp. (TSX:MOZ) ("Marathon") is the operator of the Valentine Lake Project under the sub-option and joint venture agreement ("OJVA") between Mountain Lake and Marathon.
About New Jersey Mining Company:
New Jersey Mining Company is involved in exploring for and developing gold, silver and base metal resources in the Coeur d'Alene Mining District of northern Idaho. New Jersey Mining Company has a portfolio of mineral properties in the Coeur d'Alene Mining District including the New Jersey Mine which includes a fully-permitted flotation mill and a concentrate leach plant.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This news release contains certain "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking statements and forward-looking information are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate," "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements and forward-looking information in this news release include statements with respect to the completion of the exploration and development plan, the venture and the purchase of NJMC securities by MGC.. Such statements are based on good faith assumptions that management believes are reasonable but which are subject to a wide range of uncertainties and business risks that could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. The assumptions include that contracted parties provide goods and/or services on the agreed timeframes, that no labour shortages or delays are incurred, that no material adverse change occurs to either Marathon or NJMC. Factors that could cause actual results to differ from those anticipated are discussed in NJMC's periodic filings with the Securities and Exchange Commission.
Further information about NJMC and its properties can be found at the company's website at www.newjerseymining.com.
Neither NJMC nor MGC undertakes the obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.