Mengold Resources Inc.

Mengold Resources Inc.

May 17, 2006 08:40 ET

Over 13 Massive Sulphide Targets Identified by Airborne Survey at Mengold's Burchell Lake Property

MONTREAL, QUEBEC--(CCNMatthews - May 17, 2006) - Mengold Resources Inc. (TSX VENTURE:MNI) is pleased to report the results of a 178 line-km, helicopter-borne, "Dream Catcher" VTEM survey recently flown over the Burchell Lake Property by Geotech Ltd. Over thirteen conductive zones indicative of massive sulphide targets were identified in the survey. The 1,700-hectare Burchell Lake Property is located in the Shebandowan area, 110-km west of Thunder Bay, Ontario.

The VTEM survey is a time domain system used for locating conductive anomalies and mapping earth resistivities. Geotech has also provided Mengold with Electromagnetic (EM) anomaly maps, total magnetic and second derivative vertical gradient maps, and digital terrain color maps derived from the radar altimeter and GPS height.

Most of the EM targets identified by the survey are spatially associated with high magnetic features which may represent fault structures found throughout the area. It is along the main Knife Lake Fault, also referred to as the Burchell Lake Fault, that most of the recent discoveries have been made in the Shebandowan camp, especially by Freewest Resources and the East West Resources - Mega Uranium joint venture. In the Burchell Lake area, disseminated to semi-massive sulphide-hosted Volcanogenic Massive Sulphide (VMS) style and disseminated low-grade gold mineralization appear to be the most prospective targets for exploration.

The VTEM survey results indicate that the Knife Lake Fault appears to traverse almost the entire property from the southwest to the northeastern boundary. The second derivative magnetic maps imply that a cross-cutting fault in the south-central part of the property transects the Knife Lake Fault. Most of the previous drilling was conducted in this general area where the two faults cross-cut each other. One of the historic holes drilled by Belore Mines in 1976 returned 96m of 0.23% copper near the intersection of these faults. Typically, very few samples were assayed for gold, but where sampled, assays returned grades of 1.0 - 1.5 gpt gold. The EM signature is not very strong along the Knife Lake Fault, however it is significant as it could represent an area of disseminated to semi-massive base metal mineralization with low-grade gold values.

The EM anomalies in the central part of the Property can be traced for an intermittent length of approximately 5.5-km and may be part of what has been referred to as the Upper Shebandowan Lake Shear Zone. This shear zone comes to within 400m of the Knife Lake Fault and this area represents an excellent drilling target.

A crew is now being assembled and the exploration program for the upcoming field season is being planned. A significant portion of the property is overlain with basal tills up to 50m thick. Some selective grids will be cut and surveyed using Induced Polarization (IP) to detect disseminated sulphides. The best target areas will then be tested with a diamond drilling program. Geotech is currently modeling several of the best conductors on Burchell Lake Property to determine thickness, depth, and dip. This information will assist in planning the diamond drilling program.

The Qualified Person supervising the work being carried out on the Burchell Lake and Goldcreek Properties is Joel Scodnick,P.Geo., a consultant to Mengold Resources Inc. and the President & CEO of Helm Exploration Ltd.

Mengold entered into an agreement with Helm Exploration Ltd. on April 3, 2006, to earn up to a 100% interest in the 1,700-hectare (4,200-acre) Burchell Lake Property and the 5,700-hectare (14,100-acre) Goldcreek Property which are both located in the Shebandowan area west of Thunder Bay, Ontario. Each of the properties are subject to a 4-phase earn in over 3 years and a 3% net smelter royalty. The properties are prospective for gold and Volcanogenic Massive Sulphide ("VMS") style base metal (copper, lead, zinc, and molybdenum) mineralization. Both properties are qualified by independent NI-43-101 Reports conducted by Geologica Consulting Group and the Reports are available on SEDAR. Mengold is proceeding with Phase I of the Helm agreement which consists of a cash payment of $177,025; the issuance of 1,950,000 common shares; and the completion of a $200,000 work commitment.

Mengold Resources Inc. is engaged in mineral exploration, primarily in eastern Canada. The Company is exploring the copper-zinc prospective Mountain River Property, near Sainte-Anne-du-Lac, where a drilling program was recently completed and the PGM-chrome prospective Thetford Property in the Eastern Townships of Quebec. Mengold recently acquired the Burchell Lake and Goldcreek Properties in the Shebandowan area of Ontario. Mengold has 17,666,537 common shares outstanding (23,166,987 shares fully diluted).

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • In Canada
    Mengold Resources Inc.
    Douglas G. Reeson, C.F.O. and Director
    (416) 533-0323
    (416) 533-2890 (FAX)
    Helm Exploration Ltd.
    Joel Scodnick
    President and Chief Executive Officer
    (705) 522-4439
    (705) 522-8694 (FAX)
    In Europe
    Mengold Resources Inc.
    W. Ian L. Forrest, President and Director
    011 41 22 809 9511
    011 41 22 899 9501 (FAX)