Queenston Mining Inc.

Queenston Mining Inc.

April 09, 2010 09:33 ET

Queenston Mining Inc.-2009 Year End Results and Outlook

$15 Million Exploration Budget in 2010

TORONTO, ONTARIO--(Marketwire - April 9, 2010) - Queenston Mining Inc. (TSX:QMI)(FRANKFURT:QMI)(STUTTGART:QMI) ("Queenston" or the "Company") is pleased to announce financial results for the year ended December 31, 2009 along with a review of significant events and outlook for 2010. The audited Consolidated Financial Statements and related Management's Discussion and Analysis ("MD&A") along with the Annual Information Form ("AIF") are available at Queenston's website (www.queenston.ca) or at Queenston's SEDAR filings (www.sedar.com).

Queenston maintains the largest land holdings (16,000 hectares ("ha")) in the Kirkland Lake gold camp located in northeastern Ontario where the Company is advancing four, 100% owned gold deposits towards development and continues with an aggressive exploration program. Queenston has a strong balance sheet at December 31, 2009, with assets of $89 million consisting of $50 million in property and $38 million cash and short term investments. With the recent exercise of warrants the Company's current cash position is approximately $46 million with no long-term debt. Queenston's net loss and loss in 2009 was $2,257,000 compared to $158,000 in 2008. The reason for the larger loss in 2009 is the result of two non-cash items, the reporting of the recovery of future income taxes amounting to $2.9 million (2008- $1.1 million) and the recognition of a stock-based compensation expense of over $3.5 million in 2009 compared to a recovery of $100,000 in 2008. Exploration expenditures in 2009 amounted to approximately $11 million (2008- $8 million).

The following significant events were accomplished during the past year:

  • Three NI 43-101 mineral resource calculations announced (McBean, Anoki and South Claims properties).
  • Drilling at Upper Beaver expands resource potential.
  • Bulk-tonnage gold targets identified on Upper Canada property.
  • Queenston and Kirkland Lake Gold Inc. ("KL Gold") continue to intersect high-grade on the South Claims joint venture ("JV") property.
  • Deep drilling from surface intersects high-grade gold values on the AK property.
  • JV formed with Newstrike Resources Ltd. ("Newstrike") on Commodore property.
  • Friendly merger announced between Queenston and Vault Minerals Inc. in March 2010.
  • Two financings completed during 2009 raising $35 million plus another $10.7 million received from the recent exercise of warrants.

NI 43-101 Mineral Resources

In 2009, the Company's share of NI 43-101 measured and indicated resources were increased by approximately 160,000 ounces ("oz") (926,000 tonnes ("t") grading 5.4 grams per tonne ("g/t") gold (" Au")) and inferred resources by approximately 245,000 oz (1,440,000 t grading 5.3 g/t) on three properties (McBean, Anoki and South Claims JV). With the addition of the Upper Beaver deposit, over the past two years the Company's total measured and indicated gold resources has now increased to approximately 640,000 oz (2,842,000 t grading 7.0 g/t Au) and the total inferred resources has increased to approximately 577,000 oz (2,676,000 t grading 6.7 g/t Au).

Following two phases of drilling (118 holes, 56,937 meters ("m")), in December 2009 Queenston announced the first NI 43-101 mineral resource at the 100% owned McBean property located in Gauthier township. The resource comprised four zones of gold mineralization containing 706,000 t grading 4.64 g/t Au (105,700 oz) in the indicated category and 1,221,000 t grading 4.71 g/t Au (184,700 oz) in the inferred category. The mineral resource was announced in a news release dated December 16, 2009 and outlined in a technical report entitled "Technical Report and Resource Estimates for the McBean and Anoki Gold Deposits of the Kirkland Lake Gold Project Gauthier Township, Kirkland Lake North-Eastern Ontario, Canada dated December 8, 2009 prepared by independent Qualified Person ("QP") Eugene Puritch, P.Eng. of P&E Mining Consultants Inc. ("P&E") of Brampton, Ontario.

In the same report P&E also reviewed the previous resource estimate prepared on the Anoki deposit. As a result of the review, P& E completed a new mineral resource at Anoki containing 730,000 t grading 4.74 g/t Au (110,700 oz) in the measured and indicated category and 337,000 t grading 4.80 g/t Au (52,100 oz) in the inferred category.

In July 2009, following a second phase of underground drilling, Queenston and 50-50 joint venture partner KL Gold announced an increase in the mineral resources on the South Claims property. The new gold resources include 27,087 t grading 48.8 g/t Au (42,000 oz) indicated and 46,954 t grading 41.8 g/t (63,000 oz) inferred. As a result, the total resource on the JV property is now 66,097 t grading 42.5 g/t indicated and 113,179 t grading 42.2 g/t inferred. Queenston's 50% portion of these resources is 33,049 t grading 42.5 g/t (45,000 oz) indicated and 56,590 t grading 42.2 g/t (77,000 oz) inferred. The resources were announced in a news release dated July 15, 2009 and calculated by KL Gold's geological staff which includes QP, Stewart Carmichael, P. Geo. The resource estimate was audited and verified by independent QP Glenn R. Clark, P.Eng. in a technical report entitled "Review of Resources on South Claims Property, Kirkland Lake, Ontario", dated July 17, 2009. 

Upper Beaver

At Upper Beaver 22 holes and 22 wedge cuts (20,721 m) were drilled in 2009 and continued to expand the mineralized envelope around the existing deposit. The Upper Beaver contains an indicated mineral resource of 1,373,500 t grading 8.5 g/t Au (375,000 oz.) with 0.43% copper ("Cu") and total inferred resources of 1,061,300 t grading 7.7 g/t Au (262,500 oz) with 0.39% Cu. The mineral resource was completed in September 2008 by Watts, Griffis and McOuat Limited of Toronto under the supervision of independent QP Michael W. Kociumbas, P.Geo.

The 2009 drill program beneath the existing resource was successful in intersecting quality intersections to depth of -1200 m. Drill results announced late in 2008 and throughout 2009 strongly indicate the continuation of the gold-copper mineral system to 400 m beneath the existing mineral resource. Key drill hole intersections in this area of the deposit include, 30.3 g/t Au with 1.0% Cu over 20.8 m (hole UB08-139), 6.3 g/t Au with 0.5% Cu over 19.7 m (hole UB09-135W2), 20.3 g/t Au with 2.5% Cu over 6.0 m (hole UB09-148), 7.9 g/t Au with 0.4% Cu over 4.0 m (hole UB09-148W1), 11.0 g/t Au with 1.7% Cu over 3.5 m (hole UB09-148 W2) and 9.4 g/t Au with 0.6% Cu over 37.3 m (hole UB09-100W1). 

As part of a program to upgrade the mineral resource, 13 diamond drill holes and wedges were completed within and outside the boundaries of the deposit. Highlights include, 22.9 g/t Au with 1.6% Cu over 1.7 m (hole UB09-110W3), 16.1 g/t Au with 3.6% Cu over 2.6 m (hole UB09-145W1), 15.8 g/t Au with 1.0% Cu over 13.1 m (hole UB09-149), 5.7 g/t Au with trace Cu over 7.0 m (hole UB09-151), 12.2 g/t Au with trace Cu over 3.0 m (hole UB09-153), 21.3 g/t Au with trace Cu over 6.2 m (hole UB09-152), and 15.8 g/t Au with trace Cu over 12.0 m (hole UB09-156). 

In 2010, three drills will operate on the property continuing to target the mineralized corridor both beneath and above the existing resource. New results reported in a news release dated February 22, 2010 include, 68.3 g/t Au with trace Cu over 3.0 m (hole UB10-113W2), 10.6 g/t Au with 0.8% Cu over 17.3 m (hole UB10-148W3), 7.5 g/t Au with trace Cu over 4.0 m and 3.6 g/t Au with 3.2% Cu over 2.0 m (hole UB10-159).

Upper Canada

In 2009 and early 2010 the Company completed a 35 hole diamond drill program (11,022 m) on the 100% owned Upper Canada property targeting the low-grade, bulk-tonnage potential above the workings of the past producing Upper Canada mine. Upper Canada was a significant producer in the Kirkland Lake camp from 1936 to 1972. During that period the mine produced 1.5 million ounces of gold at an average grade of 11 g/t from narrow, 2 m wide veins.

The initial 14 hole diamond drilling program announced in a news release dated October 1, 2009, targeted areas on the property for bulk tonnage mineralization intersecting significant values including 2.04 g/t Au over 33.7 m (UC09-12), 1.54 g/t Au over 54.6 m (UC09-02), 1.55 g/t Au over 45.7 m (UC09-01), 1.46 g/t Au over 49.2 m (UC09-14), 1.65 g/t Au over 25.0 m (UC09-07) and 1.10 g/t Au over 33.5 m (UC09-11). A second phase of drilling results announced on February 16, 2009 continued to report encouraging results including 1.93 g/t Au over 32.0 m in hole UC09-34, 1.12 g/t Au over 71.3 m and 4.58 g/t Au over 11.0 m in hole UC09-24, 1.02 g/t Au over 41.2 m in hole UC09-31, 1.37 g/t Au over 20.7 m and 0.91 g/t Au over 32.9 m in hole UC09-33, 0.92 g/t Au over 44.6 m in hole UC09-30.

The drilling to date has outlined a potential 1.3 km long gold system along the South Branch and 500 m long corridor along the North Branch of the Upper Canada Break. The Upper Canada Break can be traced in Gauthier Township on Queenston's 100% owned property for a distance of 4 kilometers ("km"). For the balance of 2010, a further 40,000 m of drilling is planned to continue with the bulk-tonnage target definition on the property.

Joint Venture with KL Gold

In 2009 the Company and 50%-50% JV partner KL Gold continued underground development and exploration on the South Claims property exploring the extension of the high-grade South Mine Complex ("SMC") orebody currently being mined at Macassa. During the year work included 137 m of development and 10 underground drill holes (942 m).

In addition to the increase in the mineral resources on the South Claims property, during the fourth quarter of 2009 the JV announced further drilling results on the South Claims that do not form part the mineral resource. Highlights from this drilling included, 175.5 g/t Au over 2.1 m (hole 53-1365), 175.2 g/t Au over 2.2 m (hole 53-1364) and 105.3 g/t Au over 1.5 m (hole 53-1366).

Also in 2009 the JV commenced a surface diamond drilling program targeting the eastern projection of the SMC onto the HM property. One pilot hole and three wedges (855 m) were completed during the year. High-grade mineralization was encountered in three of the holes including 46.8 g/t Au over 1.5 m (hole AK08-2W4), 8.5 g/t Au over 12.6 m (hole AK09-2W5) and 59.5 g/t Au over 1.5 m (hole AK09-2W6). These intersections occur at the same elevation and approximately 300 m east of the SMC, however more drilling is required to determine the relationship.

In 2010, the JV plans to continue with underground development and exploration to further expand the SMC deeper onto both the South Claims and HM properties.

Drilling at AK

During the year the Company completed 4 pilot holes and 7 wedge holes (6,482 m) targeting the SMC in the northwestern corner of the 100% owned property that adjoin the South Claims and HM JV properties. Significant intersections from the drilling included 13.7 g/t Au over 3.9 m with a higher grade interval assaying 96.5 g/t Au over 0.5 m (hole AK08-02W3), two high-grade intervals assaying 18.3 g/t Au over 1.5 m and 31.8 g/t Au over 2.3 m including an interval assaying 59.4 g/t Au over 0.9 m in hole AK08-02W4. The mineralization was intersected at approximately 1,700 m below surface and is interpreted to represent a portion of the SMC. Two drills will continue to explore on the AK property in 2010 to further expand the SMC to the east and south.

The AK deposit, located in the central portion of the property, was discovery by Battle Mountain Canada Inc. in the early 1990's. The deposit remains open below a depth of 600 m and occurs in the same package of rocks that host the SMC. The AK deposit reports an historic mineral resource of 2,639,300 t grading 4.5 g/t Au calculated by the Company's geological department in 1997. This resource should not be relied upon as it is not compliant to NI 43-101 and has not been verified by a QP under the Instrument. Drilling will begin on the deposit in the second quarter of 2010 to both upgrade the historic resource to NI 43-101 standards and begin deeper exploration below the deposit.

Commodore JV

In February 2009 the Company and Newstrike formed a JV to purchase and explore 36 mineral claims located in Lebel and Gauthier Townships. In August, the joint venture completed the purchase with each party paying the vendor $100,000 cash and issuing 35,000 shares of Newstrike and 10,000 shares of Queenston. In September, the JV consolidated a larger land package in the area with the purchase of an additional 4 adjoining claims from a third party, Newstrike contributing their 6 claim Morris mine property and Queenston adding 11 boundary claims. The combined Commodore property now contains 57 mineral claims comprising 25 patented and 32 unpatented claims.

In October 2009 the JV commenced an exploration program on the property and in February 2010 announced that 16 holes (3,734 m) and geophysics had been completed. The exploration was focused on the southern portion of the property where drilling and geophysics has outlined a broad alteration corridor that has been traced for 2.5 km containing the Commodore and Egg (HG) gold zones. At Commodore, 6 holes targeted the main highway zone and at the Egg Zone, 10 holes were completed. The drilling intersected wide zones of low grade mineralization at the Commodore Zone including, 1.3 g/t Au over 11.6 m (hole Com09-07), 0.8 g/t Au over 47.0 m including 3.1 g/t over 7.3 m (hole Com 09-09) and 0.3 g/t over 172.2 m including 0.6 g/t over 17.0 m (hole Com 09-06). At the Egg Zone, located 1 km west of Commodore, higher grade intervals were encountered including: 3.6 g/t Au over 10.6 m including 6.3 g/t Au over 5.0 m and 14.9 g/t over 1.0 m (hole Com 09-04), 6.8 g/t Au over 1.0 m (hole Com 09-14), 3.6 g/t Au over 2.6 m (hole Com 09-13) and 1.1 g/t Au over 9.4 m (hole Com 09-11).

For the balance of 2010 the joint venture has approved a second program to include further geophysics and 10,000 m of drilling.

Vault Merger

On March 5, 2010 the Company announced that it had entered into an agreement to merge with Vault Minerals Inc. ("Vault") by way of amalgamation, to consolidate holdings in the Kirkland Lake gold camp. Under the terms of the amalgamation Vault shareholders will receive one common Queenston share for every ten Vault shares. Queenston will issue approximately 4.1 million common shares pursuant to the amalgamation. The benefits of the merger to Queenston include: (a) the creation of a dominant land position covering approximately 19,000 ha along the major gold trends in the Kirkland Lake camp, (b) added potential adjacent to the Upper Beaver deposit, (c) exposure to both high-grade and bulk tonnage opportunities in the King Kirkland area and (d) increased presence in Teck township adjacent to KL Gold.

The transaction is subject to Vault shareholder approval at a special meeting of its shareholders on April 19, 2010. To date, the Company has received greater than 50% support of the merger from Vault shareholders including management, directors and institutional investors.


The Company's cash resources were fortified during the year as a result of two financings. On March 4, 2009 the Company completed an $18 million private placement led by Primary Capital Inc. and included Dundee Securities and National Bank Financial. The private placement consisted of 4,148,570 ($16 million) hard dollar units at $3.85 each and 460,950 ($2 million) flow-through shares at $4.40 each. Each hard dollar unit consisted of one common share and one half warrant and a full warrant entitles the holder to purchase one additional common share of the Company at a price of $5.00 for a period of 12 months. Substantially all of the warrants issued in March 2009 have been exercised before expiry netting the Company almost $11 million. In September, 2009 the Company closed a $17 million private placement led by agents Primary Capital Inc. and included Dundee Securities, Thomas Weisel, Cormark Securities, Wolverton Securities and Northern Securities. The private placement consisted of 2,428,572 flow-through shares priced at $7.00 per share and included 2,720,000 warrants at exercise prices ranging from $5.46 to $7.50 and with terms from 12 to 18 months which warrants if fully exercised would net the Company a further $20 million.


The focus of the Company continues to be the exploration and development of its core assets in Kirkland Lake, Ontario and Cadillac, Quebec. The Company's goal is to use its cash resources in advancing four gold deposits located in Gauthier Township, Kirkland Lake towards pre-feasibility and ultimately production. In 2008 the first step in this procedure successfully outlined a new NI 43-101 mineral resource on the Upper Beaver property and in 2009 the addition of further NI 43-101 resources were announced for McBean and Anoki. The bulk tonnage, open-pit discovery at Upper Canada has added a new potential to the property and could significantly enhance the resources in Gauthier Township. In Teck Township, results during the year continue to indicate growth of the SMC gold zone further onto the South Claims property where the Company and JV partner KL Gold continue exploration in 2010. Drilling will also commence in 2010 on the AK deposit to both define a NI 43-101 mineral resource and begin deeper exploration below the deposit. In Cadillac, Quebec the Company and JV partner Globex plan a surface drilling program targeting the potential for a low-grade, bulk tonnage gold system on the Wood-Pandora property.

The Company's exploration budget in Kirkland Lake for 2010 is $15 million. Currently 11 diamond drills are operating on Queenston properties and it is anticipated this number of rigs will continue to operate or increase in 2010. Queenston has sufficient funds to continue its planned exploration programs for 2010 and proposed programs into 2011. Of the Company's current $46 million cash position $10 million represents flow-through dollars that must be expended by December 31, 2010.

The merger with Vault Minerals Inc. will provide Queenston with an expanded exploration platform in the Kirkland Lake camp. Upon completion of the amalgamation in April, the Company plans to increase its activity by continuing the programs already in progress on the Vault properties. 

Mr. William McGuinty, P. Geo., VP Exploration of Queenston is the QP responsible for reviewing this news release.

Queenston's Cautionary Note Regarding NI 43-101 and Forward Looking Statements

Except for historical information this News Release may contain certain "forward looking statements". These statements may involve a number of known and unknown risks and uncertainties and other factors that may cause the actual results, level of activity and performance to be materially different from the Company's expectations and projections. A more detailed discussion of the risks is available in the "Annual Information Form" filed by the Company on SEDAR at www.sedar.com.

Contact Information

  • Queenston Mining Inc.
    Charles E. Page, P. Geo.
    President and CEO
    (416) 364-0001 (ext. 224)
    Queenston Mining Inc.
    Hugh D. Harbinson
    (416) 364-0001 (ext. 225)
    Queenston Mining Inc.
    Andreas Curkovic
    Investor Relations
    (416) 577-9927