Santoy Resources Ltd.

Santoy Resources Ltd.

August 06, 2008 09:30 ET

Santoy Expands Scope of Exploration Efforts in Saskatchewan

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 6, 2008) - Santoy Resources Ltd. (TSX VENTURE:SAN) is pleased to announce that the Company has entered into an Option Agreement with Golden Band Resources Inc. ("Golden Band") to earn an operating interest in several of Golden Band's more advanced gold exploration projects located in the La Ronge Greenstone Belt in northern Saskatchewan. The Option provides for Santoy to expend a minimum of $ 3 million prior to December 31, 2008 to earn an eight percent equity interest in the Bingo and Alimak/Decade gold deposits, and in the RKN gold prospect, or such other deposits as a management committee shall select. Essentially all of the funds will be expended on diamond drilling, targeted at on strike and down-dip expansion of these three high-grade zones, which work will commence immediately.

Rodney Orr, President and CEO of Golden Band says that, "we are particularly excited about Santoy's participation and their aggressive drilling approach to add tonnage to several of our best, advanced targets. We consider the exploration potential of these deposits, all of which are open along strike and at depth, to be excellent. Santoy's management has a long history of previous involvement in this gold camp, and we look forward to their technical contribution. This financial infusion will allow for Golden Band to direct a higher percentage of its treasury toward development engineering and the rehabilitation of the Jolu mill in preparation for the start of production. We are very pleased to have been provided the opportunity to have Santoy conduct this exploration at a time when Golden Band is undervalued and in what is a very difficult and volatile capital market. For Golden Band to undertake a significant equity financing for this level of exploration at this time would be very dilutive for our shareholders. To not seize the opportunity to not expand and maximize our projects' potential prior to finalization of a feasibility study is certainly not in anyone's best interests."

Ron Netolitzky, President of Santoy, said that "the Company simply could not pass up the opportunity to secure an equity interest in an attractive, near term to production, high-grade, Canadian gold project, at what we judge to be the bottom of the gold market. Saskatchewan has long been our most favorite exploration jurisdiction and even more so since the most recent Provincial election of a new Conservative Government. We are eager to commence drilling".

Bingo Deposit

Plans call for a minimum of 4,000 metres of drilling at the Bingo deposit, 55 km south of Golden Band's Jolu mill. Bingo has recently been explored by drilling using the 1,100 metres of underground decline and two sub-levels emplaced during the last six months by Golden Band. Bingo is a shear and quartz vein hosted gold occurrence, typically yielding grades in the order of 10 to 14 g/t over widths of up to several metres, contained primarily within the dioritic portion of the Bernaski Bay Pluton.

A December, 2007 Golden Band in-house resource estimation, utilizing a cut-off of 5 g/t Au, indicates 97,000 tonnes grading 14.11 g/t gold of measured and indicated, and 136,500 tonnes grading 14.03 g/t gold of inferred resources (the reader is referred to news releases dated January 8 and July 21, 2008 and Golden Band's website for more detail). With the 102-hole underground drilling program totaling 1,135 metres by Golden Band during June and July has now investigated the deposit over a strike length of 450 metres and to an average depth of 200 metres. A 43-101 compliant resource up-date is in progress. Santoy's drilling, which will be conducted from surface, will be targeted at expanding this resource and converting the deeper inferred resources to the indicated category.

Alimak/Decade Mine Area

The second primary target will be the former producing Decade deposit, only 275 m from the Golden Band Jolu mill and 600 metres from the former Jolu mine. A 2,000 to 3,000 metre drill program has been designed to define near-surface mineralization with near-term development potential.

The Decade area was discovered in 1944 and was to the object of limited underground mining operations in the 1970s and 1990s. The deepest portion of the existing development is approximately 50 m below surface. Portions of the zone were drill tested in the 1990s to about 100 to 150 m below surface. In addition to small-scale gold production (40 tonnes per day) in the 1970s, ore from Decade was milled at Jolu in 1990 to 1991.

During the past winter, Golden Band completed 19 drill holes totaling 1,321 metres at Decade to test the shallow portions (now referred to as the Roberts and North zones) and to explore along strike just north of the former Decade mine workings (see Golden Band news releases of February 7 and March 11, 2008). Historical drill hole intercepts of 28.5 g/t Au over 6.9 m downhole (interpreted true width of 3.0 m) and 39.0 g/t Au over 4.4 m downhole (interpreted true width of 2.2 m) are reported on Decade mine cross- and longitudinal sections. The mineralization here is known to host bonanza-style gold grades that are both complex and exhibit a "nugget effect".

Golden Band is encouraged by initial results from the Roberts zone, by the potential demonstrated by the extension of the Decade zone, and with the discovery of the North zone. All indicate possible higher-grade, near-surface gold resources that could be available for near-term production, some as an open pit only metres from the Jolu mill, as part of the company's plans to restart production in 2009 (see news in Stockwatch of Feb. 26, 2008).

The Company's historical files for the area note the existence of the high-grade Alimak Zone plunging to the west below existing underground workings at the former Jolu mine. This zone was identified during operations of the former Jolu Gold Mine as a reserve, and was partially mined from underground. The known mineralization extends from surface to 125 metres deep and mining records note underground grab samples of up to one ounce per ton Au. The new proposed drilling program will include step-out holes to test for the existence of strike extensions, and along the projected plunge of the Alimak Zone where a previous property boundary precluded testing in the past.

RKN/Golden Heart Area

The third target area will be the newly discovered, near surface RKN Zone, adjacent to the Golden Heart gold deposit at Weedy Lake, 75 km northeast of the Jolu mill along Highway No. 102. During this past winter, two discovery holes intersected 156.6 g/t Au over 2.74 metres and 5.18 g/t Au over 8.4 metres (refer to Golden Band news release of June 26, 2008). The RKN Zone's proximity to the open pittable Golden Heart (measured and indicated resource of 259,900 ounces - refer to Golden Band website for 43-101 technical report) makes this target particularly attractive. A minimum of 3,000 metres of shallow drilling will be undertaken to determine the orientation and continuity of the Zone.

With the expenditure of $3 million, the Company will earn an eight percent equity interest in the Bingo, Alimak/Decade and RKN properties, and possibly such other deposits that the Management Committee may select for drilling during the term of the Option. Upon exercise of the Option, a joint venture is to be formed. Golden Band has the exclusive right to buy-back all of Santoy's interest over a sliding scale: after March 31 and prior to June 30, 2009, for $3.5 million; July 1 to December 31, 2009, for $3.75 million; and up to the announcement of commercial production, for $4.0 million. The initial $3 million may be repaid, at Golden Band's election, in either cash or shares. If Santoy still retains its interest after the start of commercial production, it shall receive 5% of the income from production to a maximum of $3 million, and thereafter 2.5% of the income from production. If the repayment were in shares, the share price would be calculated as the volume-weighted average of the 20 trading days prior to the day of the election. A two-kilometre Area of Interest shall apply exclusively to Santoy during both the Option and the Joint Venture Agreements.

Santoy will be the initial Operator of the program. Santoy has entered into drill contracts with Newmac Industries Ltd. for 10,000 metres, and drilling is expected to commence next week.

As the Company and Golden Band have two common directors, this agreement has been reviewed and approved by independent Board committees of each company. The agreement is subject to regulatory approval.

The Qualified Person responsible for review of the technical data in this news release on behalf of the Company is J. R. Allan, P. Geol.

On Behalf of the Board of Directors


R. K. Netolitzky, President & CEO

Cautionary Statement on Forward-Looking Information

The statements made in this News Release may contain certain forward-looking statements. Actual events or results may differ from the Company's expectations. Certain risk factors may also affect the actual results achieved by the Company.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release

Contact Information

  • Santoy Resources Ltd.
    Ron Netolitzky
    (604) 669-4799
    Santoy Resources Ltd.
    Tony Perri
    Investor Relations, Manager
    (604) 669-4799
    (604) 669-2543 (FAX)