Chesapeake Gold Corp.

Chesapeake Gold Corp.

October 16, 2008 20:53 ET

Chesapeake Gold Announces Release of Metates Technical Report

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 16, 2008) - Chesapeake Gold Corp. ("Chesapeake") (TSX VENTURE:CKG) is pleased to report that it will be filing a National Instrument 43-101 Technical Report ("Technical Report") that discusses the results of a recently completed twin hole drilling program at its 100% owned Metates Project. The Technical Report also provides a review and evaluation of several processing options from which a preferred design has been identified.

The Metates Project is located in Durango State, Mexico and hosts one of the largest undeveloped gold and silver deposits in North America in two adjacent zones, the intrusive-hosted Main Zone and the sedimentary-hosted North Zone. In December 2007 Chesapeake commenced a diamond drill program on Metates which was recently completed in September. During this program 37 holes were drilled for a total of 14,415 meters. The main objective of the drill program was to twin several holes drilled by Cambior Inc. during the period 1993-1995 so that the results of these older holes, totaling 148 holes and 49,059 meters, could be validated in terms of geology and assay results. A total of 14 twin holes totaling 4,763 meters, including 3 holes which were abandoned, were drilled in the Main Zone while 7 twin holes totaling 2,997 meters were drilled in the North Zone. In addition, Chesapeake drilled 8 holes between the Main and North Zones in an area which was largely untested by Cambior and has the potential to increase the current size and/or confidence of mineralization in both zones. Eight step-out holes were also drilled to expand the known mineralization to the north and west of both zones.

The Chesapeake core twin hole program was successful in intercepting the same rock types and relatively similar metal grades over the same intervals to those in the original Cambior holes and validates Cambior drill results except as noted below.

Comparison of Mean Gold, Silver and Zinc Grades in Original and Twin Holes

Assay Mean Mean
Holes Intervals Original Twin
Gold Main Zone 11 1,192 0.87 g/t 0.71 g/t
North Zone 7 1,081 0.58 g/t 0.53 g/t
Silver Main Zone 11 1,221 19.4 g/t 18.6 g/t
North Zone 7 1,118 16.8 g/t 17.4 g/t
Zinc Main Zone 11 1,221 0.23% 0.26%
North Zone 7 1,119 0.12% 0.13%

The gold grades between the original and twin holes from the Main Zone and the North Zone support the overall grades but are lower. The difference in the mean gold grades for the Main Zone in particular could reflect an assay bias which was noted by Independent Mining Consultants ("IMC") in their work for Cambior Inc. which IMC felt resulted in the gold assays for Cambior's 1993-1995 drill program being high by up to 15.7%. The silver grades for the twin holes are comparable for both zones whereas the zinc grades are slightly higher. Once the remaining assays from the drill program are received, an independent assay bias study will be completed as part of an overall assay QA/QC study for the Chesapeake drill program.

Some of the significant assay intervals encountered in the Chesapeake twin drilling program are provided below including hole CKG08-24, the first hole drilled between the Main and North Zones. The intervals are believed to represent true thickness. Assays are pending for the remaining in-fill and step-out holes. A map showing the location of the holes drilled during the 2007-2008 drill program can be viewed on the Chesapeake web site at

Inter- EgAu
Hole From To val (i) Au Ag Zn
Type Location Number (m) (m) (m) g/t g/t g/t %
Twin Main CKG 08-03 3 552 549 1.04 0.78 18.4 0.19
Twin Main CKG 08-05 6 389 383 1.35 0.99 25.6 0.26
Twin Main CKG 08-07 4 443 439 1.22 0.88 24.5 0.18
Twin Main CKG 08-10 67 457 390 0.87 0.74 9.6 0.06
Twin North CKG 08-13 3 261 258 1.11 0.64 33.5 0.20
Twin North CKG 08-15 81 342 261 1.03 0.41 44.7 0.27
Twin North CKG 08-17 18 285 267 1.71 0.84 62.5 0.29
In-Fill CKG 08-24 6 102 96 1.40 0.71 49.5 0.24
(i) EqAu (equivalent gold) g/t equals Au g/t + (Ag g/t / 72) and assumes
metallurgical recoveries at 100%

In January 1996 IMC prepared an unclassified resource estimate for Cambior at 0.50 and 0.70 gold equivalent g/t cutoff grades. This estimate was reported in a technical report prepared by Watts, Griffis and McOuat Limited ("WGM"), dated January 15, 2007 which is filed on SEDAR. Based on their review of Cambior's 1997 Preliminary Feasibility Study ("Study"), it was WGM's opinion that the defined mineralization (resources) could not be classified as a resource according to NI 43-101 standards. The IMC resource is considered historic in nature, does not comply with NI 43-101 standards, has not been verified by the Company and therefore should not be relied upon.

After a review of alternative metallurgical processing scenarios together with significantly higher prices for gold and silver than those used in the Cambior study and WGM 2007 report, Praxis Mining Consultants and Resource Development Inc., the authors of the Technical Report, believe that the requirement for a reasonable prospect of economic extraction to establish a resource now exists. Accordingly, a current resource estimation for the entire resource (Main and North Zones) at or above a gold equivalent grade of 0.50 g/t as estimated by IMC will be prepared after all the results of Chesapeake's drill program and the independent assay bias study are available.

IMC 1996 Metates Tonnage and Grade Resource Estimate Based on Unadjusted
Gold Grade Model

0.50 g EqAu(i)/t 0.70 g EqAu(i)/t
Tonnes Tonnes
(mill- Au Ag EqAu Zn (mill- Au Ag EqAu Zn
ions) (g/t) (g/t) (g/t) % ions) (g/t) (g/t) (g/t) %
Sediments 576 0.59 13.4 0.78 0.14 306 0.71 16.7 0.94 0.15
Conglomerate 59 0.39 34.3 0.87 0.14 40 0.42 41.6 1.00 0.15
Rock 154 0.80 11.8 0.97 0.23 118 0.90 12.5 1.07 0.23
Breccia 34 0.73 22.9 1.05 0.23 28 0.79 25.3 1.14 0.23
Total 823 0.62 15.0 0.83 0.16 492 0.74 18.2 0.99 0.17
billions) 16.4 397 22.0 2.90 11.7 288 15.7 1.84
(i) EqAu (equivalent gold) g/t equals Au g/t + (Ag g/t / 72) and assumes
metallurgical recoveries at 100%

During the past year Chesapeake has focused on a broad range of activities to update and optimize the base case metallurgical processing flowsheet utilized in Cambior's Study as well as to evaluate other processing options that might have technical and economic viability. The process metallurgy at Metates is difficult owing to the moderately refractory nature of the gold and silver mineralization as well as the "preg-robbing" nature of the sedimentary host rocks. Chesapeake's technical team comprised numerous industry consultants including Golder Associates, Arcadis, Resource Development Inc., Behrent Engineering, and Brierley Consultancy. The objectives were to generate a comparative basis for a re-design of the Metates project where improvements could lower cash costs, improve metal recoveries, optimize extraction of the entire resource (intrusive and sediment hosted mineralization), increase by-product revenue, enhance site layout opportunities, and reduce technical risks and environmental impacts over those of the Cambior Study base case flowsheet.

Seven different processing options were examined, five using whole ore bio-oxidation and two using flotation to produce a sulfide concentrate. A comparative review of these processing options by Chesapeake's team resulted in three alternatives that satisfied a majority of the objectives including processing both the Main and North Zones. One flowsheet option, employing flotation to produce a sulfide concentrate, then roasting of the concentrate followed by cyanidation for precious metal extraction, was selected as the preferred option over the other two which employ whole ore bio-oxidation followed by CIL cyanidation and flotation concentration followed by pressure oxidation or tank bio-oxidation. Several techno-economic advantages are inherent with the roasting option and include the production of concentrated sulphuric acid as a readily saleable product which based on current prices is a significant source of co-product revenue Also important, the roasting process will effectively remove any organic component of the sediments thereby eliminating their "preg-robbing" behavior and facilitating conventional cyanidation recovery of gold and silver.

In Cambior's Study the base case flowsheet processed only the Main Zone's intrusive mineralization at the rate of 30,000 tonnes per day and incorporated crushing, agglomeration, bio-oxidation and cyanide leaching. Processing only costs in this 1997 Study were estimated at US$200/oz gold equivalent, or about 70% of total cash costs. Factoring these costs to a 2008 basis it is estimated the processing only cash costs would increase to the range of US$325/oz to US$375/oz gold equivalent using assumed metal prices of US$675/oz gold and US$12/oz silver.

For comparative purposes Chesapeake's team estimated a similar processing only costs for the preferred flotation/roaster/cyanide option also at a 30,000 tonnes per day process rate. As presented in the Technical Report, a comparative gold equivalent processing only cash cost is estimated to be in the range of US$300/oz to US$350/oz. However, if one-half (2,500 tonnes/day) of the total amount of acid produced (5,000 tonnes/day) is sold at an effective net price of US$80/tonne (current market price US$325/tonne) and the other half is neutralized at a cost of US$10/tonne, the gold equivalent processing only cash cost is estimated to be reduced to the US$100-$150/oz range. Significant co-generated electric power and recovery of saleable zinc metal can be integrated into this flowsheet option which could further lower the gold equivalent cash cost. Given the overall size of the Metates resource, this preferred roasting flowsheet should be scalable to increase the processing rate to the 60,000 to 75,000 tonnes per day process rate. The estimated processing only cash costs are intended for comparative use only among the different process options and should not be relied upon and do not imply the economic viability of a potential mining operation. Chesapeake has not completed a current assessment of any other mining costs at Metates.

A multi-tasked work program is underway by Chesapeake that will lead to the preparation of a NI 43-101 Preliminary Assessment in 2009 which will evaluate processing the entire Metates deposit. Metallurgical testwork with composite samples from the recent core holes is in progress to confirm and expand the results of Cambior's earlier metallurgical work. The work plan will also include engineering studies for plant and facility siting, site access, power and water supply and demand, and transportation and bulk materials handling trade-off studies for concentrates and sulphuric acid. Environmental and related geotechnical studies are also scheduled along with market studies for sulphuric acid and related issues.

Regional exploration carried out in the district has identified a number of prospects of which one mineralized target located 11 kilometers to the southeast along strike from Metates, has similar intrusives and sedimentary host rocks as Metates. A follow-up program of detailed mapping and sampling on this target is expected to commence in November after the rainy season.

The technical information contained in this release has been supervised by Gary A. Parkison, a Certified Professional Geologist, who is a Qualified Person as defined by NI 43-101.

The Company has in place a comprehensive quality assurance/quality control program including standards, blanks and duplicate samples that form part of the sampling protocol. The Chesapeake assays contained in this report were all performed by ALS Chemex Laboratories in Vancouver, Canada on sample pulps prepared by ALS Chemex Laboratories in Hermosillo, Mexico. Sample pulps were generated from sawn one-half core samples which were shipped in secure trucks from the Metates site to Hermosillo. Standard analytical procedures were a 30 gram fire assay digestion with an Atomic Absorption Spectroscopy ("AAS") or Inductively Coupled Plasma ("ICP") finish for gold and a four acid digestion followed by ICP finish for silver and other elements. Sample duplicates, and certified standards and blanks were routinely inserted into the sample stream and a review of this QA/QC data suggests the assays are reliable.


P. Randy Reifel, President

This news release contains forward-looking statements, which address future events and conditions, which are subject to various risks and uncertainties. The Company's actual results, programs and financial position could differ materially from those anticipated in such forward-looking statements as a result of numerous factors, some of which may be beyond the Company's control. These factors include: the availability of funds; the timing and content of work programs; results of exploration activities and development of mineral properties, the interpretation of drilling results and other geological data, the uncertainties of resource and reserve estimations, receipt and security of mineral property titles; project cost overruns or unanticipated costs and expenses, fluctuations in metal prices; currency fluctuations; and general market and industry conditions.

Forward-looking statements are based on the expectations and opinions of the Company's management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

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

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