Lexam VG Gold Inc.
TSX : LEX
OTCQX : LEXVF
FRANKFURT : VN3A

January 10, 2011 11:00 ET

Lexam VG Gold Reports Initial Paymaster West Resource & New Exploration Drill Results From Buffalo Ankerite

TORONTO, ONTARIO--(Marketwire - Jan. 10, 2011) - Lexam VG Gold Inc., (TSX:LEX)(FRANKFURT:VN3A)(OTCQX:LEXVF) is pleased to announce the details of an initial resource estimate for the Paymaster West Project in Timmins, Ontario. The resource estimate was prepared by Consulting Mining Geologist Peter Bevan, P.Eng, in accordance with Canadian National Instrument 43-101 standards (NI 43-101) and focused on the projects near surface gold mineralization. The resource is based on 172 diamond drill holes, 109,120.6 feet, (33,259.9 m) of core drilling and builds on Lexam VG's existing resources that either adjoin or are located in close proximity to the Paymaster West Project (Fig. 1). The potentially open pit near surface Paymaster West resource is located west of the Dome Mine Pit, that mined gold mineralization with similar grade.

RESOURCE ESTIMATE HIGHLIGHTS

  • Indicated resource of 3.23 million tonnes at a average grade of 1.82 grams per tonne (gpt) totalling 189,082 ounces of gold
  • Inferred resource of 2.79 million tonnes at a average grade of 1.77 gpt totalling 154,404 ounces of gold
  • Successfully builds upon Lexam VG Gold's current gold resources (100%) in Timmins that includes 601,756 ounces of gold in the indicated category and 614,791 ounces of gold in the inferred
  • Excellent potential exists at Paymaster West to expand the near surface resource and develop additional resources below the current estimate
  • A total of $10 million has been budgeted in 2011 to explore Paymaster West and Lexam VG Gold's surrounding projects

Paymaster West Resource Estimate

The Paymaster West resource estimate includes a cut-off grade of 0.51 grams gold/t. High grade assays above 34.29 grams gold/t were cut to this value. A conceptual open pit mining method was used for the purpose of delineating the mineralization with a reasonable prospect of economic extraction. Approximately 85% of the indicated and 60% of the inferred resources are located within 600 feet of surface. Tonnage estimates were based on a 2.81 grams/cubic centimetre density factor. Cross-sectional method was used to interpolate gold grade in the resource model. The database used to establish the Paymaster West resource is based on diamond drilling conducted by both Placer Dome (75 holes, 7958.2 metres) and VG Gold (97 holes, 25,301.7 metres). 

Classification Tons Tonnes Gold (opt) Gold (gpt) Gold (oz.)
Indicated - above 600' depth 3,019,111.0 2,738,635.6 0.0536 1.84 161,690
Indicated - below 600' depth 543,400.0 492,918.1 0.0504 1.73 27,392
total Indicated Resource 3,562,511.0 3,231,553.7 0.0531 1.82 189,082
           
Inferred - above 600' depth 2,109,076.0 1,913,142.8 0.0450 1.54 95,005
Inferred - below 600' depth 962,800.0 873,355.9 0.0617 2.12 59,400
total Inferred Resource 3,071,876.0 2,786,498.7 0.0503 1.72 154,404
  1. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
  1. The quantity and grade of reported inferred resources in this estimation are conceptual in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.
  1. The mineral resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council December 11, 2005.

A copy of the full resource estimation report will be filed on the SEDAR within 45 days of this news release. The mineral resource estimates were completed by Peter Bevan, P.Eng, Consulting Mining Geologist and are based on geological interpretations and data supplied by the Company to Peter Bevan and modified by him for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators.

Lexam VG Gold has the option to earn a 60% interest in the Paymaster West Property from Goldcorp by making $6.0 million in exploration expenditures by June 2012. Once Lexam VG Gold has given notice that it has earned its 60%, Goldcorp has six months to decide if it wishes to increase its ownership from 40% to 70% by paying Lexam VG Gold $710,000 and spending $8.25 million on the property within two years and then completing a feasibility study by the end of year three.

Existing Resources

Lexam VG Fuller

Indicated Resources:   1,533,489 tons grading 0.162 oz. Au/ton   Containing 248,005 oz. gold
         
Inferred Resources:   1,813,065 tons grading 0.165 oz. Au/ton   Containing 299,960 oz. gold

Lexam VG Buffalo Ankerite

Indicated Resources:   1,667,327 tons grading 0.135 oz. Au/ton   Containing 224,309 oz. gold
         
Inferred Resources:   2,160,734 tons grading 0.127 oz. Au/ton   Containing 274,632 oz. gold

Lexam VG Davidson Tisdale

Indicated Resources:   934,558 tons grading 0.139 oz. Au/ton   Containing 129,442 oz. gold
         
Inferred Resources:   295,857 tons grading 0.136 oz. Au/ton   Containing 40,199 oz. gold

Buffalo Ankerite Property Diamond Drilling

Recent drilling at 100 percent owned Buffalo Ankerite is focused on expanding the near surface gold resource in the South Mine Area. Previous drilling by the company's predecessor had intersected significant results that included 5.09 grams gold/t over 13.7 m and 1.61 grams gold/t over 36.1 meters and the current drilling is following up on these positive results on the extension of the South Mine geological structure called the South Mine North Limb. The company began drilling the folded extension of the South Mine in the fall of 2010 and has encountered encouraging gold mineralization and gold values along a strike length of 200 metres to date, with additional potential open to the west. Highlights from the recent drilling are below with the full results shown in Table 1. Diamond drilling in 2011 will continue to follow the North limb as part of the planned $10 million exploration program.

Hole Number From (m) To (m) Width (m) Gold (gpt)
VBA-10-138 92.1 93.6 1.5 20.5
VBA-10-140 88.9 99.9 10.9 1.19
VBA-10-144 153.9 158.3 4.3 5.53
VBA-10-150 270.8 275.8 5.0 4.02
Including     0.9 14.55
VBA-10-152 308.6 322.8 14.2 1.82
Including     4.9 4.44

Intervals reported here are core lengths. True widths are not known at this time.

Davidson-Tisdale

In 2010, drilling occurred at the Davidson-Tisdale project (Lexam VG Gold 68.5% - San Gold 31.5%) in order to test the potential at depth. A total of 29 holes were drilled. No significant mineralization was encountered in these holes. Although no mineralization was encountered Lexam VG Gold's management believe there is good potential to discover additional high-grade gold mineralization at depth, similar to that discovered closer to surface.

QUALIFIED PERSON

All exploration work was conducted under Kenneth Guy, P. Geo., designated Qualified Person for Lexam VG Gold, who has reviewed this news release.

The mineral resource estimates which are effective today were completed by Mining Geological Consultant Peter Bevan, P.Eng, and are based on geological interpretations and data supplied by the Company. Peter Bevan is an independent Qualified Person for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators and has verified the data disclosed in this release.

All drilling was completed using NQ size core. Gold analysis of the samples collected by Lexam VG Gold was assayed by ALS Chemex. Analysis consisted of a fire assay of a 30-gram sample with an atomic absorption finish. Samples assaying over 10.0 grams gold per tonne Au are re-assayed with gravimetric finish. Samples noted to contain visible gold are analyzed via total metallic assay method. A rigorous Quality Control and Assurance Program (QA/QC) is in place, using control samples such as blanks and duplicate checks. In addition, duplicate analyses of 10% of the samples are corroborated by check assays performed at a third Party Laboratory. To learn more about Lexam VG Gold (TSX:LEX), visit our website: www.lexamvggold.com.

Table 1 - Buffalo Ankerite Core Drill Results

Hole # East North Elev Length (m) Dip Az Assay From (m) Assay To (m) Width (m) Au-gpt GxW
VBA-10-137 6026 5911 10989 179.0 -80 0 80.2 89.4 9.3 0.84 7.8
                       
VBA-10-138 6026 5911 10989 125.0 -60 354 92.1 93.6 1.5 20.50 31.2
                       
VBA-10-139 6026 5911 10989 146.0 -43 354 52.0 57.4 5.4 2.17 11.8
                       
VBA-10-140 6227 5984 10977 161.0 -70 180 88.9 99.9 10.9 1.19 13.0
                       
VBA-10-141 6227 5984 10977 140.0 -85 180 no significant values  
                       
VBA-10-142 5820 6065 11020 134.0 -85 3.3 74.3 75.3 0.9 1.19 1.1
              92.4 93.5 1.1 1.44 1.5
              109.4 112.2 2.8 0.61 1.7
                       
VBA-10-143 5820 6065 11020 88.2 -45 3.3 46.5 48.2 1.7 1.21 2.1
              51.0 52.3 1.3 2.52 3.3
                       
VBA-10-144 5620 6075 11020 215.0 -86 0 153.9 158.3 4.3 5.53 23.9
                       
VBA-10-145 5620 6075 11020 119.0 -45 0 76.4 77.4 1.1 2.75 2.9
              86.1 87.1 1.0 1.23 1.2
                       
                       
VBA-10-146 5720 5844 11030 206.0 -70 3.4 165.4 166.9 1.5 0.92 1.4
              169.7 171.4 1.6 5.69 9.2
              182.9 188.1 5.2 0.88 4.6
                  3.0 1.23 3.7
                       
VBA-10-147 5520 5905 11014 354.0 -85 347.5 270.0 271.1 1.1 1.50 1.7
              281.1 283.6 2.4 0.68 1.7
                       
VBA-10-148 5520 5925 11014 245.0 -65 355 183.4 186.3 2.9 1.06 3.1
                       
VBA-10-149 5520 5925 11014 205.6 -45 355 no significant values  
                       
VBA-10-150 5420 5900 11030 338.0 -75 355 248.3 250.7 2.4 1.71 4.2
              257.7 260.6 2.9 1.20 3.5
              270.8 275.8 5.0 4.02 20.1
                  0.9 14.55 13.3
              299.7 305.3 5.5 1.03 5.7
              310.3 314.2 4.0 1.46 5.8
                       
VBA-10-151 5420 5900 11030 221.0 -50 355 204.3 207.4 3.0 1.16 3.5
                       
VBA-10-152 5420 5900 11000 365.2 -75 175 204.6 207.3 2.7 0.74 2.0
              308.6 322.8 14.2 1.82 25.8
                  4.9 4.44 21.6
              340.9 344.0 3.0 1.30 4.0
                       
VBA-10-153 5448 5824 11035 203.1 -45 178 148.1 152.1 3.9 2.22 8.7
              180.6 191.3 10.7 1.90 20.3
17 holes Total BA 2010 3445.1              
        metres              

Intervals reported here are core lengths. True widths are not known at this time.

To view Figure 1 - Lexam VG Gold Project Locations and Resources, please visit the following link: http://media3.marketwire.com/docs/lex_01_10_2011_fig_1.pdf

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

Contact Information

  • Lexam VG Gold Corp.
    Tom Meredith
    President & CEO
    416-368-0099
    416-368-1539 (FAX)
    www.lexamvggold.com