Northquest Ltd.
TSX VENTURE : NQ

Northquest Ltd.

December 02, 2010 11:15 ET

Northquest Ltd.: Pistol Bay Gold Project Acquired, Nunavut Territory

TORONTO, CANADA--(Marketwire - Dec. 2, 2010) - Northquest Ltd. (TSX VENTURE:NQ) ("Northquest" or the "Company") has acquired, through an option agreement dated as of December 2, 2010 (the "Option Agreement"), an option to earn a 100% interest in 3 mining claims comprising 2,300 hectares, known as the Pistol Bay Project, Nunavut Territory, Canada. The property was acquired from an arm's length individual. In addition, the Company also has the option to acquire certain portions of three additional claims totalling 1,220 hectares. The project is 60 kilometres south of Rankin Inlet and 80 kilometres south of the Meliadine Project of Agnico Eagle Mines.

Under the terms of the Option Agreement, the Company can earn a 100% interest in the claims by issuing 500,000 common shares and paying $50,000 upon signing the Option Agreement. There is a work commitment of at least $1 million in the first year of the agreement. On the first anniversary of the Option Agreement the Company must pay $250,000 and on the second anniversary of the Option Agreement the Company must pay $500,000. The first and second year anniversary payments are optional and can be paid in cash, common shares of the Company, or any combination thereof at the Company's sole discretion.

The Company also has acquired a supplemental option to acquire a 100% interest in four additional claims that are currently the subject of a Notice of Protest filed with the Mining Recorder for Nunavut should the title to the claims be awarded to the optionor. The Company can acquire a 100% interest in these additional claims by initially issuing 500,000 common shares and paying $50,000 to the optionor upon making a decision to exercise the supplemental option. On the first anniversary of such initial payment, the Company must pay $250,000 and on the second anniversary of such initial payment, the Company must pay $500,000. The payments for the supplemental option are optional and each of the first and second anniversary payments can be paid in cash, common shares, or any combination thereof at the Company's sole discretion.

In addition to the consideration for the option and supplemental option, in the event that the option is exercised, and in the event that a technical report discloses a Measured Mineral Resource of at least 1 million ounces of gold, on property acquired through either the option or supplemental option, the Company must pay $0.75 per resource ounce of gold in increments of 1 million ounces. In the event that a technical report discloses a Measured Mineral Resource of over 5 million ounces of gold, the Company must pay $1.50 per resource ounce of gold in increments of 1 million ounces. 

The Option Agreement has an area of interest of approximately 360,000 hectares (approximately 3,600 square kilometres) within which the Company has the exclusive right to acquire additional property at no cost other than the normal costs of staking, permitting, or other option agreements.

The Company has staked an additional eight mining claims contiguous with the optioned claims described above. The staked claims comprise an area of 7,000 hectares. Accordingly, the Company currently has a total of approximately 10,520 hectares (105 square km) of mineral rights that it has acquired through staking and option agreements.

The Company has also entered into an agreement (the "Consulting Agreement") with a consultant familiar with the region to provide services in connection with other property acquisitions. Under the terms of the Consulting Agreement, if the Consultant identifies any new project for acquisition, with an area of up to 200 square kilometres, and the Company agrees to acquire the project, the Company will pay a success fee of $25,000 and issue 50,000 common shares to the consultant. In the event that a technical report discloses a Measured Mineral Resource of at least 1 million ounces of gold, on property identified by the Consultant, the Company must pay $0.50 per resource ounce of gold in increments of 1 million ounces. In the event that a technical report discloses a Measured Mineral Resource of over 5 million ounces of gold, the Company must pay $1.00 per resource ounce of gold in increments of 1 million ounces. 

Each of the Option Agreement and the Consulting Agreement remain subject to the approval of the TSX Venture Exchange.

Geology and strategy

The Pistol Bay Project claims are underlain by volcanic rocks, intrusive rocks, and sedimentary rocks, including banded iron formation, of the Rankin-Ennadai greenstone belt. The Meliadine Project of Agnico Eagle Mines consists of several gold deposits within a segment of banded iron formation which has gold occurrences, prospects, and deposits over a strike length of at least 15 kilometres. The current reported resources are 3.3 million ounces gold (12.9 million tonnes at 7.9 g/t) in the Measured and Indicated categories and 1.7 million ounces gold (8.4 million tonnes at 6.4 g/t) in the Inferred category (www.agnico-eagle.com).

Due diligence sampling by the Company in September, 2010, indicates that there are gold occurrences at the Pistol Bay project within epizonal porphyries, quartz veins, and banded iron formation. Twenty-six selected rock samples were collected by the Company as part of the due diligence review. A summary of the results obtained in the due diligence review are set out below.

At the Pistol porphyry gold occurrence, ten rock samples were collected over a nominal width of 40 metres. Mapping in the 1990's by a previous claim owner of the same area, indicates that the porphyry is mineralized over a strike length of at least one kilometre. The gold concentrations in the rocks vary from 63 ppb gold to 9.19 g/t gold. The rocks consist of carbonatized, silicified porphyry, with fine grained, disseminated pyrite, and fine disseminated stringers of pyrite. The texture of secondary, opaline quartz with fine grained disseminated pyrite is interpreted as an epithermal level of preservation and exposure.

At the Cooey occurrence, two samples were collected of highly contorted, banded iron formation, containing secondary quartz veins and stringers, and secondary chlorite, pyrite, and arsenopyrite. The gold concentrations in the rock samples varied from 1.28 g/t to 4.1 g/t gold.

At the Sako occurrence, banded iron formation is exposed in a shear zone which occupies the axial plane of a fold. Four samples of altered iron formation, altered wall rock to iron formation, and quartz veins were collected at the occurrence. The gold concentrations in the rock samples varied from 7 ppb gold to 2.15 g/t gold.

At the Beretta occurrence, sheared, silicified, and carbonatized argillite is in contact with an altered porphyry. Two samples of argillite with minor pyrite were collected. The gold concentrations in the rock samples varied from 8 ppb to 1.54 g/t gold.

The banded iron formation that was sampled at the Cooey and Sako occurrences has a strike length of fourteen kilometres on the property.

In addition to the gold occurrences described above, there are several other gold occurrences on the property that were not examined and not sampled during the due diligence review of the property in September 2010. Potential quantity and grade are conceptual in nature. There has been insufficient exploration to define a Mineral Resource on the Pistol Bay claims and it is uncertain if further exploration will result in such target being delineated as a Mineral Resource.

The Company intends to complete an equity financing as soon as possible, and to use the proceeds from the financing to complete airborne geophysical surveys in the late winter or spring of 2011, prospecting and target definition in the spring and summer of 2011, and a preliminary phase of diamond drilling in the late summer or fall of 2011.

All technical information disclosed in this press release has been prepared under the supervision of, and verified by, Jon North. Dr. North is the President and Chief Executive Officer of Northquest and a "qualified person" within the meaning of National Instrument 43-101 of the Canadian Securities Administrators.

Northquest is a mineral exploration company focused on the acquisition, exploration and development of properties for the mining of gold and other minerals. Northquest has 17,253,139 shares outstanding (27,193,139 on a fully diluted basis).

Forward-Looking Statements

Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Northquest, including, but not limited to, the impact of general economic conditions, industry conditions, volatility of financial markets and commodity prices, risks associated with the uncertainty of exploration results and estimates and that the resource potential will be achieved on exploration projects, currency fluctuations, dependence upon regulatory approvals, and the uncertainty of obtaining additional financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, 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.  

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Northquest Ltd.
    Dr. Jon North
    President and Chief Executive Officer
    (416) 786-6348
    www.northquest.biz