Q-Gold Resources Ltd.

Q-Gold Resources Ltd.

January 05, 2007 09:00 ET

Q-Gold to Acquire McKenzie Gray and Jolly Roger Gold Veins at Mine Centre

FORT FRANCES, ONTARIO--(CCNMatthews - Jan. 5, 2007) - Q-Gold Resources Ltd. (TSX VENTURE:QAU) (FWB:QX9) ("Q-Gold" or the "Corporation") announced today that it had signed a Letter of Intent with Nipigon Gold Resources Ltd. ("NGR") a privately-owned Ontario Corporation to acquire all of NGR's assets in the historic Gold Camp of Mine Centre, Ontario.

The acquisition, which is subject to the approval of the TSX Venture Exchange (the "Exchange"), NGR's shareholders and its production royalty rights holders, includes the following NGR assets:

(1) Six contiguous Crown Leasehold Patents (including both mining and surface rights) totaling 240 acres (the "Leases"), which are surrounded on 3 sides by Q-Gold's existing holdings at Mine Centre. The Leases contain two important known gold occurrences, the McKenzie Gray and Jolly Roger Veins, as well as hosting 1,500 metres of the large cross-cutting Finger Lake Fault, an intensively sheared zone with a minimum strike length of over 20 kilometres. This huge fault is believed to be the primary conduit for hydrothermal fluids which resulted in the many gold-bearing veins in the Mine Centre area.

(2) A small mill comprised of a steel building housing mineral processing and other related equipment. Q-Gold plans to refurbish this mill to provide limited ore processing and pilot testing of bulk samples from the Corporation's extensive gold/quartz vein system at Mine Centre.

(3) Tailings ponds with a currently inactive permit that can be reinstated by Q-Gold.

(4) Geological, geophysical, drilling logs and assay data from extensive past exploration efforts by NGR and others on the Leases.

As compensation, upon closing, Q-Gold will pay NGR $25,000 in cash and, subject to Exchange approval, will issue 1 million Q-Gold common shares at $0.25 per share to NGR shareholders. Q-Gold will also pay NGR a series of cash production payments totaling $500,000 when gold production from the Leases reaches 50,000 ounces, in 10,000 ounce increments. The Leases are subject to an existing Net Smelter Return Royalty of 3%.

A report prepared for NGR by David J. Gliddon Geological Services, Inc., dated July 31, 1990 (p. 16), shows the following results from different trenching, sampling and assaying programs on the McKenzie Gray Vein by other operators between 1938-46:

Au Grade Width Strike
(grams/tonne) (m) Length (m)
McIntyre Gold Mines Ltd. 16.8 0.9 76.2
U.S. Smelter Corp. 15.1 1.2 53.4
Ventures, Ltd. 9.3 1.2 91.5

Exploratory drilling by NGR since 1988 revealed gold-sulfide mineralization in a lense plunging to the 100 metre level, with the vein remaining "open" at depth. Reserve estimates made for NGR by Ovalbay Geological Services Inc. in a report dated December 31, 1992 (p. 32) (not compliant with NI 43-101), showed 98,702 tons grading 0.30 gold equivalent ounces per ton in all ore categories (totaling 29,611 gold equivalent ounces).

After the transaction closes, the McKenzie Gray area will be scheduled for ground geophysics and drilling in 2007.

The Jolly Roger Vein is 2-3 metres in width and is hosted by a mafic dike within a highly sheared, altered and folded zone accompanying the Finger Lake Fault. Both this large fault and the northwest/southeast cross-cutting West Bad Vermilion Shear, converge on the NGR Leases. This confluence provides widespread (up to 100 metres in width) shearing, sulfidization and silicification zones on the NGR Leases, indicating the passage of altering hydrothermal fluids through the zones, many of which are goldbearing. The intensive deformation caused by dextral wrenching along the entire strike length of the Finger Lake Fault, provides numerous deformed and folded structures to be examined as potential gold traps over the more than 11 kilometres of the fault controlled by Q-Gold.

When all approvals for the NGR purchase are obtained, Q-Gold will hold 100% interest in 27,260 acres (110.3 square kilometres) of mining claims, leases, patents and optioned patents in the historic (1890's) Mine Centre Gold Mining Camp. Mine Centre is one of the last known Canadian Archean-age granite/greenstone lode Gold Camps remaining to be explored by modern methods. To that end, in 2006, Q-Gold completed a 1,516 line-kilometre DIGHEM/ MAG airborne survey and, following additional ground geophysical surveys, in February will embark on a 5,000 metre diamond drilling program on the most prospective targets as part of its fully-funded 2007 Exploration Program.

Richard C. Beard, P.Eng, Consulting Geologist, a Qualified Person as defined by NI 43-101, has reviewed and approved the technical disclosure contained in this press release.

About the Corporation:

Q-Gold is a Canadian-based mineral exploration company currently exploring for precious and base metals on its extensive holdings at Mine Centre, Ontario.

This release may contain forward looking statements implying an assessment that the resources described can be produced profitably in the future. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated.

SEC 12g 3-2(b) Exemption # 82-4931

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

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