Queenston Mining Inc.
TSX : QMI
FRANKFURT : QMI
BERLIN : QMI

Queenston Mining Inc.

April 07, 2009 12:51 ET

Queenston Mining Inc.-2008 Year End Results and Outlook

7 Drill Rigs to Operate on Queenston Properties in 2009

TORONTO, ONTARIO--(Marketwire - April 7, 2009) - Queenston Mining Inc. (TSX:QMI)(FRANKFURT:QMI)(BERLIN:QMI)(STUTTGART:QMI)(“Queenston” or the “Company”) is pleased to announce financial results for the year ended December 31, 2008 along with a review of significant events and outlook for 2009. The audited Consolidated Financial Statements and related Management's Discussion and Analysis (“MD&A”) along with the Annual Information Form (“AIF”) are available at Queenston's website (www.queenston.ca) or at Queenston's SEDAR filings (www.sedar.com).

Queenston maintains the largest land holdings (18,000 ha) in the Kirkland Lake gold camp located in northeastern Ontario where the Company is advancing four, 100% owned gold deposits towards development, and continues with an aggressive exploration program. Queenston has a strong balance sheet at December 31, 2008, with assets of $56 million consisting of $38 million in property and $16 million in working capital. The treasury was recently fortified as a result of an $18 million financing completed in March 2009, and combined with the recent exercise of warrants, the Company's current cash position is approximately $32 million with no long-term debt. Queenston's net loss and loss per share was $158,016 and $0.00 respectively, for the year ending December 31, 2008. Exploration expenditures in 2008 amounted to approximately $8 million.

The following significant events were accomplished during the past year:

  • Three separate NI 43-101 mineral resource calculations announced (Upper Beaver, South Claims JV and Wood-Pandora JV properties).
  • Deep drilling at Upper Beaver intersects high-grade mineralization below existing mineral resource.
  • Queenston and Kirkland Lake Gold Inc. (“KL Gold”) continue to intersect high-grade in drilling on the South Claims joint venture (“JV”) property.
  • Deep drilling on Queenston's adjacent AK property intersects high-grade values.
  • Positive results from the McBean drilling program.
  • From March 2008 to March 2009, the Company raised $32.7 million.

NI 43-101 Mineral Resources

During 2008, the Company's share of NI 43-101 indicated gold resources was increased by 400,000 ounces (1,393,000 t grading 8.9 g/t) and inferred resources by 375,500 ounces (1,216,000 t grading 9.6 g/t) on three properties (Upper Beaver, South Claims and Wood-Pandora) at a discovery cost of approximately CDN $12.7 million or US $13 per ounce.

Following three phases of drilling (134 holes, 97,065 m), in September 2008 Queenston announced the first NI 43-101 mineral resource at the 100% owned Upper Beaver property located in Gauthier township, Kirkland Lake, Ontario. The resource comprised four zones of gold-copper mineralization containing 1,373,500 tonnes (“t”) grading 8.5 grams per tonne (“g/t”) gold (“Au”) (375,000 oz) with 0.43% copper (“Cu”) in the indicated category, and 1,061,300 t grading 7.7 g/t Au (262,800 oz) in the inferred category. The uncapped indicated and inferred grades are 9.7 g/t Au (427,900 oz) and 8.5 g/t Au (291,300 oz) respectively. The mineral resource was announced in a news release dated September 22, 2008 and outlined in a technical report entitled “Technical Report and Mineral Resource Estimate for the Upper Beaver Property, Ontario for Queenston Mining Inc.” dated November 6, 2008 prepared by independent Qualified Person (“QP”) Michael W. Kociumbas, P.Geo. of Watts, Griffis and McOuat Limited of Toronto.

In February 2008, the Company and 50-50% joint venture partner KL Gold intersected the down-dip extension of the high-grade, South Mine Complex (“SMC”) on the South Claims JV property located in Teck Township, Kirkland Lake. The SMC is currently being developed and mined by KL Gold at the Macassa mine property directly adjacent to the JV. In July, the JV released the first NI 43-101 mineral resource comprising 39,000 t grading 38.1 g/t Au (47,730 oz) in the indicated category and 66,225 t grading 42.5 g/t Au (90,520 oz) in the inferred category. The resources were announced in a news release dated July 15, 2008 and calculated by independent QP Glenn R. Clark, P.Eng. in a technical report entitled “Review of Resources on South Claims Property, Kirkland Lake, Ontario”, dated August 25, 2008.

Following two years of exploration drilling on the Wood-Pandora property located in the Cadillac, Quebec, on March 3, 2008, JV partners Queenston and Globex Mining Enterprises Inc. (“Globex”) announced a NI 43-101, inferred, mineral resource on the Ironwood gold deposit of 243,200 t grading 17.3 g/t Au (135,300 oz). The mineral resource formed part of a technical report dated February 2008, entitled “Technical Report for the Mineral Resource Estimate, Ironwood Project, Cadillac, Quebec” completed by consulting geologist and independent QP, Reno Pressacco, P. Geo.

Deep Drilling at Upper Beaver

A deep drilling program targeting a Titan 24 geophysical anomaly located below the Upper Beaver mineral resource successfully encountered the Au-Cu mineralized corridor. The most significant result to date was intersected in hole UB08-139 assaying 30.3 g/t Au with 1% Cu over a core length of 20.8 m at a vertical depth from surface of 1,000 m. This mineralization lies 200 m vertically below the mineral resource in the Porphyry Zone. Drill hole UB08-135 also intersected the Porphyry Zone at a vertical depth of 1,200 m assaying 2.7 g/t Au with 0.75% Cu over a core length of 4.8 m. Other key intersections from the drilling include 3.0 g/t Au over 7.5 m including a 0.7 m interval assaying 9.7 g/t (hole UB08-137) and 1.2 g/t Au over 53.7 m including a 0.8 m assaying 10.5 g/t Au (hole UB08-138) (see QMI news release dated December 16, 2008).

In 2009 the Company plans two programs of drilling at Upper Beaver. One program will focus on upgrading the inferred mineral resource to the indicated category, and the other program will continue with deep exploration. Also during the year, the Company will initiate environmental baseline studies, complete metallurgical testing and initiate a preliminary assessment of the project to determine the economic viability of considering a mining operation.

Joint Venture with KL Gold

Following the announcement of the first NI 43-101 mineral resource on the South Claims property, the JV continued development and exploration that proved successful in expanding the SMC. Highlights from this work include high-grade drill hole intersections of 35.7 g/t Au over 6.6 m (hole 53-901W), 52.5 g/t Au over 0.3 m (hole 53-1084), 83.0 g/t Au over 1.8 m (hole 53-1085), 42.9 g/t Au over 2.0 m (hole 53-1086) and 62.4 g/t Au over 2.8 m (hole 53-1087) (see news release dated November 18, 2008). In February 2009, the JV acquired an additional property increasing the 50%-50% holdings to five properties and in March reported additional high-grade drilling results on the South Claims property including 62.1 g/t Au over 5.0 m (hole 53-1213), 90.2 g/t Au over 4.1 m (hole 53-1203) and 36.0 g/t Au over 3.4 m (hole 53-1200) (see news release dated March 18, 2009).

In 2009, the JV will continue underground development and exploration to further expand the SMC deeper onto the South Claims property. Also, exploration will begin to evaluate the new HM claim employing both underground and surface diamond drilling.

Deep Drilling at AK

In 2008, the Company continued with deep exploration drilling on its AK property. This 100% owned property is adjacent to the South Claims JV property and drilling is targeting the down-dip projection of the SMC. During the year, two surface holes and six wedge holes totaling 6,060 m were completed. The first pilot hole of the program (AK07-01) intersected a series of syenite-porphyry bodies containing anomalous gold values (0.30 g/t Au over 11.0 m) between a depth of 1,704 m and 2,294 m. The hole deviated and ended 600 m southeast of its intended path. The second pilot hole (AK08-02) remained on course and two directional wedge holes intersected significant gold mineralization assaying 31.8 g/t Au over 2.3 m (W3) and 13.7 g/t Au over 3.9 m (W4). The gold mineralization encountered in the drilling is interpreted to represent a portion of the SMC at a vertical depth of 2,100 m and approximately 300 m east of the SMC on the South Claims JV property.

In 2009, the deep surface drilling program will continue. A third pilot hole is in progress and will extend onto the recently acquired HM property.

McBean Drilling

In 2008, the Company completed 58 diamond drill holes (27,266 m) on the 100% owned McBean property representing two phases of drilling required to upgrade the historic mineral resources at McBean to NI 43-101 standards.Queenston and previous JV partner Inco Ltd. operated the McBean mine (1984-1987) producing approximately 50,000 oz. of gold from an open pit. There remain at McBean historic resources of 835,000 t grading 5.1 g/t Au (measured and indicated) and 1,835,200 t grading 6.5 g/t (inferred). The historic resources are not compliant to NI 43-101 and should not be relied upon as they have not been confirmed by a qualified person.

The 2008 drilling intersected multiple zones of gold mineralization including; 10.2 g/t Au over 13.6 m (hole MB08-66), 7.4 g/t Au over 15.9 m (hole MB08-54), 5.9 g/t Au over 29.1 m (hole MB08-58), 5.7 g/t Au over 18.1 m (MB08-47), 9.5 g/t Au over 6.1 m and 6.5 g/t Au over 9.3 m (hole MB08-62),15.4 g/t Au over 5.2 m (MB08-75), 5.5 g/t Au over 27.5 m (MB08-87) and 9.8 g/t Au over 5.1 m (MB08-96) (see news releases dated November 6, 2008 and January 15, 2008).

In 2009, the resource definition drilling program continues and deeper exploration targeting the McBean mineralization below a vertical depth of 600m will commence.

Financings

As a result of two financings and the exercise of warrants, the Company raised $32.7 million over the past twelve months. On March 20, 2008 the Company closed a $10 million private placement financing with a syndicate of underwriters led by Primary Capital Inc. The private placement comprised 2,500,000 flow-through shares of Queenston at a price of C$4.00 per share. A cash commission equal to 6% of the gross proceeds and 150,000 broker warrants was paid to the agents. The broker warrants were exercised in 2009 at $3.65 per share netting the Company $547,500. On March 4, 2009, the Company raised an additional $18 million through a private placement financing consisted of 4,148,570 ($15,971,994) hard dollar units and 460,950 ($2,028,180) flow-through shares. Each hard dollar unit was priced at $3.85 and consisted of one common share and one half warrant. Each full warrant entitles the holder to purchase one additional common share of the Company at a price of $5.00 for a period of 12 months. Each Flow-Through share was priced at $4.40. Primary Capital Inc. led the financing that included Dundee Securities and National Bank Financial. The agents received a commission of 6% of the gross proceeds and were issued broker warrants allowing them to purchase 276,571 Hard Dollar Units of the Company over a 12 month period at a price of $3.83 per unit.

Outlook

In 2009, Queenston has a minimum $9 million exploration-development budget for it holdings in Kirkland Lake employing up to seven drill rigs. The Company's goal is to advance four, 100% owned gold deposits located in Gauthier Township towards development and continue with the aggressive exploration drilling that proved successful in 2008. As part of the resource development program, drilling will upgrade the NI 43-101inferred mineral resource at Upper Beaver to the indicated category and the historic mineral resources at McBean and Upper Canada will be advanced towards NI 43-101 standards. The Company will also employ three drills to continue the deep exploration testing below both the Upper Beaver and McBean gold deposits. Also in Gauthier Township, one drill rig will begin to test the open pit potential above the past producing, 1.5 million oz., Upper Canada mine. In Teck Township, advanced underground resource development and exploration will continue on the South Claims JV property with KL Gold and the Company will be adding a second surface drill rig to the deep exploration drilling program on the 100% owned AK property. The Company will also be preparing the Commodore and Lac McVittie properties for drilling in 2009 with JV partners Newstrike Resources Limited and Barrick Gold Corporation respectively.

The disclosure in this news release has been reviewed and verified by Vice President Exploration, William McGuinty, P. Geo., a “Qualified Person” for the purposes of NI 43-101.

Queenston's Cautionary Note Regarding NI 43-101 and Forward Looking Statements

Except for historical information this News Release may contain certain “forward looking statements”. These statements may involve a number of known and unknown risks and uncertainties and other factors that may cause the actual results, level of activity and performance to be materially different from the Company's expectations and projections. A more detailed discussion of the risks is available in the “Annual Information Form” filed by the Company on SEDAR at www.sedar.com

Contact Information

  • Queenston Mining Inc.
    Charles E. Page, P. Geo.
    President and CEO
    (416) 364-0001 (ext. 224)

    or

    Queenston Mining Inc.
    Hugh D. Harbinson
    Chairman
    (416) 364-0001 (ext. 225)

    or

    Queenston Mining Inc.
    Andreas Curkovic
    Investor Relations
    (416) 577-9927
    Email: Info@queenston.ca
    Website: www.queenston.ca