Lexam VG Gold Inc.
Measured + Indicated by 44% to 1 Million Oz Gold and Inferred by 20% to 850,000 Oz Gold
TORONTO, ONTARIO--(Marketwire - Sept. 20, 2012) - Lexam VG Gold Inc. (TSX:LEX)(OTCQX:LEXVF)(FRANKFURT:VN3A) is pleased to announce an increase in its total gold resources due to an updated resource estimate for its Buffalo Ankerite Project in Timmins, Ontario. Total NI 43-101 gold resources have increased by 44% in the Measured + Indicated category to 1 million ounces and by 20% in the Inferred category to 850,000 ounces.
Lexam VG Gold's four exploration Projects, Buffalo Ankerite, Davidson Tisdale, Fuller and Paymaster, each have a NI 43-101 resource estimate. The table below shows the growth of Lexam's resources since the last update in January 2011 due to the updated resource estimate for Buffalo Ankerite.
Table 1. Comparison of Total Gold Resources at January 2011 and at September 2012
(M tonnes) (gpt) (oz) (M tonnes) (gpt) (oz) Change
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Measured + Indicated Resources
Fuller 1.3 5.49 236,245 Unchanged -
Davidson
Tisdale 0.8 4.75 129,442 Unchanged -
Paymaster 1.9 1.82 113,449 Unchanged -
Buffalo
Ankerite 1.5 4.63 224,309 4.5 3.70 531,671 +137%
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Total Measured + Indicated: 703,445 1,010,807 +44%
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Inferred Resources
Fuller 1.6 5.66 299,960 Unchanged -
Davidson
Tisdale 0.3 4.66 40,199 Unchanged -
Paymaster 1.7 1.72 92,642 Unchanged -
Buffalo
Ankerite 2.0 4.35 274,632 3.5 3.70 417,032 +52%
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Total Inferred: 707,433 849,833 +20%
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(See Note 1 at the end of this news release)
In this press release the following abbreviations are used: opt = ounce per
ton; gpt = gram per tonne, Au = gold; oz = ounce; ft = foot; m = metre; M =
million. The following definitions apply: 1 tonne = 1,000 kilograms = 2,205
pounds; cut-off grade = the grade value that distinguishes ore from waste,
where material which has a grade below the cut-off grade is classified as
waste and material with a grade equal to or greater than the cut-off grade
is classified as ore.
The Buffalo Ankerite Project - Description and Gold Resources
The current resource estimates for the Buffalo Ankerite Project are an update of the 2009 NI 43-101 resource estimate. A total of 98,522 metres of diamond core data from 311 drill holes was utilized to calculate the new resource estimates. The 2010-2012 drilling program has accomplished its objectives of converting portions of the Inferred Resources to Indicated Resources, of outlining additional resource extensions and of establishing potential for continued expansion of the mineralization at depth.
The Buffalo Ankerite Project consists of two separate zones, the South Zone and the North Zone, that each extend over two properties, Lexam's 100% owned Buffalo Ankerite and Lexam's 60%-Goldcorp's 40% owned Paymaster property (see Figure 1). The numbers presented in press release represent Lexam's net resources on the Project. The 2012 resource estimates were calculated using a manual polygonal cross-sectional method. High grade assays above 34.29 gpt Au (1 opt Au) were cut to this value. Tonnage estimates were based on a tonnage factor of 11.4 cubic feet per ton.
Lexam VG modeled the Buffalo Ankerite resource using different cut-off grades. In the first estimate (Option I below) the same cut-off was used as in 2009 (1.71 gpt Au) to provide a direct comparison to the earlier estimate. This approach gives investors a clear sense of the additional resources discovered through exploration. In the second estimate (Option II below) a lower cut-off was used to account for the possibility of using lower cost open pit mining methods above a depth of 300 metres. Option II cut-off grades were 0.51 gpt Au above a depth of 300 metres and 1.54 gpt Au below. These cut-off grades were derived using a formula that takes into account the current gold price and the projected cost of production. Results of the two estimates are as follows:
Option I - Using the same grade as in 2009. A cut-off grade of 1.71 gpt Au (0.05 opt Au), the same as for the 2009 resource estimate, was used to allow a direct comparison of the two estimates. As illustrated in Table 1 and Chart 1, the total resource on the Buffalo Ankerite Project at this cut-off grade was:
-- Indicated Resource of 4.5 million tonnes at average grade of 3.7 gpt
gold for a total of 531,671 oz gold, an increase of 137% from the 2009
Indicated Resource, representing a conversion of Inferred to Indicated
resources;
-- Inferred Resource of 3.5 million tonnes at average grade of 3.7 gpt gold
for a total of 417,032 oz gold, an increase of 52% from the 2009
Inferred Resource, representing a resource addition and indicating
further potential at depth.
Option II - Using a lower grade than in 2009. Due to the possibility of mining by open pit methods and to the price of gold doubling from early 2009 when the previous resource estimate on the Project was completed, management believes an additional estimate is warranted. Following current industry standards, this estimate employed cut-off grades of 0.51 gpt Au above 300 m and 1.54 gpt Au below 300 m depth (0.015 opt Au above 1,000 ft and 0.045 opt Au below 1,000 ft depth). These parameters were selected as the portion of the resource within the upper 300 m (1,000 ft) was determined to have potential for a lower cost, open-pit mining method of extraction and therefore a lower cut-off grade could be utilised, while the resource below 300 m from surface would have to be extracted with more costly underground mining methods and therefore the higher cut-off would apply. The results are presented in Table 2 and Chart 1 below.
Table 2. 2012 Gold Resource Estimate for South Zone and North Zone
(Cut-off grades: 0.51 gpt Au/ 1.54 gpt Au above/ below 300 m depth)
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Resource Tonnage Grade Gold
Classification South Zone (M tonnes) (gpt) (oz)
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Indicated Above 5.7 2.01 367,955
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Inferred 300 m 3.6 1.79 206,386
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Indicated Below 0.9 3.26 96,342
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Inferred 300 m 1.2 3.12 116,292
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Indicated Total 6.6 2.18 464,297
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Inferred South Zone 4.8 2.11 322,678
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Resource Tonnage Grade Gold
Classification North Zone (M tonnes) (gpt) (oz)
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Indicated Above 2.5 2.20 175,170
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Inferred 300 m 1.8 2.24 129,134
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Indicated Below 0.6 3.13 60,985
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Inferred 300 m 0.9 3.05 92,115
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Indicated Total 3.1 2.39 236,155
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Inferred North Zone 2.7 2.52 221,249
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(See Note 2 at the end of press release)
The total resource on the Buffalo Ankerite Project at cut-off grades 0.51 gpt Au above 300 metres and 1.54 gpt Au below 300 metres depth is consequently as follows:
-- Indicated Resource of 9.7 million tonnes at average grade of 2.25 gpt
gold for a total of 700,452 oz gold, an increase of 212% from the 2009
Indicated Resource;
-- Inferred Resource of 7.5 million tonnes at average grade of 2.26 gpt
gold for a total of 543,927 oz gold, an increase of 98% from the 2009
Inferred Resource.
The chart below presents the 2009 resource estimate together with the 2012 resource updates (Option I and Option II) on Buffalo Ankerite.
To view Chart 1, please visit the following link:
http://media3.marketwire.com/docs/lex0920chart1.pdf.The table below summarizes the differences between the 2009 resource estimate and the 2012 resource updates (Option I and Option II) on Buffalo Ankerite.
Table 3. Comparison of Buffalo Ankerite 2009 and 2012 Gold Resource Estimates
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Resource Estimate 2009 Option I, 2012
Cut-off grade 1.71 gpt Au 1.71 gpt Au
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Indicated South Zone Indicated
% Change
179,322 oz 351,374 oz From 2009:
North Zone 44,987 oz 180,297 oz
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Total 224,309 oz 531,671 oz +137%
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Inferred South Zone Inferred
% Change
251,872 oz 244,678 oz From 2009:
North Zone 22,760 oz 172,354 oz
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Total 274,632 oz 417,032 oz +52%
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Option II, 2012
Resource Estimate 0.51 gpt/ 1.54 gpt Au
Cut-off grade above/ below 300 m depth
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Indicated South Zone Indicated
% Change
464,297 oz From 2009:
North Zone 236,155 oz
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Total 700,452 oz +212%
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Inferred South Zone Inferred
% Change
322,678 oz From 2009:
North Zone 221,249 oz
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Total 543,927 oz +98%
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(See Note 3 at the end of press release)
About Lexam VG Gold Properties
All of Lexam VG Gold's properties are located in the prolific Timmins, Ontario, Canada gold district. This is a long established mining area with excellent infrastructure including highway access, readily available power and access to skilled work force.
Buffalo Ankerite Property
The Buffalo Ankerite property consists of 1,063 acres. It is located within a few kilometres from the producing Goldcorp Dome Mine to the east, past producing Hollinger and McIntyre Mines to the north and Aunor Mine to the west (see Figure 1). These mines have generated more than 50 million of the 70 million ounces of gold produced in the Timmins gold district. Between 1926 and 1953 the Buffalo Ankerite property produced 1,018,000 ounces of gold with an average recovered grade of 6.51 grams per tonne (0.19 ounces per ton). Additional information about the Buffalo Ankerite property can be found in the 2009 Buffalo Ankerite Report (see Note 1 at the end of the press release).
Fuller Property
Recent drilling at the Fuller property has continued to encounter near surface gold mineralization in the quartz-feldspar porphyry and the adjacent volcanics. Based on these favourable drill results and on historic results, a re-assessment of the Fuller mineralization that utilizes an open pit mining scenario and includes a new resource estimate is underway. Additional information about the Fuller property can be found in the 2007 Fuller Report (see Note 1 at the end of the press release).
Davidson Tisdale Property
The Davidson Tisdale property consists of 10 claims totalling 520 acres in the Tisdale Township in North-Eastern Timmins. The property is located approximately 5 km along strike from Hollinger, McIntyre and Coniaurum mines, which have produced over 31 million ounces of gold. The property is a joint venture where Lexam VG Gold owns 68.5% and SGX Resources owns 31.5%. Davidson Tisdale was subject to minor production in 1988 by Getty Canadian Metals, with a total of 7,300 ounces of gold mined. Additional information about the Davidson Tisdale property can be found in the 2007 Davidson Tisdale Report (see Note 1 at the end of the press release).
Paymaster Property
In June 2012, Lexam VG Gold announced that it has exercised its option to acquire a 60% interest in Goldcorp's Paymaster Property. Goldcorp has until December 2012 to exercise their back-in right to increase their interest from 40% to 70%. To earn the back-in right, Goldcorp needs to make expenditures of $8.96 M on the property and to complete a feasibility study within three years. Additional information about the Paymaster property can be found in the 2011 Paymaster Report (see Note 1 at the end of the press release).
About Lexam VG Gold
Lexam VG Gold has four key properties in the Timmins gold district of Ontario, Canada. The Company's exploration efforts have been designed to grow its gold resource base with the objective of identifying economic deposits. As of June 30, 2012 Lexam VG Gold had $5.8 million in cash, with no bank debt. The Company has 226,570,860 issued and outstanding shares, with 27% owned by Chairman Rob McEwen.
Technical Information
All exploration work for the Buffalo Ankerite Project was conducted under Kenneth Guy, P. Geo, Senior Geological Consultant and Qualified Person for the Company, as defined by NI 43-101. Mr. Guy has reviewed and approved the technical contents of this news 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 gpt Au were re-assayed with gravimetric finish. Samples noted to contain visible gold were analyzed via total metallic assay method. A rigorous Quality Assurance and Quality Control Program (QA/QC) was in place, using control samples such as blanks and duplicate checks. In addition, duplicate analyses of 10% of the samples were corroborated by check assays performed at a third party laboratory.
The mineral resource estimate on the Buffalo Ankerite Project was completed by Peter Bevan, P.Eng, mining geological consultant and an independent Qualified Person in accordance with NI 43-101. Mr. Bevan has reviewed and approved the technical contents of this news release. A NI 43-101 compliant technical report containing the new resource estimate on the Buffalo Ankerite Project will be filed on SEDAR (
www.sedar.com) within 45 days of this press release.
For additional information about the Buffalo Ankerite Project refer to the 2009 Technical Report (filed Aug 25, 2009), available on SEDAR (
www.sedar.com).The mineral resource estimates completed by Peter Bevan were based on geological interpretations and data supplied by Lexam VG Gold. Mr. Bevan has visited the Buffalo Ankerite Project on numerous occasions, most recently in July 2012. He has reviewed the drill hole database, resource modeling, and the QA/QC for verification of gold grades. Site visits, data review and QA/QC presented no issues of concern regarding the resource estimate.
The resource estimates contained herein do not constitute a feasibility or pre-feasibility study and contain no mineral reserves within the meaning of NI 43-101 or SEC Industry Guide 7. The mineral resource figures referred to in this press release are estimates and therefore insufficient to allow meaningful application of the technical and economic parameters to enable an evaluation of technical or economic viability and no assurances can be given that the indicated levels of gold will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. While the Company believes that the resource estimates included in this press release are well established, resource estimates are imprecise by their nature and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced in the future, this could have a material adverse impact on the Company. In addition, this news release includes inferred resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves.
Cautionary Note to U.S. Investors
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