Forest Gate Closes Cuff Lake Iron Property Acquisition

CALGARY, AB, Nov. 2, 2011 /CNW Telbec/ - Forest Gate Energy Inc. (TSXV: FGE) reports that its mineral group has completed its acquisition of the Cuff Lake iron property located in the Abitibi region of Quebec, approximately 160 kilometres southeast of Val d'Or and 145 kilometres south of Forest Gate's Pershing iron property.

As a result of the transaction Forest Gate owns a 100% interest in a mineralized iron-bearing land package consisting of 151 contiguous mining claims extending in an east-west direction over a distance of 16 kilometres (10 miles). The property is accessible by road and highway and is close to additional infrastructure and an experienced, indigenous workforce. This represents the second iron property acquisition that the mineral group has made in 12 months.

"Cuff Lake iron is a strategic acquisition for the mineral exploration side of this company's business," said Michael Judson, Forest Gate's President & CEO. "The acquisition of an iron property located in the Abitibi region of Quebec is an obvious synergistic fit with our 100 percent-owned Pershing iron property, which is located within reasonable proximity."

Judson says the company will start its exploration program at Cuff Lake possibly as early as December 2011 by flying an aeromagnetic survey. "We could be drilling the property this winter," said Judson. "And we may be able to finish 2012 with resource estimates on both Cuff Lake and Pershing."

As previously disclosed in a news release dated October 3, 2011, the property known as Cuff Lake has a non-43-101-compliant historical "open pit mineable reserve of 20,071,000 tons of magnetite ore grading 17.4% soluble iron" (source: Expo Iron Ltd. report, December 13, 1971) and an additional potential resource of approximately 180 million tonnes of similar quality magnetite-rich mineralization (source: Fenton Scott 2010 internal reports) that was geologically inferred on the basis of widely separated holes and magnetometer data.

Forest Gate Energy emphasizes that they have made no effort yet to reclassify the historic estimates of resources as current resources. These estimates therefore should not be treated as current resource estimates nor should they be relied upon.  Furthermore, because no recent work has been done to evaluate the economics of the deposit, there is no guarantee that the quoted historic "reserve" figure is potentially economic. Economic studies done in 1970 do not mean the mineralized iron deposit would be found to be economic today.

Historical reports on the property have estimated a wide range of total potential tonnage of iron mineralization that varies from 110 million tons (short) to 268 million tons depending on depth and width used to calculate the volume for each deposit.  An extensive drilling program will be required to verify these calculations. In accordance with NI 43-10, Sec 2.3 (2), the reader is cautioned that the estimate of the potential quantity and grade for the deposit is conceptual in nature and that there has not been sufficient exploration in this instance to define a mineral resource nor is there certainty that further exploration will delineate the target as a mineral resource.

The historical reports indicated that iron rich bands form several magnetite-rich locations each varying from 1.5 to 2 kilometres (5,000 - 6,500 feet) in length, 61metres (200 feet) to 152 metres (500 feet) in width, with an average 91metres (300 feet), and having down dip extensions greater than 250 metres. The magnetite-rich bands trend approximately east-west and dip at 45o to 55 o toward the north.

Metallurgical testing by Expo Iron Ltd (internal report August 1, 1970) indicated that the iron-bearing mineralized rock crushed to minus ten mesh and treated on a dry magnetic drum would retain 34.7% of the ground material, 99.1% of which was magnetite and which assayed 44.2% soluble iron. These concentrates continued to contain high sulphur (3.74%).  (Subsequent metallurgical tests at Lakefield Research laboratory reported that this sulphur content could be reduced to 0.50% by milling processing. See details below)

"Beneficiation tests conducted at Aerofall Mills Limited in Clarkson, Ontario, using 53-ton representative bulk sample, have adequately demonstrated the ability to produce a coarse, dry, pre-concentrate by autogenous grinding and low-intensity magnetic separation techniques." Finer grinding to minus 150 mesh produced magnetic concentrate having higher grades (64% soluble iron).

"Grade of these pre-concentrates was 63-64% soluble iron. Tests to produce superconcentrates were followed at Lakefield Research Laboratory in Lakefield, Ontario. Re-grinding to 70-75% minus 325 mesh and wet magnetic separation resulted in the production of superconcentrates grading 70.76% soluble iron, 0.96% silica, 0.50% sulphur, 0.008% phosphorus, 0.008% titanium and 0.20% manganese."

Forest Gate Energy Inc. has not undertaken any recent metallurgical tests to verify the quoted metallurgical results. All metallurgical results quoted above are historic in nature and taken from an Expo Iron Ltd report dated August 1, 1970

The historic 1971 Assessment Report for Expo Iron Ltd states that 17, 048 feet of diamond drilling had been completed on the property. The iron mineralization is covered by approximately 10 metres of overburden making it amenable to open pit mining methods.

Historically quoted resources at Cuff Lake were based on a review of historical work reports that used data drawn from surface sampling, diamond drilling, ground and airborne magnetometer surveys. Forest Gate has not completed any work on the property.

"The Cuff Lake project which is approximately 160 kilometres south-southwest of the Pershing iron showing is a highly complimentary acquisition for Forest Gate," said Michael Judson, President of Forest Gate. "The successful development of the Cuff Lake iron project will enhance the overall economics of developing Pershing iron in the heartland of Quebec."

"Iron ore projects in Abitibi Region of Quebec will benefit greatly from the existence of well-established infrastructure and proximity to existing railroads. As an example, a rail line operated by CN runs through Senneterre (40 kilometres north-northwest from Pershing) and connects directly to the deep-water port at Quebec City. This greatly differentiates the capital costs of our prospects from those located in more remote locations," said Judson.

In consideration of the acquisition, Forest Gate paid the vendor $50,000 in cash. Forest Gate will pay the vendor an additional $50,000 on October 31, 2012. The vendor holds a 2% Net Smelter Royalty; one percent of this royalty can be purchased by Forest Gate for $3 million. Forest Gate will also have a Right of First Refusal in the event the royalty holder elects to sell the remaining one percent royalty.

A finder's fee in the amount of $10,000 ($4,000 in cash and  $6,000 in Forest Gate common shares at $0.06) was paid to a consultant.

New video on website:
Please visit the company website (www.forestgate.ca) to view management's recent visit to the Cuff Lake Property.

Technical information in this news release was prepared in accordance with Canadian regulatory requirements as set out in National Instrument 43-101 and has been reviewed by Edward Procyshyn, Geo, who is the qualified person as defined by NI 43-101. 

About Forest Gate
Forest Gate Energy Inc. is a publicly listed oil and gas exploration and production, and non-energy resource company trading on the TSX Venture Exchange under the symbol FGE. The Company is seeking to increase shareholder value through participation and development of energy and other resources in Canada and internationally.

FORWARD-LOOKING STATEMENTS
Certain statements regarding Forest Gate, including management's assessments of future plans and operations and Forest Gate's anticipated financial performance, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond Forest Gate's control. These risks may cause actual financial and operating results, performance, levels of activity and achievements to differ materially from those expressed in, or implied by, such forward-looking statements.

Such factors include, but are not limited to: the impact of general economic conditions in Canada and the United States; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced; competition; the lack of availability of qualified personnel; fluctuations in commodity prices; the results of exploration and development drilling and related activities; imprecision in reserve estimates; the production and growth potential of Forest Gate's various assets; fluctuations in foreign exchange or interest rates; the ability to access sufficient capital from internal and external sources; and obtaining required approvals of regulatory authorities.

Neither TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this release.

SOURCE FOREST GATE ENERGY INC.

For further information:

ROBERT KRAMBERGER, V-P, INVESTOR RELATIONS OR MICHAEL JUDSON, PRESIDENT & CEO
1-866-666-3040
RKRAMBERGER@FORESTGATE.CA
MJUDSON@FORESTGATE.CA
WWW.FORESTGATE.CA

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