MILL CITY OPTIONS CROXALL PROPERTY ADJACENT TO LAKE SHORE GOLD WEST TIMMINS
GOLD DISTRICT, ONTARIO
TSX VENTURE SYMBOL "MC"
CALGARY, Sept. 22 /CNW/ - MILL CITY GOLD CORP. ("Mill City" and/or the "Company") announced today it has entered into an option and joint venture agreement with Temex Resources Corp. ("Temex") pursuant to which Temex has agreed to allow Mill City the right to earn not less than a 75% interest in the Croxall Property. The 2,400 acre Croxall Property ("Croxall") is a key property located in the area known as the West Timmins Gold District where Lake Shore Gold Corp. ("LSG") is currently in the pre-production phase of developing the first gold mine on the Timmins Mine Project, 6 kilometres northwest of Croxall. The optionors of Croxall were also the prospectors who sold the Thunder Creek portion of the Timmins Mine to the predecessor company to LSG. The Croxall property is located adjacent to the east of the southeast portion of the Lake Shore property and two kilometres to the south of the Explor Resources property.
Commented Jim Brown, President and CEO of Mill City: "We are happy to enter into this arrangement with Temex on what we believe is one of the best underexplored properties in the West Timmins area. With Temex focused on significant drilling programs on other properties in their portfolio, we saw this is a great opportunity to move into the heart of the West Timmins Gold District to an area where gold mineralization has already been discovered and where the database is such that we can start right at the drill stage. We already have a good working relationship with Temex and we hope we are very successful with the drilling planned this fall at Croxall".
Lake Shore Gold reported in their presentation at the Denver Gold show September 20, 2010 that drilling was continuing on the Golden River area 3km to the west of Croxall with 4 drill rigs (LSG website - Presentations). Information from historic work completed on the two properties, including the recent work by Temex on Croxall indicates the presence of the same style of mineralization extending for several kilometres on the two properties. Over the years, operators on the LSG property to the west found that detailed drilling and deeper drilling was required to find the higher grade and wider parts of the gold mineralized systems once they were located. To date gold mineralization has been found in drill holes at a number of sites on Croxall but little detailed follow-up has been carried out to trace the mineralization along strike or to depth.
History and Geology
The Croxall Property was optioned by Temex in 2009 based on its favourable geological position and the fact that it contained known gold mineralization. It is contiguous to the east of the Golden River trend being explored by LSG and is underlain by similar stratigraphy that hosts gold mineralization on the Lake Shore Gold property. The southern portion of the Croxall Property covers approximately 3 kilometres of the Porcupine-Destor Fault, a key marker for gold mineralization in the Timmins camp, and the property is known to host more than one "syenite" type gold-bearing porphyry body similar to that being explored by LSG and also to the north of Croxall on the Explor Resources property. Gold mineralization has also been identified by previous operators within other host rock types on Croxall.
During the first year of the underlying Croxall option agreement, Temex completed a first phase drill program consisting of eight holes totalling 2,863 metres. The Temex drill hole TC09-01 intersected significant gold mineralization including visible gold within an altered porphyry unit that assayed 5.28 g/t gold over 1.90 metres including 7.81 g/t gold over 1.10 metres. Similar altered porphyry containing molybdenite mineralization was intersected approximately 100 metres vertically below and assayed 1.09 g/t gold over 1.40 metres. This intersection represents the deepest hole drilled on the Croxall Property. A second, much larger altered porphyry intrusion intersected near the top of the hole assayed 4.15 g/t gold over 1.00 metres, while a 1.30 metre wide interval of ultramafic rock adjacent to this porphyry assayed 1.55 g/t gold over 1.30 metres.
The phase 1 results were very encouraging, and included the highest gold grades recorded to date and also included the definition of a number of altered felsic porphyry units associated with the gold mineralization. Further drilling is required to test for gold mineralization associated with the porphyry bodies which remain untested in all directions.
Agreement
Temex has an option agreement allowing it to acquire a 100% interest in the Croxall Property, located in the Ogden, Price and Thorneloe townships, in the Porcupine Mining Division. The original option agreement was announced by Temex in its June 25, 2009 news release.
Temex has subsequently entered into an agreement with Mill City under which Mill City has the option to earn not less than a 75% interest in Croxall pursuant to the following main terms: Mill City shall commit to spend $250,000 on Croxall by the first anniversary of the agreement and deliver to Temex 250,000 common shares of Mill City. In order to earn a 75% interest in the property, Mill City must spend a total of $750,000 prior to the fourth anniversary of the agreement and must pay all cash payments that remain to be paid on the property until the formation of the joint venture. Temex shall remain responsible for any share payments due to the optionors under the original agreement. If the interest of Temex under the joint venture drops below 10% its interest shall be forfeited. As part of the consideration for this agreement, Mill City has agreed to terminate its agreement with Temex dated December 12, 2007 relating to the Northern Star Eagle and Southern Star Eagle properties in the James Bay lowlands.
Bruce Durham, P. Geo., is the designated qualified person responsible for the preparation of this news release.
ON BEHALF OF THE BOARD OF DIRECTORS
"James R. Brown"
James R. Brown
Chairman, President & CEO
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this Release.
For further information:
Please contact James R. Brown at 403-640-0110 or visit the Company's website at www.millcitygold.com
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