Kirkland Lake Gold identifies potential new source of gold production in Northern Territory of Australia
Tuesday, May 01, 2018
Kirkland Lake Gold Ltd. announced positive drill results at Union Reefs, where the Company’s processing plant in the Northern Territory is located. The Company’s Northern Territory operations, including the Union Reefs Mill and Cosmo Mine, have been on care and maintenance since June 30, 2017.  Four holes for 4,287 m were drilled from surface to test the potential of the Prospect Deposit (“Prospect”), Crosscourse Deposit (“Crosscourse”) and the Lady Alice Deposit (“Lady Alice”), all related to historic open-pit mining activities at Union Reefs. The results indicate the continuation of gold mineralization at the three deposits below known Mineral Resources, and highlights the potential for Mineral Resource expansion at each location within the Union Reefs gold trends.

Drilling at Union Reefs is being conducted as part of a multi-location exploration program intended to establish economic deposits that may warrant the resumption of operations in the Northern Territory. Another key component of the program is exploration drilling and development at the Lantern Deposit, located at the Cosmo mine site approximately 70 km from Union Reefs. In December 2017, the Company announced drill results that significantly expanded the size of the Lantern Deposit, and included the highest-grade intersection ever identified at Cosmo (4,750 g/t Au over 0.3 m, with an estimated true width (“ETW”) of 0.2 m), located approximately 250 m north of the known Lantern mineralization (see Kirkland Lake Gold News Release dated December 19, 2017). Underground development into the Lantern Deposit from the existing Cosmo ramp commenced in early April 2018, with total development to date of 120 m. In total, two exploration drifts are currently being developed to expose the Lantern mineralization and support underground drilling, mapping and sampling as the Company works towards bringing the Lantern Deposit into production.

Tony Makuch, President and CEO of Kirkland Lake Gold, commented: “The potential to resume operations in the Northern Territory represents a significant opportunity to generate value for Kirkland Lake Gold. The success that we are having with the Lantern Deposit at Cosmo, and now at Union Reefs, increases our confidence that we can establish an attractive five-year mine plan in the Northern Territory that will lead to profitable gold production that generates free cash flow. For some time, we have thought that establishing an operation that meets our key objectives of around 100,000 ounces of annual production at operating cash costs of under $650 per ounce and all-in sustaining costs of better than $950 per ounce would involve feeding the Union Reefs mill from multiple locations. The Lantern Deposit is quickly advancing towards becoming an economic orebody, with progress expected to accelerate once we have completed our two exploration drifts. Today’s results from Union Reefs represent a substantial extension of known mineralization, and highlight the potential that exists to identify additional economic deposits within our Northern Territory land position. Drilling is continuing at Union Reefs, following up on the latest results, including infill drilling, and exploring for new mineralized zones. With continued exploration success, we are increasingly confident that a decision to resume operations in the Northern Territory can be made.”

Drilling Highlights within Prospect, Crosscourse and Lady Alice at Union Reefs

Drill results reported today include four drill holes for a total of 4,287 m which lie about 500 m north of the Union Reefs processing plant. The drilling was completed late in 2017 as part of the Northern Territory Large Ore Deposit Exploration (“LODE”) program targeting existing mineral deposits at depth.  It represents a successful program of large-scale, step-below drilling with results demonstrating the significant high-grade potential of Prospect, Crosscourse and Lady Alice.

Key intercepts are listed below, with further details provided in the commentary that follows.

  • 95.0 g/t Au over 1.1 m (ETW 1.0 m), including 161 g/t Au over 0.6 m (ETW 0.5 m) in hole URNDD0097 (Crosscourse)
  • 10.8 g/t Au over 3.0 m (ETW 1.9 m), in hole URNDD0096W1 (Prospect)
  • 22.2 g/t Au over 1.0 m (ETW 0.7 m) in hole URNDD0097W1 (Crosscourse)
  • 25.6 g/t Au over 0.85 m (ETW 0.5 m) in hole URNDD0096W1 (Crosscourse)
  • 20.5 g/t Au over 0.95 m (ETW 0.7 m) in hole URNDD0097W1 (Prospect)
  • 15.6 g/t Au over 0.90 m (ETW 0.5 m) in hole URNDD0096 (Prospect)
  • 7.3 g/t Au over 1.7 m (ETW 1.2 m) in hole URNDD0097W1 (Lady Alice)
All drill holes intersected significant mineralization for the Prospect and Crosscourse targets, with drill hole URNDD0097W1 extended further east to also intersect the parallel Lady Alice target. The intersected mineralization occurs within large quartz-carbonate-chlorite veins (Prospect & Lady Alice) or within stockwork vein systems (Crosscourse). Weak sericite alteration affects the metasedimentary host rocks adjacent to the veins, which have modest sulfides present, dominated by arsenopyrite and pyrite. The mineralization is also anomalous in base metals, as galena and sphalerite. Small amounts of visible gold has been observed in the drilling.

The drilling intercepts confirm that mineralization extends to over 1,000 m below surface. Past open-pit mining in the late 1990s and early 2000s was restricted to 240 m maximum depth from surface with no underground mining having occurred at Union Reefs since the late 1800s. The Prospect intercepts increase the mineralization footprint to over 500 m below existing Measured and Indicated and Inferred Mineral Resources. The Crosscourse plunge extent is now extended by approximately 800 m below existing Measured and Indicated and Inferred Mineral Resources. The Lady Alice drilling intercept occurs 800 m vertically below existing Inferred Mineral Resources. Based on current drill data, the Company believes that considerable potential exists for continued expansion of the Union Reefs Mineral Resources, both along strike and down-plunge of all historical & present deposits. More information about existing Mineral Resources at Union Reefs is provided in the Technical Report, entitled, “Report on the Mineral Resources & Mineral Reserves of the Northern Territory Operations,” effective December 31, 2015 and dated March 21, 2016, available on SEDAR at www.sedar.com and on the Company’s website at www.klgold.com.

There are currently two surface diamond drill rigs operating in the Union Reefs region, testing areas around the existing deep intersections, as well as investigating the potential for additional deep mineralized structures.

Commencement of underground exploration development mining into Lantern

Underground development, to provide locations for drilling and underground exposures of Lantern mineralization, commenced in early April, with 120 m completed as at April 22, 2018. Development has focused on the upper 920 m level drill drive and will eventually expose Lantern mineralization for mapping and sampling to strengthen geological interpretations and enhance the understanding of gold grade distribution within the Deposit.

Underground development is also progressing on the 610 m level drill drive, which will cross-cut a lower portion of the Lantern mineralization, and be advanced further westwards to establish locations for drilling.  Drilling from such locations will support potential expansion of the Lantern Mineral Resource at depth.  The development is positioned to cross-cut through Lantern mineralization down-plunge of the high-grade drill intercept 1,624 g/t Au over 0.91m (ETW 0.6 m) in hole LU73020, as previously reported (see Press Release dated December 19, 2017 filed on SEDAR).

Union Reefs Region – Background

Union Reefs is hosted in the regionally-significant Pine Creek Shear Zone, as a northwest trending strongly gold-mineralized structure. Gold mineralization at Union Reefs is focused within two sub-parallel quartz reef and shear zone systems, known as the Lady Alice Line (eastern line) and the Union Line (western line). Both lines have extensive gold mineralization that trends north-northwest through tightly folded siliciclastic rocks of the Burrell Creek Formation.

Gold mineralization along the Lady Alice Line is hosted within sub-vertical axial, planar shear zones along the western limb of the Lady Alice Anticline. Important gold deposits along the Lady Alice Line include Millar’s, Ping Que, Big Tree and Lady Alice. The Union Line dips steeply-east and hosts several significant gold deposits, including Union South, Prospect, Union North and Alta.  Crosscourse, the largest known deposit at Union Reefs, occurs between the Union and Lady Alice Lines.  A cross-cutting mineralized shear zone and complex vein system links the locally shorter distance between the Union and Lady Alice Lines at Crosscourse creating a large dilatational damage zone exploited by mineralizing fluids.

The Union Reefs region was a centre of significant gold mining between 1994 and 2004, with approximately one million ounces of gold extracted from 11 open pits.  Mining was generally from shallow oxide pits (<80 m), with the exception of the Crosscourse Pit, which was mined to a depth of approximately 240 m and produced approximately 880 koz of gold.  Mining has not occurred at Union Reefs since 2004, however the processing facility at the site continued operation until the Cosmo Mine was placed on care and maintenance effective June 30, 2017.

For more information, please visit: http://www.klgold.com

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