ELORO RESOURCES LTD. (TSX VENTURE: ELO)(FRANKFURT: P2Q) ("Eloro" or
the "Company") and MEGASTAR DEVELOPMENT CORP. (TSX VENTURE:
MDV)(FRANKFURT: M5Q) ("Megastar") are pleased to announce the
completion of the Phase 2 diamond drilling program at the Simkar
Gold Property (the "Property"), located 20 km east of Val-d'Or
(Quebec). The recently completed program followed on the Phase 1
discovery of a New Zone and current results show intersections of
up to 7.88 g/t gold over 4 metres. Given these results, Eloro plans
to immediately proceed this autumn with a Phase 3 drilling program
at Simkar, and will focus on further delineating the New Zone.
The Phase 2 drill program, consisting of 5 diamond-drill holes
totalling 2,200 metres, targeted the New Zone of gold
mineralization intersected during Phase 1 drilling earlier in the
year. The discovery drill-hole intersections included 3.96 g/t Gold
over 5 metres in SK10-16A and 9.27 g/t Gold over 5.9 metres in
SK10-12 (refer to the Eloro and Megastar news releases dated May
27, 2010). The discovery intersections are located immediately
below the historic "A" and "B" zones that were mined from the
former Louvicourt Goldfields Mine located on the Property.
The Phase 2 program focused on delineating the up-plunge and
down-plunge extensions of the New Zone, which is interpreted to
have similar geometry and orientation to the known, shallower
mineralized zones. The drilling tested the New Zone from 175 metres
to 350 metres below surface, along its projected 30 degrees plunge
to the southwest, and successfully intersected the New Zone in 4 of
5 holes. Highlights from the recent drilling are as follows:
FROM TO INTERVAL GOLD
DDH # (metres) (metres) (metres) (g/t) ZONE
SK10-18 210.65 212.40 1.75 1.61 East Zone
SK10-19 249.00 250.00 1.00 9.01 New Zone
SK10-21 357.00 358.30 1.30 5.06 New Zone
SK10-22 416.00 420.00 4.00 7.88 New Zone
Notes - All drill holes are inclined. The From and To lengths are metres
drilled down hole and not vertical depths. Lengths tabulated are down hole
lengths and not true widths. All gold assays are reported uncut. Quality
Assurance and Quality Control ("QA/QC") protocols are outlined below.
SK10-20 did not intersect the New Zone due to a porphyry dyke
that crosscuts the favourable diorite host rock where the hole
should have intersected the mineralized zone. SK10-18 intersected
the New Zone 125 meters vertically below the discovery hole
intersection in SK10-12 however, the mineralized intersection did
not return significant gold values. SK10-22, the deepest of the
Phase 2 program, intersected the projected down-plunge location of
the New Zone at a vertical depth of 375 metres (416 metres
down-hole) demonstrating the zone remains open down-plunge.
The attitude of the New Zone mimics that of the "A" and "B"
zones, but at a deeper level, signifying the possible existence of
a stacked set of mineralized lenses below the New Zone as well as
below other historic zones identified on the Property.
"We continue to build on the resource and Simkar once again is
showing great potential", stated Eloro CEO Tom Larsen. "As a
result, we are immediately moving forward with the next phase,
Phase 3, again focussed on the New Zone."
"The Simkar gold property is a previous proven producer, and we
continue to advance it with the ultimate goal of moving it into
production", stated Megastar CEO Dusan Berka. "This program, our
joint venture with Eloro and our proposed Simkar Business
Combination gives us the best opportunity to achieve this
goal."
The Simkar Gold Property and the Proposed Eloro - Megastar
Business Combination
On August 30, 2010 Eloro and Megastar jointly announced they
have reached an agreement in principle regarding a proposed
business combination (the "Business Combination"). Eloro and
Megastar propose to complete a Business Combination that will
provide that Megastar will receive 70 million (70,000,000) Eloro
common shares in exchange for all of Megastar's right, title and
interest in and to the Simkar Gold Property. Completion of the
transaction is subject to usual terms and conditions for such a
transaction, including but not limited to the completion of due
diligence, completion and execution of definitive Business
Combination documentation, receipt of all required regulatory and
shareholder approvals and no material adverse changes occurring in
the financial condition of either company.
Eloro and Megastar are currently in the second year of an Option
and Joint Venture Agreement that provides Eloro with the option to
earn a 50% interest in the Property by completing $4 million in
exploration work, paying Megastar $350,000 and issuing 4.5 million
shares of Eloro to Megastar over 3 years. Eloro has met its Year 1
commitments, including incurring exploration costs of minimally
C$750,000 pursuant to the Option Agreement with Megastar.
QA/QC Procedures
The Company has implemented QA/QC procedures to ensure best
practices in sampling and analysis of the core samples. The NQ
drill core is logged and then split in half with one-half sent for
assay. Duplicates, standards and blanks are inserted randomly into
the sample stream. The samples are delivered, in secure tagged
bags, directly to the ALS Laboratory Group facility in Val-d'Or
(Quebec) for analysis. Samples with visible gold are analyzed by
the Total Metallic Sieve method, whereas the remaining samples
undergo more conventional Fire Assays. For the reported
intersections, total metallic screen check-assays were completed on
the coarse crushed reject for all samples reporting greater than 10
g/t Gold from the initial fire assay. Other samples within the
intersection are re-submitted for check fire-assay using the
original pulps. The final reported gold grade for a sample is
either the Total Metallic Sieve assay result or it is the average
of the two fire assays.
About Eloro Resources
Eloro is a junior exploration company focused on discovering and
developing precious metals in the Val-d'Or mining camp, as well as
quality precious and base metal resources in the James Bay region
of northern Quebec. In the James Bay region, Eloro has 11
gold-copper-silver properties (1,062 claims) covering 548 km2 in
the La Grande and Eastmain Greenstone Belts, proximal to Goldcorp's
Eleonore Gold Project.
About Megastar Development Corp.
Megastar Development Corp. is an emerging resource company
engaged in the acquisition, exploration and development of mineral
properties in Canada. Megastar owns gold and base metal properties
in Quebec and British Columbia, including the Simkar Gold Project
in Val d'Or, Quebec. For further information, investors and
shareholders are invited to visit the Company's website at
www.megastardevelopment.com or call at 604-683-6648.
The technical information contained in this news release was
prepared and approved by Martin Bourgoin, P. Geo., Executive VP of
Eloro, and John Langton, P. Geo., VP Exploration of Eloro and
Project Manager of the Simkar Gold Project. Both individuals are
Qualified Persons as defined by NI 43-101.
Statements made in this news release that are not historical
facts are "forward-looking statements", and readers are cautioned
that any such statements are not guarantees of future performance,
and that actual developments or results, may vary materially from
those in these "forward-looking" statements.
To view Figure 1, please visit the following link:
http://media3.marketwire.com/docs/elo0914fig1.pdf.
Neither the TSX Venture Exchange nor its regulation services
provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Contacts: Eloro Resources Ltd. Thomas G. Larsen President and
CEO (416) 868-9168 (416) 361-1333 (FAX) www.elororesources.com
Megastar Development Corp. Dusan Berka, P. Eng. President and CEO
(604) 683-6648 (604) 683-1350 (FAX) www.megastardevelopment.com
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