Mountain Lake Provides Year-End Corporate Update
Last Update: 1/7/2009 9:01:26 AM
HALIFAX, NS, Jan 07, 2009 (MARKET WIRE via COMTEX) --Mountain Lake Resources Inc.(MOA) ("Mountain Lake" or the"Company") is pleased to provide a year-end update on its projectsand plans for 2009.
Adapting to the current global economic turmoil, the Company took ahard-lined approach in its exploration and development efforts in thelater part of 2008 to evaluate its projects and prioritize theCompany's best opportunities for growth in 2009. Additionally, theCompany strengthened its balance sheet by eliminating $2,000,000worth of debt.
Status of Projects
Bobby's Pond Deposit / Cornerstone Option (base metals) - CentralNewfoundland
Mountain Lake reported the results of a National Instrument 43-101("NI 43-101") compliant resource update for the Company's 100% ownedBobby's Pond deposit, which is located approximately 45 kilometres(kms) west by road of Teck Cominco's Duck Pond mine/mill complex.The independent resource update, prepared by Hrayr Agnerian of ScottWilson Roscoe Postle Associates Inc. as of July 31, 2008, includes anadditional 16 drill holes since the previous resource calculation(January 15, 2007) and estimates that the Bobby's Pond Depositcontains an indicated resource of 1,095,000 tonnes of 0.86% Cu, 4.61%Zn, 0.44% Pb, 16.6 gpt Ag, and 0.2 gpt Au in addition to an inferredresource of 1,177,000 tonnes of 0.95% Cu, 3.75% Zn, 0.27% Pb, 10.95gpt Ag and 0.06 gpt Au. The resource update included a 118% increasein contained copper in the inferred category from 11.3 million pounds(lbs) in the previous estimate to 24.6 million lbs; and a 45%increase in contained zinc in the inferred category from 67.3 millionlbs to 97.3 million lbs (see: NI 43-101 Bobby's Pond TechnicalReport).
In October 2008, Mountain Lake was granted a five year extension fromthe Department of Natural Resources of Newfoundland and Labrador tothe provision in the terms of the Bobby's Pond deposit mining lease,which required the property to be placed into production by July 2009.Production from the deposit must now commence by July 2014, and thelease term continues until July 2029.
Mineralization on the Bobby's Pond deposit remains open at depth,however, due to the increasing cost associated with drilling +500metre (m) holes, our 2008 exploration plan focused on finding new,near surface, mineralization in proximity to the Bobby's Pond depositon the adjacent claims optioned from Cornerstone Capital ResourcesInc. A recent drill program on the Cornerstone property encountereda 0.6 m massive sulphide zone of 7.0% Zn, 0.15% Cu, 4.7% Pb, 80.6 ppmAg and 1051 ppb Au within a 3.1 m zone of 2.6% Zn, 0.12% Cu, 0.93%Pb, 38.9 ppm Ag, and 251 ppb Au in drill hole CS-08-03. Thismineralized zone is significant in that it represents a new area ofmassive sulphide deposition in close proximity to the Bobby's Ponddeposit. Further drilling will be required to determine thesignificance of this new zone.
Despite the downturn in base metals prices, the Company feelsexploration dollars are well spent evaluating the Cornerstone propertyto ensure that it is sufficiently explored while meeting theexploration commitments of the option agreement. In that regard,Cornerstone has generously agreed to extend the terms of our optionagreement by one year. Shares of Mountain Lake will still be grantedto Cornerstone in keeping with the original option agreement. Basedon the results of the 550 m drill program just concluded, a futuredrilling plan is now being developed. Mountain Lake would also liketo extend its gratitude to the Newfoundland and Labrador Departmentof Natural Resources, Mines and Energy Division, for contributing tothe costs of this exploration program through the Junior ExplorationAssistance grant program.
Etruscan Diamonds Limited - South Africa
The Company's minority owned subsidiary Etruscan Diamonds Ltd.("Etruscan Diamonds") announced on December 12, 2008 (see newsrelease) that, due to the recent drop in rough diamond prices, it isassessing various options for the Blue Gum Alluvial Diamond Projectincluding possible alternatives for financing to provide sustainingcapital for operations or a potential temporary suspension ofproduction until such time as market conditions improve. The globaleconomic downturn, coupled with the seasonal slowdown in the roughdiamond market, has placed severe pressure on rough diamond priceswhich have dropped as much as 60% from those seen earlier in theyear.
While the current uncertainty in the rough diamond market is anobvious set back to the Blue Gum Project, recent productionstatistics continue to confirm the geological model concerning gradeand volumes. Further, the NI 43-101 compliant independent resourceupdate, prepared by Dr. Tania Marshall of Explorations Unlimited asof June 30, 2008, estimates that the Blue Gum Project contains 25.5million cubic meters (m3) of indicated diamond resource --approximately a 24% increase in the indicated resource from theprevious resource estimate of December 2007 -- in addition to 15.3million m3 of inferred diamond resource at grades ranging from 1.77to 2.85 carats per 100 m3 of gravel (see NI 43-101 Blue Gum TechnicalReport).
Mountain Lake owns 13.07% (4,350,000 shares) of Etruscan Diamonds,Etruscan Resources Inc. owns 52.07% and various third parties own theremaining 34.86%. Robert Harris, P.Eng., Vice President of Operationsof Etruscan Resources Inc., is the Qualified Person overseeingproduction and development for Etruscan Diamonds in South Africa.Additional information is expected from Etruscan Diamonds later thismonth.
Falls Grid (gold) - Northern New Brunswick
Optioned from local prospectors in December 2007, the Company'sexploration in 2008 focused on looking for new gold mineralizationwithin the carbonate - fuchsite alteration zone, which was known toextend for over 4 km across the property. The soil sampling surveyidentified areas of high gold and arsenic and follow up workconsisted of collecting samples from the overburden/bedrock interfaceusing a portable motorized sampler in the areas of the highest goldvalues. Five drill holes were targeted on gold anomalies generatedfrom the deep overburden sampling program. Two holes contained lowlevels of gold mineralization with the best zone containing 1.29 gptAu over a 4 m width. Consequently, and in keeping with the Company'sefforts to prioritize its best opportunities for growth, the propertywas returned to the Optionors prior to the first anniversary date ofthe option agreement.
Little River (gold) - South Coast of Newfoundland
Optioned from local prospectors in September 2008, the Company'sinitial results from exploration efforts on the Little River goldprospect have been very encouraging. Exploration has focused onestablishing a control grid for a soil geochemical survey.Mineralized float and subcrop on the property exhibit a strong gold -arsenic relationship and this is evident in the soil anomalies.These anomalies are located in areas where little or no prospectinghas been done and are located outside of the areas of interest thatearlier prospecting campaigns had identified. Well defined gold -gold/arsenic anomalies, greater than one kilometer long, occur in thenorthern and southern portions of the newly established grid (seeLittle River maps on the Mountain Lake website for detail). Nohistoric trenching or drilling has taken place in these areas and theywill be the focus of the 2009 exploration program.
Valentine Lake Project (gold) - Central Newfoundland
The Valentine Lake Property's Leprechaun Pond deposit hosts a NI43-101 compliant inferred mineral resource of 1,314,780 tonnes grading10.50 grams per tonne (g/t) gold. Cutting assays to 58 g/t gold, theaverage grade is 8.51 g/t gold, for a total estimated mineralresource of 443,000 ounces of gold at the uncut grade and 359,000ounces of gold at the cut grade. The resource estimate of theValentine Lake property presented in the NI 43-101 Technical Reportdated January 12, 2005 was performed by Larry Pilgrim, P. Geo., aQualified Person (see: NI 43-101 Valentine Lake Technical Report).
Project development efforts this year focused on establishing a roadand upgrading existing roads totaling 40 km to provide access to theLeprechaun Pond deposit. The road was completed to within 500 m ofthe deposit and is expected to be finished this Spring. The roadwill eliminate the need for helicopters during future explorationprograms and provide access for heavy equipment needed for largetonnage sampling in the future. The road will also provide access tothe property's 25 km strike length and the Valentine East prospectlocated approximately 13 km NE of the Leprechaun Pond deposit.
The Valentine Lake gold project is a joint-venture with RichmontMines and, consequent to Mountain Lake's exercise of the option toacquire title to the Property from Xstrata (see news release of March27, 2008), Richmont and Mountain Lake own 70% and 30% of the project,respectively. Mountain Lake is the field operator on the project andlater this quarter will be proposing the next phase for the 2009drilling program focusing on resource tonnage expansionopportunities.
Financial Transactions
In November 2008, Mountain Lake exercised its right to convert$2,000,000 worth of interest bearing Convertible Notes (the "Notes").The Notes bore interest at 7% per annum and were convertible into1,000,000 common shares of Etruscan Diamonds, a corporationincorporated under the Federal laws of Canada in which the Companyholds a minority interest, at a conversion price of $2.00 per shareof Etruscan Diamonds. All accrued interest has now been paid and the1,000,000 shares of Etruscan Diamonds have been delivered to thenoteholders. The Company owns an additional 4,350,000 shares ofEtruscan Diamonds, all of which are unencumbered.
The conversion of the Notes was completed in advance of the Company'sNovember 30 year-end and the Company has no debt other than currenttrade payables.
Mountain Lake President and CEO Gary Woods commented, "The Company isin good shape to weather the current market conditions and ouremphasis in 2009 will be on advancing our existing gold projects andon the evaluation and possible acquisition of additional goldprojects. The price of gold is holding up well in Canadian dollarterms through this difficult period and we expect it will continue todo well in the future."
About Mountain Lake Resources Inc.
Mountain Lake Resources Inc.(MOA) is a diversified juniormining and exploration company whose corporate strategy is to buildshareholder value through the exploration and development ofeconomically viable mineral properties. Current projects include: a100% interest in the Bobby's Pond base metals project (Newfoundland)as well as an option to acquire initially a 51% interest in thesurrounding claims from Cornerstone Resources; a 30% interest in theValentine Lake gold project (Newfoundland), a joint venture withRichmont Mines Inc.; a 13.07% stake in Etruscan Diamonds Limited, analluvial diamond operation (South Africa); and the Little River(Newfoundland) gold exploration property. For more informationvisit:www.mountain-lake.com
On Behalf Of the Board of Directors
Gary Woods
President & CEO