VANCOUVER – Callinan is pleased to announce that it has recently entered into an option agreement to earn an interest in 32 mineral claims comprising 5,303 hectares in the Island Lake area of East-Central Manitoba. The Island Lake property hosts several known gold occurrences, including historical drill holes with values of up to 28.3 grams per tonne of gold. Other historic work includes a 70 ton bulk sample mined by Island Lake Gold Mines in 1934 from two pits on the property, from which 47.25 oz of gold was recovered. The property is located on the same system of shears, faults and splays as the previously producing Island Lake Gold Mine operated by Island Lake Gold Mines Limited, according to assessment work filed with the Manitoba government.
“Great gold mines are often found near or under old gold mines,” said Callinan President Mike Muzylowski. “Our Island Lake property has a significant mineralized system that has produced gold with good grades. The work done by previous operators, including diamond drilling, trenching and bulk samples, consistently produced gold grades of multiple grams per ton and associated silver values. This gives us a good indication that, with modern geophysical and drilling techniques, we may be able to uncover value in this shear zone.”
Induced polarization work done by previous operators has located anomalies as large as 100 by 50 meters, and 140 by 15 meters with coincident gold values. These anomalies remain un-tested.
All assay values and grades referenced at the Island Lake property have been sourced from records of work of previous operators filed with the Manitoba Government. As the work was conducted prior to the implementation of NI 43-101, and Callinan has not been able to verify the methods used and the quality assurance and controls, if any, these early results are disclosed for information purposes only, may not be relevant and should not be relied upon.
Callinan plans to drill test targets in the Island Lake area as part of a winter 2009-2010 drilling program and has budgeted $500,000 for the drilling program. Callinan currently has $11.8M in cash, and continues to receive income from its net profits and royalty interests in the 777 Mine in Flin Flon, Manitoba.
The Island Lake property has been optioned under an option agreement with W.S. Ferreira Ltd. and William Ferreira. The agreement gives Callinan the right to earn an 80% interest in and to the Island Lake claims for initial consideration of $20,000 and the issuance of 50,000 common shares in its capital to W.S .Ferreira Ltd., upon regulatory approval. Callinan will continue to make payments of cash and shares on the anniversary of regulatory approval of the agreement in each of the next three years if the company wishes to continue to earn its interest. Should Callinan elect to exercise the option and acquire the 80% interest, the Company will have issued a further 350,000 common shares and made further cash payments of $380,000 and expended $1,900,000 on the exploration of the property over the three year time period. Upon exercise of the option, the claims will be subject to a 2% net smelter return royalty to W.S. Ferreira Ltd., with 50% of this royalty purchasable by Callinan for a total payment of $1,000,000. The option agreement is subject to regulatory approval.
Callinan’s exploration programs are being conducted under the supervision of P.J. DeVeaux, a qualified person as defined by National Instrument 43-101 who has reviewed and approved the contents of this news announcement.
Mike Muzylowski
Mike Muzylowski
President and CEO
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Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to future expenditures. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others, the ability to complete contemplated private placements and the timing and amount of expenditures. Callinan does not assume the obligation to update any forward-looking statement.