Premier Gold signs LOI for Lennie property

2009-02-18 08:48 ET - News Release

Mr. Ewan Downie reports

PREMIER ACQUIRES STRATEGIC LENNIE PROPERTY AT RED LAKE; RAHILL-BONANZA DRILLING UNDERWAY

Premier Gold Mines Ltd. has signed a letter of intent to secure a 100-per-cent interest in 10 key patented mining claims, the Lennie property, contained internal to Goldcorp's Red Lake Gold Mines (RLGM) landholdings, immediately northeast of the world-class Red Lake Gold Mines complex.

The Lennie project is strategically located northeast of the Red Lake Gold Mines complex along the same geological contact that hosts the major gold mines in Red Lake. It covers the important unconformity between the ore-hosting Balmer volcanic rocks and the overlying sedimentary rocks. Folded ultramafic rocks and conjugate fault structures, similar to those at the mine, are interpreted to be located on the Lennie claims and will be the focus of an exploration program that will begin immediately on the property, including diamond drilling.

The last exploration to occur on the Lennie property was a small, shallow drill program in 1996. That program intersected faults containing mineralized quartz-carbonate veins in Balmer rocks. It is anticipated that deep drilling will begin in the spring to test these high-potential faults as well as other targets, where they are interpreted to intersect Balmer-aged ultramafic rocks in a setting similar to that which hosts Goldcorp's high-grade zone. That zone is considered to be one of the largest and highest grade gold deposits in the world.

For this acquisition, Premier will pay $400,000 in cash payments over three years and 160,000 shares of Premier, including $100,000 and 40,000 shares on signing. A 3.0-per-cent net smelter return royalty (NSR) is payable to the vendor, of which one-third (1-per-cent NSR) can be purchased at any time for the sum of $1.0-million. A finder's fee is payable to an arm's-length party in relation to this transaction.

This phase I drill program will test several of these areas in addition to potential down-plunge extensions.

Additional drilling will test a target which passes through favourable ultramafic rock units. This deep drilling is designed to test down-dip from Wilmar where a major zone of deformation was previously intersected. This deformation is interpreted to represent the RLGM mine horizon, where rock units similar to those at the RLGM complex and the Bruce Channel zone were identified.

The Rahill-Bonanza project covers several kilometres of the main Red Lake mine trend and is strategically located between the world-class Red Lake Gold Mines to the east, and the Bruce Channel discovery to the west.

Presentations detailing the Lennie and Rahill Bonanza projects are available on the company's website.

Stephen McGibbon, PGeo, is the qualified person for the information contained in this press release and is a qualified person within the meaning of National Instrument 43-101.

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