Sage Gold acquires Clavos option from St. Andrew

2010-02-09 15:45 NT - News Release

See News Release (C-SGX) Sage Gold Inc

Mr. Nigel Lees of Sage reports

Sage Gold Inc. has entered into an option agreement with St. Andrew Goldfields Ltd. on the Clavos property located in the Timmins mining district, in Northeastern Ontario, within the Abitibi greenstone belt.

Nigel Lees, Sage's president and chief executive officer, commented: "We are very pleased to option the Clavos property in the Timmins gold camp, which has historically produced over 68 million ounces. Clavos, which was previously mined briefly, has a mining permit and significant mining infrastructure. Several operating gold mills are close by. We would expect to be able to take advantage of custom milling, which could significantly reduce the capital cost to production. We feel that there is an excellent opportunity to increase the resource. Sage intends to reinterpret the historical data, in light of current models of gold mineralization in the Timmins camp. Drilling will follow, with the objective of expanding the resource, identifying potential mineable resources and advancing the property into production. This transaction meets our stated objective of acquiring assets with near-term production potential. This very advanced project will complement our exploration properties in the Beardmore Geraldton gold camp, where we plan a follow-up program this summer, after a highly successful 2009 campaign."

Highlights of Clavos property:

• Prior gold resource reported for the project by St. Andrew in October, 2006. The resource was calculated by Scott Wilson RPA & Associates and supported by a 43-101 report filed on SEDAR by St. Andrew;
• Existing mining permit until 2019;
• Existing infrastructure in place, including underground ramp access to the 300-metre level, underground levels developed every 25 metres, power to site, surface ventilation system and water management facility;
• $72-million has been invested on Clavos, including $46-million on underground development;
• Strategically positioned 10 kilometres from Apollo Gold's 2,000-tonne-per-day mill located in Stock township;
• Located in the prolific Timmins mining camp and close geographically (20 km) to Goldcorp Inc.'s Hoyle Pond mine, which has produced more than 2,4000 ounces, since 1985, and is still in operation.

Sage has the option to earn a 60-per-cent, undivided interest in the Clavos property. The option will be deemed to be fully exercised upon Sage incurring exploration expenditures on the property, issuing shares to St. Andrew and making cash payments during the term of the three-year option period.

Sage will issue 500,000 shares and make a cash payment of $25,000 to St. Andrew upon exchange approval of the option agreement.

Sage will issue shares of a total market value of $105,000 and $105,000 in cash payments, on the first, second and third anniversaries of the effective date of the option agreement.

Sage will incur $500,000 in expenditures in the first year with $3-million in exploration expenditures for the three-year period.

Upon being vested with a 60-per-cent interest in the property, Sage Gold and St. Andrew shall enter into a joint venture agreement. The further development of the property shall be governed by the agreement. Without limitation, the joint venture shall provide that, in the event that St. Andrew's interest in the property is diluted at any time to less than 10 per cent, its interest in the property will revert to a 2-per-cent net smelter royalty.

The Clavos property is located in the German, Stock and Clergue townships. It comprises 69 patented and leased claims, and 14 unpatented claims. The patents leases and claims are wholly owned by St. Andrew, save three claims where it has a 40-per-cent interest in a joint venture arrangement with Goldcorp. The Clavos property comprises 2,540 hectares in total area. The deposit was mined briefly between mid-2005, until August, 2006, and again until May, 2007.

Please refer to the Roscoe Postle Associates Inc. report of 2003, prepared for United Tex and Sol Mines Inc. "The Clavos property is transected in an east-west direction, by a contact between mafic and ultramafic volcanic rocks of the Tisdale group, to the north, and Hoyle Assemblage clastic sedimentary rocks, to the south. The contact dips, over all, very steeply to the south but, locally, has been interpreted from drilling to dip northerly. North of and parallel to the contact is the Pipestone fault (PFZ), a major regional structural feature that also traverses the entire property. The PFZ is a major offshoot of the Destor Porcupine break. Between the PFZ and the contact are a number of irregular and discontinuous, felsic porphyry, intrusive bodies. These intrusions strike and dip parallel to the stratigraphy, and are the loci for much of the gold mineralization on the property.

Gold mineralization occurs in a series of quartz and quartz-carbonate veins, which are interpreted, from the drilling, to be steeply dipping and east-west striking, roughly parallel to the PFZ. The veins, while appearing to be consistent in orientation from section to section, are observed in the drill core to occur in a wide variety of orientations. The quartz veins occur most often in the mafic and ultramafic volcanic rocks, usually in proximity to porphyry intrusives."

Scott Wilson, in preparing the technical report on Clavos for St. Andrew in October, 2006, identified a series of zones of mineralization (A zone to E zone) in the Hanging Wall zone. It recommended additional drilling in these zones to both upgrade resources and expand the resource. The full report was filed on SEDAR by St. Andrew. Sage plans to confirm the previously reported resource for this project and file a 43-101 technical report on SEDAR in the near future. The longitudinal sections for the Hanging wall and Footwall zones, and the Scott Wilson RPA zone locations, are provided at the company's website.

Sage also corrected its news release on Stockwatch dated Oct. 22, 2009, which contained an inaccurate summary of the initial payment for the acquisition of the new Beardmore properties. The summary should have read that Sage will pay $101,000 in cash and issue a total of 1,435,000 ($24,000 of shares at six cents for 400,000) shares as the initial payment, for the acquisition of the properties listed.

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