Vancouver, British Columbia: September 14, 2006 – Galway Resources Ltd. (GWY: TSX-V) is pleased to announce that it has entered into an option agreement to purchase a 100% interest in the Lone Mountain Copper-Zinc Project, Grant County, New Mexico. Galway can gain full ownership in the property by paying US$1.15 million and by issuing 1.38 million shares over the next three years and by incurring US$7 million in property expenditures over the next five years. Any future production from the deposit is subject to a 2% NSR (Net Smelter Royalty) on the New Mexico state mineral leases and 3% on the federally-administered claims.
“This acquisition represents a significant opportunity for Galway for the following reasons. First, this project further diversifies Galway’s commodity exposure to copper and zinc, with both metals having a strong outlook. Secondly, thorough analysis of the historical drill data enabled our technical team to understand the project based on results of programs to date and confirms the potential to expand the known area of mineralization with additional drilling. Lastly, Lone Mountain has a great location with regards to infrastructure, and is also synergistic with our Victorio project which is located 60 miles to the south,” stated Robert Hinchcliffe, the President of Galway. (Click here http://www.galwayresources.com/i/pdf/LoneMtnlocationmap.pdf to see the property locations relative to one another.)
The Lone Mountain Project
The property is located in a major Southwestern U.S. porphyry copper district, about half way between the Chino (Santa Rita) and Tyrone mines. Extensive past drilling indicates that the Lone Mountain property contains a porphyritic intrusion with oxide copper mineralization and highly mineralized sediments lateral to the intrusion. The company’s initial emphasis will be on the shallower mineralized sediments where seven widely-spaced holes drilled northeast of the intrusion contain potentially ore-grade copper-zinc mineralization. The best of those intercepts is 26.3 feet averaging 1.63% Cu, 13.73% Zn, 2.54% Pb, 0.04 oz Au/ton and 3.38 oz Ag/ton (to access a typical cross section of the deposit click herehttp://www.galwayresources.com/i/pdf/LoneMtncrosssection.pdf ).
The property was drilled between 1975 and 1997, with 34 drill holes for a total of 62,797 feet of drilling (to access a map that shows basic geology and historical drill grid click here http://www.galwayresources.com/i/pdf/LoneMtnPropertyOutline.pdf ). Unlike
previous owners of the project whose focus was on the economic viability of the project purely based on copper values, management of Galway has taken a different approach and believes that the byproduct values could play a critical role in the economics of the project. Management believes to replicate the work done on the property would cost between US$3-$5 million. The property has been inactive since 1997 due to depressed copper commodity prices.
Marshall Himes, the Chief Operating Officer comments, “I am optimistic about the potential of this poly-metallic porphyry copper system, and quite encouraged by our geologists’ initial investigations and compilation work. The widely-spaced drilling suggests that the favorable stratigraphy at Lone Mountain may host a large tonnage skarn-type copper-zinc deposit with significant silver, gold, and lead credits. Our first phase of drilling will be very instructive in resolving the geometry and extent of economic mineralization.”
The Main Focus: The Upper Lake Valley Zone
The Lone Mountain property represents an exploration opportunity to expand on the Upper Lake Valley copper-zinc-silver mineralization with additional drilling between the historical widely-spaced drill holes. Additionally, there is the possibility to explore for extensions along strike from and immediately surrounding the intrusive complex margins. Looking further down the road, there exists the possibility to explore the Lower Paleozoic skarn horizon, as can be seen in Table 1 below depending on cut off grades used, Chevron reported between 17 and 94 million tons of mineralization.
As part of a preliminary economic assessment of the property, Chevron in 1983 commissioned a rough resource estimate from Pincock, Allen, and Holt, which is provided below in Table 1. The study, utilizing five widely-spaced drill holes for the Upper Skarn, and three drill holes for the Lower Paleozoic skarn, allowed only for “drill indicated” and “total potential” categorization of resources, none for “proven” classification (historically used resource terms that are not reconciled with CIM resource classifications).
Table 1. Lone Mountain Historical Resource Estimates: Chevron (1983).
------------------------------------------------------------------------- Upper Lake Valley Formation Resources (at 1 % Cu cutoff) Tons % Cu % Zn Ag (opt) Au (opt) (mmt) ========================================================================= Drill-indicated 7.4 2.04 4.6 1.09 0.006 Lower Paleozoic Resources : Tons (at1 % Cu cutoff): (mmt) % Cu % Zn Ag (opt) Au (opt) ========================================================================= Drill-indicated 17.5 1.36 N/C 0.22 0.004 (at 0.5 % Cu cutoff): ========================================================================= Drill-indicated 94.0 0.74 N/C 0.13 0.002 ------------------------------------------------------------------------- (after Dunn and Hubbard, 1983)
Several years later, Chapman, Wood, and Griswold, acting as managing partner for Granges Exploration, reviewed the data, and estimated a resource for the Upper Lake Valley skarn section of 7.5 million tons at 2-3% Cu, 1-2 % Pb, 4-5 % Zn, 2-3 opt Ag, and 0.01-0.02 opt Au disposed about the central intrusive complex (Chapman, Wood, and Griswold, 1989, 1990). Supporting data for this estimate are not expanded upon in the historical files, and the stated resource estimate is only noted here for consistency in reporting and historical reference.
As such, Table 1 and the preceding two paragraphs are provided only as a historical footnote to the discussion concerning resource potential. Galway Resources does not recognize the information as relevant or reliable, and presents it only as part of the historical database. This historical information is provided as a base-line guide for modern-day analysis and comparison only, and as a reference point to describe the extent of historical evaluations. Details of the “reserve classification” are not available for reconciliation with current CIM resource/reserve categories. The discussion of reserves refers to historical terms used at the time and are not sufficiently defined to be classified by CIM categories in use today. Galway Resources is not treating the historical figures as current mineral resources/reserves, and does not report a National Instrument 43-101 compliant resource estimate.
A technical report (the “Technical Report”) under National Instrument 43-101 dated September 14, 2006 has been prepared on the Lone Mountain property by Syver W. More of SRK (U.S.) Consulting based out of Tucson, Arizona. The Technical Report has been filed under the Company’s profile on the SEDAR website at www.sedar.com.
Galway believes that there is excellent potential to improve typical drill hole spacing of 600-900 feet with in-fill drilling to better define higher grade and/or thicker mineralized Upper Lake Valley sections around the periphery of the intrusive complex. The focus of the contemplated drilling program (which is expected to commence in early 2007) will be to drill 5 holes (as suggested as the initial work program outlined in the NI 43-101 Report) and then use those results to determine the locations for a second drilling campaign.
The focus of the initial work program will be targeted at the Upper Lake Valley skarn. There is potential for further expansion of the deposit from the presently-defined configuration, both to the north and northwest and to the south. Galway hopes to commence its first phase of drilling in January 2007.
District exploration potential includes district- and regional-scale targets to the northeast along strike from Lone Mountain towards Chino Mine and to the southeast toward Tyrone. More importantly, a better understanding of mineralization controls acquired during this first phase of drilling can allow focus down the road, for possible deeper drilling to test continuity of the Lower Paleozoic skarn horizon to approximately 3,600-foot depths at some later date.
Location & Infrastructure
The Lone Mountain Copper Property, located in Southwestern part of New Mexico, is well situated with regards to existing infrastructure with a power line crossing the project and a rail line nearby
(Click here http://www.galwayresources.com/i/pdf/LoneMtntopoview.pdf to see a topographical view of property). Silver City, the center of mining activity in southern New Mexico, is five miles northwest of the property (with a population of 10,545 (2000 census)), has the services necessary to develop a mining project.
The Lone Mountain property underwent one minor, bench-scale, primary sulfide, flotation and recovery test with 91.7 % recovery of copper.
About the Company
Galway is a mineral exploration company focused on developing three recently acquired advanced exploration projects that are located in the United States. Collectively the three projects have 300,000 feet of historical drilling done on the projects. All three projects are located in states that have a history of mining, and each project is well-situated with regards to existing infrastructure. The Company has recently commenced a drilling program at the Indian Springs tungsten project and expects to begin drilling at the Victorio molybdenum-tungsten project in the early fall.
Peter Han is Galway’s Qualified Person responsible for the technical content of this news release. Galway is following the “Best Practices Guidelines” in documenting, reporting, and conducting exploration activities at each of its properties.
For further information contact:
Galway Resources Ltd.
President and Director
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.
Forward Looking Statements:
Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to the completion of transactions, the timing and amount of payments and share issuances, the completion of financings, the use of proceeds, future exploration, development and production activities and 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 transactions, payments, share issuances and financings, the use of proceeds, the time and success of future exploration, development and production activities and the timing and amount of expenditures.