Klondike Gold Mining Corp. KG Corporate Newsletter

Having trouble viewing this email? Click here

Klondike Gold Corp. Newsletter, September 2012

NOTE TO
SHAREHOLDERS:

The Company is working to complete and assimilate results of the 2012 field season. Expect further News Releases as exploration results are assayed and reported.

Exploration Advances on the Lone Star Project

Klondike Gold Corp. (KG: TSX.V) is pleased to report that the 2012 field season at the Lone Star Project has provided encouraging exploration results and positive direction for the 2013 season.

The 2012 exploration program at Lone Star has focused on defining and understanding historical mining areas - including Boulder Lode, one of the first operating mines in the famous Klondike camp - as well as known and newly discovered gold occurrences. This was the first year that consistent exploration has been conducted on the Yukon property since 2007.

Klondike Gold's 2012 work program has benefited from the compilation of exploration results and data from previous operators since the early 1900s. This extensive volume of work was fully reviewed and applied to a new generation of geological mapping and analysis before being deployed in a wide-scale exploration initiative throughout the summer.

Our management team believes it is important to evaluate the significance of the entire claim block consisting of approximately 200 sq km. The strategically assembled land package covers more than 70% of the Bonanza Eldorado catchment area, the source of roughly 50% of the approximately 20 million ounces of mostly placer gold recovered in Yukon since the Klondike stampede of 1898.

By compiling this year's results with historic and more recent exploration data, our technical team has obtained important new insights into the structure and geology of the flagship Lone Star Project. This improved understanding will help guide ongoing exploration, which is aimed at bringing the considerable gold occurrences on the property into a recognizable resource format.

Exploration Highlights

* Boulder Lode open cut results of 1.86 g/t Au (grams per tonne gold) on vertical channel samples of a 5-meter high by 25-meter long wall including 9.43 g/t Au over 2.5 by 4.2 meters of the excavation and significant advances in understanding of the structural and lithologic control on gold mineralisation

* Pioneer Zone Diamond drilling results of 0.65 g/t Au and 1.65 g/t Ag (silver) over 11.6 meters at a depth of 20.4 to 32.0 meters, including 2.10 g/t Au and 6.8 g/t Ag over 1.5 meters

* New JF Zone trenching results of 1.75 g/t Au over 10.2 meters

* Nugget zone mapping and extension

In addition to the Boulder Lode open cut, this year's exploration of the Lone Star Project has focused on defining and understanding historical mining areas of the Pioneer and Violet Mines, as well as testing known gold occurrences at various stages, notably the JF Zone, Nugget Zone through to the Buckland trend, and the recently discovered Boy Zone (see Figure 1 below).

Figure 1: Lone Star Property Map

The Company's strategy is to work with expert consultants and systematically build on existing work that has been compiled into new, usable datasets to facilitate a thorough data review and subsequent development of new ideas and geological models.

New understanding of the mineralization at the Boulder Lode has

Boulder Lode being mined-1912-14.reduced.jpeg

Boulder Lode Mine in production from 1912 - 1914

been facilitated by the excavation and sampling of the 100-year-old open cut. Structural and lithological mapping was conducted by consultants Dr. Doug Mackenzie and Dr. James Mortensen, who have extensive experience with the property. Structure contouring and lithological mapping used previous drilling and trench data to generate an exploration model that shows gold enrichment in a sub-unit of the Klondike schist on the anticlines (structural high points) of undulating D2 and D3 folding on a 100 to 200 meter scale. Late D4 extensional deformation appears to have preferentially mineralized these anticlines. This has implications for new target areas to the east and north of the Boulder Lode (Figure 2) that will be investigated during the remainder of the 2012 exploration season.

Figure 2: Lone Star with Boulder Lode Structural Contour and Lithology Map

Sampling of the Boulder Lode open cut was conducted in three sections; the West Block, the Centre Block, and the East Block. Each Section was divided on geologic grounds, not grade. Continuous vertical channels on the walls of the excavation were cut every 1.5 meters to measure the grade. The West Block exposed significant and continuous quartz veining and showed averaged results of 1.86 g/t Au (147 vertical channel sample average) over a 6 by 25 meter wall area, including 9.43 g/t Au over a 2.5 by 4.2 meter area.

View West of the Lone Star Project-reduced.jpeg

View of Lone Star Project Looking West

The West Block contains previously released grab sample 1719053 which ran 41.3 g/t Au. This sample was excluded from these averaged channel sample results. The higher grade of the West Block agrees with the structural interpretation that higher grade intervals are expected to the southwest of the Boulder Lode. Between the West Block and the West Block Extension, 35 meters were not sampled due to debris obscuring the wall. This will be a priority for future sampling. Results are for 30-gram fire assay using methods consistent with the company's sampling procedures (Press Release: March 08, 2012 - Klondike Gold Reports Initial Results from its Fall 2011 Yukon Work Program). Calculations weighted channel samples by length so as not to improperly influence averages with any short high-grade intervals. Boulder Lode sampling results are summarized below.

NR 12-09-05 Figure 1

Geotechnical drilling in the Pioneer Zone southeast of the Boulder Lode was conducted in April and May to increase geological understanding of the relationship of the Boulder Lode to the Pioneer Mine as well as to test Induced Polarization (IP) geophysical anomalies to the north of the Pioneer zone.

Pioneer Zone Looking East

Drilling intersected 0.65 g/t Au and 1.65 g/t Ag over 11.6 meters including a best sample of 2.10 g/t Au and 6.8 g/t Ag over 1.5 meters in hole 12DDH002, which is likely a weaker continuation of the Boulder Lode mineralization. The program provided insights for future exploration. A stronger IP anomaly north of 12DDH003 is a possible target when taken in context of new lithological and structural understanding of the Boulder Lode. The stronger of the two anomalies was not drilled due to access issues during the early spring thaw. Program results are for 30-gram fire assay and summarized below.

NR 12-09-05 Figure 2

The JF Zone trench, last worked in 2006, was extended by a further 100 meters of new trenching. The new trench results include 1.75 g/t Au over 10.2 meters across mineralized structures at the western-most section of the trench. High sample intervals within the mineralised zone were 1.64 meters of 4.04 g/t Au and 1.1 meters of 4.05 g/t Au. Further work perpendicular to the trench along this mineralized trend is recommended for the 2013 season.

The Nugget Zone was trenched and drilled by previous operators with past results including a 2,769 Kg bulk-sample 05NZ-B4-B which ran 8.61 g/t Au and a 1,886 Kg bulk-sample 05NZ-B7-A which ran 6.46 g/t Au and a 2006 Diamond drill holes 96NZ02 and 96NZ03 which had results of 98.68 g/t over 0.90 meters and 30.15 g/t Au over 0.90 meters respectively (NI 43-101 Technical Report filed on SEDAR, December 16, 2011). Site investigation by the Company's technical team has found that the trend of the upper Nugget Zone can be extended on surface. Select samples were collected for the purpose of supporting future drilling to test the Nugget Zone at depth and along strike towards the upper Buckland Zone quartz veins.

The Violet Mine to 310 zone trend was investigated with mapping, prospecting, soil sampling, and rock sampling as was the recently discovered Boy Zone soil anomaly. Both targets have lab results pending.

President Erich Rauguth commented on the 2012 exploration season as follows:

"The Lone Star Property is being systematically advanced through solid technical and scientific exploration. We have faith that even in difficult market conditions investors will reward active, high-quality, transparent gold explorers."

Mine Infrastructure at Indian River Nears Completion

Klondike Gold is pleased to announce that assembly of the initial mine infrastructure at Indian River is nearing completion. The placer gold project is a joint-venture mining operation being readied for a full operating season in 2013.

Aerial View of the Indian River Gold Mine looking SE

The infrastructure includes five water reservoirs and settling facilities

2,000' water pipeline

covering 55,000 m/2 with a capacity to hold approximately
150,000 m/3 of water and sediments. The mine operation is designed to recycle the sluicing water and work with zero discharge of sediments to the stream system nearby. In order to provide the initial water for the operation, and to make up water lost through evaporation
or seepage, a 2,000-foot ( 606-m ) pipeline has been placed on a long causeway constructed for this purpose. All the aggregate for the causeway and for the construction of internal roads and ramps was obtained from the excavation of sterile overburden during the construction of the reservoirs. Gravels containing gold were identified during the construction of the ponds and transported to holding pads, where now approximately 25,000m/3 are available for processing.

The porous nature of the gravels required that the ponds must be sealed with fine sediments to avoid water loss through seepage.

Gold Production-Indian River-2012-reduced.jpeg

Gold extracted during the construction
of water reservoirs

This was achieved by setting up and operating a temporary processing plant and directing discharged tailings and sluice water into the ponds. The fine sediment contained in the tailings water sealed the ponds, which are now filled with water and are ready to be employed for mining. The gravels sluiced during the sealing process yielded approximately $70,000.. worth of raw gold. The probability is that most of the costs, if not all of the costs, for the mining infrastructure can be recovered from the material excavated out of the settling ponds.

Indian River-Temp PlantSite-2012-reduced.jpeg

Preliminary production facility, August 2012

Part of the infrastructure work included the construction of a ramp suitable to host the permanent processing plant. This ramp is also completed and
the 200m/3 per/hour plant is currently being installed.

The Yukon mining season is limited by the climate and can end anywhere between mid-September and early October due to sub-zero temperatures. Having the infrastructure and processing plant completed now will permit the full use of the mining days remaining this year and will assure a full productive season commencing in 2013.

View of permanent processing plant on night shift, September, 15, 2012 now ready
for full production in 2013

The 188-claim Indian River Placer project ( previously announced on July 26/2012 ) is a joint-venture between Klondike Gold Corp. and 46799 Yukon Ltd., a private Yukon-registered company. The project is operated by KG46 Holdings Ltd., which is owned equally by Klondike Gold Corp. and 46799 Yukon Ltd.

Mining Camp construction during August, 2012

The Indian River Property was extensively and professionally explored between 2004 and 2007, however no development work was undertaken and no camp facilities were built. KG46 mobilized to the property on July 26, 2012, and since that time has constructed a complete mine infrastructure and a 20-person camp facility.

This is a remarkable accomplishment in such a short period of time, and a special thank you is extended to all the staff and mine workers involved from all shareholders of the Company.

About Klondike Gold Corp.

Klondike Gold Corp. is a Canadian exploration company with offices in Vancouver, British Columbia and Dawson City, Yukon. The Company is focused on the development of its Yukon and British Columbia gold properties. In addition the Company holds a large portfolio of base metal projects in southeastern British Columbia.

CONTACT INFORMATION

Inquiries: Robert A. Young 604-685-2222 (Ext 398)
email: info@klondikegoldcorp.com

or

Erich Rauguth, President & CEO 604-685-2222
www.klondikegoldcorp.com

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release. Statements in this press release, other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, may include forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in resource exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements.

Forward this email

This email was sent to .com by info@klondikegoldcorp.com |

Update Profile/Email Address | Instant removal with � | Privacy Policy.

Legends
	Production
	Mine development
	Discovery
	Exploration
	Past producer
On Google Earth, click on the button, to show property information, and access to project page or company page.

Klondike Gold Mining Corp.

KG Corporate Newsletter - September 2012

Klondike Gold Mining Corp.