NORTHWEST TERRITORIES
Ontario-based Nighthawk Gold Inc. (TSX.V:NHK) was one of the best-financed gold projects in the NWT this year, if not the best funded, thanks to more than $8 million in financing the company raised this spring.

A drilling rig at Nighthawk Gold's Indin Lake gold property 200 km north of Yellowknife. The junior mining company has been successful raising exploration funds this year, despite a generally depressed capital market. - photo courtesy Nighthawk Gold Inc.

The news drew a mixed reaction from Mike Byron, Nighthawk Gold director and chief geologist.

"When you put it in that context, that's good news," Byron said. "But if that's the best there is, that's pretty lousy. It's a tough market overall. It's not just in the North, it's coast to coast."

All the bills aren't in yet, but Byron expects Nighthawk Gold will have spent between $6.5 and $7 million on exploration this past summer on the property located about 200 km north of Yellowknife.

It's a tough capital market for mineral explorers, but Byron noted it's created some cost savings where the drill bit hits rock.

"Costs have dropped," he said. "We're able to get better deals from drilling contractors."

The cost reduction, plus relatively close drill pad placement, meant the company was able to run three drill crews with only one helicopter. Fewer helicopter hours logged and cheaper drilling costs brought down the price per metre drilled this summer.

"We were between $350 to $360 per metre (drilled)," Byron said. "That will be nailed down once we get all the receipts in, but that's a substantial drop compared to last year when we were closer to $450 (per metre)."

Nighthawk drilled almost 14,000 metres this summer, primarily to expand on an existing NI 43-101 compliant inferred mineral resource estimate of 2.1 million ounces gold.

Less than half the core samples have come back from the lab, but results so far are encouraging, Byron said.

Highlights include 20.25 metres (m) of 4.83 grams per ton (g/t) gold, including 5.25m of 10.21 g/t gold and 19.60m of 4.19 g/t gold, including 7.9m of 7.85 g/t gold.

At the Colomac Main deposit, one hole intersected 25m grading 2.38 g/t gold, including 8.75m of 4.98 g/t gold.

"Every hole we drill into, the intrusion has mineralization," Byron said. "We don't have any dusters. This thing is flush. It's a large geological feature that's uniform and fairly wide."

This may partly explain why the market had been good to the junior this spring.

"You don't often find too many things out there that are within a few hundred metres of surface at this sort of volume of material," Byron added. "That's what people find interesting about this project."

But Nighthawk still has distance to cover before it's defined a big enough resource to attract the attention of a major developer.

Byron figures investors want to see four or five million ounces of gold before anyone starts talking mine development.

"It used to be that people were interested in two to three million ounce deposits," Byron said. "The yardstick is a little higher now."

Byron is confident the deposits at Indin Lake will prove in time to be the big resource investors are looking for.

He points to a 1,000 metre "Hail Mary" hole previous property owner Royal Oak Mines Inc. drilled in 1996.

"The body itself is uninterrupted and the mineralization is uninterrupted," Byron said. "When you look at the main Colomac intrusion, it runs for seven kilometres and is continuous. It's basically a (underground) wall, 40 metres to 120 metres wide and it's mineralized to varying degrees. We've got 2.1 million ounces in it and you know it's mineralized at five times the depth. You can do the math in your head."

Byron makes it clear that only extensive drilling can confirm what's at depth, how continuous the deposit is and what it grades but the single Colomac deposit - one of five on identified on the property so far - could be a five million ounce deposit.

"Those are few and far between anywhere in North America," Byron added.

Nighthawk will release the remaining results from this summer's drilling as they come in.

Byron said senior management will likely make a decision on going out for further financing in the new year.

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