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Klondike Silver Corp. - Completes Underground Drilling in Wonderful Mine

In the uncertain world of exploration, availability of assets in a known mining district with historical production always supports the underlying company’s investment case. In addition to the progress of their own exploration efforts, gold companies in the Red Lake Camp, Ontario and Uranium companies in the Athabasca Basin, Saskatchewan have attracted considerable interest. Both are indeed prolific mining districts with historical production and are the homes to several high-profile mining companies. Though not as prominent, the Slocan Mining District in BC has produced more than 24 million ounces of silver and has established itself as the silver-mining center of Western Canada.

Canadian Venture listed Klondike Silver Corp (TSX.V: KS) is the dominant land-holder of the Slocan mining district and now controls some 75% of the camp. Along with the 100-tonne-per-day fully permitted flotation mill, the Company owns the past-producing Silvana, Wonderful and Hinckley Mines, seven other dormant mines and extensive exploration properties. Heavily under-explored due to the previous fragmented claims ownership and the presence of overburden, the Slocan Mining camp is ready for its revival under Klondike.

During the underground diamond drilling from fall 2008 to spring 2009, Klondike has undertaken considerable underground exploration and development, including two diamond drill stations in the lowermost workings, Levels 3 and 4, located half a kilometre from the company’s flotation mill in the Sandon town site. In addition, ten diamond drill holes were completed, targeting mineralization at and above this elevation, for a total of 637m drilled.

Efforts, happily, have not been in vain. Drilling results demonstrate that the Wonderful vein, in the lower levels, is a nearly straight, vertical E-W planar structure with a typical width of 35cm, and is primary a sphalerite (zinc) - carbonate vein with minor amounts of lead and silver are present. Recent underground mapping, of Levels 3 and 4, show the vein to vary between 20 and 65cm width.

Drilling results have been impressive too. Drill hole, DD09-06 has intercepted a zone of structural distortion where the vein is divided into at least 3 closely-spaced veins, combining for a true width of 2.47m (8.12ft) with average grade of 12 g/T silver, 0.16% lead and 11.16% zinc. Drill hole DD09-10m have helped interpret that the zinc vein, shown in the lower workings, was structurally connected to a lead-silver vein, known as McLander's vein, found on surface (grab values reported as high as 79% lead and silver as high as 197 oz per ton), at 1265m elevation. DD09-10 has also intercepted a major fault, and it is possible that this fault separates the zinc resource delineated in the lower workings from McLander's vein.

Given the tough economic times it becomes a necessity to drop some properties and acquire more promising assets in their stead. As such, Klondike has decided to terminate its options on the Alaska North & South, Mina Grande, San Dimas, San Luis, Santa Lucia and 5 of its Starling properties. The Company's focus in Mexico will continue to be the Espiritu property, a joint venture with Kootenay Gold Corp.

Efforts are meanwhile underway to acquire 100% interest in the Goldsmith property, located in the Slocan Mining Camp. The property consists of the Enterprise Mine Group, Hallmac Mine Group, Conductor Mine Group, Vulture Mine Group, Adams Lode Mine Group, and Chambers Mine Group, as well as some additional claims. The claims cover a total of 1,063 hectares in prime mining area. Consideration for the property consists of $200,000 (payable over 10 years) and 200,000 shares (payable over 4 years). The Company is also required to incur $400,000 in exploration expenditures over a period of 10 years. There is a 2% net smelter return payable on the claims, of which half (1%) may be purchased for $250,000.

So a minor overhaul of sorts is underway within Klondike’s prospect portfolio. Pending acquisitions clearly are an indication of the company’s increased commitment to the Slocan Mining Camp. Given the steady progress the company is expected to make in all its key properties in general and in the Slocan camp in particular, Klondike appears to be entering a new phase in its development endeavours

About Klondike Silver:
Klondike Silver Corp. has assembled a quality portfolio of silver properties in historic mineral districts in North America, and is applying advanced exploration technologies to add value to these core assets. Klondike Silver is reviving the Gowganda and Elk Lake silver camps in Ontario, and the world-famous Klondike district of Yukon Territory. The Company owns a 100 TPD fully operational flotation mill in Sandon, BC, which is currently processing material from one of its Yukon properties and local mines in the historic Slocan Silver Camp.