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Linux Gold Corp. (OTCBB:LNXGF) has stepped up to the plate as it further expands its presence in Alaska’s historic gold camps. The company has recently acquired an option to purchase a 100% interest in 26 mining claims close to the historic Ester Dome mining camp near Fairbanks, Alaska for US$10.3 million in cash and shares over a two-year period. As per its October 18th press release, “on September 9, 2007, a major gold/silver discovery was located on the claims, with a potential strike length of 6,500’, width of 100’ and minimum depth of 100’ of high grade gold and silver values based on the sampling and trenching program completed this year. The area has been re-sampled and results are pending.” Placer gold has been mined around Ester Creek and its drainage for decades.

This latest acquisition adds considerable lustre to Linux’s position in Alaska, as it also owns the Granite Mountain gold-polymetallic-platinum Project– located approximately 80 miles east of Nome, on the eastern part of Alaska’s Seward Peninsula. The company staked a 37 square mile area at the ‘epicentre’ of some of the world’s greatest deposits– surrounded by Teck Cominco’s Red Dog, (the world’s largest zinc deposit) located 180 miles north, Nova Gold’s Rock Creek and Big Hurrah gold mines 75 miles west, their Khotol Silver project 60 miles east, and finally, Northern Dynasty’s massive gold-copper-molybdenum porphyry deposit (the Pebble Project) to the southeast. Red Dog is has over US$20 billion worth of zinc reserves and is producing 500,000 tons of ore annually. Indicated deposits for Rock Creek and Big Hurrah total 670,000 ounces of gold with an estimated Inferred Resource of 100,000 ounces of gold. Northern Dynasty has an inferred mineral resource of approximately 28 million ounces gold and 16.4 billion pounds of copper – certainly one of the world’s finest mineral deposits.

In early 2005, Linux acquired a 100% interest in the property by staking 148 State of Alaska 160-acre mining claims at several locations near Granite Mountain. Work done in the 1960s suggests that the property deserves additional exploration. To date, mapping and geochemical sampling has enabled the company to outline a two-mile mineralized zone with favorable discovery potential. The company’s consulting geologist for the project, Robert B. Murray, is currently completing a NI 43-101 report on the property. In September 2006, a drilling program on the property was completed, testing four separate mineralized zones. Further exploration work to confirm gold and silver values on the property is planned pending additional financing.

The USGS’ fact sheet entitled Regional Geologic, Geochemical, Geophysical, and Mineral Deposit Data for Economic Development in Alaska in the 21st Century confirms the immense base-metal resources of the Seward Peninsula: “Since the gold rush of the late 19th century, it has been recognized that the mineral endowment of the Seward Peninsula, Alaska, is considerable. The well-known placer gold operations have had significant historic production and continue operating to this day. Lode gold production has also occurred. The potential for base-metal deposits (Pb, Zn, Cu) has attracted exploration to the peninsula for decades, but the extent of that resource is unknown. Scattered across the Seward Peninsula, in an area 150 x 200 km, are numerous prospects and occurrences of stratiform massive sulfides.”
Linux also owns a 50% interest in 30 mineral claims known as the Fish Creek Prospect, located in the Fairbanks Mining Division in Alaska. The claims are located only six miles from Kinross’ Fort Knox mill. Linux has a 50/50 joint-venture with Teryl Resources Corp. (TSX.V:TRC) in the Fish Creek claims, in which Linux will spend US$500,000 on the project over three years. Linux Gold Corp. retains a 5% net smelter return or may convert into a 25% working interest. The Fish Creek claims are part of Teryl’s Alaskan holdings, which also include the Gil Project, the Stepovich claims, and the West Ridge property – all in the Fairbanks Mining District. Teryl is one of the main landowners in the district, with holdings contiguous to Kinross’ Fort Knox Project. According to Kinross’ Fort Knox Mine technical report, “the Fairbanks mining district is a celebrated placer gold camp with production in excess of 8.0 million ounces of gold since 1902. Although a significant mining district in terms of total production, it had only limited lode production until the discovery and development of the Fort Knox deposit in the late 1990s.” Fort Knox is the largest producing gold mine in Alaska, with a 4,000,000 oz Au ore reserve.

Linux and Teryl share something else – their president, CEO and chairman of the board, John Robertson, who brings an extensive business, mining and marketing background to both companies.

Management has diligently set about acquiring strategic properties near some of the world’s major producers in an area known for its world-class reserves and its mining-friendly political environment. This approach has yielded some great results so far, given the fact that it has been able to forge close ties with Kinross at Fish Creek.

The company is remarkably well-diversified in terms of its property portfolio, with projects near major former and current producers in Alaska, Arizona, China and Canada. Its accessible price point and Bulletin Board status make it especially attractive to American investors who wish to position themselves early on in the drilling stage in order to maximize their chances of seeing major-league near- and mid-term appreciation. With some good drill results we could well see Linux hit a grand slam.

This article is intended for information purposes only, and is not a recommendation to buy or sell the equities of any company mentioned herein. It is based on sources believed to be reliable, but no warranty as to accuracy is expressed or implied. The opinions expressed in the article are those of the author except where statements are attributed to individuals other than the author, in which case the opinions are those of the individual to whom they are attributed.