Underworld Releases New Drill Results

Underworld Resources Inc. has released final drill results from the 2009 drilling program at the White gold property, Yukon, including five drill holes from the Golden Saddle zone. Mineralization has also been discovered at the McKinnon zone, located five kilometres to the east of the Golden Saddle. 


                 Weighted avg.
Hole ID               (g/t Au)    Grade length (m)

WD09-102                 1.46               158.5
WD09-103                 1.98                67.7
WD09-106                 2.97                25.5

These results include step-out holes on the north and northeastern margin of the current drill pattern which confirm continuity of mineralization down-dip to the north and along strike to the northeast. Thick intercepts of gold mineralization continue to be hosted by the felsic metaintrusive which contains much of the Golden Saddle deposit. Mineralization remains open to expansion to the north and northeast.

Hole WD09-102, which intersected 158.5 metres averaging 1.46 grams per tonne Au from 368.5 metres, also included 41.72 metres averaging 4.36 g/t Au from 385 metres. Hole WD09-102 was drilled from the same set-up as hole WD09-80, which previously returned 16.94 metres averaging 5.94 g/t Au from 358 metres and demonstrates continuity of a higher grade core zone within a thick envelope of gold mineralization.

Hole WD09-103 is the most northerly hole drilled at Golden Saddle. It returned 67.7 metres averaging 1.98 g/t Au from 357.5 metres and also included 25.38 metres averaging 4.48 g/t Au from 363.62 metres. Hole WD09-103 was a 60 m down-dip step-out from hole UW09-101. Hole WD09-101 returning 142 metres averaging 1.43 g/t Au from 267 metres, including 48.75 metres averaging 3.67 g/t Au as previously reported.

Holes WD09-104, 105 and 106 are infill holes in the centre and eastern part of Golden Saddle deposit and have returned near-surface gold intercepts. Hole WD09-104 was lost at 356.6 metres in a fault. At the end of this hole, the drill core was still mineralized. The 2009 drill program included 25,670 metres of core drilled, with 19,023 metres in 60 holes completed at the Golden Saddle deposit. The 2009 drill program was completed ahead of schedule and under budget.

Underworld anticipates completing an initial NI 43-101 resource estimate for the Golden Saddle deposit in January, 2010, using the 75 holes drilled at approximate 50 m spacing during 2008 and 2009.

Visible gold mineralization was discovered at the McKinnon prospect in July, 2009, within altered and quartz veined meta-intrusive exposed on the access road from the barge landing to the Golden Saddle deposit. The host lithologies alteration and mineralization observed at McKinnon are analogous to Golden Saddle. Follow-up trenching uncovered a quartz breccia which averaged 60.2 g/t Au and 354 g/t Ag in three samples. Additional drilling will be carried out at this prospect as well as at other targets at the White gold property during the 2010 program.

Environmental baseline data collection is continuing, metallurgical testwork is under way and community relations dialogue continues at the White gold project. JDS Energy and Mining has been retained to complete a non-NI 43-101-compliant preliminary economic assessment to quantify the viability of a mine development at Golden Saddle. Based on the results of this study, to be completed in March, 2010, Underworld will plan a comprehensive program of additional engineering and processing studies to advance the White gold project toward feasibility.

Intrusion-related gold mineralization at the Golden Saddle zone is preferentially hosted within metamorphosed felsic intrusive units, as well as felsic and mafic metavolcanic rocks. Gold mineralization is associated with quartz veins, stockwork and breccia zones, as well as pyrite veinlets and disseminations. The alteration assemblage includes pervasive albite, carbonate, sericite and silicification. The main mineralized zone at Golden Saddle strikes to the northeast, with a gentle to moderate dip to the northwest.

JP and Ross property

The company is pleased to announce that it has recently completed an agreement covering the JP and Ross claims whereby Underworld Resources may earn a 100-per-cent interest. The 703-claim package covering 142 square kilometres is located in the White gold district north of the Stewart River and accessible from Dawson City by road.

The area has an extensive history of placer gold mining but limited hard rock exploration and no drilling has been carried out there. A total of 81 rock samples were collected during the 2009 summer season. Assays returned include 1.25 g/t Au with 17.4 g/t Ag in a quartz vein with boxworks after pyrite, and 0.47 g/t Au with 4.8 g/t Ag in a quartz vein displaying several deposition events. Approximately 5,500 auger soil samples were also collected during this program, assays are still pending. The acquisition of the JP Ross property extends Underworld Resources’ landholdings in the White gold district to 731 square kilometres.

The company can earn a 100-per-cent interest in the JP Ross property from a third party Yukon resident by completing annual exploration programs totalling $1.6-million ($43,000 first year), paying $450,000 in cash ($75,000 first year) and issuing 750,000 (145,000 first year) Underworld shares. Underworld will reimburse the third party $117,000 ($250 per claim comprising the property) to cover staking costs.

Commencing on July 15, 2015 (and in the event Underworld is continuing with the option), Underworld agrees to pay a $30,000 annual advance until the commencement of commercial production with respect to the property. The annual advance royalty payments will be deducted from any royalty payments.

Following both the exercise of the option and the commencement of commercial production with respect to the property, Underworld will pay a royalty, being equal to 2.0 per cent of net smelter returns. Underworld will be entitled at any time and from time to time to purchase one-half of the royalty for $2-million.

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