Resources grow as mining continues at El Cubo

Mexgold Resources (MGR-V) is simultaneously developing and exploring the producing El Cubo gold-silver mine 10 km east of the city of Guanajuato, Mexico.

Current exploration is concentrated on the Villalpando del Alto vein, that has averaged 25.2 grams gold and 765 grams silver per tonne over an average width of 0.75 metre and along 120 metres of strike. An exploration raise is being developed that will test the vertical extent of the vein. The initial eight metres graded 53 grams gold and 2,621 grams silver per tonne over an average width of 0.84 metre.

The mine produced an average 58,000 oz. gold-equivalent per year over the past five years. The mill was expanded in 2001 and has since been operating below its 1,400-tonnes-per-day capacity. Mexgold hopes to increase production to 100,000 oz. per year. Current metal recovery is 91-92% for gold and 85% for silver.

The proven and probable reserves, estimated using channel samples collected from drifts, crosscuts and raises, stood at 1.49 million tonnes grading greater than 3.81 grams gold-equivalent per tonne. The average grade was 5.36 grams gold and 162 grams silver per tonne over a width of 1.26 metres.

To reduce dilution Mexgold has begun to test mine using shrinkage stoping rather than the cut-and-fill method that has been used to date. An inferred resource of 1.19 million tonnes grading 5.21 grams gold and 345 grams silver per tonne remains in the pillars. The mine has been allowed to flood below the 8-level, down to level 12. This was done prior to Mexgold becoming the owner, however several high-grade shoots are open at depth and de-watering is an option.

The El Cubo mine area contains about 40 mineralized veins that are directly related to faults. The largest is the northwest-trending, steeply-dipping, Villalpando vein which contains about 40% of the known resources on the property. Some of the mineralized veins strike northeast and dip 70-90. Veins are generally 1-2 metres wide, however several 10-20-cm-wide veins have been mined selectively due to their high grade. Weak stockwork veining and mineralized breccia zones up to ten metres wide are present.

Mexgold bought the 45-sq.-km El Cubo project in March. It comprises 46 exploitation concessions in the Guanajuato mining district, 475 road-km northwest of Mexico City. The company also holds 12 exploration concessions in the same region, covering an additional 36 sq. km.

The project is operated by Compaa Minera De El Cubo, a Mexican subsidiary of Mexgold. Mexgold has 18.7 million shares outstanding, 29 million on a fully diluted basis. Gammon Lake Resources (GAM-T) owns 26% of Mexgold.

Mexgold is also drilling its 100%-owned Guadalupe y Calvo gold-silver project in Chihuahua State, Mexico. Assay results from 19 holes were released at the end of June. Infill-drilling is upgrading the estimated inferred resource on the property. Highlights of this drilling include a 3-metre intercept grading 20.3 grams gold and 171 grams silver per tonne over 3 metres. Fourteen other holes intersected gold-equivalent grades from 3.2-9.3 grams over widths of 1-4 metres. Three holes failed to intersect mineralization above the 3-gram-gold-equivalent-per-tonne cut off.