Canyon funds El Aquila

Vancouver — A subsidiary of Denver-based U.S. Gold (USGL-O) has launched an underground program at the El Aquila gold-silver mine in Mexico’s Oaxaca state.

The program is funded by Canyon Resources (CAU-A), which can earn a half-interest by spending US$3.5 million on exploration and development. The company has spent US$500,000 to date.

The past-producing property is held by Gold Resource, a 40%-owned subsidiary of U.S. Gold.

Gold Resource aims to place El Aquila into production and is completing a scoping study based on a 750-tonne-per-day mining and milling operation.

The company previously carried out two rounds of surface drilling that defined a shallow, continuous, sub-horizontal mineralized zone. The zone was intersected by 25 intercepts that averaged 9.5 grams gold and 90 grams silver per tonne over an average thickness of 5.3 metres.

The company opened up some historic underground workings at El Aquila and was pleased to discover that its newly discovered zone had not been previously mined. Two of the workings did pass through the mineralization, which allowed detailed underground sampling of the high-grade, silicified manto. The weighted average of 10 underground samples taken from these areas was 25.6 grams gold and 75.2 grams silver.

U.S. Gold also holds a 45% interest in the Tonkin Springs gold mine in Nevada, a joint venture with BacTech Mining (BM-V).