Corex cuts gold at Santana (August 16, 2010)

Vancouver — Corex Gold (CGE-V) is pulling good widths of gold-bearing oxide rock from the ground at its Santana project in Mexico, as two drills work to expand and link up several gold zones at the early-stage project.

Corex picked up Santana in 2008, negotiating a deal for the central 10-sq.-km section with a private landowner and then staking the surrounding ground. The area, 50 km southeast of Alamos Gold’s (AGI-T) Mulatos gold mine in Hermosillo, is known to host porphyry copper-molybdenum deposits. But the outcrop at Santana indicated the presence of epithermal gold instead.

Two years and several drill programs later, Corex has outlined three gold breccia zones, known as El Nicho, Benjamin and Ubaldo, within a 2-sq.-km area. Now, the company is working to join those zones together before estimating the project’s gold resource for the first time.

In the latest set of results, drills at Santana hit gold between two zones that had been separated by 500 metres of untested ground. Hole 58 returned 75.3 metres grading 0.96 gram gold per tonne and 3.5 grams silver per tonne starting 55 metres downhole, followed 50 metres later by 49 metres averaging 0.73 gram gold and 2 grams silver. Then hole 60, collared 90 metres away, cut 79.9 metres of 0.97 gram gold starting at 43 metres depth followed by 74.8 metres of 0.52 gram gold and 3.9 grams silver from 159 metres downhole.

These new results prove 700 metres of strike within the El Nicho zone. Earlier in the 2010 program El Nicho returned some other good intercepts, such as 63.5 metres grading 0.87 gram gold and 7.15 grams silver from 110 metres depth, 59.3 metres grading 0.78 gram gold and 2.29 grams silver from 13 metres depth, and 61.8 metres grading 0.54 gram gold and 3.7 grams silver from 18 metres downhole.

The zone sits just east of the Nicho fault, which appears to have acted as the feeder for mineralization at Santana. The other two gold zones at the project lie just west of the fault.

In May, Corex probed one of those zones — the Benjamin zone — which is roughly 700 metres west of El Nicho. The work produced some of the longest intercepts at the project to date, such as 107.7 metres grading 0.21 gram gold, 4.89 grams silver, and 0.43% copper as well as 206 metres averaging 0.24 gram gold, 3.84 grams silver and 0.32% copper. The Benjamin holes, which all carried copper in addition to gold and silver, indicated the potential for a porphyry system at depth.

Corex is aiming to complete 20,000 metres of drilling at Santana before the end of the year. Most of the drilling will focus on expanding the three known zones in an attempt to link them together, and the results from that will inform an initial resource estimate. Some of the drilling, though, will target four new areas that Corex identified using geophysical data combined with gold-in-soil information.

The Santana project seems to offer good logistics in terms of mining, such as access via a paved highway, gentle rolling hills and near-surface mineralization. Corex is the first to drill in the area.

“It’s a good start, that’s for sure,” says Craig Schneider, president and CEO of Corex. “We’re obviously on to something here and there is size potential for sure.”

Corex certainly has enough money to continue drilling for the time being, as the company just closed a $4.4-million private placement. Gammon Gold (GAM-T, GRS-N) was the main investor, purchasing 4.7 million Corex units for 68¢ apiece, while other investors picked up the remaining 1.7 million units at 25¢ apiece. Each unit comprised one share and half a warrant exercisable at 90¢ for two years.

Corex’s share price fell 2¢ on the latest results from El Nicho to close at 65¢. The company has a 52-week trading range of 32¢-$1.06 and 33 million shares outstanding (42 million fully diluted).