Timmins Gold expands horizon of San Francisco gold mine

Timmins Gold (TMM-V) is expanding the strike length at its operating San Francisco gold mine in Mexico’s Sonora state and recent gold grades are among the highest the company has ever encountered.

Drilling, which is testing the potential of the San Francisco deposit outside the limits of the currently planned final pit, continues to confirm the continuity of mineralization within a 1.2-km wide, major northwest-southeast trending gold-hosting structure, the company reports.

Results from the most current round of drilling completed in May and June include 12.19 metres of 4.39 grams gold per tonne in hole 651 and 13.72 meters of 3.88 grams gold per tonne in hole 649. The holes were drilled about 150 metres southwest of the San Francisco mine’s pit limit.

Other notable results include 10.67 metres of 6.39 grams gold per tonne in hole 725 and 4.57 metres of 3.46 grams gold per tonne in hole 728, in an area inside the northern portion of the current pit limit.

The results “indicate the potential for expansion of the open pit beyond its current projected limit and indicates that the potential exists to increase the ultimate gold resource contained within the deposit,” the company notes in a press release announcing the drill results.

The most current round of drilling adds up to 25,000 metres in 231 drill holes. Drilling has been focused on an infill basis to the north and on extending the known strike length of the newly discovered southwest extension.

The goal of exploration drilling to the pit’s southwest has been to extend the mineralized zone outside of the currently planned pit limits and beyond a drill hole 50 metres to the southwest of the pit that intersected 13.7 metres of 10.28 grams gold per tonne announced in May.

Drilling inside the northern part of the currently planned pit limits was in an area that required a higher density of drilling in order to be considered a part of the mine plan and, until now, was classified largely as waste for mine planning purposes The holes were all relatively shallow and were drilled to a maximum depth of 130 metres.

The mine started commercial production in April with first quarter sales reaching 11,319 oz. gold. Production is projected to reach a rate of more than 80,000 oz. gold per year at a life-of-mine cash cost of about US$412 per oz., based on a preliminary feasibility study in March 2008 by Micon International.

“The size of the gold mineralization zone, its presence within large shear zones and the continuous nature of the gold within these zones form the basis of management’s expectation that the ongoing program could lead to a significant increase in the resource at San Francisco and could potentially also lead to the discovery of additional satellite deposits within the existing land package,” the company states.

Timmins Gold closed in Toronto at $1.69 per share. Over the last 52 weeks it has traded in a range of 64¢-$1.93 per share and has about 123.6 million shares outstanding.