Mercer looks to be the next name in Colombian gold

With the gold boom in Colombia in full swing it may come as some surprise that speculative land next to a 10 million oz. deposit would still be available.

But up until June of last year, that was just the case with the Guayabales property.

Mercer Gold’s (MRGP-O) chief executive, Rahim Jivraj, made sure the ground didn’t stay available after his visit to the property, however.

Shortly after getting word of the property Jivraj found himself standing on the lush green mountains of Colombia, right next to Medoro Resources’ (MRS-V) Marmato project.

“I saw a 2-km road cut of entirely exposed outcrop with dense mineralization at surface,” Jivraj says.

Given that the regional geology yields deposits that are in the one gram per tonne range, it was easy for Jivraj to envision a bulk tonnage project at the site.

“Later, in June, Medoro announced the consolidation of Marmato, which is literally on the other side of the mountain. So I thought to myself ‘I really need this property’.” Jivraj says.

Getting the land meant negotiating with a mining co-op made up of 16 families that have been doing small scale mining on the land.

“I negotiated them down from $12 million to $4 million with an $11.5 million work commitment,” he explains.

Jivraj says the negotiations were made easier by virtue of the fact that he only had to deal with one vendor – which stands in stark contrast with Medoro, which had to deal with some 300 vendors in its successful drive to consolidate Marmato.

With the property locked up, Mercer has managed to garner come attention thanks to its proximity to Marmato, as the large deposit sits just 1.5 km away.

“Marmato’s Zona Alta has mineralization at 1,500-1,800 metres of elevation and the small-scale producing mines on our ground are at the same elevation,” Jivraj says. “We believe it extends on to our property in the same manner.”

As of March 5th of this year Medoro had outlined measured and indicated resources of 245 million tonnes grading 0.95 grams gold and 6.09 grams silver for 7.5 million oz. of gold and 48 million oz. of silver. Drilling at the project is on going.

As for what Mercer has on its ground the company is now beginning to find out.

It has put much of the $2 million it raised back in April into the drill bit as it began a 5,000 metre program in October.

The first results out of that program were released on Nov. 24 and were highlighted by 14 metres grading 2.12 grams gold

That hole, and a second which has yet to be assayed, were drilled with the aim of determining the true orientations of what the company calls the Encanto zone. The zone is one of four target areas to be tested as part of the 5,000-metre program.

Mercer also plans to put three deeper holes into the ground in December to test deep, Marmato-type mineralization.

And while the company already has a NI 43-101 report on the property – a report that says Guayabales geology is consistent with that at Marmato’s Zona Alta – the report stops short of making a resource estimate.

Mercer plans to correct that situation by early next year as part of its push to get a listing on Toronto’s Venture exchange by February.

So how did a 33-year-old entrepreneur like Jivraj wind up with such prospective land in one of the world’s hottest gold districts?

“It’s a product of being in right place at the right time, I think it slipped through the cracks, literally,” a humble Jivraj says.

Colombian Mines (CMJ-V) had the property but dropped it in Feb of 2009 due to the bad market conditions. The claims fell back to the local Co-op, which was the original vendor.

While in its possession Colombian Mines managed to put 17 holes into the ground but did little in terms of geochemical soil samples.

Mercer corrected that situation with extensive soil sampling and channel samples – one of which returned 1 metre grading 2.5 grams and 57 grams silver.

That early stage exploration work, combined with the 2,000 metres drilled by Colombian Gold mines and the emerging results from Mercer’s own drill program, have the company proposing an exciting thesis.

“Our interpretation is that there is disseminated epithermal mineralization at Marmato which extends onto our property in a pendulant shape structure with shear zones,” Jivraj says.

Mercer has already drilled 3,500 metres of its program and plans to have the remaining 1,500 metres done by January at which time it will look to release a first ever resource estimate on the property.