AM Gold revisits Yukon-based Red Mountain project

Vancouver – After years of inactivity at its Red Mountain gold project in the Yukon, AM Gold (AMG-V, AMX-F) has released some very long, low-grade gold hits from a recent drill program.

The company, which changed its name from Acero-Martin this summer, also recently shifted its immediate focus from its Peruvian Pinaya project back to the Yukon.

AM Gold acquired the Red Mountain project in 2002 but had done no work on it in the past three years. Multiple management shuffles and several rounds of financing now have the company once again exploring its property in the Tintina gold belt of the Mayo mining district.

The 2010 drilling was designed to test mineralization to depth and laterally as the company works to expand the established inferred resource. The current resource zone has a strike length of 250 metres and dips steeply southwest.

So far the company has released two assay results from deep holes. Earlier drilling on the property averaged 200 metres depth and the deepest hole hit 331 metres.

In the latest results, hole 10028 hit 526.6 metres grading 0.75 gram gold per tonne, with the entire hole mineralized. Drilled 75 metres west, Hole 10029 returned 451 metres averaging 0.58 gram gold.

A total of 12 holes over roughly 6,000 metres were drilled in the 2010 program.

The property is located roughly 135 km east of Dawson City and 57 km northwest of Mayo, with the northern edge of the property skirting the Dawson mining district. Red Mountain consists of 52 contiguous claims spanning close to 11,000 hectares.

Gold mineralization on the property is associated with steeply dipping sheeted sulphide-bearing quartz veins. The mineralized areas are mostly hosted in quartz monzonite porphyry.

Earlier this year the company released an updated resource estimate for Red Mountain, based on drilling up to 2006, that had 23.6 million inferred tonnes grading 0.7 gram gold for roughly 542,000 oz. contained gold.

The company recently secured full ownership of the Red Mountain project after entering a purchase agreement for the outstanding 20% of the property from a numbered company. There remains a 2% net smelter return royalty, though AM Gold has an agreement in place whereby it can reduce that to 0.5% for $1.75 million.

AM Gold also controls the Pinaya project in Peru, which hosts a resource estimate of 29.13 million indicated tonnes grading 0.53 gram gold per tonne and 0.42% copper, and an additional 12.72 million inferred tonnes grading 0.41 gram gold and 0.41% copper.

A proposed joint venture to develop the project with Solitaire Minerals’ (SLT-V) fell through earlier this year, but AM Gold is apparently forging ahead with an exploration program.

In mid-September the company closed both flow-through and non-flow-through financings, raising gross proceeds of $3.3 million. With the financings closed, the company now has 50 million shares issued or 70 million fully diluted.

AM Gold was trading at a 52-week low of 14¢ in February and recently hit a 52-week high of 63¢. The company’s stock price closed at 59¢ on the latest news.