AndeanGold to acquire 60% JV interest in Urumalqui project

AndeanGold (AAU-V) has inked an agreement with Gitennes Exploration (GIT-V) to buy a 60% joint-venture stake in Gitennes’ Urumalqui gold-silver project.

The project is an advanced-stage exploration property in north-central Peru, about 70 km east of the port city of Trujillo.

The principal target on the property, the Urumalqui vein structure, outcrops for 1.5 km on surface and has been drilled to about the 200-metre level. The Vein is open along strike and at depth, and the style of mineralization can reach depths of 400 to 600 metres.

The project consists of four contiguous concessions totaling 2,700 hectares and is at elevations ranging from 3,400 – 3,700 metres.

The Urumalqui Vein is a near-vertical zone, up to 20 metres wide, containing a core of one or two banded quartz veins ranging from 0.5 to 11 metres aggregate thickness, and intervening oxidized vein breccias and altered volcanic rocks. The Vein is exposed at surface over a strike length of 1,500 metres and consists of eight vein segments, ranging in length from 40 metres to 400 metres.

Two main vein orientations have been mapped on the property. A northwest-southeast trend includes the Urumalqui Vein, La Mariscala West Vein, La Mariscala South Vein, and the Penélope Vein. An east-west trend includes the La Mariscala East Vein, Candual East Vein, the Candual West vein zone, and the Candual Vein. These veins are developed south of the Urumalqui Vein.

Gitennes’ work programs have included grid-controlled soil sampling, IP and magnetic geophysics surveying, three phases of core drilling (about 7,336 metres in 47 holes) and preliminary metallurgical testing.

Most of the drilling has been focused on the 1,000-metre-long central and southeastern portion of the Urumalqui Vein and from surface down to a vertical depth of about 200 metres. For the 35 holes (5,835 metres) drilled in the Urumalqui Vein, the average vein intersection width and weighted average gold and silver grades were 3.31 metres of 1.33 grams gold per tonne and 154 grams silver per tonne. In the handful of holes that were deeper than 200 metres, “the Vein structure remained strong and mineralized,” the company states. “All holes appear to have been in the “boiling zone”, based upon vein textures, and the potential for good mineralization at deeper levels than those tested thus far is considered to be good.”

Mineralization is hosted in volcanics and is made up of several gold-silver quartz veins. Vein mineralogy and textures and associated alteration are characteristic of low-sulphidation, vein-style, epithermal, mineralization.

AndeanGold believes that based on preliminary metallurgical test results on core and rock samples, it may be possible to get good recoveries through a combination of crushing and milling, and gravimetric separation and cyanide leaching.

The junior’s Peruvian subsidiary, PeruGold Resources, will earn a 60% stake in the joint-venture by spending $3 million over four years and completing 3,000 metres of drilling by the end of the second-year term and 7,000 metres of drilling (cumulative) by the end of the third year.

AndeanGold also has to issue 200,000 of its publically traded shares to Gitennes. Except for the first payment, Gitennes can choose cash in lieu of shares, with the amount not to exceed $25,000, $50,000 and $100,000 with respect to the first, second and third year anniversary date payments, respectively.

Gitennes and Meridian Gold agreed to pool their resources and acquired the concessions in late 2002 and 2003. In June 2005 the two companies terminated their agreement and Gitennes assumed 100% of the project.

Mineralization is hosted in volcanics and is made up of several gold-silver quartz veins. Vein mineralogy and textures and associated alteration are characteristic of low-sulphidation, vein-style, epithermal, mineralization.

Old workings at Urumalqui include short adits, pits and an exploration shaft that was sunk to about 50 metres on the Urumalqui Vein. There was limited development on the -28-metre level, with a 250-metre drift and winze on the -50-metre level.

At presstime AndeanGold was trading at 3¢ per share and over the last year has traded in a range of 2.5¢-9¢ per share. The Vancouver-based junior has 48.9 million shares outstanding.