Drill results keep AG in spotlight

While drilling continues, along with discussions with major mining companies, Argentina Gold (ARP-V) has released an updated resource estimate for two targets at its 60%-owned Veladero gold-silver project in the Andean mountains of Argentina.

The Vancouver-based junior also intends to adopt a shareholder rights protection plan, or “poison pill,” which would allow directors and shareholders time to evaluate further unsolicited takeover bids. The company says it is in discussion with several major companies.

The poison-pill announcement follows a failed bid by Barrick Gold (ABX-T), which already has a 9.9% interest in AG, but wanted another 40.2% of the outstanding shares. Barrick also has a 40% stake in the Veladero project.

To implement the rights plan, AG will issue one right for each share to shareholders of record as of Feb. 18. Under the plan, a bid for 15% or more of the outstanding voting shares will entitle standing shareholders to buy shares at half the market price.

Watts Griffis & McOuat (WGM) prepared the updated estimates

for the Amable target after incorporating results from recent drilling. The consulting firm separated its estimate of the Amable target into higher-grade and lower-grade resources, based on cutoff grades of 2 grams and 1 gram, respectively.

The higher-grade resource consists of 10 million tonnes grading 5.58 grams gold and 47.88 grams silver per tonne in the indicated category (1.8 million contained oz.), and 4.1 million tonnes of 4.43 grams gold and 47.88 grams silver in the inferred category.

The lower-grade resource at Amable consists of 6.2 million tonnes grading 1.43 grams gold and 44.02 grams silver per tonne (indicated), and 2.4 million tonnes grading 1.42 grams gold and 44.02 grams silver (inferred).

WGM also concluded that, based on current resources, Veladero could be operated independently of any neighbouring operation, and that it has potential for expansion at Amable and elsewhere.

Consulting geologists Giles Peatfield and J.A. Zbeetnoff provided the revised estimate for the Filo Federico target (which also is open-ended).

The cutoff grade was raised to 0.75 gram from 0.5 gram to calculate resources in the higher-grade portion, which is viewed as a possible starter pit for the larger, overall Filo Federico resource.

The higher-grade indicated resource now stands at 10.5 million tonnes grading 2.03 grams gold and 9.3 grams silver, while the inferred resource adds another 9.2 million tonnes of 2.05 grams gold and 9.4 grams silver.

These resources are within a larger resource consisting of 14.2 million tonnes of 1.88 grams gold and 11.2 grams silver classified as indicated, and 14.9 million tonnes of 1.83 grams gold and 12.2 grams silver classified as inferred.

AG notes that Veladero has significant high-grade silver resources in defined areas. These resources will be calculated shortly as part of a forthcoming global resource estimate for the entire Veladero project. More work is being done on the silver metallurgy in order to boost recoveries to at least 50-60% from the 20% level reported in the initial testwork.

Meanwhile, drilling continues apace at the Veladero gold property, in Argentina’s Santa Cruz province.

At the Amable target, hole 108 was collared 10 metres east of hole 80 (212 metres averaging 3.67 grams gold and 47.71 grams silver per tonne).

The new hole, drilled vertically, intersected 304 metres grading 1.53 grams gold and 26.44 grams silver per tonne, starting at a down-hole depth of 46 metres. This intercept included 162 metres grading 2.46 grams gold and 41.72 grams silver starting at a down-hole depth of 46 metres. A higher-grade, 29-metre core averaging 5.62 grams gold and 67.97 grams silver was recovered from 103 metres down-hole.

Hole 110, collared 45 metres east of hole 92 (105 metres averaging 7.67 grams gold and 52.50 grams silver), intersected 155 metres of 1.7 grams gold and 23.93 grams silver starting at a depth of 86 metres. Included in this interval are 63 metres of 3.07 grams gold and 38.92 grams silver starting at 92 metres down-hole.

One reverse-circulation rig and one diamond-core rig are spinning at the Amable target.

Holes 113 and 116 are completed and assays are pending. The former was collared 50 metres west of hole 92 (105 metres averaging 7.67 grams gold and 52.5 grams silver), whereas the latter was collared from the same platform as hole 84 (126 metres averaging 2.66 grams gold and 22.77 grams silver) but was drilled in a southeasterly direction.

A second diamond core hole, DDA-2, is being sunk. The hole was collared 15 metres north of hole 89 (193 metres averaging 1.2 grams gold and 33.32 grams silver) and is being drilled in an easterly direction.

Meanwhile, at the Filo Federico target to the west, hole 109 returned 106 metres averaging 1.01 grams gold and 7.69 grams silver starting at a down-hole depth of 55 metres.

Also recovered was a 40-metre interval grading 1.37 grams gold and 8.61 grams silver starting at 100 metres down-hole.

Drilling at Filo Federico is continuing with a reverse-circulation rig and a diamond-core rig. Assays for six other completed holes are pending.

Currently, hole 121 is being drilled 50 metres northwest of hole 72 (192 metres grading 1.51 grams gold and 9.94 grams silver, including 47 metres of 4.4 grams gold and 15.09 grams silver).

The first diamond hole at Filo Federico, hole DDF1, is currently twinning hole 72.

About 500 metres east of that target, drill hole 122 is testing the margin of a resistivity anomaly. The hole was collared 125 metres northeast of hole 91, which returned 64 metres of 0.84 gram gold and 2 grams silver.

At a third target, Amable North, hole 111 has exhibited geology and alteration patterns similar to those encountered in the first hole drilled there. That hole, 100, returned 91 metres averaging 1.15 grams gold and 11.7 grams silver.

Hole 111, collared 50 metres east of hole 100, intersected 87 metres averaging 0.615 gram gold and 15.29 grams silver starting at a down-hole depth of 255 metres.