Golden Arrow gets lift from drill results

Stepout drilling at Golden Arrow Resources’ (GRG-V) Chinchillas silver project in Argentina’s Jujuy province has returned several long intercepts including 29 metres grading 631 grams silver per tonne, the company reports.

The near-surface intercepts come from the project’s Silver Mantos target, which remains open to expansion in all directions. Highlights of the drilling also include 22 metres of 591 grams silver per tonne  with 10 metres of 1,234 grams silver in hole 38; 29 metres of 515 grams silver with 7 metres of 1,463 grams silver in hole 39; and 23 metres of 217 grams silver in hole 34. Holes 34 to 39 were drilled vertically and reported lengths close to true widths, the company says, noting that it has completed 3,200 metres of drilling to date, and has released results from 23 of 27 holes.

The Chinchillas project is 30 km north of Silver Standard’s (SSO-T, SSRI-Q) producing Pirquitas mine and 75 km northwest of Glencore’s Mina Aguilar mine, and lies in the prolific Bolivian silver-zinc-tin belt that extends into northern Argentina. The Chinchillas property is 4,000 metres above sea level and 60 km west of Abra Pampa in northwest Jujuy. The property is road accessible and can be explored year-round.  

Management believes the geology at Chinchillas is comparable to Sumitomo Corporation’s San Cristobal mine in Bolivia, where low-grade silver-zinc-lead mineralization is being mined from an open pit within a similar diatreme-breccia environment.

Chinchillas is a Tertiary-aged, maar-diatreme volcanic complex that erupted through the Paleozoic basement schists. The resulting depression, or basin — filled with volcanic breccias and tuffs — is 1.5 km in diameter. 

Golden Arrow has the option to earn a full interest in Chinchillas from the Argentine owner of theproperty, and believes the project could host a large silver-zinc-lead deposit. Previous operators had drilled 3,000 metres in 14 holes in the north-central portion of the property. 

“There was some historic drilling on the property with positive results, and that’s what initially attracted us to it,” says David Terry, a member of Golden Arrow’s board of directors who worked as the company’s vice-president of exploration for eight years, before leaving to head up Oremex Gold in late 2011. “The historic drilling was carried out by two companies in the mid-1990s and 2000s, and of the 14 holes that were completed, 11 had intercepts with mineralization. Collectively, the geological environment and the historical results suggested that there was potential to expand the previously identified zones of mineralization.”

Golden Arrow struck the option agreement last year, and since then has progressed through the program planning, permitting and local community access agreements, Terry explains in a telephone interview from his home in Vancouver.

Golden Arrow intends to finance future drilling on the project by selling its 1% net smelter return royalty on Yamana Gold’s (YRI-T, AUY-N) Gualcamayo gold mine to Premier Gold Mines (PG-T) for $17.75 million, which is subject to shareholder approval.

“The Silver Mantos zone is flat lying and near surface, and the mineralized layers, or mantos, appear to have good lateral continuity from the drilling to date,” Terry says. “We think that there is excellent potential to expand the Silver Mantos zone and to delineate additional mineralized zones elsewhere on the property.”

When asked about the political risk in Argentina under President Cristina Fernandez, Terry says that despite the federal-level issues reported in the media, Golden Arrow has a long track record of operation there. 

“All exploration has some degree of inherent jurisdictional risk, and we focus first and foremost on having a solid relationship with the local stakeholders and local government — mining is provincially regulated in Argentina,” he says, adding that the South American nation has great mining potential.

“I view Argentina as a country that has huge, undiscovered mineral potential. And so from that standpoint alone it’s a great jurisdiction to explore, because the chances for a new discovery are better than in areas that are more developed, such as Chile and Peru.”

Golden Arrow is part of the Grosso Group of companies, a management group specializing in resource exploration that has been working in Argentina since 1993.

News of the drill results pushed Golden Arrow’s shares up 12.5%. At presstime the company traded at 32¢, within a 52-week range of 23¢–40¢ per share.