VANCOUVER — Newly formed Goldgroup Mining (GGA-T) is racing through a 15,000-metre drill program at the San Jos de Gracia project in Mexico, in advance of a resource update for the historic mine.
Goldgroup was formed in April from the merger of Sierra Minerals and privately-held Goldgroup Resources. The move combined Sierra’s operating Cerro Colorado gold mine in Mexico’s Sonora state with Goldgroup’s portfolio of development- and exploration-stage gold projects, which are all also in Mexico.
The latest news from the new company concerns its San Jos project in Sinaloa. Goldgroup is earning into the project; it has already earned a 25% stake and can increase that to 50% by spending another $6.5 million on exploration by March 2011. The current 60-hole program will contribute towards that expenditure.
In the first 21 holes of the program, Goldgroup found the best mineralization in the San Pablo vein. Of the 10 holes punched into San Pablo, nine intersected mineralization grading better than 2 grams gold per tonne and two of those also hit additional parallel veins below the main vein.
Hole 133 hit 3 metres of 13.1 grams gold at 127 metres downhole, followed 20 metres later by 0.7 metre of 8.88 grams gold. Hole 131 returned 1.1 metres carrying 28.25 grams gold from 96 metres downhole, followed by three other short intercepts including 1.8 metres of 7.18 grams gold.
Hole 137 intercepted 5 metres of 5.35 grams gold starting 136 metres downhole, followed a few metres later by 1.4 metres of 8.8 grams gold. Hole 138 cut 3 metres of 8.8 grams gold from 151 metres depth. And hole 139 returned 0.7 metre of 8.79 grams gold at 110 metres depth followed by 5.5 metres averaging 20.51 grams gold from 132 metres downhole.
The resource at San Pablo currently stands at 1 million inferred tonnes grading 8.84 grams gold and 14.26 grams silver.
Goldgroup also drilled at San Jos’s three other deposits but the results were not as strong. At La Union the two hole drilled both hit mineralization: hole 143 cut 1.4 metres of 12.08 grams gold and hole 144 returned 3.8 metres of 1.63 grams gold. Over at Rosario South, four of five holes did not return gold mineralization and at La Purisima three of four holes contained no significant gold.
The project had already seen 200 drill holes before Goldgroup and more than half of those holes were drilled in 2007 and 2008. In March, the company used historic drill data to inform a resource estimate which included all four project areas: the San Pablo vein, the La Union vein, the Tres Amigos vein and the La Purisima trend. Together the areas host 3.4 million inferred tonnes averaging 5.59 grams gold and 10.02 grams silver.
Some of the historic drill results used in the resource calculation are strong. The better intercepts include 21.5 metres of 14.09 grams gold, 16.5 metres of 3.91 grams gold, 6.1 metres of 26.89 grams gold, 7.5 metres of 53.98 grams gold, and 10.8 metres of 19.32 grams gold.
Goldgroup says the San Jos property has produced more than 1 million oz. gold historically, from veins grading between 30 and 60 grams gold. Goldgroup and its partner, DynaUSA, are seeking a gold resource capable of sustaining an annual production rate of 100,000 oz. gold.
As for the company’s wholly-owned Cerro Colorado mine, it is on target for a year of record pro- duction. The open-pit, heap-leach operation produced 20,546 oz. gold in 2009; in the first quarter of 2010 the operation churned out 6,382 oz. Goldgroup is aiming to produce 25,000 to 30,000 oz. gold from Cerro Colorado this year, from 2.7 million tonnes of ore averaging 0.57 gram gold. Recoveries at the mine average 63%.
Goldgroup also holds three development- stage projects, the smallest but most advanced is the El Porvenir project. The company is finishing a metallurgical program at El Porvenir aimed at enhancing recoveries, and plans to make a production decision within the next few months.
In addition, Goldgroup holds a 70% interest in Caballo Blanco, which it bought from NGEx Resources (NGQ-T), the primary exploration unit of the Lundin Group, for $6 million in cash, 9 million shares and a 1.5% net smelter return royalty on future mine production plus a one-time royalty payment of $5 million. The remaining 30% of the project is owned by Almaden Minerals (AMM-T).
Goldgroup’s immediate plans at Caballo Blanco include further exploration to expand and upgrade the current resource and to test other project targets. The 200-sq.-km property has three mineralized zones which each host several target areas; a resource has only been defined for one target. The La Paila area in the Northern zone hosts 6.7 million measured and indicated tonnes grading 0.65 gram gold and 1.92 grams silver plus 27.6 million inferred tonnes averaging 0.58 gram gold and 1.84 grams silver.
In its first month of trading as Goldgroup, the company’s share price climbed from 85¢ to $1.15 but it has since fallen, closing recently at 65¢. Goldgroup has 85 million shares outstanding.
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