Goldgroup hits high-grade gold at San Jose de Gracia

Vancouver – Mexico-focused Goldgroup Mining (GGA-T) has hit a very high-grade gold intercept at the San Jose de Gracia project where it is earning a 50% interest.

Targeting the northeast section of the San Pablo quartz breccia vein, hole 10-203 cut 5.5 metres averaging 332.86 grams gold per tonne and 143.9 grams silver per tonne from 71 metres depth. The hole included a 0.75-metre section grading 2,424.89 grams gold and 1,037.8 grams silver.

Goldgroup CEO Keith Piggott stated in a press release that “This incredible intersection further verifies that the San Jose de Gracia district hosts bonanza-style gold mineralization,” adding that a third diamond drill will be added to the 18,500-metre drill program underway.

Earlier results at San Jose de Gracia, released in September, included 1.7 metres grading 105.51 grams gold from 75 metres, 16.4 metres carrying 10.58 grams gold from 229 metres, and 10.9 metres grading 4.22 grams gold from 223 metres, all from the Tres Amigos vein.

San Jose de Gracia has historically produced over 1 million oz. gold, with much of the production from high-grade veins.

Goldgroup needs to spend US$4.5 million by March 15, 2011 to earn in its 50% interest in the 1,000-sq-km property, which the current drill program should largely fulfill. DynaUSA controls the rest of the project.

At Goldgroup’s flagship Caballo Blanco gold project in Veracruz State, the company continues to work through a 30,000-metre drill program started in early October. The company recently released the first two reverse circulation holes from the La Paila zone on the project.

Hole 48, drilled in part to confirm the grades from 32 diamond drill holes completed by previous operators, hit 62 metres grading 0.44 gram gold and 4.67 grams silver from 42 metres and then another 62 metres grading 0.75 gram gold and 0.76 gram silver starting at 112 metres depth.

Hole 49, drilled 50 metres east of known mineralization, hit 16 metres grading 0.67 gram gold, 18 metres grading 0.38 metres and 10 metres averaging 0.29 gram gold, with all sections under 100 metres depth, and then a 48-metre section carrying 0.53 gram gold from 110 metres.

Goldgroup acquired a 70% interest in Caballo Blanco in November, 2009 for US$6 million in cash and 9 million shares. The project hosts 6.7 million indicated tonnes grading 0.65 gram gold for 139,000 contained oz., and 27.6 million inferred tonnes grading 0.58 gram gold for 517,000 contained oz.

The company’s producing mine, Cerro Colorado in the state of Sonora, is expected to produce around 21,000 oz. gold this year. Due in part to extensive stripping to expose higher grades, the cost per oz. for the nine months ending Sept. 30 was US$926. The company expects a recently installed crusher to help with recoveries.

In late November Goldgroup closed a $3-million private placement with Sam Magid, issuing 3 million units at $1 each. The company now has roughly 89 million shares issued and outstanding.

Goldgroup’s share price was up 17¢ or 14.8% to close at $1.32, a new 52-week high, on 2.1 million shares traded. The company completed a reverse takeover of Sierra Minerals and share consolidation in May.