Palmarejo hits additional gold-silver (January 02, 2006)

Vancouver — Palmarejo Gold‘s (PJO-V, PMJOF-O) drill program on its namesake gold-silver project, in the Temoris District of northern Mexico’s Chihuahua state, has returned wide, highly-mineralized intercepts and extends the strike of the La Blanca structure eastward.

Reverse-circulation (RC) hole PMDH394 intersected 22.9 metres (from 126.5 metres) averaging 19.6 grams gold per tonne and 243 grams silver per tonne. The hole tested the 108 clavo on the La Blanca quartz breccia structure. High-grade ore shoots (or clavos) host the bulk of the known gold-silver mineralization at Palmarejo.

Two primary quartz breccias, La Blanca and La Prieta, contain a number of clavos that have returned significant gold-silver intercepts in drilling. Further recent results include the following:

– hole PMDH403D returned 13.5 metres (from 149 metres) in the 108 clavo grading 9.6 grams gold and 202 grams silver within the La Blanca stockwork structure;

– RC hole PMDH380 cut multiple mineralized intercepts including 15.2 metres of 9.5 grams gold and 775 grams silver, 7.6 metres of 5.8 grams gold and 466 grams silver, and 4.6 metres of 7.9 grams gold and 553 grams silver in the Rosario clavo within both main quartz breccias; and

– hole PMDH390D cored 2 metres (from 68 metres) averaging 24.2 grams gold and 1,844 grams silver in Hall’s clavo within the La Prieta stockwork.

In addition, initial drilling on a new target, Cerro de los Hilos (Hill of Stringers), about 2 km south of Palmarejo, intersected 1.5 metres of 3.3 grams gold. Cerro de los Hilos is a bulk-tonnage target previously detected through a surface-trenching program. A series of moderate-grade, sheeted vein sets occur over 100 metres of true width.

A recently updated resource estimate pegs Palmarejo with a measured and indicated resource of 9.8 million tonnes grading 1.6 grams gold and 220 grams silver using a 1 gram gold equivalent cutoff. Additional inferred resources of 10.6 million tonnes averaging 1.4 grams gold and 196 grams silver were also reviewed using the same cutoff.

The company expects to initiate a feasibility study at Palmarejo in early 2006.

Following the results, shares of Palmarejo jumped to a new all-time high touching $4.14-per-share before closing up a quarter at $3.75 on low volume.