Partners confirm El Aguila continuity

Having confirmed the continuity of a gold-siver zone, partners Gold Resource and Canyon Resources (CAU-X) are proceeding with a scoping study at their Aguila property in Mexico’s Oaxaca state.

The pair recently completed a second phase of drilling that entailed 2,124 metres in 38 holes to test a mineralized system developed in massive quartz bodies. All except five of the holes were of the reverse-circulation type, and the core holes were shallow.

Seventeen holes yielded more than 1 gram per tonne over 4 or more metres of true width, and 12 ran more than 3.5 grams over at least the same thickness. Results include the following:

— Hole 330 — 6 metres (starting at a down-hole depth of 6 metres) grading 8.46 grams gold and 111 grams silver per tonne.

— Hole 331 — 6 metres (at 36 metres) grading 1.52 grams gold and 16 grams silver, and 4 metres (at 50 metres) of 54.71 grams gold and 700 grams silver.

— Hole 333 — 12 metres (at 2 metres) grading 8.73 grams gold and 64 grams silver; the final 6 metres ran 15.69 grams gold and 101 grams silver.

— Hole 334 — 6 metres (at 6 metres) grading 9.4 grams gold and 25 grams silver.

— Hole 343 — 6 metres (at 60 metres) grading 1.62 grams gold and 12 grams silver, and 8 metres (at 68 metres) of 10.85 grams gold and 62 grams silver.

— Hole 348 — 14 metres (at 20 metres) grading 0.86 gram gold and 4 grams silver.

Owing to the shallow nature of mineralization, the companies are eyeing the zone as a potential open-pit operation. Preliminary leaching tests using 100-400 mesh suggest that 94-99% recovery rates for gold and 89-91% for silver can be expected.

Once the independent study is complete, Canyon will have three months in which to decide whether to provide US$3 million for development or convert the US$500,000 it has already funded for 600,000 shares in Gold Resource. Gold Resource is an affliate of, and 40% held by, U.S. Gold (USGL-O).

Gold Resource and Canyon also note that the zone occurs in a small area and that similar but untested gold-silver anomalies exist elsewhere on the 37-sq.-km property, which is underlain by rhyolitic domes and sedimentary rocks. Mineralization is associated with zones of silica alteration.

Canyon owns the Briggs gold mine in California and the advanced but stalled Seven-Up Pete Venture in Montana, which is the subject of an ongoing legal battle. The lawsuit pertains to the state’s passing of an anti-cyanide leaching law (I-137) in 1998.

U.S. Gold’s main asset is the past-producing Tonkin Springs gold mine in Nevada’s Eureka Cty. In mid-2003, it granted BacTech Mining (BM-V) the right to a 55% interest in exchange for US$12 million in development funding and US$1.75 million. Of the latter amount, US$1 million has been paid, and the remainder is due on July 31 if production has been resumed by then, or in 12 subsequent but equal monthly instalments if it has not.