Positive PEA for Grayd’s La India (October 21, 2010)

Vancouver – Grayd Resources (GYD-V) has been exploring and expanding the La India property in Sonora, Mexico, for almost seven years and now that work has been rewarded with a preliminary economic assessment (PEA) that predicts a heap leach operation at the site could generate a healthy return.

La India is a 264-sq. km property in the Mulatos belt that Grayd assembled through seven separate option agreements. The company now owns the entire land package outright and has outlined a near surface epithermal gold deposit home to 26.8 million measured and indicated tonnes grading 0.88 gram gold per tonne plus 19.7 million inferred tonnes averaging 0.8 gram gold.

The PEA for La India found that deposit could well support a mine. The study looked at developing an open pit, heap leach operation at La India processing 16,000 tonnes of oxide material each day. The deposit requires a strip ratio of 0.72 to 1 and heap leaching should recover 84% of the gold contained in the oxide ore.

To build the operation should cost US$72 million. The mine would then produce 92,000 oz. gold annually for nine years, at an average cash cost of US$507 per oz. Using a gold price of US$950 per oz. and a 5% discount rate, the project carries a net present value of US$187 million and a 51% internal rate of return. It should take less than three years to repay the initial capital investment.

Grayd is hopeful that it can extend the mine life with further exploration. In May the company discovered a new zone at La India called Tarachi, which is 10 km north of the main La India deposit. Grayd punched seven holes into Tarachi; all seven holes returned gold mineralization, starting from surface. Highlights include 56 metres of 0.71 gram gold, 296 metres of 0.21 gram gold, and 159 metres of 0.22 gram gold.

Gold at Tarachi is associated with breccias and veins that resemble an intermediate-sulphidation epithermal system. Grayd is particularly encouraged by the results at Tarachi because the veins and breccias seem to come from the upper levels of a system, indicating potential for considerably more mineralization at depth. Some intercepts from Tarachi have also returned molybdenum and zinc, which support that theory.

La India is 7 km away from Alamos Gold‘s (AGI-T) 4.7-million oz. Mulatos gold project and hosts a similar style of deposit. Since acquiring the first claims at La India in late 2003 Grayd has completed 60,400 metres of drilling in 702 holes.

Grayd’s share price has performed well over the last year, climbing from 40¢ to a recent high of $1.50. On news of the PEA it fell 9¢ to close at $1.41. Grayd has 81 million shares outstanding.