UPDATE: Golden Reign continues to unearth Nicaraguan gold

Golden Reign Resources (GRR-V) is looking to do its part to help return Nicaragua to its former vaunted status in the gold world.

Before the Sandinista revolution of 1979, Nicaragua was one of Central America’s largest gold exporters.

And while B2 Gold (BTO-T) has done much to establish the country as a serious mining jurisdiction by building two gold mines, Golden Reign has a handle on a region near the border with Honduras that it believes will one day host a significant mine as well.

Not that mining is new to the Nueva Segovia area where Golden Reign’s flagship San Albino-Murra project sits.

The property was home to historic mining back in the 1920s but years of neglectful stewardship at the hands of an ill-informed dictator, an ill-advised mining law, and then a socialist revolution, meant that the area’s prospectiveness passed through much of the 20th century without every being properly understood.

Indeed mining in the area is directly connected to Nicaragua’s tumultuous political history. So while gold was being mined prior to the country’s first revolution in the late 1920s, all of that came to an end with the rise to power of Anastasio Somoza Garcia, a dictator who claimed the land for himself after he took over the presidency in 1936.

“No one had access,” Zoran Pudar, Golden Reign’s chief geologist explains of the aftermath of Somoza’s seizure. “And they didn’t have a clue what they were doing. The head of mining extradition was Somoza’s son who was a military man trained at West Point and the rest of the engineers were military guys as well. They used so much dynamite for blasting that they destroyed the tunnels.”

After the Second World War western companies began moving in but they still faced considerable obstacles. The chief one amongst them was an inefficient mining law which required separate exploration and exploitation licenses.

“No one felt secure enough to put in five, ten or twenty million in exploration capital because they may not have chance to mine it,” Pudar says.

That sense of security was scuttled even further when the socialist Sandinistas took control of the country after a 1979 revolution. And while the Sandinistas leader, Daniel Ortega, stepped aside in 1990 after losing an election, he returned in 2006 and recently won a second term.

Pudar, however, says Ortega has come a long ways over the years and has put aside his former brand of socialist rhetoric replacing it with an understanding of the importance of foreign direct investment.

As for the antiquated mining law, that too has changed as in 2001 the law was reformed to give companies 25 year exploration and exploitation license, which can be renewed for another 25 years at its conclusion.

At San Albino itself Pudar explains that the mineralized area is defined by a structural corridor trending in a northeasterly direction that is 3 km wide and 15-km long. Within that broad area there are several shear zones and quartz vein structures.

And while Golden Reign controls the entire 15-km long area, it isn’t alone in Nueva Segovia. Other Toronto listed juniors in the area include Cassius Ventures (CZ-V) and Condor Resources (CN-V).

“But we have the heart of the belt,” Pudar says. “They are just surrounding us trying to do same thing we’ve been doing.”

Pudar chalks up Golden Reign’s ability to carve out such a large and prospective land package for itself to good timing.

The property had been held by Condor but with the financial meltdown of 2008 the company decided to focus on its assets in El Salvador and Honduras and as a consequence it let the property lapse.

Before it did, however, the company did 2-years worth of reverse circulation drilling and outlined a small resource of 78,000 oz. of gold with an average grade of 5.1 grams per tonne.

The use of RC drills by Condor doesn’t sit will with Pudar, who puts little stock in the resource estimate. Instead he has insisted upon using diamond drill core rigs so that a better understanding of the geology can be gained and a more reliable resource can be outlined. That resource calculation is due out in September of this year.

The latest results from the property bode well for future resources. The results came from its on-going trenching program at the Las Conchitas area of its San Albino-Murra.

More specifically the trenches cut into the California Vein and the Las Dolores mine area in the southwest corner of the property. California and Las Dolores are both near-surface high-grade vein prospects and were tested to a depth of roughly 1.5 metres.

Highlights from three separate trenches include: 4 metres grading 21 grams gold and 21.9 grams silver; 3.5 metres grading 42.64 grams gold and 11.7 grams silver and 12.6 metres grading 6.56 grams gold and 12.5 grams silver.

Those results boosted the zones strike length to 750 metres and it remains open in both directions and at depth and trends in a southwesterly direction onto Golden Reign’s recently acquired El Jicaro concession.

Golden Reign is interpreting California and Las Dolores as extensions of the structures first identified by trenching in 2011 and further outlined by a 2012 sampling program. Those past results were highlighted by 14 metres grading 5.89 grams gold and 11.8 grams silver (from trenching) and 2 metres grading 69.33 grams gold and 47.8 grams silver from sampling of the California vein.

And while the results from California and Las Dolores have been promising thus far, the targets represent just two of 29 high priority targets that Golden Reign plans to test this year. Such testing will be made up of trenching and then drill testing where warranted.

Las Conchitas — which is the broader area that hosts California and Las Dolores — sits roughly 3-km south of Golden Reign’s principal focus on the property, the San Albino Mine area. The company currently has three drill rigs in operation at San Albino and is working towards its maiden resource calculation which is due out by the middle of this year.

The latest trench results follow on the heels of drill results from San Albino Mine area which returned highlight assets of 9.3 metres grading 11.01 grams gold and 29.8 grams silver and 4 metres grading 20.44 grams gold and 42.7 grams silver.

San Albino covers 2 sq. km of the total land package and was the first of target to be drill tested. The company says that currently the San Albino zone has an open pittable portion with a strike length of 400 metres and a down-dip extension of 300 metres.

Golden Reign recently earned an 80% interest in the San Albino-Murra property and it is also exploring its wholly owned El Jicaro property — both of which are in the Nueva Segovia region of Nicaragua roughly 40-km south of the Nicaragua and Honduras border.

In total, Gold Reign has permits on 138 sq. km of land within the Corona de Oro Gold Belt which spans 3-km in width and 20-km in length and includes numerous small-scale historical mines.

Earlier in the month the company announced it had arranged a private placement that will raise $5 million in capital by issuing 7.5 million units for 67¢ per unit. Each unit is made up of one share and one warrant with a strike price of $1.00.

The company currently has 83 million shares on a fully diluted basis with directors and management holding 16% of the company’s equity. If outstanding warrants are exercised it would bring in another $12 million in capital to the company.