US Gold expands El Gallo (June 09, 2010)

As US Gold (UXG-T) awaits the results of an initial resource estimate for its El Gallo silver project in Sinaloa state, Mexico, ongoing drilling on the Main zone is showing that mineralization has potential for expansion.

The resource estimate, due next month, will encompass drilling completed up until the end of March but the company hasn’t stopped exploring – it’s in the midst of a 100,000-metre, $18-million drill program and has just released assays from the latest 18 holes.

US Gold’s recent focus was to test the Main zone for near surface mineralization as well as mineralization at depth, and to extend the zone to the east.

Hole GAX-155, drilled on the eastern part of the Main zone showed mineralization starting at 37.3 metres with an intercept of 38.1 metres grading158.1 grams silver per tonne.

Hole GAX-154 intercepted mineralization at just 13.5 metres depth with 7.7 metres grading 245.2 grams silver per tonne including 1.3 metres grading 739 grams silver per tonne.

US Gold also highlights the results from GAX-154 which averaged 11.6 metres grading 111.7 gram silver per tonne starting at 61.5 metres depth.

GAX-148 returned one of the deepest mineralized intercepts to date with 97.4 metres grading 8.7 grams silver per tonne, starting from 180.7 metres to 189.4 metres depth.

US Gold says that GAX-152 was drilled in an eastern area of the Main zone where minimal drilling has been done. Drilling returned 26.5 metres grading 56.5 grams silver starting form 78.6 metres depth and 18.5 metres grading 285.7 grams silver starting from 131.5 metres depth.

Drilling has extended mineralization along strike to the east by about 70 metres bringing the known length of the Main zone to 655 metres. One of the eastern-most holes was GAX-164, which returned 21.8 metres grading 66.5 grams silver starting from 25.4 metres depth.

US Gold says the gap is beginning to close between the Main zone and the North zone, so much so, that the company’s vision of mining from one large open pit could become a possibility. More drilling is needed though.

The company also says it may have found a new zone that is parallel to the Main zone. So far, the parallel zone has a known strike length of 110 metres.

El Gallo is located about 5 km north of the past-producing Magistral open-pit gold mine and 11 km northwest of the historic Palmarito silver mine, which are both on US Gold’s 2,100-sq.-km property.

El Gallo is a low sulphidation epithermal system with a lot of breccia in the system. That means there aren’t the typical vein systems often seen throughout Mexico.

The host rock is andesite and the thickness of the host rock varies throughout the project from a minimum of 100 metres to about 220 metres as you go along strike.

US Gold discovered El Gallo in the summer of 2008 and began its first drill program in November 2009. While El Gallo is the focus right now, the company is also advancing several gold projects in Nevada’s Cortez Trend.

US Gold shares were down 7¢ to $4.14 in morning trading with a volume of 16,500 shares changing hands. Shares reached a new 52-week high of $4.43 on May 26 while the 52-week low, reached in February is $2.16 per share.