US Gold expands El Gallo (June 21, 2010)

As US Gold (UXG-T, UXG-X) 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 in July, 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 155, drilled on the eastern part of the Main zone showed mineralization starting at 37.3 metres with an intercept of 38.1 metres grading 158.1 grams silver per tonne.

Hole 154 hit mineralization at 13.5 metres depth with 7.7 metres of 245.2 grams silver including 1.3 metres of 739 grams silver.

US Gold also highlights the results from hole 154, which averaged 11.6 metres of 111.7 grams silver, starting at 61.5 metres depth.

Hole 148 returned one of the deepest mineralized intercepts to date with 97.4 metres of 8.7 grams silver, starting from 180.7 to 189.4 metres depth.

US Gold says that hole 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 from 78.6 metres depth and 18.5 metres at 285.7 grams silver starting from 131.5 metres depth.

Drilling has extended mineralization along strike to the east by 70 metres bringing the known length of the Main zone to 655 metres. One of the eastern-most holes was hole 164, which returned 21.8 metres at 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 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 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.

On news of the assays, US Gold shares tumbled 15¢ to $4.06 with 38,300 shares changing hands. Shares reached a new 52-week high of $4.43 on May 26, while reaching a low of $2.16 in February.