US GOLD CORPORATION (NYSE:UXG)(TSX:UXG) has announced very encouraging drill results from several different areas at and surrounding the company's El Gallo project in Sinaloa state, Mexico.
Drilling has discovered a series of new veins 6 miles (10 km) north of the main resource and has also extended many of the known zones throughout the district.
These results will not be included in the El Gallo Preliminary Economic Assessment due to be released in early February.
EXPLORATION HIGHLIGHTS
- Several new silver-gold veins, located 6 miles (10 km) north of the El Gallo resource, have been discovered with intersections of 1,325.1 grams per tonne (gpt) silver and 2.1 gpt gold over 1.2 meters, 235.0 gpt silver and 18.3 gpt gold over 0.7 meters and 273.6 gpt silver and 0.7 gpt gold over 10.5 meters.
- Near surface expansion and delineation drilling at Palmarito intersects 135.1 gpt silver and 0.3 gpt gold over 21.1 meters, 121.4 gpt silver and 0.6 gpt gold over 12.2 meters and 70.6 gpt silver, 0.6 gpt gold over 26.4 meters all starting from surface.
- First follow-up holes at the El Gallo Gold Zone return more high-grade 16.9 gpt gold over 2.0 meters, 7.0 gpt gold over 1.1 meters, and 5.2 gpt gold over 2.0 meters.
- Near surface mineralization at Chapotillo extended to the southeast, returning 218.3 gpt silver, 1.6 gpt gold over 4.6 meters, and 110.0 gpt silver, 16.2 gpt gold over 0.5 meters.
- Drilling at El Gallo, designed to increase the size of the resource encounters more encouraging results 75.3 gpt silver over 22.2 meters.
- Preliminary Economic Assessment for El Gallo due to be released in early February
EL GALLO AND DISTRICT EXPLORATION
US Gold controls over 500,000 acres of land around El Gallo, with many areas having been mined historically on a small scale. Since many of these areas have not been subject to modern exploration, US Gold's management feels the district holds a lot of growth potential. Continued drilling at El Gallo will focus on expanding the total size of the resource and upgrading the inferred resource to the measured and indicated categories. Drilling on the new veins will focus on delineating the mineralization in order for them to be incorporated in an updated resource estimate. US Gold anticipates spending $15 million on exploration in Mexico during 2011, in addition to moving the project through to feasibility.
1) New Veins Discovered North of El Gallo Resource
A new series of veins have been discovered 6 miles (10 km) north of the El Gallo resource. A total of 14 core holes were completed on two of the veins known as Mina Grande and Los Mautos, which are separated by 1,300 meters. Drilling at Mina Grande occurred over a strike length of 550 meters. The best results were intersected along the northwest section of the vein where there is good potential to expand the mineralization laterally and at depth. Drilling on the Los Mautos vein occurred over a strike length of 120 meters. The mineralization at Los Mautos' is hosted in siliceous breccia bodies that outcrop at surface. This is important because this is the same type of occurrence that hosts silver mineralization at El Gallo. Highlights are shown below:
2) Palmarito – Good Grades & Thickness Discovered at Surface
The discovery of the Southwest Zone, announced in 2010, has opened up multiple areas for expansion at Palmarito. Since the discovery was announced, six additional core holes have been completed. The objective of these holes was to begin connecting the Southwest Zone to the main Palmarito resource located 250 meters to the north. Five of the six holes encountered encouraging grades and thicknesses starting at or near surface.
The results from these holes are important because: 1) the silver grades encountered are approximately 75% higher than the current in-situ resource at Palmarito, 2) the mineralization in each of the holes starts at or near surface, 3) the holes fill in the large gap that previously existed between the two zones and, 4) there appears to be multiple areas where the mineralization can be further expanded. Based on these results, a larger drill program is being designed for Palmarito and will commence in the coming weeks. Highlights are shown below:
3) El Gallo Gold Zone – Early Success Continues
US Gold first announced the discovery of the Gold Zone on December 8, 2010 with the first two core holes returning 7.7 gpt gold over 4.8 meters and 6.4 gpt gold over 3.1 meters. The vein is located 300 meters southeast of the El Gallo silver resource. However, unlike El Gallo this new zone is predominately gold. Results from the first two follow-up holes have been received. The holes were drilled in order to test the down-dip potential and to establish the orientation of the vein, which appears to be trending east-west. Grades continue to be encouraging. It is also important to note that the "basement rock", which underlies the El Gallo silver resource and acts as a floor to the mineralization, occurs much deeper at the Gold Zone. This is an encouraging development because it indicates potential for mineralization at increasing depths.
4) Chapotillo – Near Surface Mineralization Expanded
The primary focus of US Gold's drilling at Chapotillo is to define the areas near surface potential. Since the discovery hole was announced on October 27, 2010, which returned 236.2 gpt silver and 1.6 gpt gold over 18.6 meters, results have been received for three additional holes. Each of the holes successfully intersected the zone at or near surface, expanding the mineralization by approximately 60 meters to the southeast. Drilling at Chapotillo is ongoing.
5) El Gallo – Expansion and Infill Drilling Continues to Encounter Success
Recent exploration at El Gallo has been focused on two goals: 1) Exploring for extensions of known zones in order to increase the size of the resource and, 2) Upgrading inferred resources to the measured and indicated categories.
Drilling to expand the mineralization focused on the southern extension of Main Zone. A total of seven holes intersected the zone, expanding the mineralization by 150 meters. The primary objective of US Gold's drilling at El Gallo is to expand the mineralization to the south and the east.
Drilling to upgrade mineralization into the measured and indicated categories focused on the area between the Main and North Zones. The results from these holes successfully met expectations. Ongoing in-fill drilling will occur throughout 2011 as US Gold moves towards the feasibility stage. Highlights from the recent in-fill holes are shown below.
6) Preliminary Economic Assessment Update
The Preliminary Economic Assessment for El Gallo is scheduled to be released in early February. This study will analyze potential production rates, capital expenditures and rates of return for the project and is expected to become the foundation for the El Gallo Feasibility Study.