Going for Mexican Gold

by Adam Hamiltaon, via Silver Doctors.com: 

Mexico’s massive precious-metals belts are some of the world’s finest.
As global #1 in silver production they are obviously quite well known for the shiny-white metal.
But these belts have also been flexing their gold muscles recently, placing Mexico among the world’s top-10 producers.

Mexico really has come a long way over the course of gold’s bull market.  Back in 2003 there were actually 20 other countries producing more gold.  But with prices trending higher after a long bear, this country’s favorable geology, generally-friendly geopolitics, and mild climate/physiography started attracting attention.  And the exploration cycle that followed has yielded numerous discoveries.

The development of many of these discoveries has resulted in a greater than four-fold increase in production since 2003 to ~3m ounces annually.  Major miners like Goldcorp and Agnico Eagle have built some big mines.  Smaller miners the likes of Alamos Gold and Timmins Gold have also contributed several mines to the mix.  And exploration companies like GoGold Resources are grooming the next generation of Mexican gold mines.

Despite a robust mining history that pre-dates the Spanish colonials, the modern-day miners are finding that the miners of yore had literally only scratched the surface.  Mexico’s abundant high-grade surface deposits kept them busy over the centuries, but ultimately they didn’t have the knowledge, understanding, and technology to tackle the lower-grade ore or to go very deep to find the source deposits.

Today’s miners have had great success not only making fresh new discoveries, but using the historic workings as treasure maps to find quality deposits.  And a treasure map is what GoGold used to zero in on its flagship gold deposit.

This asset is the Santa Gertrudis project located in northeastern Sonora, about 65km south of the Mexico-USA border.  And it was historic mine workings that initially attracted the modern miners to the area back in the 1980s.  These miners performed systematic exploration that identified several sedimentary-rock-hosted gold occurrences.  And this led to a fantastic discovery that was eventually developed into a profitable mining operation.

Blast-from-the-past miners Phelps Dodge and Campbell Red Lake operated the Santa Gertrudis open-pit mine from 1991 to closure in 2000, over which time it produced an impressive 564k ounces.  This deposit was far from depleted though upon shutdown, which was prompted by Campbell’s demise and ultimately bear-market-low metals prices.  So really it would only be a matter of time before Santa Gertrudis got another look.

The first meaningful work occurred several years later, conducted by junior Animas Resources.  And positive results from Animas’ field studies and drilling is what eventually captured GoGold’s attention.  After due diligence and a bidding war with another potential suitor, GoGold was able to acquire Animas in a deal that closed in April 2014.   And its work over the last year or so has been incredibly encouraging.

Work completed by GoGold includes an extensive data review, which incorporated assays from over 2500 drill holes.  It also created 3D models using 200,000+ blast holes from dozens of pits on the property.  And it performed confirmation and resource drilling of its own in order to feed an updated resource estimate and preliminary economic assessment.

This resource estimate showed Santa Gertrudis to be a high-quality million-ounce-plus complex of deposits, including 810k ounces in the indicated category and 255k ounces in the inferred category.  These resources grade over 1.0 g/t, which is excellent for surface oxide ore.  And since the majority of the ore is oxidized, it is amenable to heap leaching.

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