Veterans Tap into Formerly Producing MinesWed, 10/21/2015 - 08:20
Originally established and headquartered in Canada, GoGold Resources (GoGold) can count on certain strong advantages. It is well-financed, it has turned a number of properties into profitable mines, it has raised hundreds of millions of dollars on capital markets, and its management team is comprised of veterans from successful mine developments and operations in Mexico. This has led it to become a strong development-stage exploration company, with three current projects in Mexico: Parral Tailings in Chihuahua, San Diego in Durango, and Santa Gertrudis in Sonora.
The company’s Parral Tailings project is located at the heart of the Mexican silver belt, within the municipality of Hidalgo del Parral in Chihuahua. Sized at approximately 141 hectares, this property contains a tailings repository left behind from over 300 years of operations at the Mina La Prieta silver and base metal mine. Exploration and sampling results from the site indicate a mineral resource of approximately 214,000oz of gold and 26.4 million ounces of silver. Metallurgical work has shown that a heap leach recovery process could be a viable option to further develop the property. The inefficient historic recovery processes carried out at Parral have left significant amounts of silver and gold in the tailings which GoGold is now recovering. In May 2014, the heap leach project at Parral began the commissioning of agglomeration and ore stacking on the heap leach pad, representing a major milestone for GoGold. Parral and the surrounding area have a long mining tradition that also plays into GoGold’s hands. The company has ample local access to skilled personnel, equipment suppliers, and contractors that possess the required capabilities for the project. Unlike many more remote mine sites, it can draw its power from the local grid and fresh water is in easy supply. These amenities and advantages provide GoGold with an advantageous platform for ongoing operations at the site.
In April 2014, GoGold acquired Animas Resources at a relatively competitive rate. The company also bought the Santa Gertrudis project, which was a producing gold mine in the past. In September 2014, GoGold published an initial PEA that upgraded Santa Gertrudis’ resource estimate to 810,000oz of gold indicated and 255,000oz of gold inferred. This project is expected to have low capital costs that GoGold can easily finance given its cash flow from the Parral Tailings project. As a past producer, Santa Gertrudis already has decent infrastructure in place, including a number of pits that have been stripped with haul roads, making it virtually ready to mine. GoGold is currently continuing exploration at the site and expects the resource to grow, while predicting a significant potential for high-grade targets to be identified. The company is advancing the project with additional confirmation drilling and environmental studies, with an aim to restart gold production during 2015. The project aims to have a 7,500 t/d heap leach facility that will be supplied from a number of pits, while a 12-year mine life is projected with a total estimate production of 671,000oz of gold.
GoGold recently announced that it has executed a land agreement to both mine and explore on the ejido property on which Santa Gertrudis stands. The agreement allows GoGold to mine and explore the 2,006 hectares of land for a period of ten years with an option to renew for a further five years. With the company’s intent to re-establish its mining operations, this agreement will allow GoGold to fast track production at Santa Gertrudis. The compensation for the agreement stood MX$1.5 million upon signing and MX$500,000 (US$102,000) to be paid each year. Another clause in the agreement is that any old waste material from past production at the site will remain with the ejido.
The San Diego area contains an epithermal gold-silver system that extends for more than 35km. This massive property is part of the Sierra Madre Occidental GoldSilver Belt, one of the largest epithermal precious metal regions in the world, and host to the majority of Mexico’s gold and silver deposits. Widespread gold in quartz veins, breccias, and stockworks occurs over the entire length of the system, gold and silver are exposed at the surface, and the hillsides are punctuated with dozens of small hand dug mines. Although the district has been mined on a small scale since the 1700s, there has been very little modern exploration until now. The property contains multiple geological exploration targets, each representing potentially impressive bulk mineable and/or underground operations. To date, over 10,000 gold, silver, and copper samples have been gathered from just a few exploration targets within the property. Numerous unexplored targets still remain, providing potential opportunities for more long-term exploration.
According to the company’s end of year report, GoGold experienced a tough 2013-2014 period, incurring a loss of CA$7.2 million (US$6.08 million). However, with the Parral Mine in the commissioning phase of production and another gold project with planned production in mid-2015, GoGold is forming a balanced portfolio of properties that should provide ample cash flow over the next few years.