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U.S. Gold's objective is to maximize its shareholder value through its interest in the Tonkin Springs mine and participating in other mining opportunities, particularly in Mexico. On August 24, 2001, USGL announced that through an equity investment in an affiliate company, Gold Resource Corporation, U.S. Gold is participating in a silver, zinc, lead property, its Zimapán Property, in the Zimapán mining district in the state of Hidalgo, Mexico.

U.S. Gold Corporation   USGL   OTCBB

Gold Resource Corporation, an affiliated company is active in Mexico.

Zimapan Mining District, Hidalgo. Peñoles has been active in this underground Ag-Pb-Zn district for years and GRC has leased a 100% interest (subject to a 5% NSR) in a 47 hectare property strategically located in this district. It is still undeveloped and under-explored because of prior ownership issues. In the past mining has occurred up to the boundaries of this property. Underground core drilling is planned ASAP to establish a minimum reserve.

GRC’s focus is on achieving production and cash flow from the Zimapán Project at the earliest practical date. The strategic location of this property in an active mining district, its favorable geologic setting and its unique circumstances could result in sizable near-term cash flow that may bring significant value to U.S. Gold and GRC shareholders and provide financing for long-term mine development. GRC is currently raising a targeted US$1 million under private placement sale of its common stock. This level of funding is considered adequate for the initial exploration program at the Zimapán Project. GRC plans to commence an underground core-drilling program shortly targeted to establish a minimum reserve.

This initial drilling is anticipated to be carried out from underground in inactive workings on adjoining property owned by Peñoles. Peñoles has agreed to allow such access but Mexican mining law equally gives GRC such rights. Core drilling, assaying and geologic logging of the core will be the primary activity of the initial exploration program

El Aguila Gold-Silver Project, Oaxaca.  A gold-silver exploration property located approximately 100 Km southeast of the city of Oaxaca in the state of Oaxaca, Mexico. Gold Resource has leased this property, encompasses approximately 1,900 hectares subject to a 4% to 5% net smelter returns royalty. Access to the property is readily available from the nearby Pan-American highway. The Oaxaca property is part of the larger Octolan mining district that in 1905 had 64 small mines working high-grade veins. According to historical reports, all the mines in the district were shut down by the Mexican revolution of 1910 with most of the area residing in the Mexican National Reserve from 1972 until about 1999. Geologically at the Oaxaca property, numerous Tertiary rhyolitic domes and flows have been emplaced into a series of gently dipping Jurassic sedimentary rocks and younger Tertiary volcanic rocks. Hydrothermal alteration and silicification are centered around the domes. Areas of strong silicification produce resistant quartz zones in outcrop. Sampling by Gold Resource and others of certain quartz zones at the Oaxaca Project, both on the surface and underground have yielded high-grade gold and silver values. Gold Resource intends to initiate an exploration program during 2003 on the Oaxaca Project.

Gold Resource Corporation, a private Colorado corporation, is continuing exploration of its El Aguila property in the state of Oaxaca, Mexico, that is subject to an earn-in agreement with Canyon Resources Corporation (AMEX: CAU - News). Two rounds of exploration drilling at the property have demonstrated continuity of high-grade gold mineralization in a shallow, sub-horizontal silica "manto" that had previously shown high-grade values from sampling on the surface and from shallow underground workings. The drilling has shown continuity of the manto with 25 high-grade intercepts above 3 g/tonne gold (0.09 oz/ton) having a weighted average of approximately 9.5 g/tonne gold (0.28 oz/ton) and 90 g/tonne silver (2.6 oz/ton) over an average 5.3 meter thickness (17.5 feet).

"Recent access last week to the old underground workings that had previously been developed below the drilled manto look very positive for potentially increasing additional areas for high-grade mineralization," said William W. Reid, president of Gold Resource and U.S. Gold. Work is now underway to survey, geologically map and sample these new, exciting areas. A scoping study by Lyntek Inc., a Denver engineering firm, will be completed soon and is intended to define the operating and capital costs for a 750 tonne/day mining and milling operation so a determination can be made at what minimum resource level a production decision can be made with the target of establishing gold production at the earliest possible time. Canyon can earn a 50% interest in the El Aguila property by funding $3.5 million in exploration and development expenditures. 

Press Release 9Mar04

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