Gold Resource Corporation is an affiliate of U.S. Gold Corporation who holds a 33% equity interest. Gold Resource is currently exploring a very exciting gold property designated the El Aguila property located in Oaxaca, Mexico. Gold Resource is also evaluating other mining opportunities in Mexico.
El Aguila Gold-Silver Project, Oaxaca. Property located approximately 100 Km southeast of the city of Oaxaca in the state of Oaxaca, Mexico. Gold Resource leased this property, encompassing approximately 1,897 hectares (approximately 4,687 acres) subject to a 4% to 5% net smelter returns royalty. Access to the property is readily available from the nearby Pan-American Highway. The El Aguila project covers a large and extensive volcanogenic system of Tertiary rhyolite domes and flows into and over a package of Cretaceous limestone, sandstones and shales. Extensive silicification has yielded stockworks of quartz veins and massive, thick quartz veins and "mantos", particularly replacing limestones in sub-horizontal orientations. Significant potential exists in this large, robust, high-value gold/silver geologic system.
U.S. Gold reported October 9, 2003 and January 8, 2004 on the results of Gold Resource's drilling program on the El Aguila Project as funded by Canyon Resources Corporation (AMEX:CAU), where Canyon received 600,000 shares of Gold Resource common stock for $500,000 of exploration funding. Sixty-four (64) reverse circulation holes and five (5) core holes were drilled totaling 3,944 meters. Twenty-two (22) holes intersected high-grade gold values greater than 3.5 grams gold/tonne (0.10 ounces gold/ton) with the highest individual sample interval assaying 101.5 grams gold/tonne and 1,040 grams silver/tonne (2.96 ounces gold/ton and 30 ounces silver/ton) over 2 meters in hole number 331. The drill holes with high-grade intercepts are listed in the table below:
g/mtn / oz/tn
g/mtn / oz/tn
Legend mtn - metric tonne tn - ton g - gram oz - ounce
(One gram per tonne is approximately equivalent to .0292 ounce per ton.)
These results show 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 in shallow underground workings.
An independent Scoping Study dated July 13, 2004 on the El Aguila property estimated hypothetical cash costs to produce an ounce of gold could be $107 (using silver revenues as a credit). The study was based on a 750 tonne/day milling rate project having capital cost of $11 million and a capital payback period of 8 months at a $375 per ounce gold price and a $6.00 per ounce silver price. The limited exploration drilling to date has encountered a continuous zone of high-grade gold/silver mineralization in a shallow, massive quartz body averaging 7.43 grams gold/tonne (0.22 ounces gold/ton), using a 2.5 grams gold/tonne cutoff, and 63 grams silver/tonne (1.84 ounces silver/ton). Additional drilling will be required prior to a development decision at El Aguila.
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