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Gold Resource Corp may define next economic deposit next year if drilling momentum continues

Last updated: 03:50 18 Dec 2013 AEDT, First published: 04:50 18 Dec 2013 AEDT

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Gold Resource Corp (NYSE MKT:GORO) shares are rising Tuesday after the company announced it has expanded its Switchback discovery at its El Aguila project in Mexico, saying it could have its next economic deposit defined sometime next year if similar drilling results continue. 

The U.S.-based gold miner, which already produces gold from its flagship project, intercepted several high grade veins over a 68-metre wide interval, according to a statement. 

The Switchback discovery is located about 500 metres northeast of the Arista deposit and underground mine, which the company is currently developing. The new discovery has been Gold Resource Corp's highest priority exploration target since first drilling in June.

Recent step out drilling has yielded intercepts of 5.27 metres of 2.93 grams per tonne (g/t) gold, 0.89 metres of 16.95 g/t gold and 1.6 metres of 575 g/t silver. This follows two intercepts from the area reported in June, including 2.2 metres of 12.91 g/t gold and 410 g/t silver.

In addition, a better drill more suited to reach the Switchback target zone from underground drill stations was recently brought to the site, drilling two more step-out holes that extended high grade mineralization 40 metres to the southeast and 200 metres along strike northwest. The drilling also expanded mineralization 115 metres vertically below previous holes. 

A third step out hole is currently underway, the company said, with several other holes planned in the coming months to test target extensions.

“This mineralization is either an extension of the Arista deposit or a parallel vein system 500 meters to the northeast,” said CEO Jason Reid in the release. 

“It is very positive to continue to see high-grade gold, silver, copper, lead and zinc associated with these latest drill results.  The grades and the drill core at the Switchback look very similar to our veins in the Arista vein system and dramatically speak to the potential size of our high-grade epithermal system on the Aguila Project and our 48 kilometer mineralized structural corridor."

He added: "If step-out drilling at Switchback continues with similar results we may have our next economic deposit defined sometime next year and plan to position our mine development accordingly.”

Late Monday, Gold Resource Corp said it has wrapped up its El Aguila mill expansion plan in Mexico, boosting its mill capacity to 1,500 tonnes per day. At the end of September, the U.S.-based gold miner milled an average of 853 tonnes per day, with plans to ramp up this mill feed to 1,500 tonnes through the continued development of its Arista underground mine at the site. 

The company, which has returned more than $91 million to shareholders in monthly dividends since beginning production at its El Aguila operations in Mexico in 2010, said last month that it is expecting a stronger cash position early next year following the completion of its mill expansion through increased daily tonnage and lower per tonne production costs. 

Shares of the Colorado-headquartered company jumped 2.7% on Tuesday, to $4.92. 

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on 12/6/18