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Eight-fold Expansion
Goldgroup plans two 2013 Mexico gold mines
~By Greg Klein - August 23 2011
The metal has hit the pedal. Gold smashes record after record as it continues not expensive, and because it’s not expensive it won’t take long to get into
its 11-year run. Some analysts predict gold will surpass its 1980 historic high production. We already possess open-pit heap-leach technology and experi-
of an inflation-adjusted $2,300 per ounce. But are such prices enough to ence because we have a producing mine in northern Mexico.” The new mine,
guarantee prosperity in the mining sector? David Fry, Corporate Development he says, will add a low-cost 100,000 gold ounces a year to the company’s
for Goldgroup Mining, doesn’t think so. annual output.
“Goldgroup is in a really unique position because unlike other companies Further north and close to the west coast, Goldgroup holds a 50% interest
who are more senior to us, who are really taking advantage of the leverage with DynaUSA in another advanced-stage gold project, San Jose de Gracia.
through the price of gold, we are also creating leverage by expanding our A 2009 estimate shows an inferred resource of 3.44 million tonnes with
resources—through consolidation, as well as the drill bit—and by increasing 618,000 gold ounces grading 5.59 g/t and 1.11 million silver ounces grading
production,” he says. “Our projected increase within the next two to two-and-a 10.02 g/t.
half years is from 25,000 ounces per year currently to around 200,000 ounces
per year.” Since then the company has drilled another 135 holes, providing data for an
updated resource due 3Q 2011 with a PEA following and underground mining
slated for late 2013. Goldgroup projects another 100,000 ounces a year from
San Jose.
Farther north in Sonora State, Goldgroup’s 100%-owned Cerro Colorado
open-pit heap-leach mine is expected to produce 25,000 gold ounces this
year. The 2009 resource estimate shows 107,000 tonnes grading 0.63 g/t for
2,157 gold ounces measured, 9.6 million tonnes grading 0.54 g/t for 167,986
gold ounces indicated and 5.6 million tonnes grading 0.41 g/t for 74,177 gold
ounces inferred. Cerro Colorado has been in production for seven years, with
five additional years estimated. Exploration drilling continues.
The company’s only early-stage project is El Candelero, which it’s exploring
under an option from its near-namesake Goldcorp. Goldgroup may earn up to
Goldgroup plans that eight-fold expansion by increasing its interest in two 70% of this gold prospect.
joint ventures and bringing them into production by late 2013. That will give
the company three operating gold mines, all in Mexico. Goldgroup’s team, Fry emphasizes, knows mining and knows the landscape.
“[President/CEO] Keith Piggott has 14 years of experience in Mexico. He’s
Last week the company announced completion of a 70% earn-in on its built two mines there already. They weren’t part of public companies, so
flagship Caballo Blanco Project near the southeastern port of Veracruz. The most people don’t know about that. He has extensive experience identifying
remaining 30% is held by Almaden Minerals. deposits and putting them into production in Australia. One of our directors,
Paco [Francisco] Escandon, worked for [Vicente] Fox when he was President
Caballo Blanco’s 2009 resource estimate shows 6.7 million tonnes grading of Mexico. He worked for him six years; he’s an extremely well-connected guy.
0.65 grams per tonne for 139,000 gold ounces indicated and 27.6 million We have several hundred employees who work for us down there, both in the
tonnes grading 0.58 g/t for 517,000 gold ounces inferred. The resource also mine and at various projects. We, unlike some other companies, find operat-
estimates 410,000 silver ounces grading 1.92 g/t indicated and 1.63 million ing in Mexico very good because we’ve got the track record and the history to
silver ounces grading 1.84 g/t inferred. This resource is limited to the project’s do that.”
La Paila Zone, which is open in all directions.
At press time Goldgroup had 120.3 million shares trading at $1.28, for a
“
August 11 assays from La Paila include 0.71 g/t gold over 84.8 metres, 0.53 market cap of $156.4 million. Management owns approximately 17% of the
g/t over 94.8 metres, 0.51 g/t over 71.5 metres, 0.62 g/t over 42 metres and shares, and the company has no debt and $40 million in working capital.
0.52 g/t over 22 metres.
These assays, Fry comments, are “more of the same. They’re all around or at
cut-off, which is 0.2 grams per tonne. That’s a high-sulphidation, almost totally It’s run-of-mine, it’s no strip, it’s no crush-
oxidized low-grade bulk-tonnage deposit. We continue to extend the known ing, and it’s highly oxidized ore that leach-
mineralization to the south and southwest based on our recent drill results. es extremely fast. It’s not expensive, and
We’re essentially just extending the ore body. The purpose of that is to revise
the current 43-101 and add to the existing ounces.” because it’s not expensive it won’t take
long to get into production
Along with the update, Goldgroup plans to begin a PEA later this year with the
intention of shipping ore by the end of 2012. –David Fry
It’s a fast-paced but simple project, Fry explains. “It’s run-of-mine; it’s no strip;
it’s no crushing; and it’s highly oxidized ore that leaches extremely fast. It’s
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