Argonaut Gold Inc.
TSX : AR

Argonaut Gold Inc.

April 07, 2011 09:06 ET

Argonaut Gold Begins Resource Expansion Drilling at the La Colorada Project, Sonora, Mexico

Looking to Increase Economic Resource in 2011

TORONTO, ONTARIO--(Marketwire - April 7, 2011) - Argonaut Gold Inc. (TSX:AR) ("Argonaut" or the "Company") is pleased to report the Company has commenced an aggressive drill program at the La Colorada property aimed at converting mineralized material from an inferred resource to a Measured & Indicated resource in an effort to create further value at the property. La Colorada was incorporated into Argonaut's portfolio of projects as part of the Pediment Gold acquisition, which was completed in January of 2011. The La Colorada is a gold-silver project located 50 kilometers southeast of Hermosillo, Mexico.

PRODUCTION HISTORY OF THE LA COLORADA MINE

From 1994 to 2002 La Colorada was operated as an open-pit heap-leach mine, producing approximately 353,000 ounces of gold and 1.2 million ounces of silver. During these years, mining took place on the El Creston, La Colorada and Gran Central mineralized zones. The overall historical strip ratio was approximately 3:1, with an average grade of 1.04 g/t gold and 17.07 g/t silver. The reported recoveries were 70% for gold and 15% for silver. Approximately 30% of the ore was run of mine (ROM) with the remaining material being crushed to 1 inch minus and stacked on a separate leach pad from the ROM ore. Mining ceased in 2001 due to low gold prices.

RESOURCE AND GEOLOGY

Pediment Gold completed the following NI 43-101 compliant resource estimate in December of 2009 entitled "Geological Report on the La Colorada Property with a Resource Estimate on La Colorada and El Creston Mineralized Zones. Sonora, Mexico dated November 20, 2009. 

Class Au
 Cutoff
(g/t)
  Tonnes>
Cutoff
(tonnes)
  Grade>Cutoff   Contained Metal
Au
(g/t)
  Ag
(g/t)
  Au
(ozs)
  Ag
(ozs)
El Creston 0.30   5,060,000   0.894   14.019   145,000   2,280,000
La Colorada/ Gran Central 0.30   14,190,000   1.008   6.257   460,000   2,850,000
M & I 0.30   19,250,000   0.978   8.30   605,000   5,130,000
El Creston 0.30   4,070,000   0.981   15.719   128,000   2,060,000
La Colorada/ Gran Central 0.30   16,000,000   0.883   8.036   454,000   4,130,000
Inferred 0.30   20,070,000   0.903   9.59   582,000   6,190,000
*The current resources are contained within the La Colorada, Gran Central and El Creston open pit areas.

Previous mining on the three deposits exploited near surface mineralization and the remaining gold and silver resources are peripheral to and beneath the previously mined areas.

The La Colorada vein deposits are hosted in both intrusive and metamorphosed sedimentary rocks with the previous open-pit operations localized where wide zones of mineralized veins and stockworks are exposed on surface.

The Veta Madre zone, which lies approximately 1,000 meters east of the open pit area, is an outcropping zone of gold mineralization that has limited drilling. Mineralization here is related to sulfide stockworks (now oxidized) forming a flat-lying tabular zone of varied thickness that reports an average grade of around 0.5 g/t gold. 

LA COLORADA 2011 DRILL PROGRAM

The main objective is to better define and upgrade the Gran Central, and La Colorada deposits.

Pete Dougherty, President and CEO stated "Argonaut's objective in 2011 is to significantly expand the current resource through an aggressive drill program therein creating value."

The majority of the drilling will target known areas of inferred mineralization where it extends down dip and on strike from the Measured &Indicated resource. As part of the evaluation process the Company will complete core drilling to obtain representative samples for metallurgical study.

To view "Figure 1: La Colorada Project - Drill program 2011", please visit the following link: http://media3.marketwire.com/docs/AR_col_prj.pdf

Zone RC Drilling (meters) Core Drilling (meters) Hammer Drilling (meters)
La Colorada 5,000 1,500  
Gran Central 11,000 3,500  
Veta Madre 3,000 1,000  
ROM     400
Stockpile     400
TOTAL 2011 19,000 6,000 800

EXPANDING ON THE CURRENT RESOURCE

In addition to the areas which define the current resource, there is interesting potential at the Veta Madre and La Verde zones that have seen limited drilling in 2008 and 2009, which demonstrated potentially economic gold grades over mineable widths. Early drilling on Veta Madre has traced mineralization for approximately 500 meters along strike with widths varying between 50 and 100 meters. This zone appears to be open in all directions. Drill-hole intercepts starting at or near surface include:

Drill
hole
  Section
(Northing)
  Azimuth/Dip
Degrees
  From
(m)
  To
(m)
  Length
(m)
  Au
g/t
  Ag
g/t
08-LCOL-R11   3,185,643   160/-50   1.52   45.72   44.20   0.64   7.52
09-LCOL-R66   3,185,711   160/-60   0.00   25.91   25.91   0.81   3.55
09-LCOL-R91   3,185,660   180/-45   0.00   25.91   25.91   1.08   2.94
09-LCOL-R92   3,185,647   0/-90   12.19   36.58   24.38   1.83   12.44

STOCKPILES AND RUN OF MINE PAD

The Company has completed a drilling program to test the ROM pad and several ore "stock piles" that could represent low-cost ounces to be processed early in the operation. For this study a "Becker Hammer Drill" was utilized that is capable of recovering a coarse sample product up to six inches in diameter. A total of 16 holes were completed on the ROM pad and an additional 10 holes were distributed over four separate stock pile areas. Representative samples of the ROM and stockpile material will undergo metallurgical testing. Additional drilling will take place on the stockpiles.

Tom Burkhart, Vice President of Exploration states "It appears that there is still plenty of gold left in the ROM leach pad and the low-grade stockpiles. At current gold prices, it represents a significant amount of mineralized material that could potentially yield low-cost ounces".

Class   Tonnes   Avg. Grade
(g/t)
ROM tonnage   2.5 million   0.5 g/t – 1.0 g/t
Stockpile(s)   10 million   N/A
*This information is available in the N.I. 43-101 filed by Pediment Gold, dated Nov. 30, 2009.
 
 
2011 Drilling
Drill
hole
  Section
(Northing)
  Azimuth/Dip
Degrees
  From
(m)
  To
(m)
  Length
(m)
  Au
g/t
  Ag
g/t
11-LCM-01   3,186,298   0/-90   0.00   24.40   24.40   0.22   34.27
11-LCM-02   3,186,309   0/-90   0.00   22.90   22.90   0.64   49.97
11-LCM-03   3,186,316   0/-90   0.00   21.30   21.30   0.28   29.74
11-LCM-04   3,186,320   0/-90   0.00   22.90   22.90   2.11   36.63
11-LCM-05   3,186,310   0/-90   0.00   25.90   25.90   0.33   32.16
11-LCM-06   3,186,312   0/-90   0.00   25.90   25.90   0.31   29.40
11-LCM-07   3,186,323   0/-90   0.00   24.40   24.40   0.58   32.29
11-LCM-08   3,186,247   0/-90   0.00   24.40   24.40   0.20   25.22
11-LCM-09   3,186,243   0/-90   0.00   25.90   25.90   0.26   32.60
11-LCM-10   3,186,242   0/-90   0.00   27.40   27.40   0.40   36.22
11-LCM-11   3,186,217   0/-90   0.00   22.90   22.90   0.77   43.86
11-LCM-12   3,186,213   0/-90   0.00   22.90   22.90   0.56   46.41
11-LCM-13   3,186,206   0/-90   0.00   22.90   22.90   0.29   39.35
11-LCM-14   3,186,198   0/-90   0.00   24.40   24.40   0.62   29.79
11-LCM-15   3,186,245   0/-90   0.00   24.40   24.40   0.43   35.85
11-LCM-16   3,186,265   0/-90   0.00   22.90   22.90   0.52   37.44
09-LCOL-R85   3,186,255   0/-90   0.00   15.20   15.20   0.44   41.34
09-LCOL-R86   3,186,220   0/-90   0.00   15.20   15.20   0.37   21.34
09-LCOL-R87   3,186,244   0/-90   0.00   15.20   15.20   0.44   30.34
09-LCOL-R88   3,186,265   0/-90   0.00   15.20   15.20   1.17   36.34

UPDATED RESOURCE

Argonaut has contracted SRK Consulting to complete an updated NI 43-101 Technical Report, utilizing the results of the 2011 drilling program, expected to be completed in the 4th quarter of 2011. 

QUALIFIED PERSON COMMENTS/QUALITY CONTROL PROCEDURES

For sample analysis the Company utilizes a system of Quality Assurance/Quality Control that includes insertion and verification of standards, blanks and duplicates consistent with industry standards. The preparation of this Press Release was supervised and approved by Thomas Burkhart, Argonaut Gold's Vice President of Exploration and a Qualified Person under National Instrument 43-101. Mr. Burkhart also reviewed the reverse circulation and core drilling programs and on-site sample preparation procedures at La Colorada.

Samples from the La Colorada Project are shipped by commercial courier from the Company's facility in Hermosillo directly to Inspectorate America Corporation's analytical laboratory in Sparks, Nevada for sample preparation and analysis gold by fire assay with atomic absorption (Au AA-23 assay method code; 0.005 to 10ppm detection limit). Samples over 10 g/t Au are assayed with gravimetric finish (Assay code AU-GRA21). All samples are also assayed by ICP-MS (code ME-ICP41) for a suite of 35 elements.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management's current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release.

About Argonaut

Argonaut is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production-stage El Castillo Mine in the State of Durango, Mexico, the development stage San Antonio project, the past producing La Colorada project, and the exploration stage La Fortuna project, all of which are located in Mexico. Argonaut is a producing gold company created by former executive management team members of Meridian Gold Inc.

Creating the Next Quality Mid-Tier Gold Producer in the Americas.

Contact Information