Argonaut Gold Ltd.

Argonaut Gold Ltd.

March 31, 2010 09:53 ET

Argonaut Gold Ltd: Reports Initial Drill Results from 2010 Resource Expansion Program

Significant mineralization is extensive to the south and south-east and includes 56.2 Meters Grading 1.10 Grams Per Tonne Gold in 14,350 Meters Drilled to Date

TORONTO, ONTARIO--(Marketwire - March 31, 2010) - Argonaut Gold Ltd. (TSX:AR) is pleased to announce initial results from its ongoing reverse circulation drill program aimed at expanding gold resources at the Company's 100% owned flagship open pit gold mine, El Castillo, located approximately 100 km north of Durango, Mexico. The program was designed to identify the extent of the El Castillo gold system as it projects to the south and south-east of the existing open pit operation. To date, 109 drill holes, totaling over 14,350 meters (m), have been completed.

The best drill intersection of this program was hole CA-295, which intersected 56.2 meters of 1.10 grams per tonne gold (g/t) from a depth of 51.7 meters to 107.9 meters. A summary highlighting some of the assay results are listed below in Table 1. Results from this current program will be used to plan and prioritize an aggressive follow-up drill program with the goal to bring these areas into a resource category and ultimately part of the mine reserves.

Pete Dougherty, President and CEO for Argonaut noted, "The drill expansion program has provided some very encouraging results at El Castillo. El Castillo was acquired with the expectation that upside potential existed in both exploration and production at the mine". He added: "This drill program is a key initiative in realizing El Castillo's full exploration potential. Results so far have verified our initial expectations. Once the 16,000 meter program is completed, and these new zones of mineralization are drilled further, we anticipate a new National Instrument 43-101 resource calculation for El Castillo by year's end".

Table 1
Summary Assay Results – El Castillo Mine Resource Expansion Drill Program

Hole Depth From To Length Average
Number (meters) (meters) (meters) (meters) Grade (g/t)
CA-253 166.0 0.0 9.1 9.1 0.602
including   15.2 62.3 47.1 0.227
CA-260 92.7 0.0 33.5 33.5 0.487
CA-268 139.8 22.8 139.8 117.0 0.254
CA-275 95.8 0.0 66.9 66.9 0.238
CA-285 51.7 19.8 50.7 31.9 0.786
CA-289 91.2 0.0 35.0 35.0 0.477
CA-295 173.3 51.7 107.9 56.2 1.100
CA-298 103.4 0.0 68.4 68.4 0.341
CA-316 120.1 18.2 57.7 39.5 0.531
including   74.5 111.0 36.5 0.562

*Note: Reported mineral widths have not been verified as true widths as more drilling will be required to identify the orientation of the mineralization.

The Company's plans for further exploration of the mineral resources to the south and south-east of the present designed El Castillo open pit are:

  1. To conclude drilling on a 100 meter spacing program, release full results and analyze the results to identify the extent of the El Castillo gold system as it projects to the south and south east of the open pit mining operation.
  1. Identify priority target areas for 50 meter drill pattern based on results from the 100 meter space drilling.
  1. Complete several core holes within the ore body to obtain metallurgical samples of the Transition and Sulphide zones that underlie the known oxide-ore zone. The Transition Zone is a layer of varied thickness of mineralized rock that has undergone partial oxidation and lies above the deeper sulfide zone. Further metallurgical studies are necessary to better understand how both the Transition and Sulfide ores will respond to heap leach gold recovery as this mineralization could add significantly to future mining reserves. (See Castle Gold Corporation press release May 7, 2009)
  1. Bring key portions of the mineralized system into an indicated resource category via a new National Instrument 43-101 compliant technical report expected to be completed by the end of the year.

Argonaut's Drill Program to date includes a total of approximately 14,350 meters yielding 109 reverse circulation drill holes including 7 condemnation drill holes. As of this press release, assay results have been received for 91 holes. An additional 10 drill holes remain within the initial budgeted 16,000 meter program. A complete table outlining all drill intercepts over five meters in thickness and above a resource cut-off grade of 0.15 grams per tonne gold (used to calculate the El Castillo mine gold resource and reserves) is available online at the Company's website.

To view the attached map, please visit the following link:

About Argonaut Gold Ltd.

Argonaut is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets being the production-stage El Castillo Project and the exploration-stage La Fortuna Project, both located in the State of Durango, Mexico. Argonaut is a new venture created by former executive management team members of Meridian Gold Inc. aiming to create the next quality mid-tier gold producer in the Americas.

Qualified Person Comments/Quality Control Procedures

This Press Release was reviewed and approved by Thomas Burkhart, B.Sc. in Geology, Argonaut Gold's Vice President of Exploration. Mr. Burkhart is a Qualified Person as defined in National Instrument 43-101. 

Mr. Burkhart reviewed the reverse circulation drill program and on-site sample preparation procedures at El Castillo. All drill hole samples were composited at site into 1.5 meter intervals and split with half the sample transported to ALS-Chemex's sample preparation lab in Hermosillo, Mexico. Pulps are prepared in Hermosillo and then sent to ALS-Chemex's Laboratories in Vancouver, Canada where gold assays are completed using a fire assay procedure with an Atomic Absorption Spectroscopy finish. The Company utilizes a system of check assays and sample blanks consistent with industry standards.

To be reported here there must be a minimum of 5 meters of material where each sample interval is equal to or exceeds a .15 gram per tonne cutoff (which is representative of the current AC Howe pit design).

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 Ltd. assumes no obligation to update the forward-looking information contained in this news release.

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