In late April 2011, Cangold Ltd. TSX.V – CLD, signed a letter of intent  to  acquire a 75% interest in the Ixhuatan advanced stage gold project in the north-western part of Chiapas State, southern Mexico. The Ixhuatan property comprises 4,176  hectares and is host to the Campamento Au-Ag deposit (carbonate base metal Au mineralization) and the Cerro La Mina Porphyry Cu-Au-Mo prospect.

Several other Au and Au-Ag mineralized zones and exploration targets have been identified - The San Isidro, Laguna Chica, Central, Caracol and Cacate prospects, are all located in a one to two kilometer wide, four km long corridor between the Campamento and Cerro la Mina deposits.

The Campamento deposit contains a NI43-101 compliant resource estimate, using a using a 0.50 gram per tonne (g/t) gold cut-off, of:

 

Measured and Indicated - 1.041 million oz of gold and 4.4m oz of silver within 17.6 million tonnes (Mt) at an average gold grade of 1.84 grams per tonne and average silver grade of 7.79 g/t.

 

Inferred - 0.703m oz of gold and 2.26m oz of silver within 21.8 Mt at average grades of 1.01 g/t gold and 3.23 g/t silver.

 

Since the Campamento resource is already so well defined Cangold will concentrate on the engineering studies needed to move the deposit as fast as possible down the development path towards a full feasibility study. Metallurgical sampling has been initiated to facilitate initial flow sheet development and ascertain potential gold and silver recoveries. This work provides the critical information necessary for the completion of a scoping study. The next step would be starting a prefeasibility study in the second half of 2012

 

Cangold Ltd. has commenced a metallurgical testing program for the Ixhuatan gold-silver project in Chiapas, Mexico. Cangold is earning a 75-per-cent interest in the Ixhuatan project through its own wholly-owned Mexican subsidiary, Coboro Minerales de Mexico, S.A. de C.V.

 

More than 89,000 metres of drilling in 342 holes have been completed on the Ixhuatan project since 2003, and most of the split core is stored in a warehouse facility. As such, there is sufficient material available for preliminary metallurgical testing without the need to conduct further drilling at this time.

 

The Campamento deposit, upon which Cangold's current scoping study is focused, is a high-sulphidation epithermal gold-silver system with no significant base metals. Four composite samples ranging from 43 to 74 kilograms each have been collected from four drill holes that represent a good cross-section of low-grade to high-grade sulphide mineralization, as follows:

 

DDH IX-101: Composite collected from 15 samples having an average grade of 2.85 g/t gold (Au) and 17 g/t silver (Ag) from within the interval from 22 metres to 108 metres (86 metres), averaging 2.764 g/t Au and 15 g/t Ag.

 

DDH IX-22: Composite collected from 16 samples having an average grade of 4.16 g/t Au and 14 g/t Ag from within the interval from 30 metres to 94 metres (64 metres), averaging 4.11 g/t Au and 13 g/t Ag.

 

DDH IX-32: Composite collected from 14 samples having an average grade of 1.94 g/t Au and 30 g/t Ag from within the interval from 34 metres to 90 metres (56 metres), averaging 1.9 g/t Au and 29 g/t Ag.

 

DDH 70-B: Composite collected from 13 samples having an average grade of 0.76 g/t Au and 2 g/t Ag from within the interval from 112 metres to 162 metres (52 metres), averaging 0.73 g/t Au and 2 g/t Ag.

 

The samples have been sent to Lakefield Research, a division of SGS Canada Inc., where they will undergo a range of tests to determine possible processes for the recovery of gold and silver and to facilitate initial flow-sheet development. The test work is expected to take approximately three months and will provide critical information for the completion of an internal scoping study for the Campamento deposit. Once the scoping study is complete, the company will engage an independent engineering firm to undertake a prefeasibility study.

 

The Campamento deposit at the Ixhuatan project contains a NI 43-101 compliant mineral resource comprising 17.6 million tonnes at average grades of 1.84 g/t Au and 7.79 g/t Ag in the measured and indicated categories (1,041,000 ounces of gold and 4.4 million ounces of silver) and 21.8 million tonnes at average grades of 1.01 g/t Au and 3.23 g/t Ag in the inferred category (703,000 ounces of gold and 2.26 million ounces of silver), both using a 0.5 g/t gold cutoff.

 

(Note: Cangold has filed an updated NI 43-101 report on the project. The authors of the report, Gary Giroux, PEng, MASc, and Philip Seccombe, PhD, MAIG, are independent of both the vendor and the issuer.)

 

At the same time as the aforementioned technical work was being conducted, Cangold initiated a parallel track of social due diligence. It is the company's intent to work in a transparent, honest and accountable manner with the local communities in advancing the Ixhuatan project so the first order of business was to identify the local stakeholders. An initial, high level scoping study of the social situation in the immediate Ixhuatan project area was completed from November to December, 2011. This is being used as a baseline for a strategy to establish a collaborative approach to project development. Cangold is developing a comprehensive corporate social responsibility policy that will guide the company's work in the Ixhuatan area and elsewhere.

 

Robert Brown, PEng, director and vice-president of exploration for Cangold is the qualified person for the company. He has reviewed the technical information referenced above and has approved this news release.