Guadalupe de los Reyes, MEXICO
Guadalupe de los Reyes is a gold and silver project comprised of 6,302 hectares and located in the Sierra Madre Range in Sinaloa, Mexico. This historic mining district, dating back to 1772, has produced over 600,000 ounces of gold and 40 million ounces of silver.
The project is currently 100% owned by Vista Gold Corp. On January 16, 2014 Cangold announced a signed Letter of Intent whereby Cangold will be granted an option to acquire from Vista up to a 100% interest (subject to certain underlying royalties) in the mining rights to the Guadalupe de los Reyes Project.
The historic workings at Guadalupe de los Reyes occur in a low sulfidation vein system that extends over one kilometer in strike length and at least 400 metres down dip with open mineralization and the potential for higher gold and silver grades at depth.
A Preliminary Economic Assessment (“PEA”) carried out on the project by Tetra Tech for Vista in 2013 estimated an Indicated resource of 6.8 million tonnes at a grade of 1.73g/t gold and 28.71g/t silver (380,100 oz gold and 6,315,300 oz silver) as well as an Inferred resource of 3.2 million tonnes at a grade of 1.49g/t gold and 34.87g/t silver (155,200 oz gold and 3,639,000 oz silver). Cangold is considering the resource in the PEA to be a historical estimate as Cangold's qualified person has not done sufficient work to classify the estimate as a current mineral resource for Cangold, as per NI 43-101 requirements. (Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. A copy of this report is available on SEDAR under Vista’s profile.)
The 2013 PEA envisaged an open pit operation, while Cangold is considering a combined open pit and underground approach with a higher grade. Following the signing of a formal Option Agreement, the Company plans to undertake a complete review of all previous work, conduct additional baseline studies, diamond drilling, and advance the project to the pre-feasibility stage.
Terms of the option call for Cangold to pay to Vista a total of US$5,000,000 in staged payments over three years (a total of $1,000,000 in the first year) in order to acquire a 70% interest in the project. Cangold may then purchase the additional 30% by making a positive production decision and paying to Vista US$3,000,000 plus an escalator payment based upon the price of gold and the number of NI 43-101 Measured and Indicated gold equivalent ounces over and above those in the March 2013 PEA, at the time of the decision. Should Cangold elect not to place the project into production, Vista will have the option to buy back the original 70% for US$5,000,000 plus a similar escalator payment.
Cangold Ltd. will commence immediately with a phase I surface work program on the Guadalupe de los Reyes gold-silver project in Sinaloa state, Mexico. A crew will be mobilized to the project within the next week and will focus on detailed geological mapping, trenching, and rock sampling in order to further define the numerous mineralized structures on the property (click here to see map).
"Our geologists have been standing by and we are anxious to start working on the Guadalupe de los Reyes Project," stated Robert Archer, President and CEO of Cangold. "The Phase I program will give us better familiarity with the geological setting and allow us to define targets for future drilling."
Diamond drilling by Vista Gold Corp. ("Vista") in 2012 demonstrated both bulk tonnage potential for the GDLR project, as well as high grade gold-silver mineralization originally exploited in the 18th and 19th centuries. More than 42,000 metres of drilling in 420 holes have already been completed on the property but there are still areas that have not been previously drilled.
Due diligence re-sampling (drill core rejects) of 39 of Vista's drill core intersections displayed excellent correlation between companies, with a correlation coefficient of 0.945 for gold and 0.995 for silver (1.0 is a perfect correlation). One example that demonstrates the locally high grade nature of the mineralization came from the San Miguel zone where Vista drill-hole 12SM-08 intersected 4.0 metres @ 12.69 g/t gold and 348 g/t silver and Cangold re-assays returned 13.02 g/t gold and 403 g/t silver over the same 4.0 metres.
The Guadalupe de los Reyes Project comprises 6,302 hectares, and covers a past-producing district dating back to 1772. A Technical Report and Mineral Resource Estimate carried out on the project by Tetra Tech in 2013 were re-issued for Cangold on May 20, 2014. The resource comprises 6.8 million tonnes at a grade of 1.73g/t gold and 28.71g/t silver (380,100 oz gold and 6,315,300 oz silver) in the Indicated category and 3.2 million tonnes at a grade of 1.49g/t gold and 34.87g/t silver (155,200 oz gold and 3,639,000 oz silver) in the Inferred category, all at a cut-off grade of 0.50g gold per tonne.
As announced on April 15, 2014, the Company signed a formal agreement whereby Cangold has been granted an option to acquire from Vista, up to a 100% interest (subject to certain underlying royalties) in the mining rights to the Guadalupe de los Reyes Gold-Silver Project. The Company received formal approval for the transaction and concurrent financing from the TSX Venture Exchange on July 23, 2014.
Robert Brown, P. Eng., Director and VP Exploration for Cangold is the Qualified Person for the Company. He has reviewed the technical information referenced above and has approved this news release. The Company's QA/QC program includes the regular insertion of blanks, duplicates and standards into the sample shipments.