Gold Resource Corp (AMEX:GORO) said Tuesday that it has launched two new underground exploration programs at its El Rey and Alta Gracia properties in Oaxaca, Mexico.
At El Rey, a high grade vein system was discovered at the site in 2008, with veins predominately gold and some silver. Highlights included 9.0 metres of 19.4 grams per tonne (g/t) of gold, including one metre of 66.4 g/t gold.
The new program will follow up on this find, and will include refurbishing and extending the existing shaft, driving two development drifts along the two veins encountered, and establishing underground drill stations for an advanced program.
“The Alta Gracia veins previously mined by others may be located higher up in the mineralized horizon," said president Jason Reid.
"With exploration at depth we could find a situation similar to La Arista where the mineralization begins 100 meters below the surface as a function of boiling point.”
Indeed, the company said that the potential high grade gold ore from El Rey is planned to be processed at its El Aguila mill, where the high grade La Arista deposit is situated, adding to Gold Resource Corp's production profile.
The ore would also be a source of gold and silver for producing the company's Double Eagle coins, Reid continued, which could potentially be used for future-in-kind dividend distributions.
A similar exploration program is also underway at the Alta Gracia property, where three high grade polymetallic veins have been discovered near historic workings. The new campaign will work to test for mineral continuity, laterally and at depth.
The Oaxaca mining district was mined previously on a small scale as recently as the 1970s. Yesterday, Gold Resource announced that it boosted its holdings in the area, adding a sixth asset.
The new property consists of several new claims the company staked, including El Chamizo, which consists of 26,386 hectares connecting its Alta Gracia property to the El Rey asset - effectively consolidating 48 kilometers along strike of the north 70 west regional structural corridor.
The company's Oaxaca mining unit now contains the El Aguila, El Rey, Alta Gracia, Las Margaritas, El Chamizo and Solaga properties.
In March, the company began the transition from processing lower grade, open pit ore, to processing underground ore from the high grade Arista deposit at El Aguila - well ahead of the original mid-year target.
La Arista is the company's largest deposit discovered to date at the project, and as Gold Resource continues to ramp up and improve operations, the deposit is expected to result in higher average grade ore, lower cash costs and greater output levels.