Torex Protects Its Growing Mexico Deposit
By Ted Niles
When you’re getting grades like 6.6 grams per tonne gold over 50.5 metres, it is probably to be expected that a little bad will come with so much good. Since Torex Gold acquired the Morelos Project in Mexico, the property’s already considerable promise has only increased. However, the company was obliged in March to suspend its operations after the armed robbery of several of its trucks. While no one was hurt, Torex removed its employees from the site. But now the gold is secure, and drilling has resumed at Morelos with three rigs and a fourth and fifth expected to begin soon.
“We’re in a little town that had no police,” explains President and CEO Fred Stanford, “and it had never needed them. I think we injected enough money into the community that we attracted a criminal element.” He reports, “We asked the government to help, and they’ve been extraordinarily helpful. There are now police, and we’re back and moving forward. The government’s been very good; the community wants the mine; and we’re negotiating now for land. No doubt there will be issues, but we’ve got a great partnership with the community.”
The project is located in Guerrero State, 200 kilometres southwest of Mexico City, and consists of seven concessions totalling 29,006 hectares. Teck Resources acquired the Morelos project from the Mexican government in 1998 and, in joint venture with Goldcorp, drilled 608 holes of just under 100,000 metres over the next decade. “They shut the project down in the financial crisis and put it up for sale,” Stanford says. “We bought it at the end of 2009 and got a drilling program started in the middle of 2010.” Morelos has a measured and indicated resource estimate of 3 million ounces gold, 900,000 ounces inferred.
The project consists of three deposits—Guajes East, Guajes West and El Limon—and, according to Stanford, “It looks to us like those three deposits are all going to connect.” He continues, “There’s a kind of intrusion, and the deposits ring right around the edge of it, so these three will connect right around the edge of the intrusion north of the river. We’re gradually stepping-out from Guajes East, and we continue to find mineralization in the direction of Guajes West. Very high-grade mineralization.”
Step-out drilling from the Guajes East and Guajes West deposits reported June 27 include 6.6 grams per tonne gold over 50.5 metres (including 11.88 g/t over 18.3 metres), 8.6 g/t over 15 metres (including 27.33 g/t over 4.5 metres), 2.16 g/t over 46.4 metres and 2.74 g/t over 18.4 metres. Stanford comments, “These particular results are just confirming what we have expected all along, which is that Guajes East and Guajes West are indeed one deposit.”
May 30 assays from El Limon include 10.97 g/t gold over 33.2 metres, 2.9 g/t over 118.6 metres, 2.69 g/t over 44.3 metres, 12.33 g/t over 5.7 metres and 5.77 g/t over 47.6 metres.
Running and building mines is what I do —Fred Stanford
The objective of the current drill program is to grow the resource to 5 million ounces gold. “We’re intending to drill 100,000 metres this year,” Stanford says, “basically, moving forward quickly into turning it into a mine.” A revised estimate is anticipated for December 2011, and a “decision on production” is expected within 12 months. He continues, “Then it’ll be a two- to three-year construction period, depending on how long it takes to build roads up to the top of the mountain and start mining.”
“Our strategy has always been to take Morelos to production,” Stanford declares. The former president of Vale Inco’s Sudbury nickel operations explains, “Running and building mines is what I do.”
Torex has 349 million shares outstanding and a market cap of $607 million. At press time, shares traded at $1.74, up $0.11 (6.75%) from the previous days.
Stanford concludes, “This is my first small junior exercise, and I’ve been extraordinarily lucky with the quality of the asset. This has the potential to grow and grow. I suspect all juniors say that, but if you look at the results, and if you look at the ground, you’ll see why I have such confidence.”