Spanish Mountain Gold Ltd TSXV:SPA announced results from its Spanish Mountain Gold Project in central BC. Highlights include 0.65 g/t gold over 321.6 metres (including 1.03 g/t over 50 metres), 0.5 g/t over 284.5 metres (including 1.35 g/t over 66.5 metres), 0.55 g/t over 214.3 metres (including 16.9 g/t over 1.5 metres) and 0.91 g/t over 123 metres (including 106 g/t over 0.75 metres).
President/CEO Brian Groves tells ResourceClips.com, “The company took on the name Spanish Mountain Gold in early 2010. Prior to that it was called SkyGold Ventures, which had been a Vancouver-based junior exploration company since about 2002 or 2003. The key asset is the Spanish Mountain Project near the town of Likely in south-central BC. It started off as a joint venture with another Vancouver junior called Wildrose Resources, and then in 2008 the company merged with Wildrose to acquire 100% of the property. I joined as president in early 2008, then in late 2009 and early 2010 we overhauled the board and management team, so we have a team now that’s prepared to advance the project hopefully to a mining stage. That’s the game plan at the moment.
“We completed a PEA in late 2010 and we just completed some infill drilling to move the resource mostly from inferred into at least measured and indicated, so we can then initiate a prefeasibility study.
“We have active placer operations right close by our Spanish Mountain Project. It’s interesting to see evidence of the Cariboo Gold Rush and the placer operation still going today, which speaks to the vitality of the industry, I guess—and the price of gold.”—Brian Groves
“We’ve spent a lot of time dealing with communities and First Nations, so we’re quite advanced in our community relations, and that’s a pretty positive aspect, for any project in BC, especially,” he adds.
“Currently we’ve completed all the drilling in the Main Zone, which is the main deposit area of the Spanish Mountain Gold Project, and we’ve just started drilling one of the peripheral targets approximately three kilometres away from the Main Zone. It’s a gold-in-soil geochemical anomaly which had not been previously tested by the owners of the piece of property which we acquired in mid-2010. It’s basically contiguous with our Spanish Mountain Project. We have two drills turning on that target at the present time. We need to outline that before we actually move too aggressively into the prefeasibility phase, but at the current time we know that the Main Zone at Spanish Mountain can support quite a nice operation with quite good net present value and payback and so on. So we expect to be in the prefeasibility phase in September with a view that the prefeasibility and feasibility study could be completed by the end of next year.”
Referring to today’s results, Groves says, “I think these are some of the longest intercepts we’ve seen on the property, and there are a lot of market watchers who are becoming very, very bullish on the future gold price. Even at the current level around about $1,600, we see a lot of upside on the overall pit design. Our PEA used a fairly conservative $950 US gold price for the pit design. Even without the drilling that we just completed, we know that if we were to design a $1,100 gold pit we would have probably somewhere in the range of 2.8 million recoverable ounces. Again, that’s before the infill drilling. So I think we’re demonstrating greater continuity with some of these holes today.”
Groves continues, “I think the biggest impact will be the potential reduction in operating costs, because in those areas we won’t be moving as much waste as we had originally planned. That’s because we now see more mineralized material in those areas, and again we think that with a $1,100 gold-price assumption, which some people think is still fairly conservative, we think the cut-off grade will probably fall to about 0.2 grams per tonne or less. Our understanding of the metallurgy is approaching prefeasibility level. A lot of the components of that study were already approaching prefeasibility level, and I suspect that when we come to update the resource model some time in the fall, once we have all the assay results from the Main Zone drilling, we’ll have achieved our goal of moving a lot of ounces into the M and I categories, as well as potentially expanding the resource. So I think it’s all very positive.
“We have excellent infrastructure,” he points out. “Mount Polley, owned by Imperial Metals, is 12 kilometres across the valley. We have high-voltage power. We have gravel road access right through our camp, proximity to a town three kilometres away, proximity to operating mines, proximity to a mill the size of maybe 40,000 to 50,000 tonnes a day. We understand the pricing that would be involved in that, that’s probably about $8 million, but that’s already covered in our CAPEX budget that’s proposed in our PEA. Infrastructure is a crucial point because we’ve seen all these big projects blow up on the CAPEX side—Barrick and NovaGold especially.
“We have active placer operations right close by our Spanish Mountain Project. It’s interesting to see evidence of the Cariboo Gold Rush and the placer operation still going today, which speaks to the vitality of the industry, I guess—and the price of gold,” he says.
“The plan is to take this into operation ourselves. But we’re practical guys, and we realize that if someone does come along and wants to partner with us, it’ll be the board that ultimately decides what happens, and we’ll put it to the shareholders. But at this time we have a team and financial backing from some very significant Europeans that I believe puts us in a very good position to go into production. We don’t know what’s going to happen.”
Groves concludes, “We also have the upside of additional targets on our Cedar Creek Property, a gold and copper target. Given that we’re a pure gold project at the Main Zone, and that Mount Polley, 12 kilometres away, is a porphyry copper-gold, we know that there’s a geological trend somewhere between the two projects, and we have quite a conspicuous copper anomaly. Again, it’s a soil geochemistry but the soils have been a very, very good indicator for targeting. The Main Zone was discovered by drilling under a gold-in-soil anomaly, so we know that there’s been little transportation of the geochem anomalies. So everything should be in situ, which means that there should be very, very good potential for a significant discovery of some sort in the area. At the moment we have that nice balance between a development story and exploration upside, which I think is something that a lot of people might be looking for.”
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Spanish Mountain Gold Ltd
by Greg Klein