Spanish Mountain Gold Bolsters Viability Toward 2015 Production

By Kevin Michael Grace

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Spanish Mountain Gold TSXV:SPA President/CEO Brian Groves was in a good mood when Resource Clips last spoke to him. He had every right to be. The price of gold was high, and his company was well on its way to proving a significant deposit at its eponymous BC gold project. Ten months later, gold is still high, but the market is in a historic downturn, and his shares trade at a 50% discount. On the other hand, the project is considerably richer than before, with every indication it will become richer still.

Today, Spanish Mountain is, in Groves’ words, “a project with several million ounces in gold in what I consider still a very safe environment in BC, with a board that has an enormous network of connections globally.”

Spanish Mountain Project: 2.17 million ounces gold M&I and rising

The Spanish Mountain Project is located 70 kilometres northeast of Williams Lake in Cariboo Country, the scene of one of Canada’s most-famous goldrushes. The area has produced 3.8 million ounces historically. Prominent neighbours are Imperial Metals’ TSX:III Mount Polley Mine, which has 2012 planned production of 34 million pounds copper, 46,800 ounces gold and 90,000 ounces silver, and Taseko’s TSX:TKO Gibraltar Mine, which has 2012 planned production of 115 million pounds copper.

According to a November 2011 resource estimate, Spanish Mountain hosts measured and indicated resources of 138 million tonnes grading 0.49 grams per tonne gold and 0.64 g/t silver (at a 0.2 g/t gold cutoff) and inferred resources of 339.6 million tonnes grading 0.37 g/t gold and 0.65 g/t silver. This translates to 2.17 million ounces gold and 2.84 million ounces silver measured and indicated and 4.04 million ounces gold and 7.1 million ounces silver inferred. Compared to the November 2010 preliminary economic assessment, these figures constitute a 59% increase in gold measured and indicated and a 561% increase in inferred.

Since November, the project has seen four additional assay result releases at its Main Zone and the announcement of a new gold zone, the Phoenix.

Highlights of the December 11 Phoenix assays include

• 0.58 g/t gold over 92.5 metres (including 4.12 g/t over 7.5 metres)
• 0.82 g/t over 55.4 metres
• 0.35 g/t over 47.5 metres
• 0.5 g/t over 56.7 metres
• 0.48 g/t over 15.8 metres

Highlights from the most recent Main Zone assays (May 29) include

• 3.25 g/t gold over 64 metres (including 10.73 g/t gold over 18 metres)
• 1.14 g/t gold over 31.5 metres
• 0.79 g/t gold over 63 metres
• 0.52 g/t gold over 89 metres
• 0.51 g/t gold over 62.5 metres
• 0.75 g/t gold over 52.6 metres
• 1.88 g/t gold over 21.5 metres
• 0.7 g/t gold over 53.9 metres
• 1.05 g/t gold over 43.5 metres

The result from Hole DH-1060 (3.25 g/t over 64 metres) is a much higher grade than seen previously. Is this an anomaly? Groves responds, “We do know there are pods within the Main Zone that have displayed higher grades than what we see on our resource table. That’s why we’ve talked about the potential of optimizing starter pits in the first few years of any potential operation.

“[DH-1060] doesn’t necessarily mean that there is potential at depth for higher grade material; we just don’t know. We are probably looking at another, let’s say, 20 holes still to come in the final batch of holes that represent the infill drilling in the Main Zone. We expect to have those results out possibly by the end of this month. And some of the holes that remain to be disclosed are in this general area, so we’ll see if there is any support. Having said that, that sort of width and thickness is very promising because what it will do is force the pit. We believe it will end up with the pit flaw potentially capturing some of this material where before it would have been below the pit flaw. So it is encouraging that there is potential to add ounces to a pit-constrained resource estimate.”

Groves says that any future project drilling will target the Phoenix Zone. The completion of the Main Zone infill program (the purpose of which was to move inferred ounces to measured and indicated) will suffice to improve the project’s economic viability. Groves explains, “As you understand, feasibility level ounces have to have measured and indicated ounces.”

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