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Treasure Islands

January 30th, 2012

Miners Face Increasing Danger from Crime, Social Unrest and Violence

By Greg Klein

With 22 years’ experience in the British Special Forces, 10 of them with the Royal Marines and the other 12 with the SAS, Alan Bell is no stranger to conflict. Since founding the Toronto-based security company Globe Risk International in 1996, he’s provided his expertise and active involvement to a number of exploration and mining companies overseas. And he’s seen a few changes over the years.

“I remember when I started out in the 1990s, the old VPs of exploration used to go out into the mountains with their hammers and their boots and their trousers tucked into their socks. The old-school guys would go out there and say, ‘We don’t need any security.’ Well the world has changed dramatically since then.”

Miners Face Increasing Danger from Crime, Social Unrest and Violence

His admonition would apply to all resource companies but especially those of Canada, “the global leader in mineral exploration,” according to the Prospectors and Developers Association of Canada. Rising prices and limited supply push exploration into increasingly dangerous places, in a world that is itself becoming more troubled.

Companies often turn to Globe “when things go wrong,” Bell says. “They’ve got to spend a lot more time researching where they’re going and what they’re going to do. They’re running out of places to go, and the places that are left are where there’s problems.”

Bell’s company will visit the site of a proposed project to assess certain types of risk—not so much political risk, which might involve expropriation or a sudden and onerous tax/royalty regimen, but conflict in the form of crime, social unrest, sectarian violence or terrorism.

“There could be anything from suicide bombers to vehicle-exploding devices. We talk about what’s in the area. Can you get helicopters in there; what type of security do you need; who can assist you? We assess the local population, aviation, flight clearances, landing sites. Basically we develop a report for the client so they can see what their problems and options are before they bid on these contracts.

“We’ve had many clients who have looked at our reports and said, ‘Well this looks like an option, we’re willing to take a certain amount of risk,’ and they go in. Others say, ‘Shit, we’re not going to get involved in this, it’s too dangerous.’”

Bell started out with assignments in Latin America and Africa. In 2004, he began working on Canadian government contracts in Afghanistan. He employs a number of former Canadian military but trains locals to work as onsite security.

“We just finished a major project in northern Afghanistan for a Chinese company looking to start in March or April. What we will do, if they wish, is provide them with security to do their work. We’ll get a camp built for them, train the security team, get the vehicles. When they come over and start carrying out their exploration, we’ll support them from a security perspective as well.”

Precautions notwithstanding, not everything can be predicted, let alone prevented.

Last September, for example, Semafo TSX:SMF shut down its Kiniero Gold Mine in Guinea and evacuated its expatriate employees after protests about foreign workers turned violent. The mine still hasn’t re-opened, although exploration resumed in late October.

In December 2010, Luna Gold TSXV:LGC lost 1,500 ounces of gold, worth over $2 million at the time, to an armed gang at its Aurizona Mine in Maranhao State, Brazil, about 2,000 kilometres north of Rio de Janeiro. Robbers failed in a second attempt last November, however, despite taking hostages. The captives were released unharmed, an outcome which the company attributes to precautions taken after the initial heist.

We knew that this was going to happen based on intelligence-gathering by our security people. We advised the local police. The police were on site at the time the outsiders came. And the police just stood by while they vandalized the place —Donald East

In March 2011 Torex Gold TSX:TXG suspended work at its Morelos Project in Guerrero State, 200 kilometres southwest of Mexico City, after the armed robbery of several of its trucks. No one was hurt, but employees were evacuated nonetheless. Operations have since resumed.

Last June Torex President/CEO Fred Stanford explained, “We’re in a little town that had no police, and it had never needed them. I think we injected enough money into the community that we attracted a criminal element…. 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.”

Other companies work in the thick of cartel country. US Gold’s TSX:UXG El Gallo Silver-Gold Project is slated for mid-2012 production in Sinaloa State on Mexico’s north-central coast. Senior VP Ian Ball said, “We have been very active there for three or four years and have been able to establish a pretty good relationship—and this might sound strange—with the cartel. You have to know who they are and inform them what you’re doing and where you’re moving to…. They don’t want you near their marijuana crops.”

When it comes to Colombia, Sunward Resources TSX:SWD COO David Forest can’t say enough good things about the country. “Geologically, there’s nothing like it,” he told ResourceClips.com last August. “There’s nothing on the planet with that kind of potential that’s so underexplored. Nothing happened there for 50 years. It’s phenomenal terrain, completely underexplored.”

He added that his flagship Titiribi Gold-Copper Project is in Antioquia Department, a region of northwest Colombia “which has very strong rule of law and tradition of order. We don’t have any security at site.” That confidence seems to be borne out by the presence of others. Neighbours include AngloGold Ashanti, Gran Colombia TSX:GCM, Colombian Mines TSX:CMJ, Continental Gold TSX:CNL, Bellhaven Copper and Gold TSX:BHV and Batero Gold TSX:BAT.

But while Forest emphasized, “The security and safety situation is fine in 90% of the country now,” there is that other 10%. It includes Sunward’s former Murindo-Mande Norte Project straddling the border between Antioquia and Choco departments. “There’s a number of issues including FARC [the Revolutionary Armed Forces of Colombia] and indigenous groups,” he said. “If you can name an issue in Colombia, that region’s got it. The prize, if and when we can get in there, is enormous. It’s an anomaly the size of Yaletown [a high-density Vancouver neighbourhood], with copper sticking out of the ground. For 30 years, everybody’s known about this unbelievable anomaly, but it’s remained a place where nothing happened. We’re working on getting in there and, if we can, it’ll be a lot of fun.” By December, however, Sunward had divested itself of the property.

Speaking from Bogotá, Gran Colombia COO Donald East waxes enthusiastic about his company’s Marmato Gold Project, now in prefeasibility and projected for 2015 production. If all goes to plan, it will be the company’s seventh operating mine in northern Colombia. Last October, however, the company shut down its Mazamorras Project in Nariño Department, in the southwest corner of the country, after a mob demolished the buildings.

“We knew that this was going to happen based on intelligence-gathering by our security people,” says East. “We advised the local police. The police were onsite at the time the outsiders came. And the police just stood by while they vandalized the place. We then complained to the government about that. In any country in the world you have to rely on some sort of legal protection for your assets. So I think that created a bit of a wake-up call for the government.”

There’s nothing remarkable about the security company’s presence, East maintains. “Obviously on any mine you have security because you have assets. It’s just a local security company; that happens on every mine.”

East says he still doesn’t know who’s responsible for the attack or what motivated them. But he believes they were from outside the region and the attack was somehow linked to the local and regional elections that were about to take place. The local population, he says, supports the project for the sake of jobs as well as the social work the company performs. “We’re just going to let the thing wait until we feel the risks aren’t too great for any of our people to go back there. So it’s probably going to be next year before we start to re-visit that project. Mazamorras is not really critical to our current planning.”

Read Part II of this story here.

Shareholders approve US Gold takeover of Minera Andes

January 20th, 2012

Resource Clips - essential news on junior gold mining and junior silver miningUS Gold Corporation TSX:UXG and Minera Andes Inc TSX:MAI announced that shareholders of both companies voted in favour of the acquisition of Minera Andes by US Gold. The business combination resolution was approved by 89% of the votes cast by Minera Andes shareholders and 94% of the votes cast by US Gold shareholders. Upon acquisition Minera Andes will be renamed McEwen Mining Inc and will trade under the stock symbol TSX:MUX. The closing of the transaction is conditional on receipt of a final order from the Court of Queen’s Bench of Alberta, which is expected shortly.

US Gold CEO Rob McEwen stated, “I am thrilled that the proposed merger was overwhelmingly favoured by shareholders of Minera Andes and US Gold! This brings us one step closer to qualifying for the S&P 500. We look forward to future growth and prosperity this combination creates.” McEwen is the largest shareholder in both companies.

View Company Profile

Contact:
US Gold Corporation / Minera Andes Inc
Investor Relations
647.258.0395

by Ted Niles

US Gold reports Mexico Gold Assays as high as 3.2 g/t over 14m

December 13th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningUS Gold Corporation TSX:UXG announced assays from the Mina Grande area of its El Gallo complex in Sinaloa State, Mexico. Results include

3.2 g/t gold over 14 metres (including 19.9 g/t gold over 1.8 metres)
1 g/t gold over 13.2 metres
8.1 g/t gold over 1.5 metres
1 g/t gold over 18.7 metres
1.2 g/t gold over 30 metres
1.8 g/t gold over 19.4 metres
278 g/t silver over 4.5 metres
1.4 g/t gold and 138.1 g/t silver over 2.6 metres
7.7 g/t gold and 2,070 g/t silver over 1 metre
4.8 g/t gold and 240 g/t silver over 1.1 metres
3.3 g/t gold and 531 g/t silver over 1.2 metres

Chairman/CEO Rob McEwen said, “Mina Grande is just one of several targets we have been exploring since infill drilling at El Gallo and Palmarito was completed. Recent drilling has intersected several zones of encouraging mineralization. Although early, these results, combined with our recently announced San Dimas discovery are setting the foundation for our next phase of growth in Mexico.”

View Company Profile

Contact:
Jenya Meshcheryakova
Investor Relations
647.258.0395

by Ted Niles

US Gold reports Mexico Assays including 461.7 g/t Silver over 11.3m

October 26th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningUS Gold Corp TSX:UXG announced results from El Gallo Complex in Sinaloa State, Mexico. Assays include

461.7 g/t silver over 11.3 metres
(including 1,945.6 g/t silver over 2.4 metres)
309.7 g/t silver over 10.3 metres
(including 3,510 g/t silver over 0.7 metres)
727.7 g/t silver and 5 g/t gold over 2.7 metres
(including 2,260 g/t silver and 16.2 g/t gold over 0.8 metres)
130.9 g/t silver over 19 metres
113.5 g/t silver over 8.5 metres
28.7 g/t silver over 33.2 metres
92.9 g/t silver over 7.5 metres
47.5 g/t silver over 8 metres

Chairman/CEO Rob McEwen stated, “Since making El Gallo discovery in 2009, we have completed an aggressive exploration program of 165,000 metres of core drilling and we still have not found the limits of the system. Impressive intersections of near-surface silver mineralization continue to be encountered. In addition, I believe the proposed merger with Minera Andes will create an attractive, high-growth, low-cost mid-tier silver producer. The fundamentals look exceptionally bright for the company, despite the current share price decline.”

View Company Profile

Contact:
Jenya Mescheryakova
Investor Relations
647.258.0395
866.441.0690

Read more about US Gold Corp.

by Greg Klein

US Gold reports Mexico Silver Assays including 109.8 g/t over 20.4m

September 21st, 2011

Resource Clips - essential news on junior gold mining and junior silver miningUS Gold Corporation TSX:UXG announced assays from its El Gallo complex in Sinaloa State, Mexico. Highlights include

408.7 g/t silver over 1.8 metres (including 1,695 g/t over 0.4 metres)
140.9 g/t over 10.1 metres
64.5 g/t over 16.1 metres
109.8 g/t over 20.4 metres (including 859 g/t over 1.1 metres)
113.7 g/t over 11.7 metres
51.7 g/t over 18.1 metres
107.4 g/t over 17.6 metres
40.9 g/t over 33.6 metres

The El Gallo complex includes the El Gallo and Palmarito silver deposits and the Magistral gold deposit. Phase 1 mining is expected to begin in mid-2012, producing 30,000 gold ounces per year, with Phase 2 producing 5 million silver ounces per year beginning in 2014.

View Company Profile

Contact:
Ian J Ball
Senior Vice-President
647.258.0395
or 866.441.0690

by Ted Niles

US Gold reports Mexico Results of 237.6 g/t Silver over 12.2m

September 8th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningUS Gold Corp TSX:UXG announced assays from the Palmarito Deposit of El Gallo Complex in Sinaloa State, Mexico. Results include 237.6 g/t silver and 0.2 g/t gold over 12.2 metres (including 891 g/t silver and 0.2 g/t gold over 2 metres), 5,870 g/t silver and 1.5 g/t gold over 0.4 metres, 102 g/t silver and 0.1 g/t gold over 18.3 metres, 263.2 g/t silver and 0.3 g/t gold over 6.5 metres (including 500 g/t gold and 0.5 g/t silver over 1 metre) and 130 g/t silver and 0.1 g/t gold over 12 metres (including 395 g/t silver and 0.1 g/t gold over 1.1 metres).

The complex includes El Gallo and Palmarito silver deposits and the Magistral gold deposit. Phase 1 mining is expected to begin in mid-2012, producing 30,000 gold ounces per year, with Phase 2 producing 5 million silver ounces per year beginning in 2014.

View Company Profile

Contact:
Ian J. Ball
Senior Vice-President
647.258.0395
866.441.0690

by Greg Klein

Fast Tracked

August 17th, 2011

US Gold Hastens Mexico Mine, Plans Merger

By Greg Klein

Drilling started in 2009; the first resource estimate came out last summer, an updated resource last November and a PEA in February. Full feasibility is scheduled for 1Q 2012. With 11 core drills, five percussion drills, a 2011 budget of $25 million and an on-site assay lab running 24/7, this project has definitely hit the fast track. By early 2014, US Gold’s El Gallo project in Mexico is slated for open-pit silver-gold production, potentially becoming one of the 10 largest low-cost silver mines in the world.

“We’ve been trying to advance quickly,” says Senior VP Ian Ball. “The project’s pretty simple from a mining standpoint, being all near-surface. So there’s no underground development to worry about. The infrastructure in the area is quite reasonable. You’re close to power and the roads are well developed.”

US Gold Hastens Mexico Mine, Plans Merger

The November resource estimate shows 39.8 million silver ounces and 543,728 gold ounces measured and indicated and 19.7 million silver ounces and 23,764 gold ounces inferred. About 90% of the resource lies within 100 metres of the surface.

Based on November’s figures, the February PEA estimated production at 5 million silver ounces and 50,245 gold ounces annually for six years. Assuming silver to be $18 an ounce and gold $1,000, the report estimates a 27% internal rate of return with a $155-million net present value. With $28.50 silver and $1,350 gold, the IRR reaches 65% and the NPV $521 million. And since November, continued drilling has found six new silver-gold veins.

Assays released August 11 include 180.4 grams per tonne silver over 72.4 metres (including 955.2 g/t silver over 10.1 metres), 168.1 g/t silver over 36.6 metres (including 289.3 g/t silver over 11.7 metres), 88.7 g/t silver over 27.4 metres (including 205.8 g/t silver over 9.9 metres), 325.4 g/t silver and 6.8 g/t gold over 4.5 metres (including 675 g/t silver and 13.9 g/t gold over 1.5 metres) and 9.3 g/t gold over 3.1 metres (including 22.5 g/t gold over 1.1 metres).

Ironically, El Gallo production has been held back by assays that are too good to ignore. “Originally our feasibility study was scheduled for release later this year,” Ball explains. “But it’s probably going to be 1Q of next year. A lot of issues involve drill findings. There have been a lot of cases where we wanted to place waste rock or the site of the mill on a certain location, then we hit mineralization below those planned buildings. So we have to follow up and see how much material is down there or whether it’s just a one-off occurrence. That’s been the main reason for the delay.” El Gallo includes the former Magistral Mine, whose buildings and assay lab will be incorporated into the new project.

Working in Sinaloa State, however, means proximity to a drug cartel. “We have been very active there for three or four years and have been able to establish a pretty good relationship—and this might sound strange—with the cartel. You have to know who they are and inform them what you’re doing and where you’re moving to…. They don’t want you near their marijuana crops,” Ball says.

“We do have quite an extensive security policy,” he emphasizes. “We do have audits that are done by outside security, and they make ongoing recommendations on how we can continue to improve. We provide training for the employees; all that is ongoing.”

If you combine this pretty strong cash flow with something that’s growing in size and providing excitement, you are going to be combining the best of both worlds —Ian Ball

Closer to home, the company’s Gold Bar Project in Nevada is undergoing prefeasibility. “We’ll publish at the end of October,” Ball says. “We will not be going to final feasibility, based on the small CAPEX that’s required—we’re in the $50-million ball park.” Bell expects permitting to take at least 18 months.

“That deposit right now, all in, is about a million ounces at one gram per tonne, approximately 90% oxide material. We are envisioning an open-pit heap-leach process there,” Ball says.

About 120 kilometres away in Nevada, the company is drilling its Limo Project, which produced 91,000 gold ounces from 1989 to 1990.

Perhaps the best indication of US Gold’s future came last June with the announcement of a planned merger with Minera Andes Inc. The new company, to be called McEwen Mining Inc, is the concept of Rob McEwen, chairman and CEO of US Gold and CEO of Minera. He’s the largest shareholder of both companies, holding 21% of US Gold and 30% of Minera. As the founder of Goldcorp Inc, McEwen is credited with steering that company from a market cap of $50 million to over $10 billion.

Minera currently has three Argentina assets: a 49% interest in the San Jose Silver-Gold Mine, which produced 5.3 million silver ounces and 84,000 gold ounces in 2010, a 100% interest in Los Azules copper exploration project, which is currently undergoing prefeasibility, and a portfolio of silver-gold exploration properties. Ball expects to see the merger completed by November.

“With Minera Andes you have a mine that’s in production, that’s generating silver and gold. It has exciting exploration properties but no discoveries yet beyond the mine. Whereas El Gallo has some very attractive exploration but no cash flow. And so we thought, if you combine this pretty strong cash flow with something that’s growing in size and providing excitement, you are going to be combining the best of both worlds—benefiting from the higher prices of metals through the cash flow on the mine, which should be able to build the mine in El Gallo.”

At press time US Gold had 136.3 million shares outstanding at $5.97, for a market cap of $813.9 million. Minera Andes had 282.7 million shares at $2.35 for a market cap of $664.3 million.

US Gold reports Mexico Silver Assays up to 211.6 g/t over 14.2m

March 31st, 2011

US Gold Corporation TSX:UXG announced drill results from its El Gallo Project in Sinaloa State, Mexico. Assays include 115.9 g/t silver over 9.5 metres (including 586 g/t over 1.4 metres), 508 g/t over 1.1 metres, 132.4 g/t over 9.1 metres, 423 g/t over 3.5 metres (including 1,270 g/t over 1.1 metres), 293.8 g/t over 1.8 metres (including 411 g/t over 0.8 metres), 63.7 g/t over 10.6 metres, 83.9 g/t over 14 metres and 211.6 g/t over 14.2 metres.

Chairman/CEO Rob McEwen commented, “With a $30 million exploration program over the next two years, a large land package and multiple new discoveries at and around El Gallo, the potential to expand the resource looks excellent. We are pushing aggressively to grow the size of the project as we move it through feasibility and towards production.”

View Company Profile

Contact:
Ian J. Ball
Senior Vice-President
647.258.0395

by Ted Niles

US Gold reports Mexico Silver Assays up to 233.3 g/t over 12.4m

March 8th, 2011

US Gold Corporation TSX:UXG announced results from its El Gallo Project in Sinaloa State, Mexico. Assays include 233.3 g/t silver over 12.4 metres, 515.6 g/t over 3.2 metres, 77.9 g/t over 17.2 metres, 1,204.8 g/t over 1.1 metres, 76.9 g/t over 21.8 metres, 116.3 g/t over 13 metres, 114.9 g/t over 5.9 metres and 72.2 g/t over 9.5 metres. Drilling also revealed gold results of 27.2 g/t gold over 1 metre, 5.9 g/t over 6 metres (including 13.7 g/t over 1.5 metres) and 1.4 g/t over 5.9 metres.

An expanded infill drill program is underway at El Gallo to upgrade inferred mineralization to the measured and indicated categories. Mine permit application and a feasibility study for El Gallo are expected to be completed by year-end.

View Company Profile

Contact:
Ian J. Ball
Senior Vice President
647.258.0395

by Ted Niles

US Gold reports Mexico Assays as high as 1,325.1 g/t Silver over 1.2m

January 13th, 2011

US Gold Corporation UXG:CA announced assay results from its El Gallo Project in Sinaloa State, Mexico. Highlights include 1,325.1 g/t silver and 2.1 g/t gold over 1.2 metres, 235 g/t silver and 18.3 g/t gold over 0.7 metres, 135.1 g/t silver over 21.1 metres, 121.4 g/t silver over 12.2 metres, 16.9 g/t gold over 2 metres, 7 g/t gold over 1.1 metres, 5.2 g/t gold over 2 metres, 218.3 g/t silver and 1.6 g/t gold over 4.6 metres, and 75.3 g/t silver over 22.2 metres.

The El Gallo Project has a measured and indicated resource estimate of 39.8 million ounces silver, 543,728 ounces gold, and an inferred resource of 19.7 million ounces silver and 23,764 ounces gold. Drilling on the new veins will focus on delineating the mineralization in order for them to be incorporated into an updated resource estimate. US Gold anticipates spending $15 million on exploration in Mexico during 2011, in addition to moving the project through to feasibility.

View Company Profile

Contact:
Ian J. Ball
Senior Vice-President
647.258.0395
or 866.441.0690

by Ted Niles