Despite a rocky end to 2011, precious metals have once again gripped the attention of investors as the ongoing financial crisis elevates the significance of gold and silver. The gold price continued its upward trajectory and defied volatility with a healthy 10% gain for 2011. And while silver took a harder fall, which could be attributed to margin calls, market weakness and a mainstream awareness that is still emerging, the white metal’s vast industrial applications and monetary history have compelled investors to take a long-term position and re-enter the precious metals hunt.
In my previous article, I highlighted the emergence of Mexico’s renowned Guanajuato Silver District and how the recent activity of a handful of miners is throwing this region back into the international spotlight. Having produced an estimated 1.2 billion oz of silver and 6 million oz of gold throughout its history, this slice of Mexico has been touted for its uncovered riches and historical mines.
Lately, the district has attracted the activity of a handful of renowned miners. These include, as mentioned previously, AuRico Gold Inc. (TSX: T.AUQ, Stock Forum), Endeavour Silver Corp. (TSX: T.EDR, Stock Forum), and Great Panther Silver Ltd. (TSX: T.GPR, Stock Forum). These miners have produced an extensive analysis of the area and have benefited greatly from expanding their presence, with Endeavour recently announcing its seventh consecutive year of production growth, as its Guanajuato presence has helped the Company exceed its 2011 production estimate of 3.7 million oz Ag and 19,000 oz Au.
These miners have also, through repeated attempts, aimed their sights on what may turn out to be the region’s untapped treasure chest—the Algun Dia. Stories of repeated attempts from the region’s miners to acquire the historical Algun Dia have circulated around the bullboards for some time. But it was only recently that the well-financed, managed and positioned junior explorer Golden Fame Resources Corp. (TSX: V.GFA, Stock Forum) snatched up the deal and began an ambitious 2011 drilling program.
With a June financing of $7.1 million and an option to acquire a 70% interest in the Algun Dia gold-silver copper project, GFA is now preparing for a steady stream of news releases as assay results come in from the drill program, which consists of 20 diamond drill holes totaling approximately 10,000 metres.
The January 12 press release, “Golden Fame Resources Corp. Reports Drill Core Assays Up to 26.53 g/t Au, 171.75 g/t Ag and 0.98% Cu over 1.75 Metres at Algun Diau,” delivers the promise of strong potential and future profit. The Company is obviously pleased to report that it has received the results for the first three holes, with the following results indicating a strong system of mineralization:
“ . . . a high-grade, gold-silver-copper interval in hole GFAD002: 73.2 g/t gold over 0.6 m (or 26.53 g/t gold over 1.75 m); 348 g/t silver over 0.6 m (or 171.75 g/t silver over 1.75 meters); and 0.98% copper over 1.75 meters between 99.4 and 101.15 meters core length. This anomalous intersection is contained within a 10.15 meter wide interval which assays 4.77 g/t gold, 52.24 g/t silver, and 0.59% copper. Additionally, highly-anomalous copper values, ranging up to 4.07% over a core length of 1.1 meters (GFAD003), with additional highly-anomalous copper zones forming much wider intervals occur throughout the first three holes.”
These results reflect a strong start for GFA, which places the Company in a favourable position for investors. The results come from the San Cayetano vein, a structure that can be traced on the surface for approximately 1 km and varies between 9 and 30 metres in thickness, having only been intersected to a depth of 110 metres in the first three holes. In fact, the initial adit, which reported a true width of the vein of 10-12 metres, may have been a bit too conservative: hole GFAD002 shows a true width of almost 15 metres, while GFAD003 shows over 24!
CEO Graham Clark states, “We are very excited to have shown that the mineralization which occurs at surface and in the very limited underground workings near surface, continues down the dip of the San Cayetano vein-structure and that the thickness of the structure remains robust . . . These results are from just the first three holes.” Hole GFAD001 recorded an interval of 3.0 metres averaging 0.89 g/t gold, 53.03 g/t silver and 1.47% copper between 124 and 127 metres, with 2.0 metres averaging 1.2 g/t gold and 48.55 g/t silver. Hole GFAD002 recorded an average of 4.77 g/t gold and 52.24 g/t silver over 10.15 meters. The full results, as weighted average intersections, are provided below:
----
Weighted Average Intersections - Holes GFAD001, GFAD002, GFAD003
-------------------------------------------------------------------------
From To Length Au Ag
Hole ID (m) (m) (m) g/t g/t Cu %
-------------------------------------------------------------------------
GFAD001 63 67 4.00 0.04 15.75 0.29
GFAD001 107 128 21.00 0.17 14.53 0.64
GFAD001 inc 107 114 7.00 0.01 9.83 0.85
GFAD001 inc 122 128 6.00 0.49 31.58 0.97
GFAD001 inc 124 127 3.00 0.89 53.03 1.47
GFAD001 inc 125 127 2.00 1.20 48.55 0.78
-------------------------------------------------------------------------
GFAD002 84.5 101.15 16.65 2.95 36.50 0.48
GFAD002 inc 91 101.15 10.15 4.77 52.24 0.59
GFAD002 inc 93.65 101.15 7.50 6.44 64.29 0.74
GFAD002 inc 99.4 101.15 1.75 26.53 171.75 0.98
-------------------------------------------------------------------------
GFAD003 61 63 2.00 0.02 16.00 0.21
GFAD003 76 78.25 2.25 0.10 18.16 2.09
GFAD003 inc 77.15 78.25 1.10 0.17 34.00 4.07
GFAD003 92.9 117.15 24.25 0.24 20.94 0.42
GFAD003 inc 94.85 95.85 1.00 0.19 49.00 0.95
GFAD003 inc 99 108 9.00 0.26 30.54 0.68
GFAD003 inc 101.85 104.8 2.95 0.61 51.71 1.21
GFAD003 inc 103.7 104.8 1.10 1.59 106.00 2.13
GFAD003 inc 116 117.15 1.15 1.92 67.00 0.45
-------------------------------------------------------------------------
At this point, it’s safe to say that GFA is onto something big. The positive results from the first three holes are highly encouraging as they verify that the surface mineralization continues at depth and that the San Cayetano has, thus far, a width of 9 to 30 metres.
The Company’s strong management team anticipates that the results of the remaining 17 holes will be released in Q1/2012, a promising move considering that the market is regaining its bullish outlook for precious metals. GFA’s close proximity to producers is also stirring up excitement, as the drill results have caught the attention of the region’s successful miners. Location, demand and initial drilling are very positive for GFA—and soon we will see just how the story unfolds.
For more information on Golden Fame, go to www.goldenfameresources.com.
Disclaimer: the author Nick Bedford does not currently hold any shares of any of the companies mentioned in the article. However, the author reserves the right to acquire interests in any of the companies mentioned after 36 hours have elapsed upon initial publication of this article.