Cerro Prieto
On January 24, 2013, Goldgroup Mining ("Goldgroup" or the "Company") entered into a binding agreement with Oroco Resource Corp. whereby Goldgroup would acquire a 100% interest in Oroco's Cerro Prieto Project (the "Cerro Prieto Project") in Sonora State, Mexico, subject to receipt of regulatory and Oroco shareholder approvals. On August 30, 2013 the Company completed the acquisition of the Cerro Prieto project.
The Cerro Prieto Project, located in the Cucurpe Mining District, Sonora, Mexico, is comprised of the San Felix (205 ha), San Francisco (10 ha), Elba (5.82 ha), Huerta de Oro (20 ha), Reyna de Plata (9.79 ha), Cerro Prieto "North" (2,508 ha) and Argonauta 6 (4,120 ha) mineral concessions. The Cerro Prieto Project is 52 road kilometers from the regional center of Magdalena de Kino and 150 kilometers northeast of the city of Hermosillo.
Cerro Prieto commenced small-scale trial mining and leaching in December 2013. During the three and nine months ended September 30, 2014 Cerro Prieto produced 1,076 and 4,174 ounces of gold, respectively. The Company is working to ramp-up mining operations to commercial production rates.
An updated National Instrument 43-101 Measured and Indicated and Inferred mineral resource estimate for the Cerro Prieto Project was prepared in the first half of 2013.
Mineral Resource Estimate Highlights:
- Measured Mineral Resources in veins (Table 1) comprised of 1.18 million tonnes grading 1.56 grams per tonne (g/t) gold, 30.28 g/t silver, 0.15% lead and 0.33% zinc for a total of approximately 59,000 ounces of gold
- Indicated Mineral Resources in veins (Table 2) comprised of 4.92 million tonnes grading 1.03 g/t gold, 22.12 g/t silver, 0.32% lead and 0.80% zinc for a total of approximately 163,000 ounces of gold
- Inferred Mineral Resources in veins (Table 3) comprised of 5.025 million tonnes grading 0.75 g/t gold, 20.62 silver, 0.49% lead and 1.28% zinc for a total of approximately 121,000 ounces of gold
- Cerro Prieto remains open to the south of the existing resource along the 7.5 kilometer extension of the mineralized shear zone
- Preliminary column leach test work completed by Kappes Cassidy & Associates, under the direction of Arthur H. Winckers and Associates, a consultant for the Company, at the Project returned gold recoveries of between 47% to 68% with head grades ranging from 0.79 g/t to 0.95 g/t gold over 98 days.
Qualified Persons:
The Mineral Resource estimate for the Cerro Prieto Project was prepared by G.H. Giroux, P.Eng., MASc. and Dr. Duncan J. Bain, P.Geo. who are independent "Qualified Persons" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. The technical report title Report on the 2011-2012 Exploration Program Including an Updated Resource Estimation on the Cerro Prieto Project, Magdelena De Kino Area, Sonora State, Mexico" and dated June 10, 2013 is available for viewing on SEDAR (www.sedar.com)
Table 1: CERRO PRIETO MEASURED RESOURCE IN VEINS
|
Cut-off |
Tonnes > Cut-off |
Grade > Cut-off |
|||
|---|---|---|---|---|---|
|
Au (g/t) |
Ag (g/t) |
Pb (%) |
Zn (%) |
||
|
0.10 |
1,230,000 |
1.51 |
30.67 |
0.15 |
0.34 |
|
0.15 |
1,230,000 |
1.51 |
30.69 |
0.15 |
0.34 |
|
0.20 |
1,220,000 |
1.52 |
30.46 |
0.15 |
0.34 |
|
0.25 |
1,180,000 |
1.56 |
30.28 |
0.15 |
0.33 |
|
0.30 |
1,160,000 |
1.58 |
30.31 |
0.15 |
0.33 |
|
0.40 |
1,090,000 |
1.66 |
30.45 |
0.14 |
0.33 |
|
0.50 |
1,030,000 |
1.73 |
30.68 |
0.15 |
0.33 |
|
0.60 |
960,000 |
1.81 |
30.74 |
0.14 |
0.33 |
|
0.70 |
880,000 |
1.92 |
30.77 |
0.14 |
0.33 |
|
0.80 |
790,000 |
2.05 |
30.98 |
0.14 |
0.32 |
|
0.90 |
720,000 |
2.17 |
31.00 |
0.14 |
0.32 |
|
1.00 |
660,000 |
2.28 |
31.03 |
0.15 |
0.32 |
Table 2: CERRO PRIETO INDICATED RESOURCE IN VEINS
|
Cut-off |
Tonnes > Cut-off |
Grade > Cut-off |
|||
|---|---|---|---|---|---|
|
Au (g/t) |
(Ag g/t) |
Pb (%) |
Zn (%) |
||
|
0.10 |
5,130,000 |
1.00 |
22.60 |
0.32 |
0.79 |
|
0.15 |
5,120,000 |
1.00 |
22.56 |
0.32 |
0.79 |
|
0.20 |
5,050,000 |
1.01 |
22.43 |
0.32 |
0.80 |
|
0.25 |
4,920,000 |
1.03 |
22.12 |
0.32 |
0.80 |
|
0.30 |
4,760,000 |
1.06 |
21.79 |
0.31 |
0.79 |
|
0.40 |
4,090,000 |
1.17 |
22.11 |
0.31 |
0.76 |
|
0.50 |
3,450,000 |
1.31 |
21.92 |
0.31 |
0.76 |
|
0.60 |
2,940,000 |
1.44 |
22.23 |
0.31 |
0.75 |
|
0.70 |
2,570,000 |
1.55 |
22.72 |
0.30 |
0.72 |
|
0.80 |
2,230,000 |
1.67 |
23.33 |
0.28 |
0.70 |
|
0.90 |
1,950,000 |
1.79 |
23.51 |
0.27 |
0.66 |
|
1.00 |
1,750,000 |
1.89 |
24.29 |
0.26 |
0.64 |
Table 3: CERRO PRIETO INFERRED RESOURCE IN VEINS
|
Cut-off |
Tonnes > Cut-off |
Grade > Cut-off |
|||
|---|---|---|---|---|---|
|
Au (g/t) |
Ag (g/t) |
Pb (%) |
Zn (%) |
||
|
0.10 |
5,100,000 |
0.74 |
21.20 |
0.49 |
1.28 |
|
0.15 |
5,100,000 |
0.74 |
21.20 |
0.49 |
1.28 |
|
0.20 |
5,091,000 |
0.74 |
21.05 |
0.49 |
1.28 |
|
0.25 |
5,025,000 |
0.75 |
20.62 |
0.49 |
1.28 |
|
0.30 |
4,883,000 |
0.76 |
20.59 |
0.49 |
1.28 |
|
0.40 |
3,994,000 |
0.85 |
21.39 |
0.51 |
1.29 |
|
0.50 |
3,160,000 |
0.96 |
22.67 |
0.51 |
1.27 |
|
0.60 |
2,323,000 |
1.11 |
23.68 |
0.48 |
1.18 |
|
0.70 |
1,901,000 |
1.21 |
22.99 |
0.47 |
1.15 |
|
0.80 |
1,538,000 |
1.32 |
21.21 |
0.45 |
1.11 |
|
0.90 |
1,315,000 |
1.40 |
19.85 |
0.45 |
1.09 |
|
1.00 |
1,082,000 |
1.50 |
19.94 |
0.44 |
1.05 |
The Cerro Prieto Project is subject to a 2% net smelter return royalty ("NSR").
The company wishes to make clear that it is not basing its production decision on a preliminary economic assessment demonstrating the potential viability of mineral resources or a feasibility study of mineral reserves demonstrating economic and technical viability, and as a result there is increased uncertainty and multiple technical and economic risks of failure which are associated with this production decision. These risks, among others, include areas that are analyzed in more detail in a preliminary economic assessment or feasibility study, such as applying economic analysis to resources or reserves and more detailed metallurgy.
Goldgroup Mining Inc.
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