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Goldgroup Mining Inc. ("Goldgroup" or the "Company") (TSX:GGA) is pleased to announce that additional diamond drill holes at the Company's 100% wholly owned Caballo Blanco gold project in Veracruz, Mexico have yielded significant gold intercepts. All diamond drill holes are contained in completely oxidized, vuggy and siliceous rock occurring within and peripheral to the La Paila Zone, which lies within the Northern Zone. All 11 drill holes reported below (see Tables 1 and 2 and the drill hole location map) are above the established cut-off grade and are part of the ongoing drilling program intended to increase mineralized resources at Caballo Blanco. Of the 11 drill holes reported below, six of these drill holes further define the La Paila mineral resource, and the remaining five drill holes expanded the southwestern flank of the La Paila Zone. The zone currently remains open to the south and southwest.
Keith Piggott, President and CEO of Goldgroup, stated, "We are pleased with these new diamond drill results, which continue to confirm, define and expand the La Paila Zone. As we continue to receive positive results from our 2011 drill program and conduct our additional 30,000 metre drill program in 2012, we expect to increase resources at the La Paila Zone, as the zone currently remains open to the south and southwest. Furthermore, Management expects to identify new zones of mineralization in both the Northern Zone and Highway Zone through its 2012 drill program."
The Company focused its 2011 drilling program primarily on the La Paila Zone, specifically with the objectives of designing the first open pit and updating the current NI 43-101 mineral resource estimate for Caballo Blanco, which is expected to be released in the coming weeks. Moreover, in-house and consultant engineering have significantly advanced Goldgroup's column leach testing in its large on-site facility and progressed leach pad and carbon recovery plant design. The drilling and infrastructure work, combined with the anticipated upcoming updated NI 43-101 mineral resource estimate, are intended to form the basis of a preliminary economic assessment (PEA) expected to be completed on the Caballo Blanco project in the first quarter of 2012. The current drilling program, together with the on-going column-leach metallurgical testing, environmental and sociological studies as well as the run of mine heap-leach pad design and other engineering, form the basis for targeting commencement of production at Caballo Blanco by 2012 year-end.
As part of Goldgroup's ongoing 30,000 metre drill program in 2012, the Company expects to continue diamond drilling in the La Paila Zone, in addition to diamond drilling a number of identified geochemical and geophysical targets occurring to the south, southwest and northeast of the La Paila Zone, all within the large Northern Zone ring structure. Furthermore, the Company also intends to drill targets in the Highway Zone, which is located approximately seven kilometres to the southeast of the Northern Zone.
Table 1. Drill-Hole Results for the Caballo Blanco Project, Mexico
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All of the holes presented above intersected gold mineralization in excess of the 0.2 g/t Au cut-off grade used in the current Caballo Blanco NI 43-101 technical report dated February 28, 2011 which is available on SEDAR. However, it is expected that as a result of favourable leach kinetics, recovery and ease of mining, a lower cut-off grade may be applicable.
The results presented today are part of the 2011 drill program and are intended to be used in the preparation of the upcoming updated NI 43-101 mineral resource estimate. Drill holes 11 CBN 150, 151, 151A, 153, 156 and 159 were all drilled within the main La Paila Zone to further define the mineral resource. Five of these six drill holes encountered mineralized intervals at widths and gold grades comparable to those used in the initial resource calculation. Drill hole 11 CBN 150 encountered sporadic mineralization above the 0.2g/t cut off grade, below the main zone. Drill holes 11 CBN 152, 154, 155, 157 and 158 were all collared on the southwestern flank of the La Paila Zone and extend the mineralization in this direction. Relative to the current NI 43-101 resource estimate, the La Paila Zone has been extended by the current drill campaign an average of 50 metres down dip to the west and on average 150 metres down plunge to the southwest. The zone remains open to the south and southwest. The middle portion of the eastern flank between coordinates 2,184,200N and 2,184,500N has been extended 50 metres further east. A complete summary of the assay results from diamond drill holes DDH 11 CBN 150 to DDH 11 CBN 159, as well as a drill-hole location map of the La Paila Zone detailing the relative locations of all historical drill holes will be posted on the Goldgroup website under at http://www.goldgroupmining.com/s/projects.asp.
Table 2. Drill Hole Location Data, Caballo Blanco Project, Mexico
About Caballo Blanco
Goldgroup owns 100% of the Caballo Blanco gold project which consists of a series of fully oxidized gold zones located in the State of Veracruz in eastern Mexico. The principal known gold zone at Caballo Blanco is the La Paila Zone located within a cluster of high-sulphidation epithermal alteration zones referred to as the Northern Zone. The current NI 43-101 mineral resource estimate for the La Paila Zone was compiled from 32 diamond drill holes totalling approximately 7,000 metres completed by NGEx Resources Inc., prior to Goldgroup's acquisition of its interest in the project in November 2009. This mineral resource estimate consists of 139,000 ounces of gold (6.7 million tonnes grading 0.65 g/t Au) contained in the category of indicated resources and 517,000 ounces of gold (27.6 million tonnes grading 0.58 g/t Au) contained in the category of inferred resources. NGEx Resources Inc. drilled an additional 8 drill holes at the Caballo Blanco project outside the La Paila Zone. Subsequently, Goldgroup has drilled an additional 149 holes in 2010 and 2011, for a total of 189 holes drilled to date at the Caballo Blanco project.
During 2011, Goldgroup completed a 30,000 metre, 120 hole drill program, of mostly HQ core, centered largely on the La Paila mineralized zone. The Company has received assays for all 2010 holes and 90 holes drilled in its 2011 program, which are expected to be used to update the NI 43-101 mineral resource estimate in the coming weeks.
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