Goldgroup Mining Inc. (Goldgroup or the Company) (TSX:GGA) is pleased to announce further assay results from the continuation of underground tunnel development at the Company's 100%-owned Caballo Blanco gold project in Veracruz, Mexico. Both the main tunnel and a new crosscut tunnel to the west of the main tunnel continue to encounter mineralized, massive and brecciated massive silica. Assay results from the channel sampling in the main tunnel returned 49.40 metres of 1.13 g/t gold and 28.25 metres of 1.26 g/t gold from channel sampling in the crosscut tunnel. The average gold grades of the mineralized zones in the tunnel continue to correspond well with the grades of the drill holes completed in the area surrounding the tunnel. These results provide indirect confirmation for a robust resource model, serving to de-risk the Caballo Blanco project.
Goldgroup expects to release initial results of its Preliminary Economic Assessment (PEA) for Caballo Blanco in mid-April. Goldgroup has received delivery of a draft PEA report, but is still awaiting final determination of a few key parameters before the results can be issued. The completion of the Caballo Blanco PEA, the first such report in the history of Goldgroup, represents a significant milestone for the Company. The PEA report will provide details of the operational and financial nature of the project.
The main tunnel and west crosscut tunnel at the La Paila Zone are being driven to collect bulk-sample material for ongoing metallurgical test work. The tunnelling also provides direct access to the mineralized zone allowing the Company to enhance its understanding of the geological and geotechnical characteristics of the mineralization at the La Paila Zone. Since the previous tunnel news release dated February 27, 2012, the main tunnel has advanced an additional 49 metres to a total length of approximately 225 metres. A new crosscut tunnel to the west of the main tunnel has been driven 28 metres to date.
The results disclosed today from the current tunnel sampling are outlined in the table below:
The tunnel plan linked above shows the sample intervals and average gold grades for both the channel and blasted material samples together with drill-hole traces in the vicinity of the tunnel, with assays plotted 2.5 metres above and below the 485-metre level. For a map showing the assay results issued prior to those announced in this press release, please see the news release dated February 27, 2012.
The tunnel was collared at an elevation of 485 metres above sea level, approximately 115 metres vertically below the highest point of the hill at the La Paila Zone. The tunnel has dimensions of approximately 2.5 metres wide by 2.8 metres tall and is being driven horizontally northeast at 25 degrees, approximately in-line with the interpreted strike of the La Paila mineralized zone. In addition, one crosscut tunnel has been completed while the second westward crosscut tunnel is ongoing. The target of these crosscut tunnels is an inferred higher-grade structure along the western margin of the mineralized zone.
As expected, the main tunnel initially encountered approximately 20 metres of non-mineralized andesite before passing into the mineralized zone at La Paila. Gold mineralization is predominantly hosted by vuggy silica, massive silica, and brecciated massive silica. All tunneling completed to date beyond the andesite has been within the La Paila mineralized zone.
The tunnel is advancing by drilling and blasting rounds of approximately 1.5 metres in length. The blasted material is removed using a mechanical scoop and divided into mineralized and non-mineralized storage piles near the tunnel entrance. After each blast, channel samples are cut using a diamond blade equipped rock saw in both the east and west walls, in addition to the ceiling of the tunnel. Representative samples are also taken from the material generated from each blast.
The three channel samples from the sides and roof of the tunnel are assayed separately, with the results averaged together to arrive at the grade for each channel sample interval. The representative samples from the blast material for each blast are also assayed separately with the results averaged together to arrive at the grade for the blast material interval. The channel samples from the walls and ceiling are considered to be more representative of the tenor of mineralization due to the difficulty of taking representative samples from the large piles of blasted material.
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 property consists of fourteen mineral claims covering an area of 54,732 hectares. Two large areas of epithermal gold mineralization have been discovered within the Caballo Blanco property, referred to as the Northern Zone and Highway Zone. Both zones are prominent high-sulphidation, epithermal gold prospects that occur within extensive areas of clay and silica alteration. The gold is fine and occurs within a vuggy and brecciated silica alteration of an original andesite host rock in the upper levels of the surrounding epithermal system.
The principal known gold zone at Caballo Blanco is the La Paila Zone located within the Northern Zone, a cluster of high-sulphidation epithermal alteration zones. The La Paila Zone is located on the northern portion of a large 'magnetic high' ring structure that measures approximately three kilometres in diameter. At least four other large induced polarization (IP) resistivity high anomalies occurring here, with similar silica alteration to La Paila, are identified along the inner flanks of this magnetic feature.
To date, 168 holes have been drilled by Goldgroup at the Caballo Blanco project. Of these holes, 19 were reverse circulation holes, seven were holes drilled outside the La Paila Zone within the Northern Zone, and four were unassayed as of the date of the current Caballo Blanco Technical Report dated effective February 7, 2012, resulting in a total of 112 holes incorporated into the current Caballo Blanco mineral resource estimate.
Assaying and Qualified Person
The channel samples and blast material samples were collected and bagged separately with unique identification for each sample. Samples were then collected by ALS Minerals and transported to their Guadalajara preparation facility where they were dried and crushed to -2mm. A 250 gram split of the coarse material was then pulverized to -200 mesh. The rejects were stored at the prep facility and the pulps were air couriered to the ALS Minerals North Vancouver facility and analyzed for gold by 30 g fire assaying with an AA finish. In addition, a 35 element ICP analysis was conducted on all samples.
A QA/QC program was implemented as part of the sampling procedure for the tunneling program. Standard and blank were regularly inserted into the sample stream. Goldgroup's QAQC program is supplemental to the internal laboratory QAQC program. The information in this news release has been approved by Marc Simpson, P. Geo., the Company's Qualified Person under National Instrument 43-101 standards.
Goldgroup is a well-funded Canadian-based gold production, development, and exploration Company with significant upside in a portfolio of projects in Mexico, including its flagship 100%-owned advanced stage gold development project Caballo Blanco in the state of Veracruz, and the 50%-owned high grade gold exploration project San José de Gracia in the state of Sinaloa. The Company also operates its 100%-owned Cerro Colorado gold mine in the state of Sonora.
Goldgroup remains in a flexible financial position with a strong cash balance, no debt and no gold hedging. The Company is led by a team of highly successful and seasoned individuals with extensive expertise in mine development, corporate finance, and exploration in Mexico. Goldgroup's mission is to increase gold production, mineral resources, profitability and cash flow, building a leading gold producer in Mexico.
For further information on Goldgroup, please visit www.goldgroupmining.com
On behalf of the Board of Directors,
Keith Piggott, President & CEO Tel: 604-682-1943
Stephanie Batory, Investor Relations Toll Free: 1-877-655-ozAu (6928)