The price of gold continues its climb as the year winds down, with levels surpassing the $1,350 U.S. mark per ounce in early October. Almost as rarefied as these prices is the thin air of Mexico, an area buzzing with mining and prospective mining activity.
It’s there, particularly in the Baja Sur region of Mexico, that Vancouver-based Pediment Gold Corporation (OTCBB:PEZGF) announced results of more than 50 drill holes on its San Antonio Gold project.
Mineralization was rich on the property, ranging all the way up to 3.98 grams per ton (g/t). In PEZGF’s most recent news release, all summarized intervals were calculated using a 0.20 g/t Gold cut-off grade. Intervals contain no more than three low-grade to barren samples between mineralized samples containing over 0.20 g/t Gold. High grades were not capped.
PEZGF fixes as its goal the discovery, exploration and development of low-cost gold assets, directing its efforts exclusively on Mexico. The company’s main gold assets are in San Antonio, as well as La Colorada gold project in Sonora state, both of which are advanced-stage gold projects. PEZGF also boasts a “robust” treasury of $10 million and no debt.
As of August, the gold resource at San Antonio consisted of 1.22 million ounces measured and indicated and 28,449 ounces inferred. This was part of a positive preliminary assessment of San Antonio by AMEC E & C Services. Other indications projected a financial return, assuming a base case gold price of only $900 U.S. (it seems so long ago!), with a pretax net present value (at 8%) of $79 million U.S.
The AMEC preliminary assessment suggests that the project could potentially produce an average of 82,500 ounces of gold per year and have an average cash cost of $513 U.S. per ounce gold produced. With prices continuing skyward, there has never been a better time to be a miner.
La Colorada gold-silver mine property is located approximately 40 km southeast of the town of Hermosillo. The mine dates back prior to the Mexican Revolution in the early 20th century, but during the late 1990s, Eldorado Gold Corp (TSX:ELD) developed a bulk tonnage heap leach operation from several open pits; although the operation was sold in late 2000, production continued by a private Mexican owner until April 2002, yet La Colorada was never shut down for the lack of gold.
All signs continue to point upward for this company, as for the gold mining industry in general. The stock peaked for the last 52 weeks in early January, the price reached $1.90. Last October saw a gulch of 73 cents. The latest developments from San Antonio bolstered the price almost five cents to $1.71 at time of writing, though on fairly moderate volume. As the excitement over gold prices continues to increase, investors may enjoy observing the prospects for this junior miner, and find themselves dancing to a Mexican salsa beat.
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