Gammon scores at Northeast Ocampo (June 05, 2003)

Shares in Gammon Lake Resources (GAM-T) shot up more than 12% in early trade in Toronto on June 5, after the company reported a new gold resource on its wholly owned Northeast Ocampo project in Chihuahua State, Mexico.

The new resource, audited by Pincock Allen & Holt, is split into underground and surface portions.

Underground measured and indicated resources are pegged at 3.5 million tonnes grading 5.9 grams gold and 302 grams silver per tonne for about 1.2 million contained ounces of gold equivalent, based on a silver to gold ratio of a 65 to 1. Another 4.5 million tonnes of inferred material runs 6.1 grams gold and 298 grams silver, or 1.5 million contained ounces of gold equivalent.

The underground estimate is based on a cutoff grade of 3 grams gold equivalent, a gold price of US$300 per oz., and a silver price of US$4.61 per oz.

Measured and indicated resources in the surface portion are placed at 2.4 million tonnes of 1.32 grams gold and 55 grams silver (for 168,000 equivalent gold oz.). Some 1.1 million tonnes averaging 1.12 grams gold and 47 grams silver (from 66,000 equivalent gold oz.) fall in the inferred category. The surface resource employs a 0.4-gram-gold-equivalent cutoff.

The figures are based on some 24,000 metres of diamond drilling and 9,700 metres of reverse circulation drilling in a total of 179 holes.

So far, metallurgical test work by Kappes, Cassiday & Associates (KCA) has yielded average gold recoveries of 97% and 86% for silver via standard cyanide extraction techniques. KCA is currently working on optimizing cyanide concentrations.

Gammon is in the midst of driving 2.5 km worth of underground development ramps and 4-by-4.5-metre adits to allow for continued underground drilling on the high-grade zones. The company also plans some test mining and bulk sampling to obtain larger metallurgical samples to refine the mining and processing cost estimates as part of a feasibility study.

Future drilling will test for additional shallow surface and underground deposits outside of the ramp development area.