Zappa prepares for Enriquez drilling

With its share price pushing new highs, Zappa Resources (VSE) is preparing to test three bulk-tonnage gold targets within its concession in the Ponce Enriquez district of Ecuador.

Zappa acquired the property through a share exchange with owner Prominex. Since the beginning of the year, the latter’s share price has more than doubled. Zappa acquired all of Prominex’s outstanding shares in return for 6.8 million common shares, 3.5 million of which are issuable on a performance basis.

The performance shares will be released on the basis of one share for each US$1 of value attributable to Prominex’s mineral assets, either based on a net revenue basis or as stated by an independently prepared engineering report.

In April, drilling will begin testing the three gold zones

on the property, including Guadalupe-Gaby, Junction and Mollopongo-Limoncito. The Guadalupe-Gaby zone is believed to contain the southern half of the Gaby porphyry gold deposit currently being developed by Startigan (ASE). Previous drilling on Startigan’s Gaby returned an average of 0.05 oz. gold per ton over 150-558-ft. intersections.

Limited drilling on the Prominex ground to the south returned an intersection of 0.044 oz. gold per ton over 105 ft. within a 4,600-ft.-long gold geochemical anomaly with a 300 parts-per-billion (ppb) gold cutoff. Zappa is conducting additional surface sampling to extend the limits of the gold anomaly prior to beginning drilling.

Surface sampling and mapping are under way on two zones of brecciated and altered volcanic rocks peripheral to Guadalupe-Gaby.

The Junction zone is defined by a 300-ppb gold-in-soil anomaly measuring 1,500×6,000 ft. and limited sampling has outlined values of 0.05 oz. gold over 230 ft.

Mollopongo-Limoncito includes a north-trending, 300-ft.-wide zone of numerous quartz veins.

Zappa expects to spend US$6.5 million in 1994, including US$3 million on drilling at Ponce Enriquez, US$2 million for work on other properties and US$1 million for new acquisitions.

The company has 9.2 million shares outstanding, including the 3.3 million shares issued to Prominex. It is reviewing financing options with potential underwriters.