Rea discovers gold zone at San Gregorio property in Uruguay

Drilling around the San Gregorio gold deposit in northern Uruguay has turned up additional mineralization for Rea Gold (REO-T).

The discovery was encountered in the footwall of the Main pit ore zone, outside the limits of current reserves but within the preliminary pit design.

For that reason, the company expects the new mineralization to expand reserves in the Main pit.

Intercepts from this zone include 6.5 metres grading 2.78 grams gold per tonne and 10 metres grading 2.81 grams in drill hole MB-15. Hole MB-15A hit three ore intercepts of 5.5 metres at 2.96 grams, 4 metres at 3.22 grams, and 6.5 metres at 2.8 grams. So far, six holes have penetrated the new zone, and additional drilling will attempt to delineate the extent of the mineralization.

The company continues to carry out definition drilling on the Santa Teresa and Santa Teresa West targets, which lie a little more than 1 km west of San Gregorio.

At Santa Teresa West, 18 drill holes cut the mineralized structure over a strike length of 150 metres. Highlights from drilling on this zone include a 22-metre intercept grading 2.46 grams, and a 13.7-metre intercept grading 2.36 grams from RCD-4.

The company has scheduled more drilling at Santa Teresa West, and is evaluating the work done on the Santa Teresa.

Meanwhile, construction at San Gregorio has entered its fifth month. The foundation for the carbon-in-leach mill has been completed and the tanks are being erected. The mill should have a capacity of 2,500 tonnes per day, and a recovery rate of 92% is anticipated.

The warehouse, workshops and other support facilities have been completed, and construction of a tailings dam has begun.

Excluding the new footwall mineralization, the mine has reserves of 5.06 million tonnes with an average grade of 2.59 grams. Rea expects the mine will be in production by early next year, slightly ahead of schedule. Annual output at the operation is forecast at 70,000 oz. at a cash cost of US$180 per oz. Capital costs are estimated at US$41.9 million.

The company is also exploring the Rivera region of northern Uruguay, as well as the Florida Greenstone in the south. At Rivera, Rea has contracted for 7,200 line-km of high-resolution, airborne geophysics, and will study satellite imagery of the area with the help of scientists at a Brazilian university.