Torex chalks up another gold discovery at Morelos with Media Luna

Not content to sit on its multi-million-ounce, open-pit Morelos deposit, Toronto-based Torex Gold Resources (TXG-T) has again struck gold on its 290-sq.-km land concession 180 km southwest of Mexico City.

Morelos already boasts a measured and indicated resource closing in on 5 million oz. gold at average grades around 2.8 grams gold per tonne, while having explored 10% of Morelos’ overall land parcel.  

Torex is in the midst of a US$35-million, 84,000-metre exploration drill program aimed at expanding mineralization on the north side of the Balsas River, as well as targeting new zones to the south. Six drills are operating on the south side of the Balsas, with 35,000 metres planned on the El Cristo, Naranjo and Media Luna gold targets. Torex  has focused four drills on the Pacifico, Guajes South and Limon Sur zones to the north, where an additional 35,000 metres in progress.

The company released initial assays from drilling into Media Luna  on June 13.

According to president and CEO Fred Stanford, Media Luna is part of a 3-by-1-km magnetic anomaly, which Torex suspects is linked to a large iron and sulphide skarn located at depth at the main intrusive-sediment contact. The skarn reportedly carries mineralization between 4 and 21 metres thick, including higher-grade portions of gold, silver and copper between 4 and 7 metres width. As such, Media Luna is considered prospective for skarn-style gold mineralization where calcareous sedimentary rocks are in contact with the granodiorite intrusive.

The first five holes at Media Luna unveiled “consistent gold mineralization” over 900 metres of strike length, with intervals that include 5 metres grading 6.13 grams gold per tonne and 2.4% copper starting from 408 metres depth in hole 1; 4 metres carrying 4.3 grams gold and 0.78% copper from 500 metres depth in hole 2; 4 metres of 4.91 grams gold and 1.38% copper starting from 334 metres in hole 7; and 7 metres grading 6.6 grams gold and 1.15% copper from 515 metres in hole 8. All holes returned gold, silver and copper mineralization, with gold-equivalent values in hole 1 totalling 10.81 grams gold.

“At this early stage of the discovery, it’s definitely encouraging to see the consistency of the gold mineralization, and the high silver and copper values over a significant strike length and thickness,” Stanford comments. “Given the size of this target, and the pervasive mineralization discovered to date, we intend to aggressively push forward with exploration of this and other magnetic anomalies, both north and south of the Balsas River.”

Torex is hoping the Media Luna discovery is the first of many, as the company undertakes exploration on the remaining 90% of its landholdings along the Guerrero gold trend.

“The drill results appear to validate the model of targeting magnetic anomalies along the intrusive-sediment contact and support potential for significant longer-term resource additions,” BMO Capital Markets analyst Andrew Breichmanas writes in a June 13 research update. “Morelos is already unique among the gold projects for its relatively high-grade, open-pit potential, but the continued delineation of new resources could grow the scale to world-class proportions.”

Breichmanas maintains a “speculative outperform” rating on the stock. He notes that Torex management is demonstrating its ability to achieve significant milestones, and labels Morelos a “quality development project in an established mining jurisdiction.” Company shares closed at $1.95 at presstime on an above-average 2.8 million shares traded.

Torex had US$90 million in cash and no debt to end May. The company had 413 million shares outstanding and a US$806-million market capitalization at presstime.

The company intends to use US$25 million of its cash on “mine building,” including US$5 million dedicated to Morelos’ feasibility study, US$15 million on early works and US$5 million completing outstanding land agreements required under engineering specifications.

“We’re pretty much cashed up right through feasibility,” Stanford comments. “At some point we’ll need to build the thing, but we definitely won’t need to complete any additional financings before that, and we have excessive targets lined up for our drill programs.”