Gammon Lake advances Ocampo property

Junior Gammon Lake Resources (GAM-T) has increased its land holdings in the Ocampo gold-silver district of western Chihuahua state, Mexico, and begun a third round of drilling in preparation for a feasibility study.

The Nova Scotia-based company owns 60% of the main Brenda Mine property and has an option to buy the remaining interest from Mexican-based Minera Fuerta Mayo.

The current program will span 6,000 metres. To date, the company has drilled 50 holes totalling 3,700 metres in an attempt to test gold-silver mineralization along a 4-km structure. In the last phase of drilling, completed in December 1999, Gammon Lake intersected 53 metres grading 1.2 grams gold and 86 grams silver per tonne in hole 12. The interval included 22 metres of 1.4 grams gold and 178 grams silver. Other highlights include:

– hole 15, which hit 43 metres of 0.8 gram gold and 59.8 grams silver;

– hole 20, which intersected 22 metres of 1.2 grams gold and 34.4 grams silver; and

– hole 25, which cut 25 metres of 1.1 grams gold and 56 grams silver.

These results would seem to demonstrate continuity of mineralization, as well as the potential for both bulk-tonnage and underground deposits.

Gammon Lake also sees potential for additional mineralization in the Cubiro/Mastuerzo shear zones and in the Fe and Santa Ana zones.

The results have also attracted the attention of several major mining companies, which have signed confidentiality agreements for possible joint-venture opportunities.

Also, the junior has an option to purchase a 49% interest in the 17-claim Soyopa property, which surrounds the Brenda Mine property. This brings to 25 sq. km the company’s total land package in the district. Minerales de Soyopa owns the remaining 51% stake in Soyopa, though Gammon is expected to operate the joint venture.

To earn its interest, Gammon Lake must spend US$1.3 million on exploration and pay US$5 million in cash. The first instalment includes US$500,000, which must be paid by the end of the due diligence period. The next US$500,000 payment is due February 2001, and the remaining US$4 million is to be paid in September of that year.

Soyopa has a resource of 411,000 oz. gold and 18.7 million oz. silver in 5.8 million tonnes grading 2.2 grams gold and 100 grams silver per tonne, based on a cutoff grade of 1 gram per tonne.

Exploration expenditures in 1999 exceeded US$7.5 million, which Gammon Lake financed by exercising warrants and through private placements and rights offerings. These arrangements have increased by 40% the number of outstanding shares, to 15.3 million. The company still has $4 million in cash.