LATIN AMERICA — Francisco funds exploration at El Sauzal in Mexico

Vancouver-based Francisco Gold (FGX-V) will use the proceeds from a $29.5-million “bought-deal” financing to accelerate exploration activities in northern Mexico.

The company plans to start a third phase of drilling to test for lateral extensions of the known gold resource at El Sauzal in Mexico’s Chihuahua state. At the same time, reconnaissance work will test several geological targets near El Sauzal, within the company’s 200,000-acre land position in the region. Targets advanced to the drill-ready stage also will be tested in the third phase.

Francisco’s El Sauzal project is being closely watched by mining analysts after drilling from the second-phase program returned results that significantly expanded the potential of the property.

Results from that program include: 261.5 metres averaging 2.24 grams gold per tonne; 123.9 metres of 5.5 grams; 193.9 metres of 2.3 grams; 260.1 metres of 5.74 grams; 56.9 metres of 30.86 grams; 95.5 metres of 3.27 grams; and 135.2 metres of 2.13 grams.

More than 33 holes have been completed to date, and analysts already are describing El Sauzal as “a major discovery.” The preliminary resource is estimated at 28.9 million tonnes grading 3.8 grams gold. The deposit is believed to be amenable to open-pit mining.

El Sauzal lies in steep, rugged terrain in Mexico’s Batopilas mining district. Here, gold mineralization is hosted in a series of silicified, hematized volcanic breccias at the upper margin of a diorite intrusive.

Some preliminary metallurgical work has been carried out to test mineralization from El Sauzal. Results to date have shown recoveries in excess of 75% from bottle-roll leach tests.

Franciso is reported to be engaged in discussions with senior companies interested in participating in the project. However, armed with the proceeds of the recent financing, the company appears to be well-financed to carry out a third phase of work on its own.

The company’s success at El Sauzal has prompted several junior companies to acquire ground in the immediate area. The list includes Queenstake Resources (GTR-V), Alamos Minerals (AAS-V), Lucero Resource (LCR-V) and Morgain Minerals (MGM-V).