Marmato drilling shows promise for Medoro

With the objective of expanding and upgrading the multi-million-ounce gold resource at the Marmato project in Colombia, Medoro Resources (MRS-T) continues to deliver some noteworthy intersections in an ongoing exploration and infill drilling campaign that’s at the halfway point.

Highlights of the results from the latest batch of 19 holes, include: 215 metres averaging 1 gram gold per tonne and 4.9 grams silver in hole 128, at 180 to 396 metres downhole; and a 37-metre interval averaging 3.9 grams gold and 8.2 grams silver from 259 to 296 metres depth in hole 1283A.

“We are very pleased with the consistently good results we are generating from this drill program, which demonstrate economic gold grades over significant widths,” stated Medoro’s interim president and CEO Serafino Iacono.

During this latest campaign, Medoro plans to complete 90,000 metres of core drilling by the second quarter of 2011. The total number of metres drilled to date is 46,870 metres in 136 holes. The budget for the 2010 portion of the program is US$17 million, comprising 72,000 metres in 203 diamond drill holes. There are nine drill rigs operating on surface at the Marmato project, with up to four more rigs positioned from underground.

Marmato has a single gold deposit with three contiguous licence areas of Zona Alta, Echandia and Zona Baja. The project covers 12 sq. km in the heart of a main historical gold-producing region, 80 km south of Medellin in Caldas state.

A 43-101 technical report, completed in March 2010, shows the project contains a measured and indicated resource of 7.5 million oz. gold and 48 million oz. silver in 245 million tonnes grading 0.95 gram gold and 6.09 grams silver. Inferred resources contain an additional 2.2 million oz. gold and 13.4 million oz. silver in 75.8 million tonnes of 0.92 gram gold and 5.51 grams silver.

Gold mineralization at Marmato is porphyry related and is a deep-level type of epithermal intermediate sulphidation. The main host rock is a dacite porphyry stock. Mineralization is structurally controlled by a sheeted system of brittle shear zones that host steeply-dipping pyritic sulphide veins and veinlets ranging from less than 1 mm up to 2 metres wide. The shear zones of about 10 to 50 metres true width are separated by barren zones of weak alteration, isolated veinlets and grades generally less than 0.3 gram gold.

Between October 2009 and March 2010, the acquisition of three different companies, each holding separate licenses at Marmato, allowed Medoro to consolidate these into a single project, covering a significant portion of the Marmato gold district. Medoro raised $114 million in 2009, of which $61 million was used in respect of property acquisitions in Colombia.

As part of these acquisitions, Medoro acquired the operating Mineros Nacionales underground gold mine at Zona Baja, one of the area’s largest employers with 700 people. The mine produces 25,000 oz. gold annually from a mill throughput of 800 tonnes per day, at a grade of 3.5 grams, generating roughly US$5 million in cash flow. During the three months ended June 30, 2010, the mine produced 6,907 oz. gold and 10,917 oz. silver at a cash cost of US$844 per oz., net of silver credits.

Marmato is “distinguished by its access to excellent infrastructure, an existing operational mine and mill, and topography, which will facilitate the construction of a large tonnage, open-pit mining operation,” said Iacono.

Concurrent with plans to complete a scoping study, Medoro is doing baseline environmental studies and metallurgical work. The company faces some tough hurdles regarding environmental rehabilitation and community development. Prior to Medoro’s involvement, hundreds of years of unregulated artisanal mining and milling caused major environmental degradation and destabilization to the town of Marmato. Steps to move the town to a new site, 1.5 km away at El Llano, arose in 2006 when a landslide collapsed part of the town. Since then, more than 170 new homes have been built and occupied at El Llano.

Medoro is committed to financially assisting with the continued relocation of the town of Marmato. “Our vision . . . is about resolving problems that have been created by hundreds of years of small-scale mining, and building a better future for everyone,” Iacono stated.

After consolidating its shares on a 3-for-1 basis in August, Medoro has 140 million shares outstanding. The company was trading at $1.80 at presstime, in a 52-week range of 43¢-$2.12.