Mercer holds gold in Colombia

With the gold boom in Colombia in full swing, it may come as some surprise that speculative land next to a 10-million-oz. gold deposit would still be available.

But up until June 2009 that was just the case with the Guayabales gold property. However, Mercer Gold’s (MRGP-O) president and chief executive Rahim Jivraj made sure the ground didn’t stay available after his visit to the property.

Shortly after getting word of the property Jivraj found himself standing on Colombia’s lush green mountains, right next to Medoro Resources’ (MRS-V) Marmato gold project.

“I saw a 2-km road cut of entirely exposed outcrop with dense mineralization at surface,” Jivraj says.

Given that deposits in the region are often in the 1-gram-per-tonne range, it was easy for Jivraj to envision a bulk-tonnage project at the site.

“Later in June, Medoro announced the consolidation of Marmato, which is literally on the other side of the mountain. So I thought to myself, ‘I really need this property,'” Jivraj says.

Getting the land meant negotiating with a mining co-op comprised of 16 families that have been doing small-scale mining on the land.

“I negotiated them down from $12 million to $4 million with an $11.5-million work commitment,” he explains.

Jivraj says the negotiations were made easier because he only had to deal with one vendor — which stands in stark contrast with Medoro, which had to deal with some 300 vendors in its successful drive to consolidate Marmato.

With the property locked up, Mercer has managed to garner some attention thanks to its proximity to Marmato, as the large deposit sits just 1.5 km away.

“Marmato’s Zona Alta has mineralization at 1,500-1,800 metres of elevation and the small-scale producing mines on our ground are at the same elevation,” Jivraj says. “We believe it extends on to our property in the same manner.”

As of March 2010, Medoro had outlined measured and indicated resources of 245 million tonnes grading 0.95 gram gold and 6.09 grams silver for 7.5 million oz. gold and 48 million oz. silver. Drilling at the project is ongoing.

As for what Mercer has on its ground, the company is now beginning to find out.

It has put much of the $2 million it raised in April into the drill bit as it began a 5,000-metre program in October.

The first results out of that program were released on Nov. 24 and were highlighted by 14 metres grading 2.12 grams gold.

That hole, and a second which has yet to be assayed, were drilled with the aim of determining the true orientations of what the company calls the Encanto zone. Encanto is one of four target areas to be tested as part of the current drill program.

Mercer also plans to put three holes into the ground in December to test deeper, Marmato-type mineralization.

And while the company already has a National Instrument 43-101 report on the property — a report that says Guayabales’ geology is consistent with that at Marmato’s Zona Alta — the report stops short of making a resource estimate.

Mercer expects to correct that situation by early next year as part of its push to get a listing on the TSX Venture Exchange by February.

So how did a 33-year-old entrepreneur like Jivraj wind up with such prospective land in one of the world’s hottest gold districts?

“It’s a product of being in the right place at the right time. I think it slipped through the cracks, literally,” Jivraj says.

Colombian Mines (CMJ-V) had the property but dropped it in February 2009 due to the poor market conditions. The claims went back to the local co-op, which was the original vendor.

While in its possession Colombian Mines drilled 17 holes but did little in terms of geochemical soil samples.

Mercer corrected that situation with extensive soil sampling and channel samples — one of which returned 1 metre grading 2.5 grams gold and 57 grams silver.

That early-stage exploration work, combined with the 2,000 metres drilled by Colombian Mines and the emerging results from Mercer’s own drill program, have the company proposing an exciting thesis.

“Our interpretation is that there is disseminated epithermal mineralization at Marmato which extends onto our property in a pendulous shape structure with shear zones,” Jivraj says.

Mercer has already drilled 3,500 metres of its program and plans to have the remaining 1,500 metres done by January at which time it will look to release a resource estimate on the property.

And while the company is still in the early stages of exploration, it has managed to attract an experienced board to guide it forward.

Key directors include Ed Flood, who has more than 35 years of mining experience, and most notably served as a founding president of Ivanhoe Mines (IVN-T, IVN-N). Also on the board is David Shaw, a geologist and CEO of Colombia Gold when it was sold to Medoro in 2010, and Roberto Partarrieu who worked as business development manager for Yorkton Securities and later as general manager and director for several junior mining companies.