Meridian drops Machacala

Shares of Montreal-based junior Gold Hawk Resources (CGK-V) were sent reeling on Nov. 19, after the company announced that operator Meridian Gold (MNG-T) has decided to drop the Machacala gold-silver project in Peru.

Gold Hawk said in a prepared statement, “In the opinion of Meridian, the recently completed exploration program seems to indicate that the Machacala gold-silver deposit does not meet their corporate objectives.”

Meridian’s plans for 20002 at Machacala called for about US$800,000 worth of work, including 5,000 metres of infill and reverse-circulation drilling and 2,000 metres of reconnaissance diamond drilling.

Meridian was working at Machacala under a deal that saw the mid-tier producer take a 20.4% stake (6.5 million shares at 20 apiece) in the junior. The deal also included 6.5 million warrants, each good for one share at 20 for 18 months. Meridian also subscribed to a 1-year, $1.3-million convertible note from Gold Hawk. Fully converted, Meridian would hold 50.7% of Gold Hawk.

The 39.2-sq.-km property lies beside a caldera, about 42 km east of the Peruvian coastal city of Trujillo. More than 12 sub-parallel gold-silver-mineralized quartz veins, ranging from 500 metres to more than 2 km in length, have been mapped on the property. These low-sulphidation, sub-vertical veins vary in width from one to 30 metres.

Initial drilling by Gold Hawk in 2000 returned an average of 11.6 grams gold-equivalent from three veins. All five of the widely spaced holes cut economic values over 1.5-3.5 metres.

Later that year, another eight holes returned up to: 3.7 metres (from 189 metres) grading 11.32 grams gold and 23.6 grams silver per tonne from the Casa Fuerza vein in hole 2; and 3.2 metres (from 156 metres) of 13.55 grams gold and 164 grams silver from the Fragua vein in hole 4.

Gold Hawk plans to wait for a full report from Meridian before deciding on its next step at Machacala.

In early trade in Vancouver on Nov. 19, Gold Hawk shares were off 14 or 56% of value at 11.