Nayarit Gold rides success at Orion

Vancouver – While others go to slaughter on the market, Nayarit Gold (NYG-V) has bucked the trend and instead, somehow, found rich pasture in its parallel Del Norte and Animas veins at its Orion property, 109 km north of Tepic, Mexico.

Over the summer and into this fall the Halifax-based junior has pulled off two death-defying feats. It closed a $10 million BMO-brokered private placement at the end of July. And, despite the ongoing U.S. credit tumult and increasingly picky appetite of investors, it held a steady share price between about 60 and 70.

“I think we’ve done well because of good drill results,” reasons Terry Christopher, Nayarit’s chief geoscientist.

But in today’s market, where often good drill results aren’t good enough for share-price boosts, that may sound like an understatement to some. Christopher, though, isn’t willing to dwell on the dollars and cents. For him it’s as simple as drilling as much as he can within the budget he’s given.

Nayarit wandered into rich pasture in the second half of 2007 as part of 7,000 metres of phase I drilling targeting, among other areas, the Minas de Animas zone. Two parallel veins, known as Del Norte and Animas, lie there at what was then the northwestern extent of Nayarit’s over 100,000 ha. Orion concession on the southwestern extent of the Sierra Madre metallogenic province.

Its first result from hole 30 hit as much as 10.5 metres starting 173.5 downhole grading 3.57 grams gold per tonne and 287.56 grams silver per tonne. Those to follow showed similar results, cutting mineralized lengths ranging between 3 and 10 metres and grading between 1 and 10 grams gold and 100 and 1,000 grams silver. Hole 32, for instance, intersected 5.4 metres starting 175.5 metres downhole grading 9.59 grams gold and 980.15 grams silver.

Still open to the east, west and at depth, in the year since its first results Nayarit has outlined a total of 600 metres of mineralization by drilling on strike to a depth of over 200 metres. It has also returned increasingly long, high-grade intersections.

In May, 2008, it announced as much as 48.4 metres in hole 59 grading 2.74 grams gold and 218 grams silver starting 178 metres downhole. And five months later it released news of as much as 16.6 metres in hole 102 grading 6.26 grams gold and 649.7 grams silver starting 123.3 metres dowhole.

On news of the latest round of drill results, September 24, 2008, the company gained 6 to close at 74.

“We’re seeing the higher values where there’s flexure in the structure,” Christopher explains. He also says Nayarit has plucked the “low hanging fruits”, or especially long mineralized intercepts, in the strongly altered stockwork to the north of the main Del Norte vein.

There the andesite porphyry host rock is more receptive to fracturing, in some cases beginning from surface. Not so to the south.

Since the epithermal vein system is hosted in a graben, the host rock found close to surface in the north has been dropped to greater depths to the south. In the south the host rock near surface is an andesitic-crystal, lithic tuff less easily fractured or receptive to stockwork.

Christopher says part of the excitement about that gold and silver mineralized stockwork to the north of the veins is that it might be conducive to open pit mining, in conjunction with underground mining of higher grade gold and silver in the veins below.

Drilling is ongoing, especially now that the company, whose funds were dwindling, is cashed up. At the end of July, 2008, Nayarit closed a $10 million private placement brokered by BMO.

The private placement consisted of 17.9 million units at a price of 56, with each unit entitling holders to one common share and one warrant. Warrants give holders the right to buy an additional common share at 75 over two years. Nayarit currently has about 67.5 million shares issued.

The company has also consolidated its land position. As it was already in the northwestern corner of its concession, and since the Animas and Del Norte veins could be traced over 2.5 km. east-west and there was another vein system running several kilometres to the northwest, Christopher says, “We were sort of boxed in.”

But since swinging a few deals this summer, Nayarit has picked up properties it needs to ensure contiguous control of the veins.

With the land secured, Christopher says Nayarit will continue to drill at the main Animas and Del Norte zone and to explore targets in the west including the past-producing Francisco mine on strike to the west, the Pantaleon past-producer on strike to the east, and some targets in a relatively unexplored vein system extending to the northwest.

He also says the company expects to release a resource calculation for Animas and Del Norte in early 2009.