Southern Metals begins drilling in Ecuador

Southern Metals (SUH-V) has begun a core drilling program at the Paccha gold property in southwestern Ecuador in an effort to test high-grade structures.

The junior is earning a 70% interest in the project from its sister company Ecuadorian Minerals (EMC-T).

Five of seven widely spaced holes will target the Paccha vein over a strike length of more than 700 metres. The steeply dipping vein stretches for more than 1,000 metres and contains strong silicification and brecciation.

Previous owners traced the vein and outlined several other geochemical anomalies through extensive soil and rock sampling. Six shallow holes penetrated the vein to a maximum depth of less than 40 metres.

Southern Metals hopes to intersect the vein at great depths, as much as 100 metres below the surface.

Two holes will be drilled at the brecciated zone, southeast of the main vein, where the previous owner outlined a gold anomaly. Surface mineralization contains quartz-tourmaline stockwork, with values as high as 9 grams gold per tonne.

Southern Metals can earn an initial 50% interest by spending US$1 million over three years and issuing 1 million shares to Ecuadorian in four tranches of 250,000 shares. The first year’s work commitment is budgeted at US$150,000.

The company can earn an additional 10% by spending US$2.5 million on a bankable feasibility study, and another 10% by arranging all financing for development and construction.

Paccha is surrounded by ground held jointly by Iamgold (img-t) and AngloGold (au-n).

Other companies active in Ecuador include Corriente Resources (CTQ-T) and London-based Billiton, which are jointly exploring for porphyry copper deposits.