Western Golfields adds to allure of Mesquite

Results from another oxidized zone near Western Goldfields‘ (WGI-T, WGDF.OB-O) main pit at its Mesquite mine in California gave its shares a healthy lift on Thursday.

The Toronto-based company saw its shares climb 20% or 39 to $2.34 on 1.7 million shares on Dec. 14 — a day after the results were released.

The results are from the Brownie Hill zone, which lies 305 metres to the west of the Mesquite Mine’s planned Big Chief pit expansion.

The seven holes drilled to date at Brownie Hill have outlined oxide mineralization measuring 395 metres in length by 214 metres in width with an average thickness of 76 metres. The company says mineralization is open along strike.

Results include oxide intercepts of 1.1 grams gold per ton of gold over 70 metres and 0.77 grams gold per ton of gold over 91 metres.

The Brownie Hill Zone is currently an inferred mineral resource that was not included in Western Goldfields current mine plan but with the latest drill results the company says the zone has the potential to add to the life of the mine.

Roughly 3,294 metres of the 21,000 metre drill program have been completed. Additional drill additional holes are planned with the aim of upgrading to the resource category.

Mesquite mine’s proven and probable reserves are currently estimated at 2.36 million oz. of gold and measured and indicated resources are estimated at 1.25 million oz. The average grade of the currently defined oxide reserve is 0.53 grams gold per ton.

Western Goldfields estimates an average annual production of 165,000 oz. of gold from the mine, with an initial project life of 9 years.

Acquired in 2003 from Newmont Mining (NMC-T, NEM-N), Western Goldfields is trying to bring the Mesquite mine back into full production. Newmont had operated the mine for seven years but stopped in 2001 due to low gold prices.

The mine was originally discovered by Goldfields (GOF-L) and then put into production in 1985. In all some 4 million oz. of gold were mined.

Western Goldfields has been producing small amounts of gold from ore left on heaps by Newmont, and says gold production in 2006 to be about 14,000 oz.