The Vancouver-based junior explorer Heliostar Metals Ltd. (TSX-V: HSTR) (OTCQX: HSTXF) (FRA: RGG1) reported its best drill result of all time at the Ana Paula project in Guerrero, Mexico on Tuesday.
The company announced intercepting 9 g/t gold over 242 metres with high-grade sub-intervals throughout that length. These include 23.6 g/t Au over 35.2 metres and 42.4 g/t over 9.9 metres.
Heliostar also intercepted a high-grade intercept of 6.14 g/t Au over 104.1 metres in another one of the holes. The company says these holes exceed the resource model’s predicted grades and significantly extend the site’s high-grade mineralization.
“This shows a remarkably consistent, very long length of core that few ore bodies in the world are capable of producing,” said Heliostar’s CEO Charles Funk.
The news follows the company reporting a high-grade intercept of 6 g/t Au over 129.2 metres at Ana Paula in June and 8.3 g/t over 101.1 metres in May from its first drill there after acquiring the project from Argonaut Gold Inc. (TSX: AR) for US$30 million. Heliostar is aiming to declare commercial production at the project within three years.
New results further indicate potential for profitable underground mining
The Ana Paula project has had approximately US$75 million invested into it in recent years and currently has an open-pit mining permit. However, Heliostar indicated in May that re-scoping the asset with a focus on underground mining would be in the company’s best interest and the new drill results further reinforce that theory.
The company is currently in the midst of a re-scoping program for the project, consisting of geometallurgical optimization studies and underground mine design. Heliostar will also be releasing an updated resource estimate for Ana Paula later this year.
The company is using a cut-off grade of 5 g/t Au for the operation and has drilled 16 holes at Ana Paula since acquiring the project. Only eight of those holes have been assayed so far at ALS Limited’s (ASX: ALQ) laboratories in North Vancouver.
The Ana Paula deposit contains measured and indicated resources of 1.47 million ounces of gold and 3.6 million ounces of silver. The project was first discovered in 2005 by Goldcorp prior to its acquisition by Newmont Corporation (NYSE: NEM) (TSX: NGT) in 2019.
Mexico’s Mining Chamber recently expressed concern that Newmont’s ongoing strike at the Peñasquito gold mine in Zacatecas would have a negative impact on the country’s rate of mining production, which decreased by 5.3 per cent in 2022.
Other gold mining companies operating in Mexico include Alamos Gold Inc. (TSX: AGI) (NYSE: AGI), owner of the Mulatos mine; Magna Gold Corp. (TSX-V: MGR) (OTCQB: MGLQF), owner of Sonora’s San Francisco mine; and Minera Alamos Inc. (TSX-V: MAI), which owns and operates the Santana open-pit gold project.
Heliostar shares rose significantly Tuesday by 23.2 per cent to trade at $0.34 on the TSX Venture Exchange.