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Figure 1.
Subject Company's Logo
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AM Gold Inc.
(TSX-V:
AMG)
AM Gold Inc. is a
Canadian-based mineral exploration mining company listed on the TSX
Venture Exchange (ticker symbol AMG) (US Listing: ACERF.PK) (Frankfurt:
AMX1). The Company has come to our attention due, in part, to the
exceptional opportunity afforded shareholders within AM Gold's Pinaya
gold-copper deposit in Peru, and Red Mountain gold project within the
Tintina Gold Belt, Yukon.
The new management team took Red Mountain from grassroots to
approximately 2 million oz inferred resource in a very short time frame
and with expenditures of under $3/oz for every gold oz in the inferred
category. This ratio is by far the lowest we have seen in the industry
where the average oz of gold discovery can range anywhere from
$50-200/oz.
AM Gold now has sizeable resource
estimates on two fronts with strong growth prospects, making AMG.V an
undervalued and exceptional risk-reward scenario. The risk-reward
characteristics are highly advantageous for investors establishing a
long position in AMG.V as the current in-situ gold equivalent resource
valuation is one of the most undervalued in the industry. Although the
share prices themselves have not performed exceptionally, the management
has as they have executed a plan to build its resource on each front.
Each project offers major new discovery potential and potential resource
expansion, all are located in mining favorable jurisdictions. Mining
Marketwatch Journal provides insight into each of these below:
#1)
Pinaya gold-copper deposit, Peru -
Pinaya possesses very large bulk tonnage potential similar to Goldfields
5.6M oz gold equivalent Chucapaca only 80km away on same trend.
#2)
Red
Mountain within Tintina Gold Belt, Yukon Canada - In Q1 2012 AM Gold
released an updated NI 43-101 resource estimate on Red Mountain of
approximately 2 million oz inferred. The project is located
29km west of
Victoria Gold's Dublin Gulch which hosts 6.3M oz gold, in the same geological belt as Underworld
and Keno Hill.
NOTE:
Remember while you are reading
the copy below, that the market cap of AMG.V is currently UNDER $10
million. We have attempted to cover all salient points to help
you make an informed opinion, however we also urge you to call the
company too.
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1)
Pinaya Gold-Copper Project,
Peru
- (48,000 acres / 19,200 hectares) 100% owned
with no NSR
AMG.V's Pinaya property is the flagship of the Company as it is the most
advanced, having had ~$20,000,000 in exploration from the past
operator (160 core holes from 46,531.7 m of drilling completed between
2004 and the end of 2007) and ~$1,500,000 (~$500K on geophysics, and
~$800K on groundwork since) from AMG.V since 2008.
Ironically being the flagship AMG.V has not yet had a chance to drilled
the property itself as first it was waiting for drill permits, then just
as it was preparing to drill the political situation in Peru required
the plans to be put into abeyance until recently. It is unanimously
agreed the political situation is now considered friendly and stable for
mining and the project can again take center stage. The hiatus
serendipitously proved advantageous in two ways as it forced AMG.V to
advance its Yukon project in the interim to the point where it is now a
significant asset in its own right, and secondly in the interim over the
last four years a large number of major mining companies have literally
surrounded AMG.V's Pinaya project with AM Gold Inc. holding key ground
-- IT APPEARS LIKELY ONLY A MATTER OF TIME
BEFORE A MAJOR TAKES INTEREST IN THIS PROPERTY.
Background
The Pinaya project was acquired by
predecessor in 2004 for ~$4M cash CAD and $1.83m in shares/cash
equivalent. The Pinaya property was identified, acquired (purchased from
the local community for over the course of 3 years), and expanded based
on an old gold pit area that was being mined by dozens of artisanal
miners that were making a living off the gold outcropping on the
surface. The previous operators concentrated on one specific area of the
Pinaya property to build a resource without taking much of a risk of
stepping out to discover the potential of the property. When AM Gold
Inc. stepped in it corrected any defaults that existed from the previous
operators. The data was intact so AMG.V rechecked the core and upgraded the
resource, there was 90 holes that were brought into an updated resource.
From the geophysics that AMG.V has completed on the property all
indications are the property holds immense world-class potential.
The Pinaya Deposit
There are two zone types at Pinaya; a
Western Porphyry and a Gold Oxide Skarn Zone. The 3D geological model,
seen to the left, portrays the deposit at AM Gold's Pinaya gold-copper
project. One satellite drill hole was drilled in the last round of
drilling and intercepted values to depth.
Figure
2. (Seen to the left) 3D View of AMG.V Pinaya
Geomodel
Click to enlarge
This model image is of the
old resource and provides a good visualization
of the deposit.
The current resource at
Pinaya sits just shy of 1 million ounces Gold + 610 million pounds
Copper
The in situ contained metal across all
categories adds up to 969,000 ounces of gold and 610M pounds of copper
averaging ~.5g/t gold and ~.4% copper. If you look at gold equivalent
you are looking about 1.2 grams gold equivalent/tonne (not taking into
account metallurgy) or ~.8% copper - this would be considered a high
grade porphyry at today's gold prices.
The new resource
was based on 151 holes (out of 160 drilled on
the property). |
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Property Location Map
Click To Enlarge Image |
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Property Access Map
Click To Enlarge Image |
Location & Infrastructure
The Pinaya Gold-Copper Project
is located approximately 775
kilometers southeast of Lima,
the capital of Peru, and 110
kilometers north-northeast of
Arequipa, the second largest
city in Peru. The property area
is comprised of mineral
concessions totalling over
19,200 hectares.
Excellent infrastructure:
Access to the property is
excellent, proceeding
northeastwardly from the city of
Arequipa, via paved Peruvian
Highway Number 30B, for 142
kilometers to the Tintaya Copper
Mine access road, and then
northward on a well-maintained
gravel road to the small
community of Occopaica. At
Occopaica, a gravel access road
leads 7 kilometers eastwardly to
the property. Arequipa
international airport has daily
flights to and from Lima. A
nearby airstrip capable of
accepting small jets is located
at the Tintaya mine
approximately 100 kilometres
north of Pinaya.
Figure 4. AMG.V main core shed, kitchen, living, health
complex at Pinaya AM Gold
possesses quality infrastructure at Pinaya
including a core shed facility, a camp, and
kitchen facility for operation of the project.
Access would be considered exceptional, water is
on the property, power is a very short distance
to the west (~12km) and paved highway 7 km
distance.
Figure 5. Camp and core storage
(above) - The onsite facilities will reduce
costs when it comes to drilling. AMG.V still has 46,000 m of core, every
piece of core drilled on the property is sitting
in the racks in containers seen in the inset
image on the bottom right.
100% Ownership: 100%
owned by AM Gold's subsidiary
with no underlying NSR, AM
Gold's 100% owned operating
company in Peru. |
Stable,
Mining-Friendly Jurisdiction
- Peru is clearly signaling it
is open for business.
Peru is unanimously
agreed in the mining community
to be a stable, mining friendly
region. Ranking within the
Fraser Institute's Annual Survey
of Mining Companies released Q1
2012 may be viewed
here. The mining claim and permitting process in Peru is highly transparent
and clearly laid out. At the tail end of September 2011, Peru passed
three
new mining laws. The new mining law provides clarity for mining
companies, it modifies some
mineral royalties and
establishes a new legal
framework for the industry. The
end result is that Peru is now
considered stable and
mining-friendly, there is no
uncertainty, and the level of
interest from majors regarding
junior resource
deposits/projects of
significance in Peru now is
high. The new royalty is not
prejudicial towards juniors and
affects mostly the large
established producers that had
sweetheart deals that kept their
royalty payments low (were
essentially paying nothing).
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Area Discoveries (Southern Peru)
Pinaya is on a belt that
is ~250 km with a lot of majors on it and producing
mines.
Figure 6. Location Map (above)
Goldfields-Buenaventura's 5.6M oz 1.9 g/t Gold equivalent Chucapaca discovery is located ~80km south south-east of
AM Gold’s Pinaya deposit, it is a very similar deposit with
copper and gold, similar in altitude as they are at 4800 metres
and Pinaya is at 4,200 – 4,400m on the same trend, on the same
mountain range, in the same district. Chucapaca is still open in several
directions and could continue to grow. This discovery has sparked a
number of majors to look
for a similar discovery and with AMG.V holding a large highly
prospective land package at Pinaya makes an attractive prospect for a major suitor. At ~19,200
hectares AM Gold's Pinaya is an extremely large land package; to date AM
Gold has only explored less ~1% of Pinaya. It is literally impossible to
assemble a land package this size in this highly prospective district.
Hopefully this gives you an idea as to
what AMG.V's Pinaya project should be valued at: In the image above
note Antares' Haquira Project to the North of Pinaya, it was
purchased by First Quantum Minerals for $460 million when Antares'
project was around 700M tonnes of rock at ~0.40% copper with low gold
credit. Now compare that to AMG.V's Pinaya -- Pinaya has credits ~twice
what they have, Antares' tonnage is ~8 times what AMG.V has currently and
they were bought for $460M. Confidence is high that if the resource is
tripled at Pinaya a major or mid-tier producer would be keen on AMG.V at
much higher multiples. It is Mining MarketWatch Journal's
opinion that there is a high likelihood that a significant partner could
materialize.
Volcanic
Belt
AMG.V holds key ground and is surrounded
by majors.
Figure 7. Volcanic Belt Claim Map (above)
- AMG.V's Pinaya has the key ground on
the volcanic belt. BHP moved in in 2008-2009, Orion is an affiliate of
Goldfields and Buenaventura. Newmont and a few others are in this area
too. The Volcanic belt trends right through AMG.V's Pinaya property.
AMG.V's predecessor was the first one in here in 2004. Throughout that
32 km trend the volcanics pop out from the cap of the ground around it,
the resource area is where the red star is and is one of the areas it
pops though.
Pinaya property has multiple
targets and anomalies
AMG.V has seven of the world's largest
mining companies that have taken positions around them in the last 4
years.
Figure 8. Pinaya Property Multiple
Targets and Anomalies (above)
- The resource area is within that small
yellow box. That yellow box represents ~1% of the surface area that AMG.V
holds (~200 ha of the 19,200 ha). The red box is AMG.V's area of focus,
the Company has identified numerous targets on this 32km trend on the NW
SE
structure. To the west of Pinaya (in the yellow shaded area) is BHP
Billiton (the biggest mining company in the world). To the south there
is a little green shaded area of ~1500 ha that belongs to IAM Gold. The
purplish magenta shaded area on the NE side of Pinaya is the
Goldfields/Buenaventura affiliate Orion exploration. In the blue shaded
area is Newmont Mining (the largest gold mining company in the world).
To the NE seen in brown is Teck Cominco. To the north at the top of the
map there is about a ~2 km parcel that is owned by Vale (largest
publicly traded nickel producer in the world).
2012 Area of Interest
Below is a zoom-in of the image above.
Figure 9. 2012 Area of Interest (above)
- Above is a detailed look at the
resource zone in Pinaya Peru with 7 channel ASTER (Advanced Spaceborne
Thermal Emission and Reflection) -derived iron oxide anomaly regions,
indicative of drilled mineralized areas/occurrences. The image shows
potential mineralization at surface with drilling superimposed. The
potential mineralized areas can clearly be seen and when it is merged
with the 46,531.7 m of drilling performed to date one can see that there
is a correlation between what is seen at surface and what has been
drilled. The two established resource zones are seen within the yellow
box, and seen to the NW just outside the yellow box is a sizeable target
zone waiting to be drilled. The VTEM geophysics indicate the three zones
are connected at depth. Although the resource area may show 1300 m of
strike, at depth the VTEM shows the true target of the area is actually
3 km by 4 km -- this is why majors are interested in this area as
this could be a sleeping giant.
A
significant zone called 'Cobre de Oro' located ~2 km from the resource
area - 'The mountain of copper and
gold'
Figure 10. Geochem overlay map showing
Cobre de Oro relative to resource area (above)
- AMG.V's VTEM geophysics show that the
Cobre de Oro zone is potentially connected to the rest at depth too. What you are
looking at here is geochem map over a ~4km area, seen in orange is the
surface material that grades 0.5 - 1+ g/t gold at surface -- geologists
get excited when they see broad areas with 100 PPB (1/10th of a gram)
gold at surface, many of these areas are 5X - 10X those grades at
surface across broad areas. The blue is
where there is a cap and the volcanics are not accessible at surface,
however the geophysics demonstrate that the whole area is potentially connected at
depth and a much larger target than what is seen at surface. The
previous operator only took one step out chance, this image shows it,
they stepped out 2.2 km from the resource area to the north. The locals
call it 'Montaña de Cobre de Oro' Cobre is copper, Oro is gold -- it's
been referred to for hundreds of years as 'the mountain of
copper and gold'. Gold has been high-graded out of this area
historically by the locals so the past operator decided to drill there.
Normally when you drill from a pad you drill in four different
directions, as you can see they drilled five holes all in the same
direction, the past operator likely did not understand it was an
epithermal system (if you drill a hole transverse to where the veins are
running you might drill through four different veins, but if you drill
parallel and you end up drilling between some of the veins you will get
zero). They got lucky on a couple of drill holes of their five holes and
hit mineralization; PDH41 they hit 17 m of 1.72 g/t gold and PDH43 8.5m
of 5.45 g/t gold. Unfortunately at the time silver, copper, lead and
zinc mineralization in this area that is understood to be there it is
there, in gold equivalents this area appears to be running up to 10 g/t
gold equivalent. AMG.V has compiled trenching and geochem data in this
area and can see there is probably a number of parallel structures ~ 5 -
10 m wide running 5 - 10 grams gold equivalent/t so AMG.V potentially
could
very quickly delineate a fairly large resource at much higher grade than
it has in the lower zones.
Pinaya assay results and notable
intercepts
Figure 11. Select drill core results (above)
- Some of these are significant holes
and AMG.V believes the areas it has lined up to drill going forward will
rival them. When looking at the results above you will note some areas
have lower gold and higher % copper, that is the difference between the
two zones; the Gold Skarn Zone is predominantly gold with little copper
and the Western Porphyry Zone is predominantly copper with a lower gold
credit. You can generally tell by looking at the grade of the gold and
the copper what area the holes are from. There is no doubt that if AMG.V
did not have this ground it tied up it would definitely be being
explored by a major right now.
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Figure 12.
Map of Gold Skarn Zone & Western
Porphyry:
Click to enlarge
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Soil
Geochemistry
Figure 13. Soil geochem map (above)
- The map shows where all the sampling has been done, the resource area
is on the far left. AMG.V has from this delineated four main targets.
Since the property is so large AMG.V chose to focus the geochem on the
southern half of the property. AMG.V took ~6000 samples from the
southern half of the property - the line spacings are outlined in the
image, about half were analysed with and XRF portable unit and 700 of
those keys samples were sent in for assays. AMG.V encountered a lot of
copper gold and silver mineralization throughout the property.
Pinaya EM
Southern Property - Primary Targets
Figure 14. Pinaya EM Southern Property
-Primary Targets (above) - The resource are is on the left, it is
open to the north, open to the south, and open at depth, with the actual
target area being much larger. There are two additional
gold-copper-silver porphyries to the SE which have never been drilled.
To the very far south of the property AMG.V have a porphyry as well as a
potential for a high grade skarn zone; AMG.V found an old adit, probably
400 - 500 years old (back then they only high-graded 3-5% copper as they
did not have the ability to smelter material).
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Regional
Geology
Click To Enlarge Image |
Regional Geology
Regionally, Pinaya is located
within the southeastern end of
the emerging Andahuaylas-Yauri
metallogenic belt which hosts
the Tintaya Mine (Xstrata PLC),
the Las Chancas deposit
(Southern Peru Copper
Corporation), the Las Bambas
deposit (Xstrata PLC), as well
as numerous other
copper-gold-molybdenum porphyry
and skarn occurrences. The
Tintaya Mine, one of the largest
copper producers in Peru, and
situated 100 km north of the
Pinaya Project, was purchased by Xstrata from BHP
Billiton for US$750 million a
few years ago.
Most of the stratigraphy,
structure, magmatism, volcanism
and mineralization in Peru is
spatially- and
genetically-related to the
tectonic evolution of the Andean
Cordillera which is situated
along a major convergent
subduction zone where the
oceanic crust, the Nazca Plate,
slips beneath the overriding
South American continental
plate. The Andean Cordillera has
a metamorphic rock basement of
Proterozoic age on which
Hercynian Paleozoic sedimentary
rocks accumulated and were in
turn deformed by plutonism and
volcanism to Upper Paleozoic
time. Beginning in the Late
Triassic time, following
Atlantic Ocean rifting, two
periods of subduction along the
western margins of South America
have resulted in the formation
of the present Andes; the
Mariana-type subduction from the
Late Triassic to Late Cretaceous
and Andean-style subduction from
the Late Cretaceous to the
present.
Peru can be divided into
physiographic regions which
correspond to tectonic elements
of the Andean Cordillera. In
southern Peru there are, from
west to east, the Coastal Belt,
Western Cordillera, Altiplano,
Eastern Cordillera, and
sub-Andean zones. Heterogeneous
Precambrian basement lithologies,
underlying the Coastal Belt and
comprising part of the Western
Cordillera in southern Peru, are
called the ‘Arequipa Massif’.
The northern extent of the
Precambrian basement corresponds
to the termination of the
Altiplano and the start of the
Nazca Ridge. There is an
intervening northeasterly
trending tectonic element,
called the ‘Arica’ deflection or
‘Bolivian Orocline’, that is
underlain by basement
lithologies where the Andes
widen and bend easterly.
Late Triassic to Late Cretaceous
Mariana-type subduction resulted
in an environment of extension
and crustal attenuation
producing an oceanic trench,
island arcs, and back arc basin
from west to east. The back arc
basin reportedly has two basinal
components, the Western Basin
and Eastern Basin, which are
separated by the Cusco – Puno
high, probably part of the
Maranon Arch. The basins are
largely comprised of marine
clastic and minor carbonate
lithologies of the Yura and Mara
Groups overlain by carbonates of
the Ferrobamba Formation. The
western back-arc basin, called
the ‘Arequipa Basin’, is the
present Western Andean
Cordillera of Peru; the site of
a Holocene magmatic belt that
spans the Andes and was emplaced
from Late Oligocene to 25 Ma.
The Western Andean Cordillera is
famous for its world-class base-
and precious-metal deposits;
many of which have been
intermittently mined since Incan
time. Most of the metal deposits
in Peru are spatially and
genetically associated with
metal-rich hydrothermal fluids
generated along magmatic belts
that were emplaced along
convergent plate tectonic
lineaments. Furthermore, many of
these primary base-metal
deposits have undergone
significant secondary enrichment
over the last 30 Ma as a result
of periodic continental uplift
and leaching followed by
volcanic cover preservation.
Radiometric studies have
correlated the igneous host
rocks and attendant hydrothermal
alteration for some of the
largest and richest porphyry
copper deposits in the world
along the Western Andean
Cordillera from 6 degrees to 32
degrees south, including the
Chalcobamba – Tintaya
iron-gold-copper skarn and
porphyry belt (30-35 Ma) in the
main magmatic arc, southward
through the Santa Lucia district
(25-30 Ma) and into Chile. The
Andahuaylas-Yauri Porphyry
Copper Belt, a well known
300-kilometre long porphyry
copper belt related to middle
Eocene to early Oligocene
calc-alkaline plutonism, is
situated along the northeastern
edge of the Western Andean
Cordillera. The Pinaya property
is situated near the
south-southeastern end of this
belt.
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Figure
16. Hand dug workings at Pinaya |
Figure
17. Drill Core Warehouse at Pinaya |
Plans for 2012 at Pinaya -
Targets with big payoff
potential have already been
identified AMG.V
AMG.V has been waiting for two
years to drill and in the
interim delineated some
exceptional targets. The
established resource is good
(open in two directions),
however AMG.V believes an even
bigger prize (main system) lies
elsewhere; AMG.v has an
additional 19 targets of which four
have been delineated as primary targets
aside from the resource area. AMG.V believes that there are
some bigger targets than the
existing resource area on the
property and has already done
target identification and
evaluation. Shares of AMG.V
could be in store for a major
bump if the company is
capitalized well enough to
accomplish its goals -- then
again there is also a strong
possibility a major materializes
or expresses interest in AMG.V.
See related May 10, 2012 news
release entitled "AM
Gold: Pinaya ZTEM Geophysical
Survey Delineates 19 New Targets
and Suggests Significant Lateral
and Depth Expansion Potential of
Current Resource Zones". ------ ------ ------ ------ ------ ------
2)
Red Mountain gold project, within Tintina
Gold Belt, Yukon Canada
- (3,600 ha), 0.5% NSR
80% interest with option to earn 100% ownership (to earn the remaining
20% AMG.V only has left to pay a nominal $75,000 and issue 625,000
shares).
• Quality
Gold intercepts and growing ounces
• 1,947,000
Troy Ounces Inferred Gold Resource Estimate
• The
resource is open in all direction and at depth
AM Gold's
Red Mountain possesses very large resource growth potential with
possibility to rival Kinross's Fort Knox mine
The geophysical interpretation is that
there is a very large intrusive which is just peeking through the top of
Red Mountain and comprises the centre of the mountain. The potential is
that the whole mountain is prospective and AMG, although already at
1,947,000 oz Gold Resource inferred gold resource estimate, is just
starting to drill into it.
Figure 18. Topography view 3D model
(above) - Arrows in the image above extend to reference specific points
to give the viewer a correlation to the topography and show the size and
the scope of the potential. The ridge in the distance is ~2.5 km from
the resource. If you at the north end of the 3D model you can see a sort
of a green patch; that is the quartz-monzonite intrusive material of the
Tombstone Porphyry that is sticking out at surface. The quartz-monzonite
is the higher grade (.7+ g/t) material, sediments found on the mountain
are running .3 - .5 g/t gold which generally brings the overall grade down but
it is certainly not waste rock.
The current
resource at Red Mountain
On March 8, 2012 AMG.V provided an updated
resource estimate. See related release entitled "AM
Gold Inferred Resource Estimate at Red Mountain Significantly Increased
and Remains Open in All Directions and at Depth". The resource now
sits at 127 million tonnes @ 0.48 g/t inferred resource = 1.95 million
oz Au using 0.30 g/t cut-off. This was accomplished with a small amount
of drilling, ~16,572m.
Steady
economical progress
AMG.V has made steady progress at Red
Mountain since beginning from grassroots. It has been adding an ounce of
gold with approximately every $2.50 cents spent on the ground as a
result of the consistency of the mineralization and long intercepts that
have allowed it to add a lot of ounces very quickly with this type of
porphyry system. Essentially, AMG.V has spent $5.5M and it now has an
inferred resource of ~2M oz gold -- an admirable accomplishment.
Location & Infrastructure
The Red Mountain project is
located within the world famous
Tintina Gold Belt, long known
for significant Gold deposits.
The property has summer road
access (which is something most
projects in the Yukon don't
have), it is ~7km from a paved
highway, and 48 kilometers East
of the Klondike Highway. Power
wise it is ~50 kilometers from
the Mayo-Hydro Dam (nearby
Victoria Gold has moved to
feasibility on ~1.8M oz of gold
resource and will be building a
large facility, bringing power
~25 km closer), it is 1
Kilometer from water, and
located ~2km from a private
airstrip.
Figure 19.
Neighboring Yukon Gold
Discoveries
Stable,
Mining-Friendly Jurisdiction
The Fraser Institute ranks the
Yukon as one of the top 10 in
the world (Q1 2012 ranking may be viewed
here),
drill permits are issued
quickly, and there are no First
Nations land claim issues.
Inferred Resource Model Red
Mountain, Yukon
Figure 20. Topography Map
(above) - From an open pit
scenario there is absolutely no
strip ratio; there is no waste
material to strip. The deposit
is open in all directions. The
majority of AMG.V's holes ended
in mineralization and thus are
still open at depth. The inset
table demonstrates the different
cut-off options; AM Gold has
chosen to use a porphyry cut-off
of 0.3 g/t gold which results in
~1/2 a gram of gold per tonne.
In reviewing the above table
notice that the deposit is
consistent as material is
excluded at different cut-offs.
Just because the average grade
is ~1/2 g/t does not mean there
is no high grade, there are
assays that run up to an ounce
of gold per tonne but all
material averages in the bulk to
~1.2 g/t.
Metallurgy
AMG.V has demonstrated
metallurgy is positive. See
related February 28, 2012
release entitled "AM
Gold Reports Preliminary
Metallurgical Results From Red
Mountain".
Significant assay results from
Red Mountain
Figure 21. Drill Intercepts
(above) - A couple of the key holes here were the first ones drilled in
the season the previous year; i.e. 526 m of .75 g/t gold within that 101.4 m of 1.41
g/t gold -- that demonstrates AMG.V has starter material, readily
accessible higher-grade zones can provide quick payback in the first few
years of production.
AMG.V has employed a methodical process in
building a resource of significance. Initially it stepped into Red
Mountain as a grass-roots property with no resource, configured some of
the holes and ended up with ~half-million resource. Then in 2010 it
drilled and came out with a resource of 1.23 m ounce resource of 0.56
g/t. Mid 2011 it succeeded at depth and showed quality mineralization at
500+ m from surface (there is a considerable amount of mineralized
material that it still has not brought into the resource that it knows is
there below the existing resource -- the next phase of drilling will
potentially allow it to be projected further down). It also expanded the Jethro Zone
to the East, West and to the South, the fruit of that was an expanded
1,947,000 oz gold resource.
Interpretation with aeromagnetic backdrop
Figure 22. Alteration Zones
(above) -
The orange area is the area covers in the current
1,947,000 oz gold
resource,
the
green area is the resource from last year. The lines are the histograms
of the different kinds of rock with grades printed on the histogram,
click here to
expand in PDF detail.
Extension Drilling -
consistent mineralization from top to bottom
Figure 23. Expansion drilling in 2011 -
West (above) - The image shows the
previous resource was 150m wide and projected for 300 m deep. Now it is
projected in some areas as high as 450 m - 500 m wide and projected to
300 m deep. The important thing to note here is the histogram, the
little bars on there with different colors, that represents 1.5m
increments and one can see from the legend on the left that demonstrates
the grade of those intercepts -- one thing you will note from here is
that it is very consistent top to bottom; its half a gram gold to 1 gram
material, there is NO smearing (spreading a hot spot over a large area
as Mining MarketWatch Journal notices some companies try to do to pop
their stock). AMG.V has a fairly consistent mineralized material from
top to bottom and the mineralization continues for 250 m below that but
it is not charted on this diagram and not in the resource.
Figure 24. Expansion drilling -East
(above)
Figure 24. Property Geology &
Alteration (above) - This is the thrust of AMG.V's target. Seen
above is an area 3km by 3 km and up to 1.5 km in depth; AMG.V has only
explored 3% - 5% of the potential of the this target. Mining MarketWatch
Journal believes the
achievable resource area is significantly much larger and that there is
the opportunity for high grade epithermal systems as well.
Geophysics
Magnetics – Primary Targets Identified
Figure 25. Geophysics and Magnetics
(above) - The mag-low is seen in the blue, the mag-high is the
magenta-color -- AMG.V's focus has been the mag-low. The resource area
is outlined in white and within that you can see dots, those dots are
drill holes. There are a fair number of holes on the western edge, that
area is running 0.8 to 1 gram per tonne and coincides with the mag-low
in blue.
The
new target area to the north is particularly intriguing
In 2011 AMG.V intended to drill the new
north target area (coinciding with the mag-low) however due to weather
conditions it only managed a couple of holes (encountering ~50 m of 1/2
a gram at the bottom of one of the holes) discovering a new zone that
was not included in the resource. To the west of that it is
completely open for ~2km and that target area is running around 1 gram
per tonne sample-wise.
Geology -
Primary Expansion Target Zones -
The potential to expand this resource is quite significant.
Figure 25. Showing the rock type
(above) -The correlation is positive between the geophysics and the
mapping of the rock is that the quarts-monzonite which is the host rock
(seen in pink above) to the NW and to the SW, thus the potential to
expand this resource is quite significant.
AM Gold's Red Mountain possesses very large resource
growth potential with possibility to rival Kinross's
Fort Knox mine
-- See target area size in the two images below relative
to the resource area (identified as the oblong
pink circle); the published resource constitutes a very
small percentage of that target area....
Figure 26. Interpretation Map
(above); Building ounces within the intrusive target of
the Tombstone Monzonite
Figure
27. Red Mountain IP Target (Above)
The target area is defined
by geology and geophysics -- shown in the figures above is a very large target
area basically designating intrusive, the altered
intrusive, and the published resource area to date.
Depth-wise so far AMG.V has drilled about 1/3 of the way
into the mag-low above (that would be where it
encountered 526 m of .75 g/t and still ended in
mineralization). The
striking thing about the target area is that
the published
resource constitutes a very small percentage of that target area.
So even being generous saying its 5% of the target area
we get 20 times the area that needs to be explored yet
-- if AM Gold continues to hit this is going to be
enormous.
Plans for
Red Mountain
The ultimate near-term
goal for AM Gold Inc. on Red Mountain is to establish a
3M ounces resource and then it will be time to do a
scoping study.
Red
Mountain 2012 plans - Stepping out and hitting high
grade areas
AMG.V flew a geophysics
VTEM in October and will be completing the
interpretation. AMG.V will complete geochem
(ground work and sampling), ID ground targets at surface
with the highest readings in conjunction with
geophysics. The focus will be to take all the data
compiled and hit the high grade areas.
------ ------ ------ ------ ------ ------
AM Gold's
Management & Technical
Leadership:
Skip to top
The current board of directors has a well rounded
combination of people that each contribute expertise in
disciplines necessary for a successful mining entity:
Mr. John Fiorino, CEO and Director
Mr. Fiorino currently sits on the board of several
private companies and is currently the President/CEO of
Infinite Merchant Solutions Inc. As a financier,
businessman, investor and consultant with over 15 years
experience in assisting private and public companies
with corporate operations, capital development,
financing and strategic advisory services, he has
concluded mining transactions involving gold and other
commodities in North and South America.
Dr. Stewart Jackson, P.Geol., Director
Dr. Jackson
is an accomplished mining professional with 49 years of
experience in the exploration and development of mineral
deposits and in the management of public companies. He
has been involved in multiple mineral discoveries and
evaluations.
Most recently Dr. Jackson has been involved in the
acquisition and delineation of one of the most
significant discoveries of modern mining history; a
major uranium, molybdenum, nickel and vanadium resource
in Sweden on properties held by Continental Precious
Minerals Inc. These properties contain a significant
uranium resource exceeding 1.1 billion pounds of uranium
oxide (U3O8), 17 billion pounds of vanadium (V2O5), 1.5
billion pounds of molybdenum (Mo) and 2.3 billion pounds
of nickel (Ni), with drilling continuing to expand the
resource.
Prior to that he was instrumental in the advancement of
the Turnagain nickel sulphide deposit of northern
British Columbia, Canada, held by Hard Creek Nickel
Corporation, from a prospect to the billion tonne
resource category.
While involved with his initial public company, Crown
Resource Corporation in the 1980’s, multiple discoveries
of gold were made in Washington State, USA; totalling to
date in the order of 4.5 million ounces; continuing to
be produced by Kinross Gold Corporation.
In the 1970’s he recognized the potential of the
enormous Red Dog zinc-lead deposits in western Alaska,
and was instrumental in their exploration and
development by Cominco American Incorporated (now Teck-Cominco).
Red Dog today produces over 6% of the world production
of zinc from this long-lived zinc resource field.
Subsequently, he was Exploration Manager for Houston Oil
and Minerals Corporation during the discovery and
development of the Manhattan, South McCoy and Borealis
gold deposits of Nevada, USA.
Dr. Jackson has authored and co-authored a number of
scientific publications, is a member of several
scientific and professional organizations, and holds a
Professional Geologist (P. Geol.) Registration in the
Province of Alberta, Canada. He holds a Bachelor of
Science degree in Geology from the University of Western
Ontario, a Master of Science degree in Stratigraphy and
Mineral Deposits from the University of Toronto, and a
Ph.D in Stratigraphy and Economic Geology from the
University of Alberta.
Mr. Neil Downey, P. Geo., BSc. Geo, Vice
President of Exploration
Mr. Downey is an exploration geologist with over 30
years of mineral exploration experience in gold, uranium
and base metals. He has planned and implemented
multi-faceted exploration programs from the grass roots
level to resource definition resulting in producing
mines. Throughout his extensive career Mr. Downey was
part of the team at Camflo Mines Ltd. (acquired by
Barrick Resources in 1984) whose primary project was
located near Val D’Or, Quebec whose acquisition was a
turning point for Barrick. Neil was also part of the
Barrick team that took the Holt-McDermott mine north of
Kirkland Lake, Ontario from a remotely located showing,
right through to production. Mr . Downey then went on to
work for Gulf Minerals for over 20 years and has worked
in every Province and Territory within Canada over the
course of his 30+ years in the exploration industry. Mr.
Downey is a graduate of the University of New Brunswick
with BSc. Honours, Geology.
Mr. Dennis B Goldstein,
Director
Mr. Dennis B. Goldstein is a practicing natural
resources lawyer in San Francisco, California with 37
years' experience in the mining business, including 26
years with Homestake Mining Company, a New York Stock
Exchange listed, international gold mining company. When
Homestake was purchased by Barrick Gold Corporation in
2001 for $3.34 billion CDN, he was Vice-President and
Corporate Counsel. Mr. Goldstein is the Lead Director of
FX Energy Inc., an oil and gas exploration and
production company active in Poland. He has served on FX
Energy Inc.'s Board of Directors since 1999. In addition
to Lead Director, he currently is chairman of FX Energy
Inc.'s Nomination and Governance Committee and member of
its Audit and Compensation Committees. Mr. Goldstein is
a graduate of Brown University, Stanford University Law
School, and Executive Program of the Stanford Graduate
School of Business. He is a member of the California and
the American Bar Associations and speaks Spanish and
Italian.
Dr. Kelly Hyslop,
Director
Dr. Hyslop is retired after 25 years as a Physician and
Clinical Professor in the Department of Medicine at UBC. Dr Hyslop is
and has been involved in multiple companies, generally aiding the
companies in raising capital in Europe and offering his experience in
corporate governance as a member of the Board of Directors.
Mr. Mark Lawson, MBA, CFO and Director
Mr. Lawson is currently the President & CEO, Director of
New Global Ventures International Ltd., a company listed
on the TSX Venture Exchange. He is also a director of
Bradenburg Metals Corp., Toro Resources Corp., Hunter
Bay Minerals PLC, and EcoloCap Solutions Inc. Mr. Lawson
worked as an investment banker with Morgan Stanley in
New York from 2005 until 2008 where he was involved in
the execution of over $6-billion worth of mergers and
acquisitions, $8-billion worth of debt offerings, and
$500-million of equity financings. Mr. Lawson was
previously a director of a boutique corporate finance
firm in Toronto, Canada. He received his bachelor of
arts in statistical sciences from the University of
Western Ontario and his MBA from The Richard Ivey School
of Business, Univeristy of Western Ontario. Mr. Lawson
was also a 1st round draft pick of the CFL Edmonton
Eskimos. ##
Note: This list is not intended to be a complete overview of AM
Gold Inc. or a complete listing of
AM Gold's projects. Mining MarketWatch urges the reader to contact the subject company and has
identified the following sources for information:
For more information
contact AM Gold's head office at:
Ph
1.877.646.0067
Company's web site:
www.amgold.ca
SEDAR Filings:
URL
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The
risk-reward characteristics are highly advantageous for investors
establishing a long position in AMG.V as the current market cap of AMG.V
relative to the inherent value of their properties seem
disproportionate. Shares of AM Gold appear poised for
significant upward price movement with only ~69M shares outstanding
(~86M fully diluted) and is trading under CDN$0.10. AM Gold’s
current in-situ gold resource (Market Cap/Oz Au In-Situ) valuation
is one of the best bargains in the mining sector.