TSX:GGD

A Canadian-based gold and silver producer
with properties in Mexico

GoGold Resources Inc. Updates Mexican Gold/Silver Transaction, Resumes Trading and Releases Due Diligence Sampling Results

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NEWS RELEASE

 

March 23, 2011

Trading Symbol:  TSX-V: GGD

Release 2011-02 Shares Issued:  41,716,665


GoGold Resources Inc. Updates Mexican Gold/Silver Transaction, Resumes Trading and Releases Due Diligence Sampling Results


 

HALIFAX, NOVA SCOTIA -- (CNW – March 23, 2011) - Terry Coughlan, President and CEO of GoGold Resources Inc. ("GoGold" or the “Company”), announces that the Company has entered into a definitive share purchase agreement, completed its due diligence process and completed a geological report pursuant to the transaction originally announced on February 15, 2011. GoGold has received conditional approval of this Fundamental Acquisition from the TSX Venture Exchange (“Exchange”) and awaits final approval from the Exchange. Closing is subject to GoGold’s filing of final documents with the Exchange and Exchange final approval. The common shares of GoGold will resume trading today.

Historic Drilling and Due Diligence Samples Collected On-Site

Historic Drill Hole Highlights

Hole #

Width (m)

Gold g/t

Silver g/t

BCA-003

9.5

1.91

126.1

BCA-007

26.6

1.83

21.3

BCA-008

11.9

2.54

8.3

BCA-009

15.45

2.32

12.4

(Note: These drill holes are historic and have not been verified. True widths are unknown, reported lengths are core intercepts). Excerpt from Sivertz G., 1995, Castle Rock Exploration Corp, 1995, Phase I Exploration and Drilling program Cerro Agujerado Project, Pueblo Nuevo Durango Mexico)

Due Diligence Samples

Sample #

Description

Gold g/t

Silver g/t

26576

outcrop chip

58.64

161.00

26577

outcrop - quartz vein

0.18

24.00

26478

20m chip

0.09

7.00

26579

3m chip/breccia

2.64

76.00

26580

2m chip (workings)

7.80

26.00

26581

grab sample (workings)

1.79

9.00

26582

grab sample (workings)

2.30

550.00

26583

grab sample (workings)

3.20

30.00

26584

2m chip

0.03

0.00

26585

2m chip

0.65

0.00

26586

grab sample (old pit)

0.02

0.00

26587

grab sample (ore pile)

15.00

3.00

SDN -1

grab sample (ore pile)

31.30

137.00

SDN - 2

grab sample (ore pile)

24.40

93.00

LCH-13-T

grab sample (ore pile)

16.10

69.60

LCH-13-B

2m chip

1.72

1.80

LCH-13

2m chip

1.54

1.10

 

Transaction Summary

GoGold will acquire all of the issued and outstanding securities of Mexican Gold Holdings Corporation Incorporated (“MHC”), a Canadian company. MHC and MHC’s wholly owned Canadian subsidiary, North American Gold Holdings Corporation Incorporated (“NAHC”), together own 100% of Minera Dorango Dorado S.A. DE C.V., a Mexican company, (“MDD”). MDD is a party to agreements to earn a 100-per-cent interest in five (5) gold and silver properties consisting of a number of Mexican mining concession titles (the “Claims”) covering approximately 24,000 hectares in Durango, Mexico (the “MDD Agreements”).

GoGold, MHC and MHC’s shareholders have entered into a definitive share purchase agreement to acquire all of the MHC shares.  GoGold will issue 14,000,000 common shares of the Company to the shareholders of MHC and pay a total of $1,100,000. The 14,000,000 common shares issued will be subject to a 4 month hold period.

The terms of the MDD Agreements provide MDD with an option to acquire a 100% interest in the Claims in exchange for the following:

i.    a first year payment of $140,000;

ii.    a total work commitment for all Claims for the first three years of $900,000 and a total work commitment for years four through eight for all Claims of $2,650,000; and,

iii.    paying a minimum advance royalty of $130,000 per annum starting in year three and ending in year eight. The royalty is based on a payment of up to $4.00 per ounce of gold equivalent NI 43-101 compliant mineable reserves (“Reserves”). Any advance royalty payments will be applied against the final royalty payment due. MDD has agreed to pay the current optionors of the Claims an ongoing royalty of up to $4.00 per ounce of any future increase in Reserves.

iv.    MDD may exercise the option to acquire the Claims at any time by paying the royalty or at the end of the eight year period provided all payments above have been made.

A geological report for the Claims compliant with National Instrument 43-101 (“NI43-101”) has been completed (the “Geological Report”).  The Geological Report has been reviewed and accepted by the Exchange.  The Geological Report is filed on SEDAR and can be viewed at www.sedar.com.

 

Summary of the Geological Report

This Geological Report on the geology and mineralization of the San Diego Property was prepared by Mercator Geological Services Limited ("Mercator") and Servicios y Proyectos Mineros de Mexico SA DE CV ("SPM") on behalf of GoGold to comply with Geological Reporting and disclosure requirements set out under National Instrument 43-101. The property consists of five gold and silver properties consisting of a number of Mexican mining concession titles covering approximately 24,000 hectares in Durango, Mexico.  The property is located in Durango State approximately 110 kilometers southwestern of the Durango capital.

The claims are host to an epithermal gold/silver system that extends for more than 15 kilometres. Widespread gold in quartz veins, breccias and stockworks occurs over the length of the system. The district has been mined on a small scale historically and has produced gold reportedly from as far back as the 1700’s. MHC has spent the last two years assembling the claim area and developing relationships with local officials, geologists, contractors and inhabitants. Their exploration work over the last two years included reconnaissance sampling which identified gold and silver in veins and in large disseminated alteration zones along the entire strike of the system.

This report documents the exploration and mining history of the San Diego property.  Although mining has taken place on the San Diego property since colonial times, much of this work has been undertaken by small scale artisanal miners called Gambusinos. The most significant documented historical exploration on the San Diego property was completed by Castle Rock Exploration Corp. (Castle) on the Cerro Agujerado gossan zone in 1994 and included geological mapping, sampling, and 1038.9 m of diamond drilling in 9 holes.  The diamond drilling intersected gold and silver mineralization spatially associated with a breccias intrusive body, and the highest reported gold grades were associated with coarse sphalerite, galena and chalcopyrite mineralization which replaced the breccia matrix. Highlights of individual drill hole intersections are included in the table below:

(Note: These drill holes are historic and have not been verified)

Hole #

Width (m)

Gold g/t

Silver g/t

BCA-003

9.5

1.91

126.1

BCA-007

26.6

1.83

21.3

BCA-008

11.9

2.54

8.3

BCA-009

15.45

2.32

12.4

(Note: True widths are unknown, reported lengths are core intercepts). Excerpt from Sivertz G., 1995, Castle Rock Exploration Corp, 1995, Phase I Exploration and Drilling program Cerro Agujerado Project, Pueblo Nuevo Durango Mexico

Recent exploration work completed on the San Diego property by SPM on behalf of MDD has outlined three target areas for further investigation on the San Diego property. This work included geological mapping and sampling of a number of known gossan and quartz veined zones and focused on three areas identified as the San Diego North, San Diego Centre and San Diego East. This program is currently ongoing but to date a total of 257 rock samples have been collected by SPM and represent chip samples, grab samples production ore pile samples and outcrop samples. This work was preliminary in nature and although chip samples were taken across veins and alteration zones more work is needed to fully assess the true width, size and grade of the veins and alteration zones sampled during this program. See the table below for highlights of the sampling program:

Selected assay results from San Diego Centre

Sample Name

Au g/t

Ag g/t

Width (meters)

Sample Type

Geology

Adri 8

0.52

1.7

3

channel

andesitic rock with silicification

Adri 9

4.22

5.4

2

channel

andesitic rock with silicification

Adri 13

1.01

2.7

2

channel

andesitic rock with silicification

Adri 14

1.61

0

2

channel

andesitic rock with silicification

Adri 20

1.61

1.9

2

channel

andesitic rock with silicification

Adri 22

1.87

0

2

channel

andesitic rock with silicification

Nop-02

8.87

8.9

1.9

rock sample

andesitic breccia with quartz fragments and pyrite

Nop-04

1.3

2.7

2

rock sample

andesitic rock with pyrite and quartz veinlets

Nop-05

2.1

2.9

4

rock sample

andesitic rock with pyrite and quartz veinlets

Nop-06

4.72

6.4

2.5

rock sample

andesitic rock with pyrite and quartz veinlets

Nop-07

0.85

3.8

2

rock sample

andesitic rock with pyrite

Chinc-03

2.82

128

2

rock sample

andesitic rock with pyrite

Chinc-05

0.90

20.6

2

rock sample

andesitic rock with pyrite with silicification and Fe oxide

PNA-12

0.53

7

2

rock sample

andesitic rock with pyrite and silicification

PNA-13

0.76

26

2

rock sample

andesitic rock with pyrite and silicification

PNA-14

3.44

97

1

channel

quartz breccia with pyrite

PNA-31

0.63

1

1

channel

fault zone

PNA-32

0.52

1

3

channel

fault zone

PNA-34

2.33

2

3

rock sample

fault zone

PNA-35

4.99

9

0.55

rock sample

fault zone

PNA-67

1.76

5

0.7

rock sample

fault zone

PNA-92

3.85

54

1

channel

fault zone

PNA-93

4.98

41

1

channel

andesitic breccia with quartz fragments and pyrite

PNA-94

9.52

40

1.5

channel

andesitic breccia with quartz fragments and pyrite

PNA-95

1.74

13

1.3

channel

andesitic breccia with quartz fragments and pyrite

PNA-96

2.79

17

1

channel

andesitic breccia with quartz fragments and pyrite

PNA-97

6.25

19

2

channel

dacitic rock with strong silicification

PNA-101

3.20

2

0.5

rock sample

andesitic rock with silicification and Fe oxide

 

Selected assay results from San Diego East

Sample Name

Au g/t

Ag g/t

Width (meters)

Sample Type

 

PNA-197

0.30

18

3

rock sample

andesitic rock with pyrite

PNA-199

1.30

28

1.5

rock sample

andesitic rock with pyrite

PNA-204

0.78

16

5

rock sample

andesitic rock with pyrite

PNA-236

3.33

2

1.5

rock sample

andesitic rock with silicification and oxidation

 

The San Diego property is located in the central portion of the Sierra Madre Occidental (SMO) province. The Sierra Madre is one of the largest volcanic belts in the world, and extends for over 2,000 km from the U.S. – Mexico border to southern Nayarit State where it is overlain by the Trans-Mexican Volcanic Belt. The SMO is recognized as an extremely prospective mineral belt for gold, silver and poly metallic mineral deposits.  The volcanic-related epithermal precious metal deposits of middle Tertiary age occur throughout the north of the SMO and include low-sulfidation Ag-Au (±Pb-Zn-Cu) veins, and high-sulfidation Au-(Cu) deposits. Low-sulfidation deposits are mainly quartz ± calcite veins with chlorite + adularia + sericite alteration. These deposits are Ag-dominated at the lower levels of the volcanic column, and Au-dominated towards the top of the sequence.

The authors visited the property in January 2011 and verification sampling has confirmed that known alteration and mineralization on the property is consistent with low sulfidation epithermal type gold and silver mineralization. Of the 12 samples taken by the authors 7 returned gold values in excess of 1 g/t. An outcrop sample from the Cerro Agujerado gossan zone, of strongly altered andesite with yellow to red brown alteration, goethite, hematite and disseminated pyrite returned 58.64 g/t Au, 161 g/t Ag and 2.29% Pb. A grab sample from an ore production pile, of quartz breccia with strong alteration, specularite, and manganese, from the San Diego Centre property returned 3.20 g/t Au, 30 g/t Ag and 1.07% Zn. This sampling is preliminary in nature and more work is needed to fully assess all alteration and mineralized zones on the San Diego property. Based on the finding of the report a Phase 1 and Phase 2 exploration program is proposed. Phase 1 exploration is recommended to include detailed mapping and sampling of known mineralized zones. In addition, satellite image analysis and reconnaissance mapping and sampling of newly identified gossan zone, and altered and mineralized zones is recommended. The Phase 1 estimated budget is $930,000. Recommended Phase 2 exploration is contingent on successful Phase 1 exploration and is proposed to include additional detailed mapping and sampling of new zones outlined in Phase 1. Phase 2 recommendations also include diamond drilling of the Cerro Agujerado gossan zone, targets at San Diego Centre and new targets outlined from the detailed mapping and sampling. The estimated Phase2 budget is $1,425,500.

Sampling Method and Approach

Additional sampling presented in the NI 43-101 report was completed by SPM for MHC and this sampling is discussed in this section. As part of a reconnaissance exploration program completed by SPM collected 257 samples from various location of the San Diego property as described in Section 9.0 of this report. This included the sampling of quartz veined, altered and mineralized zones that the geologists felt were representative of the nature and style of mineralization of these zones, and had potential to return anomalous precious and base values. A description of each sample method follows.

Channel Samples

Channel samples were collected across the exposed width of quartz veins and alteration zones. Samples were chipped perpendicular to the exposed veins in an attempt to get a true width sample. However, due the nature of some surface exposures, it was difficult to determine if the sample actually represented a true width. Samples were collected with hammer and chisel along a continuous line of exposed rock. Fragments or chip samples from a channel of approximately 5 cm or less in depth were collected in numbered plastic sample bags, and approximately 2 to 3 kg of rock was collected. Sample intervals are marked on the rock with spray paint along with the sample number. In addition, the sample number is marked on florescent orange flagging tape.

Rock Samples

Rock samples were collected where large areas of exposed outcrop exist. Representative samples from veins and alteration zones were collected in a circle pattern with an approximate 5 m radius. Each sample was placed in a numbered sample bag and approximately 2-3 kg of rock was collected from the exposed outcrop.

Production Piles Samples

Production pile samples were collected from small piles of ore material, hand mined by the Gambusinos. Approximately 2 to 3 kg of rock was randomly sampled from active mining ore, or piles left from previous operations. The purpose of this sampling was to determine the grade and mineral content of material considered to be ore by local Gambusinos.

Grab Samples

Fist size grab samples were taken of loose rock from veined, altered and mineralized zones considered by the geologist to be a zone of potential interest. These samples are not outcrop but were collected as a reconnaissance evaluation tool to help the geologists to determine if an area warranted additional exploration work.  All samples were collected in separate plastic bags and labeled with the sample number. All samples taken by the project geologist to a certificate laboratory and SPM utilized both ALS Chemex Labs and SGS Labs.

Sample Preparation, Analyses and Security

All independent samples collected by the authors for this report were taken to SGS Laboratories in Durango Mexico and were processed by method FAG323 and ICP14.  Samples were crushed and pulverized in a ring and puck pulverizer until 250 g of material passed through a 75 micron screen. All samples were first assayed by ICP 14 for a multi-element analysis. Samples were also assayed by method FAG323 for gold and silver which has detection limits for Au of 3 g/t and Ag 5 g/t. A 30g sample was assayed by Fire Assay with an AAS finish for Au and a gravimetric finish for Ag.  All samples collected by SPM were supervised by author Ramon Luna. These samples were bagged, tagged and sealed at the sample site and delivered to either SGS labs or ALS Chemex labs and were in the control of SPM geologists at all times. At no time were SPM employees involved in sample preparation. SPM utilized sample preparation facilities operated by SGS in Durango, Mexico and ALS Chemex in Hermosillo, Mexico and these labs are ISO certified and also tested by an independent body. All assays were performed by the associated lab at assay facilities located in Canada and the methods used are described in the technical report. These commercial labs utilized internal QA/QC including blanks, standards and duplicates, results were verified by SPM falling within acceptable levels. The authors are certain that the sample preparation, security, analytical procedures and sample results, from the SPM sampling are representative of the mineralized zones detailed in this Geological Report.

GoGold Due Diligence and Reconnaissance Sampling

During two separate visits to the property, initial reconnaissance sampling totalling 17 samples were taken by Terry Coughlan, P.Geo, President and CEO of GoGold as well as by Peter Webster, P.Geo and President of Mercator Geological Services, who is the Independent Qualified Person responsible for the 43-101 technical report for the project.
“Individual results gathered from multiple locations throughout the large land package have  included individual gold assays ranging up to 58.64 g/t gold and individual silver assays ranging up to 550 g/t. silver ” stated Terry Coughlan, President and CEO of GoGold, “It’s very exciting to find such encouraging results on and near surface. Exploration efforts in the area are continuing and we look forward to the successful completion of the transaction.”

Results of the 17 samples are listed in the table below:

Sample #

Description

Gold g/t

Silver g/t

26576

outcrop chip

58.64

161.00

26577

outcrop - quartz vein

0.18

24.00

26478

20m chip

0.09

7.00

26579

3m chip/breccia

2.64

76.00

26580

2m chip (workings)

7.80

26.00

26581

grab sample (workings)

1.79

9.00

26582

grab sample (workings)

2.30

550.00

26583

grab sample (workings)

3.20

30.00

26584

2m chip

0.03

0.00

26585

2m chip

0.65

0.00

26586

grab sample (old pit)

0.02

0.00

26587

grab sample (ore pile)

15.00

3.00

SDN -1

grab sample (ore pile)

31.30

137.00

SDN - 2

grab sample (ore pile)

24.40

93.00

LCH-13-T

grab sample (ore pile)

16.10

69.60

LCH-13-B

2m chip

1.72

1.80

LCH-13

2m chip

1.54

1.10

 

Seventeen samples (26576-26587) were assayed by SGS labs using method FAG323 for gold and silver which has detection limits for Au of 3 g/t and for Ag 5 g/t. A 30g sample was assayed by Fire Assay with an AAS finish for Au and a gravimetric finish for Ag. Please note the samples taken by Terry Coughlan are not reported in the NI 43-101 report. Samples SDN-1, 2, LCH-13, T, B were collected by Terry Coughlan and bagged, tagged and sealed at the sample site and delivered to ALS Chemex labs and were in the control of Terry Coughlan at all times.  ALS Chemex utilized methods Prep-31, Ag-GRA21, Ag-GRA22, Au-GRA21 and Au-GRA22.  Full descriptions of ASL Chemex and SGS lab methods can be found in the technical report filed on SEDAR.

Mr. Terry Coughlan, PGeo, president and CEO of GoGold, is the qualified person as defined by National Instrument 43-101 and is responsible for the preparation of this release.

Mr. Peter Webster, PGeo, president of Mercator Geological Services is the qualified person as defined by National Instrument 43-101 and is responsible for the preparation of the NI 43-101 report summarized in this release.

For further information please contact:
Terence F. Coughlan, President,
GoGold Resources Inc.,
T: 902 482-1998
F:  902 442-1898,
or visit GoGold’s website at: www.gogoldresources.com.

 

CAUTIONARY STATEMENT:

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.  No stock Exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.  This News Release includes certain “forward-looking statements”.  All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of GoGold, are forward-looking statements that involve various risks and uncertainties.  There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.  Important factors that could cause actual results to differ materially from GoGold’s expectations are exploration risks detailed herein and from time to time in the filings made by GoGold with securities regulators.

(Not for distribution to US wire services or for dissemination in the United States of America)