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Mercator Gold says assays at Copper Flat show conformity with historic results, awaiting permit for drilling

New assays of historic core support the resource estimate and Mercator is gearing up for a new six-hole programme aimed at gaining more data for resource expansion.


Shares in Mercator Gold (AIM: MCR) rallied 20% after the company updated the market on the evaluation of the Copper Flat project in New Mexico, where assaying of historic drill core and pulp residues has so far showed “good conformity with historic drill results” that were used for the estimation of the project.

Mercator holds an exclusive option over the project, which is exercisable by making payments of US$1 million by February 14, 2010, US$1.85 million by August 14, 2010, and US$7 million by February 14, 2011 to the vendors, which would retain a net smelter return of 3.25%. The final payment is deferrable until May 2011 for an additional US$150,000.

One of the cornerstones of the programme is the verification of data generated during historic drilling programmes. Mercator has identified and located a large amount of drill core and pulp residues from these programmes with duplicate sample pulps from the reserve drilling programme carried out from 1975 to 1979 by Quintana Minerals currently being recovered and inventoried.

The resource estimate currently stands at 45.5 Mt (million metric tonnes) grading 0.45% Cu (copper), 0.015% Mo (molybdenum), 0.15g/t (grammes per tonne) Au (gold) and 2.25 g/t Ag (silver) at a cut-off grade 0.23% Cu. The assay results reported today included 1.25% Cu, 0.31 g/t Au, 0.024% Mo and 4.04 g/t Ag over a 109.5 metre intercept and 0.64% Cu, 0.155g/t Au, 0.017% Mo and 2.30g/t Ag over a 246.6 metre intercept.

The work programme is designed to help put together a preliminary economic assessment of the project by SRK Consulting, which has already completed substantial work on the project from 1994 to 1999 on behalf of Alta Gold, completing the draft of an environmental impact study, a formal plan of operations and formal audits of the historical reserve for the US Securities & Exchange Commission.

Mercator has planned six HQ-sized drill-holes for a total 6,000 feet to provide data for grade control and more specific geotechnical confirmation and additionally evaluate the opportunity for resource expansion. Two rigs have already been mobilized to the location and drilling will commence once the New Mexico Energy, Minerals and Natural Resources Department issues a minimum impact drilling permit. Electrical power has been restored and equipment and supplies for the planned drill programme have also been delivered.

The pulps from ten selected historic holes had been sent to be assayed for copper, molybdenum, gold and silver, and the results for two were reported today.  Assay results for the remaining eight holes are pending. Mercator said the initial results indicate “exceptional reproducibility” of the copper and molybdenum grades and intercept thicknesses used in the PAH ore reserve audit of 1998.

Mercator is considering an open pit mine treating up to 6 million short tons per annum to produce 30-45 million pounds of copper a year.  Past metallurgical work completed on the project showed copper recoveries of 92%, and over 39,000 meters of reverse circulation drilling.  There is also “important infrastructure” already in place, and a full pre-strip of the ore body has already been completed.

“Mercator is making real progress at Copper Flat, The recovery of the duplicate drill samples and their conformity to the historic assay values has made new an extremely valuable database over 150 drill holes, and over 30,000 metres of drilling are being validated by the company. This will help the company achieve its objectives of adding great value to what we believe is a robust project,” said managing director of Mercator Gold, Patrick Haford.

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Price: 3.05 GBX

Market: AIM
Market Cap: £21.15 m

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