Any exploration company CEO would be pleased to report a headline number of 204.6 grams per ton gold. For Goldplay (V.GPLY) CEO Marcio Fonseca, that is just the beginning. The drill result reported in the July 30 press release is part of a much larger story.
Fonseca is quoted in the press release as saying, “The high-grade gold-silver intercept is highly significant as it supports the Company’s goal of expanding the San Marcial resource. It is the first time in approximately 10 years that any type of exploration work has been carried out on the project. One year ago, our data indicated high-grade silver, lead and zinc at San Marcial. Today, we have added high-grade gold. We are committed to continue systematic exploration and drill programs at San Marcial.”
“What we found in this hole,” said Fonseca in a phone interview, “Is one meter of high-grade gold. That meter was part of a much wider interval. It is not a vein, it is part of a disseminated and massive sulfide hosted in volcanic rocks.”
In fact, Goldplay found the high-grade Au-Ag disseminated sulfide mineralization was surrounded by similar host rock within a five meters wide zone. The drill hole itself was drilled under the discovery trench which was reported in February. This trench showed high silver values, up to 472 grams per ton silver, and the intention with the diamond drill hole was to look down-dip from that trench, but attractive geology drove management to continue drilling.
“This is an area a short distance away from our maiden resource,” said Fonseca. “There are older workings, some dating back to the 1800’s, along what we believe is an approximately 600 meter-long Faisanes target zone.”
“These old workings are very shallow. A ten-meter tunnel or a five-meter shaft,” said Fonseca. “Our concession has never been worked by a large gold-silver mining company.”
Goldplay is actively studying the geology of its target area. To do that this first hole only went down 75 meters below the surface, although it was 280 meters long. “As we were drilling,” said Fonseca. “We started seeing more and more sulphides.”
Fonseca, with his training as a professional geologist and his decades of experience in large mining companies and as an investment banker focussed on mining, is taking a very methodical, strategic approach to the exploration of the San Marcial Project aiming at more discoveries.
“Right now, we have the drill at our other target, the Nava, where we recently discovered 24 m @ 2.0 g/t, which is 1.5 km west of the San Marcial resource area and approximately 1 km west of the Faisanes discovery,” said Fonseca. “We are doing surface work in the Faisanes zone and we want to determine if the mineralization is continuous over the 600 meters.”
Working on these two targets while already having a 43-101 compliant high-grade silver resource (47 Moz Ag Eq), with potential to be an open-pit project, is all part of Goldplay’s strategy of showing the market that it can extend the resources at the San Marcial project.
“Our concession is 6 kilometres long and we have only explored about half of it,” said Fonseca. “We have the silver and now we are discovering a lot of gold.”
The drilling in the Nava zone is expected to be completed soon and then the drill will be brought back to the Faisanes zone. There Goldplay will drill an additional three holes each some distance away from the initial discovery hole reported today.
“This is not a narrow vein story,” said Fonseca. “It is not a traditional story at all. What we are looking at is mineralization which is widespread, shallow, pitable and likely attractive as a low-cost development story.”
The market reacted to Goldplay’s announcement with V.GPLY up $0.045 to $0.22 on the discovery news. However, a bonanza grade discovery likely has another effect in the market. It draws attention to the company and the company’s strategy. Strategically, this means that Goldplay will have an eager and growing audience for what is anticipated to be a continuous news flow as the results from the drilling and trench programs are reported.
“Larger players might be taking a closer look at the San Marcial story,” said Fonseca.
Asked about the public market’s interest, Fonseca allowed, “I’m getting more calls.”