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Pediment Gold Advances 11,000m Drill Program, Begins Pre-Feas studies in Mexico

According to the Fraser Institute, states in Northern Mexico soar past their southern neighbors economically not because of their proximity to the US, but rather because they are more economically free. And for my next guests, Gary Freeman and Mel Herdrick of Pediment Gold, with two projects in Northern Mexico, this is a reality that could net his company’s shareholders some just desserts. Pediment Gold’s two advanced stage gold projects are located in the norther Mexican states of Sonora and Baja California Sur, both with greater than one million ounces inferred or better. Gary Freeman is the company’s President and CEO, and Mel Herdrick is the VP of Exploration.

Resource Intelligence TV: How did you two meet and get into business together?

Gary Freeman: Mel and I met in 2002. Mel had spent a number of years in Mexico with Phelps Dodge and had some specific ideas of what he wanted to do in Mexico from an exploration and mining standpoint. I was intrigued. We spent some time together and I flew down to Mexico, looked at the property, spent some time with Mel and from that time forward we decided to build a public company.

RI: Where does the name Pediment come from?

GF: Pediment refers to the alluvial cover that the project we’ve been working on have. It was our expectation to look in the mega shear which is in Sonora and some other shear systems in Baja under what they call pediment cover.

RI: Mel, what is the history of mining like in this region that the San Antonio project is found?

Mel Herdrick: The history of most of Mexico is very rich with a mining background. It has a longer history of mining than most of the United States and Canada. It began in both La Colorada and San Antonio about 1700 and possibly even before that.

RI: Skipping forward here, you’ve already developed at San Antonio in particular substantial resources–1.5 million ounces. Tell us what you know so far.

MH: San Antonio is a different type of deposit. What people call a Mesquite sort of deposit. It is more disseminated. It is related to granitic rocks. It is also hosted in metamorphic rocks and it appears to have fairly large potential for very large deposits.

RI: If you could make an analogy for us with another existing mine, who would you compare it to?

MH: Mesquite would be a good example. It’s an open pit heap leach gold mine. Tonnage I think is in the 100 million tonne range.

RI: So this is a widely disseminated, low grade, open pit type deposit that you’re looking at?

MH: Correct.

RI: At San Antonio you’ve got 47 million tonnes in the measured category grading better than a gram per tonne. Tell us about the drilling you’ve done to get here.

MH: What we’ve done already is a fairly dense drilling program of drill holes that are both RC and core. It has very good continuity between drill holes. Some areas are higher grade and it appears to have a high-grade central core to it. It appears to have extension possibility as well. We have targets to try to expand that in the coming year.

RI: What is your present drill program?

MH: We are planning for 11,000 meters. The technical report recommended 8,500 meters.

RI: There are two trends. One of them hosts your existing deposit and one of them hosts some targets. Can you talk about that?

MH: The main trend that we’ve been working in is called the San Antonio trend and it’s like the mega shear of Sonora. It’s a mega shear in terms of being 200 to 300 meters thick and extending over 20 to 40 km north/south and it hosts the gold mineralization in it. The gold mineralization is pretty much gold only in terms of economic metals whereas the other trend, the Triunfo trend, is oriented northeasterly instead of north/south, so it looks like these two could converge in the area of our deposit. The Triunfo trend also has silver and lead-zinc mineralization along with gold. It’s a little different, but its still within the same type of shear host rock that is nice and granetic rock.

RI: Gary, what is Pediment’s exploration plan?

GF: Our plan this year is to work a lot in the San Antonio district.

Last year we spent time there focusing more on things like water acquisitions and acquiring surface rights above the deposit, because as you know in Mexico, land tenure holders is a group you have to deal with because you have to negotiate the surface rights with land owners. We spent a lot of time doing these sorts of things and they are important because without them you can’t access the deposit area and obviously you can’t mine it.

Last year, we also spent a lot of time working on La Colorada.

So now we’re back at San Antonio. We now have a 43-101 that defines about 1.6 million ounces and about 95% of it is in the measured category. We did a number of tightly spaced holes over the last couple of years and our intentions are to do some land usage changes so we can continue to drill in the discovery zone, but also move south down trend to look at some of the other targets that Mel spoke about.

RI: Gary, can you explain the importance of the Ejido in Mexico?

GF: It’s probably an essential factor for anyone exploring in Mexico. The Ejido has been around since the early 1900s and it really points to the community ownership of the surface rights with respect to agriculture and for ways for communities to earn a living. It is important to note that while you can buy the mining rights, for surface rights you have to deal with the locals, and that–in many cases–can stop a company dead in its tracks from having success with respects to going to mining.

RI: What did it do for Pediment?

GF: When we started recognizing the success we were having, we knew that we were $11 million into it and that for us we really needed to resolve the issue of surface ownership, but also importantly, water ownership. With the Ejido behind us, that really meant that it was time to get back there and spend some more money and look to see what else is in the area.

RI: How did the market react to that?

GF: We were very mindful of the money we spent. 2007/08 were not easy years. As the President I had to think about whether or not we could go into 2007 with $22 million in the bank. We had acquired the El Truinfo which is adjacent to San Antonio and that was $1.3 million; we had acquired the La Colorada deposit and that was more money. So we had to figure out how we were going to get through this quiet period without spending our money foolishly. Not that exploration is foolish, but spending it at that time was really just creating opportunities for sellers.

I’m not against anybody selling their stock, but we have a company to run and we have employees and we have to make our payroll. I thought there were a lot of things we could do to pare back the exploration. To focus on things like surface rights and water rights, I thought would probably be the prudent way to spend money going forward. Once the water rights were resolved and the surface rights were dealt with and the Ejido became friendly to the project, we recognized that the time was right to get back to work, and with all that culmination of everything we were planning to do and the news coming out on it, certainly the stock reacted very favorably.

RI: Lets talk briefly about gold. We came through this difficult period for companies like yours into a very bullish time right now. How has that changed the program that you’ve put forward?

GF: It wasn’t really about gold. Gold has always been fairly strong, so I was never concerned about the gold price not performing well, but being non-dilutive with your company is extremely important and that is to say that you don’t want to have to finance at an inopportune moment.

RI: Mel, can you tell us about La Colorada?

MH: There is a very good trend of gold mines across Sonora, where it looks like new mines will be built in the coming years. La Colorada is an older mine that produced in the 1990s by Eldorado and prior to 1900 as an underground mine. It was a high-grade gold mine that produced 3.5 to 4 million ounces. We’re looking at about 1.1 million ounces in our total resource. It looks like a resource with excellent potential for expansion as well.

RI: How much more do you feel you need to prove up to take La Colorada to the next stage?

MH: I would like to see us increase up to 2 million ounces and bring in a substantial resource of higher-grade underground mineable material. I think that we can do that there. It’s a very large mineralized system, about 7 km long.

RI: How much drilling have you done in the 7 km area?

MH: We’ve completed about 10,000 meters in the last two years in two different campaigns. We’re going to do some more probably later this year, but at this time we’re going to step back and evaluate all that information to see part of the economic picture of the area, as well as how we are going to best test the deeper high grade vein system.

RI: The Fraser institute has looked at the reasons that some countries fail and some countries succeed economically and they’ve said that the more economically free a country is the better off economically it becomes. Has this changed your history in mining?

MH: I live and work there full time. Northern Mexico is definitely where we put our effort into exploration because of the infrastructure and it’s easier to work there with much lower costs with a well-trained workforce. Those are the things that will probably stay in that area as far as the future goes.

RI: Gary, you’re at a fairly early stage still. You’re moving into a scoping study stage on both projects. These things get more expensive as you go along.

GF: Absolutely. Its important that you show the public that you are going in that direction. So we are looking towards PEA’s, scoping studies and prefeasibility studies, because you get to a point where you either sell or develop the project. So we’re going to continue to move forward. We are going to start to do prefeasibility studies and we’ve seen some pre-production economic numbers that are a little loose right now and need more stable data to work with.

We have about $13 million dollars in the bank currently and we are well funded for the next 18 months. I think that through this next project phase and the drilling on the Baja, there should be more excitement in the stock… and that will certainly help us into the next phases of both our projects.

Symbol: PEZ
Exchange: TSX
Name: Pediment Gold Corp.
Shares outstanding: 47,313,000
Country: Canada
Province: British Columbia
City: Vancouver
Address: 720 – 789 West Pender Street
Postal code: V6C 1E1
Phone number: 604-682-4418
Fax number: 604-669-0384
Email address: info@pedimentexploration.com
President & CEO – Gary Freeman

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