I am writing to update you on the progress of AM Gold Inc. (the “Company” or “AM Gold”)(TSX-V: AMG; Frankfurt: AMX) over the past year and to outline for you the Company’s operational initiatives for the year 2011 and beyond.
The Company has resolved the issues set out in the Cease Trade Order (the “CTO”) the British Columbia Securities Commission (the “BCSC”) issued against the Company on April 13, 2011 and I am pleased to report that the BCSC issued an order on May 13, 2011 which granted full revocation of the CTO. The Company is now in the process of seeking reinstatement on the TSX Venture Exchange (the “TSX-V”). The Company is unable at this time to provide a definitive determination as to when the Company’s shares will resume trading but the Company will disseminate a further news release when the timing is settled.
Through the course of this past year, the Board of Directors and Management of AM Gold have undertaken the process of building a new company focused on creating shareholder value through the development of the Company’s core assets at Pinaya, Peru and Red Mountain, Yukon Territory. To that end, the Board and Management structure of AM Gold have continued to evolve. Dr. Kelly Hyslop and Mr. John Fiorino have joined the Board of Directors with Mr. Michael Scholz, Mr. Jack Bal and Mr. Jeff Reeder departing. Management of the Company has been strengthened through the appointments of Mr. John Fiorino as Chief Executive Officer, Mr. Jerry Aberle as President and Chief Operating Officer, Mr. Mark Lawson as Chief Financial Officer, and Mr. Neil Downey as Vice President of Exploration.
While much has been accomplished in just 12 months, we believe AM Gold continues to present opportunity for growth in the coming year and the years beyond.
The Company’s Red Mountain property is located in central Yukon Territory approximately 55 kilometers northwest of the community of Mayo in the heart of the Tintina Gold Belt.
Between 2002 and 2007, a number of exploration programs were conducted by the Company at Red Mountain, including an airborne magnetic survey, general prospecting and sampling surveys and four separate drill campaigns. Exploration permits were secured and by late July 2010 a $1.8 million dollar diamond drill program was underway. A total of 4,100 meters of diamond drilling was completed in 12 holes through the course of the program. This resulted in the publication of an updated inferred resource estimate of 79.3 million tonnes grading 0.52g/t gold, containing approximately 1.32 million gross troy ounces of gold (see the Company’s news release dated December 2, 2010, available under the Company’s SEDAR profile at www.sedar.com). As disclosed in the Company’s news release of December 2, 2010 a sensitivity analysis was performed on the resource estimate at various cut-off grades with the resulting tonnages and grades summarized in the following table:
AM Gold’s 2010 drill program at Red Mountain extended the inferred resource area to a distance exceeding 650 meters along strike of the Jethro Structure, with the strongest mineralization open to extension laterally to the east, west and at depth.
This year’s program at Red Mountain is expected to be focused on the inferred resource area and the testing of other areas of interest on the property, including the mineralization discovered by Hole ICE10037 (see the Company’s news release dated November 30, 2010, a copy of which is available under the Company’s SEDAR profile at www.sedar.com). Preparations are underway for the program and the Company has contracted with Kluane Drilling of Whitehorse, Yukon Territory to conduct a 6,000m diamond drill core program. Through an agreement reached at the conclusion of the 2010 season, two of Kluane Drilling’s KD1000 skid-mounted, all-hydraulic drill rigs were winterized and left on the property to facilitate an early start for the 2011 campaign. Mobilization of the camp is planned for late-May with the resumption of drilling operations anticipated by early-June, depending on weather conditions.
The Pinaya project is located approximately 775 kilometres southeast of the city of Lima, Peru, in the Tintaya Gold Belt.
Over the past year, AM Gold invested in re-organization of its wholly-owned Peruvian subsidiary, Canper Exploraciones S.A.C., including new management and staff to prepare Pinaya for the resumption of active exploration on the property. The continuation of good community relations has been pursued as a high priority through the implementation of a new socio-impact study and the continued funding of the Company’s community relations program which provides support for local schools, healthcare services, and community agricultural organizations. Community relations have been further improved through renewed employment opportunities within the Company’s ongoing exploration activities at the property.
As a result of this effort, AM Gold has negotiated new two-year surface access agreements covering virtually the entire property position, which are critical to the execution of the property-wide work programs planned for this season. In addition, community support was a vital requirement for the Company’s application for a new two-year exploration permit for the resumption of diamond drilling operations at the resource area, which was approved on January 28, 2011.
An exploration program has been planned for 2011 at Pinaya which will focus on resumption of drilling within the resource area as well as the exploration of porphyry and skarn-related targets that were identified during a three-week field program undertaken in December, 2010. A heavy mineral stream sediment sampling program and soils sampling program are currently underway covering approximately 6,000 hectares at the southern end of the property.
AM Gold has also entered into an agreement with Geotech Ltd. of Aurora, Ontario to conduct a combined Z-tipper Electromagnetic (ZTEM) and Cesium-magnetometer survey of both the entire Pinaya property and the Company’s Minas Lucho property located approximately 70 kilometres to the southeast of Pinaya. The ZTEM survey is an airborne passive geophysical system measuring resistivity and conductivity contrast features of the sub-surface. The survey will appraise the entire 19,200 hectare Pinaya land position testing new exploration targets while validating the results of ground-based geophysical surveys previously concentrated in close proximity to the resource zone. The ZTEM survey of the Pinaya property commenced on May 8, 2011 and is expected to be completed on or about May 22, 2011. The 2,400 hectare survey of Minas Lucho property is expected to commence immediately thereafter and serves to followup earlier geological, geochemical and remote sensing studies that have identified areas on the property prospective for gold and copper mineralization similar to Pinaya.
At AM Gold, we are very pleased to communicate the operational initiatives planned for the year.. Our mission for 2011 is to continue to build shareholder value through work at our core properties Pinaya, Peru and Red Mountain, Yukon Territory. We appreciate your continued support.
Dr. Stewart Jackson, P. Geol. a director of the Company, and a Qualified Person has reviewed and approved the technical disclosure contained in this news release.
For further information on AM Gold please contact Murray Caruth at 1-604-646-0067 or by e-mail at , or visit AM Gold’s website at amgold.ca.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statement Regarding “Forward-Looking” Information
Some of the statements contained in this press release are forward-looking statements and information within the meaning of applicable securities laws. Forward-looking statements and information can be identified by the use of words such as “expects”, “intends”, “is expected”, “potential”, “suggests” or variations of such words or phrases, or statements that certain actions, events or results “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements and information are not historical facts and are subject to a number of risks and uncertainties beyond AM Gold’s control. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except as may be required by law.
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