Nayarit rides drilling success at Orion

Vancouver — While most others go to slaughter in the market, Nayarit Gold (NYG-v) has bucked the trend and instead found rich pasture in its parallel Del Norte and Animas veins at its Orion gold-silver property, 109 km north of Tepic, Mexico.

Since mid-year, the Halifax-based junior has pulled off two feats: It closed a $10-million financing; and, despite the ongoing U. S. credit tumult and increasingly picky appetite of investors, it held a steady share price between about 60 and 70.

“We’ve done well because of good drill results,” says Terry Christopher, Nayarit’s chief geoscientist.

But today, when good drill results often don’t translate into rising share prices, Christopher isn’t dwelling on the market’s daily ups and downs. For him it’s as simple as drilling as much as he can within budget.

Nayarit wandered into its rich pasture in the second half of 2007 as part of a first-phase, 7,000-metre drill program targeting, among other areas, the Minas de Animas zone. Two parallel veins, known as Del Norte and Animas, lie there at what was then the northwestern extent of Nayarit’s Orion concession covering over 1,000 sq. km on the southwestern portion of the Sierra Madre metallogenic province.

Its first result from hole 30 hit as much as 10.5 metres (from 174 metres down-hole) grading 3.57 grams gold and 287.56 grams silver per tonne. Following holes showed similar results, cutting mineralized lengths ranging between 3 and 10 metres and grading 1-10 grams gold and 100-1,000 grams silver. Hole 32, for instance, intersected 5.4 metres, starting 176 metres down-hole, grading 9.59 grams gold and 980.15 grams silver.

The deposit is still open to the east, west and at depth.

In the year since its first results, Nayarit has outlined a total of 600 metres of mineralization by drilling on strike to a depth of over 200 metres. It has also returned longer, higher-grade intersections.

In May 2008, the company announced as much as 48.4 metres in hole 59 grading 2.74 grams gold and 218 grams silver, starting 178 metres down-hole. And five months later it released news of as much as 16.6 metres in hole 102 grading 6.26 grams gold and 649.7 grams silver starting at 123 metres.

On news of the latest round of drill results in late September, the company gained 6 to close at 74.

“We’re seeing the higher (gold and silver) values where there’s flexure in the structure,” Christopher explains, noting that Nayarit has plucked the “low-hanging fruits,” or especially long mineralized intercepts, in the strongly altered stockwork north of the main Del Norte vein.

There, the andesite porphyry host rock is more receptive to fracturing, in some cases beginning from surface. Not so to the south.

Since the epithermal vein system is hosted in a graben, the host rock found close to surface in the north has been dropped to greater depths to the south. In the south, the host rock near surface is an andesitic-crystal, lithic tuff — less easily fractured or receptive to stockwork.

Christopher says part of the excitement about that gold and silver mineralized stockwork north of the veins is that it might be conducive to open-pit mining, in conjunction with underground mining of higher-grade gold and silver in the veins below.

Drilling is ongoing, especially now that the company, whose funds were dwindling, is cashed up. At the end of July 2008, Nayarit closed a $10-million private placement led by BMO Capital Markets. It consisted of 17.9 million units at 56 apiece, with each unit comprised of a share and a warrant. Each warrant gives its holder the right to buy another share at 75 within two years. Nayarit now has 67.5 million shares issued.

The company has also consolidated its land position. Christopher says Nayarit was “sort of boxed in,” as the company was already in the northwestern corner of its concession, and since the Animas and Del Norte veins could be traced over 2.5 km east-west and there was another vein system running several kilometres to the northwest.

But since swinging a few deals in mid-2008, Nayarit has picked up contiguous properties it needs to ensure control of the veins.

With the land secured, Christopher says Nayarit will continue to drill at the main Animas and Del Norte zone and to explore targets — including the past-producing Francisco mine on strike to the west, the Pantaleon past-producer on strike to the east, and some targets in a relatively unexplored vein system extending to the northwest.

The company expects to calculate a resource for Animas and Del Norte early next year.