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Pediment Gold's Two Paths to Production

By Eric Pratt
MidasLetter.com
Wednesday, April 22, 2009

Pediment Gold Corp.’s (TSX:PEZ) was formed in late 2005 to exploit precious metals mining opportunities in Mexico. Since then, the company has moved two projects from grass roots exploration into mine and resource development, and expanded its portfolio of exploration targets through acquisition and staking.

The company’s principle focus is on the San Antonio project, which recently saw 80% recovery of gold from metallurgical tests in preparation for production of gold. The San Antonio project is located on the Baja Peninsula, adjacent to the historic mining town of San Antonio and 40 km southeast from the port city of La Paz. Good paved roads traverse most of the project area and a high voltage power line crosses through it. The 100%-owned project covers 48,715 ha and 14 km (about 9 miles) of favorable geological trend. In the late 1990s Echo Bay Minerals located and partly tested the Colinas gold resource that is contained by the company's staked ground.

San Antonio, Baja, Mexico
In June of 2008 the Company released the results of an initial NI 43-101 compliant resource study of the San Antonio project which is based on drill results completed prior to the end of 2007. This study calculated an Inferred Mineral Resource of 30.58 million tonnes averaging 1.32 g/t gold at Los Planes and of 5.62 million tonnes averaging 0.83 g/t gold at Las Colinas (for an aggregate total of 1.45 million gold ounces) both at a 0.4 g/t cut-off grade. All results of later drilling between early to mid 2008 of approximately 16,500 meters on both mineral deposits will be incorporated in future resource studies.

Pediment has now completed a total of 37,000 metres of drilling that provided data for the 43-101 report, and demonstrates the presence of two large gold mineralized resources, and the latest results open the potential for a connection between the Los Planes and Las Colinas zones, where more drill targets will be tested in a second phase drill program.

“Our next phase is to extract a bulk test sample of 100,000 tonnes which will give us real data with respect to crushing sizes as well as chemical consumption which are an important part of identifying costs at San Antonio to make sure it is a profitably mined heap leach operation, said company president Gary Freeman. “We don’t feel that with the experience at the corporate level spending time or money on a feasibility study is prudent as its only going to take approximately $8 million get it producing, so that time and money is better spent compressing the timeline to cash flow.”

“Currently we are negotiating Ejido at San Antonio to finalize an agreement allowing long term surface access rights including test mining and production related activities. The agreement is expected to be concluded soon,” he added.

“We expect to produce 35,000 to 45,000 ounces of gold within two years at San Antonio. After that, we expect that with additional investment we will be able to bring production up to higher level of gold production annually.”

El Triunfo, Baja, Mexico
In August 2008 Pediment also acquired the El Triunfo Mineral Reserve, a past producing district of gold-silver vein system which has been without exploration for about 95 years. The concessions have more than an 8-km long common border with the existing Pediment Baja ground.

Mr. Freeman says, “This area of the concession offers very good exploration potential as this has been a producing mine site off and on over 400 years. We have also acquired with the purchase 700,000-800,000 tonnes of mineral rich dumps and although this was not the core reason to purchase the area we are convinced that there is more where the dump material came from. “

La Colorada
The La Colorada gold mine project is located adjacent to the town of La Colorada and about 40 km southeast by paved Highway from the city of Hermosillo.

During the main historic mining period from 1876-1914 the production of more than 3 million ounces of gold was recorded, making La Colorada Mexico’s biggest mine for many years. In 1990 the Mexican Geological Service (SGM) measured 1.5 million tons of tailings that were utilized at the start of the open pit production by Eldorado Gold (NYSE:EGO) in 1993. The last formal resource estimates for the open pit project were done by Eldorado in 2000 and were recorded at about 550,000 oz .

Earlier this year Pediment announced results of an initial study that was conducted to develop new data to target the expansion of know resources and to test for new zones of mineralization. During this study the company worked on four key areas to the historic open pit mine, including drilling, mapping and bench sampling. Three drill holes that were completed at the Gran Central block indicate the continuation of the vein zone at a depth beginning at approx. 200 meters Data pertaining to both open pit potential and high grade underground resource potential are also being reviewed and evaluated for a possible mining scenario.

Power has been hooked up again to the buildings, and a base line study has been completed to assess environmental liabilities left from past production. , Pediment is contemplating permitting and the reactivation of the existing surface workings to test the integrity of the existing pads while creating some limited cash flow. While this is not the ultimate goal or the scope of the project the company feels that in the short term the possibly of substantial cash flow is possible this is because for the most part the project is still in good shape and with some work could be back producing a limited amount of ore .

“The real gem here,” Mr. Freeman states, “is the underground opportunity. We think the true potential of the mine lies here and feel that with the this is a major high grade target (2-3 million ounces gold) that is supported with many years of data collected ands stored in the building at the site

Mr. Freeman stated, “Based on the 500 plus drill holes that El Dorado completed during their ownership, we have a pretty good understanding of the geology underground. So we think the most efficient way to explore it from an economic standpoint will be to drill it from underground as today 43-101 requirements would make it very expenses to drill long core holes from surface considering the required spacing.

There are three pits in two main areas at the LaColorada Grand Central block we estimate based on the engenerring studing appx 240,000 Ozes these are not 43-101 but again well identified ans“We also have 350,000 ounces under the (El Creston) pit that is buried under 6 – 7 million tonnes of waste, so that presents a bit of problem, but that will add to our production from La Colorada down the road. Our first ore will be leached from wall rock surrounding the older pits, where we know that some of the ore is high grade up to 10 grams per tonne, however most of the minable rock is of a lesser grade..

Management
Gary Freeman has over 23 years of valuable experience in the industry by starting out to study fundraising, leadership & management and the Canadian Securities Course which subsequently led him to spend time and gain his experience in the Brokerage industry with C.M. Oliver. Prior to accepting a commitment to Pediment, Mr. Freeman successfully prepared Wealth Minerals Ltd. for development into an established junior exploration company.

Another key member of the team is the company’s Chairman, Chester Millar, who was instrumental in the building of Glamis Gold which was purchased by Goldcorp (NYSE:GG) for $9.5 billion in 2006. He was also central to El Dorado Gold’s success in Mexco, and is widely regarded as one of the world’s foremost open pit mine operators.