The San Andres deposit is classified as an epithermal gold deposit associated with extensional structures within tectonic rift settings. Gold occurs in quartz veins predominantly comprised of colloform banded quartz (generally chalcedony with lesser amounts of fine comb quartz, adularia, dark carbonate, and sulfide material). The gold mineralization is deposited as a result of cooling and the interaction of hydrothermal fluids with groundwater and the host rocks. The hydrothermal fluids may have migrated some distance from the source; however, there is no clear evidence at the San Andres Mine that the fluids or portions of the fluids have been derived from magmatic intrusions. Minor silver is present in the mineralization.
An exploration program completed in 2010, using reverse circulation drilling, mapping, and sampling of rock exposures in road cuts, had been carried out to better define the extent of the mineralization, test areas between the pits, and assess potential extensions of the mineralization in other areas of the mining lease.
The results of this work have generated new insight into the deposit geology and controls on mineralization. Previous exploration has focused on three principal pit areas: Water Tank Hill, which is depleted; Twin Hills, currently being mined; and East Ledge, where additional mining will take place as part of the expansion plan. Recent results indicate that the gold mineralization system is much more extensive than previously recognized. The Company believes that economically extractable gold mineralization is continuous between the East Ledge pit and the Twin Hills pits and extends to the east, west, and south of these pits.