Weststar Resources sets its sights on near term production at La Paloma gold project

WestStar Resources (CVE:WER) is a Canadian based junior gold explorer, with exploration interests in Canada and has expanded into Mexico, where the Company recently acquired the right to develop the La Paloma Property, which hosts an abandoned high grade gold mine. The property is currently under redevelopment for production of gold from the Veta Ancha gold bearing system that was previously mined at shallow depths along a 1,500 metre mineralized trend.
La Paloma is located in the state of Jalisco, which is approximately 75 kilometres west of Guadalajara, and nearby Ahualulco. The Property covers 160 hectares that includes a historically productive gold mine that ceased production in 1928, following a workers strike.
A historical report from the last year of operations detailed the production of 41,090 tonnes of ore at an average grade of 5.87 g/t gold and 507 g/t silver, with plans to extract a further a further 44,300 tonnes at an estimated grade of 6.64 g/t gold and 500 g/t silver. This includes historical records that indicate the location of ore blocks that were estimated to contain non compliant resources of 4,700 tonnes at 9.8 g/t gold and 663 g/t silver, and 1,900 tonnes at 11.51 g/t gold and 681 g/t silver that were available for ongoing mining operations.
The old mine workings extend over a horizontal distance of 1,563 metres, with multiple shafts and tunnels developed into mineralized zones, where WestStar has identified a non compliant conceptual resource of 2 million tonnes at 4.0 g/t gold and 400 g/t silver, believed to potentially contain over 250,000 ounces of gold and 25 million ounces of silver, and only covers a small footprint along the mineralized 1.5 kilometre strike line.
The main structural target on the property carrying gold and silver values is known as the Veta Ancha or Wide Vein and contains quartz, calcite and iron oxides, while minor ones are argentite and pyrite, trace galena, chalcopyrite and sphalerite, with kaolin, sericite and chlorite are the most common alteration minerals.
In 1983 and 1984 the Mexican Government agency known as the Consejo de Recursos Minerals dewatered the northern end of the Veta Ancha workings and completed a sampling program that covered an exploration drift to estimate a non compliant “potential reserve” of 750,000 tonnes grading 4.19 g/t gold and 123 g/t silver.
In 2006, a small leach plant with capacity to hold 45 tonnes of crushed rock and a 30 tonne per day crusher was erected on site to recover gold from process material recovered form mine workings. Sampling programs were also completed over the next 2 years that identified new mineralized targets across the property.  
The property is located only 15 kilometres from the historically productive Ameca-Etzatlan mining district, and is accessible by road and trails and has electric power and on site water supply.
In March of 2011, Snowden completed a NI 43-101 compliant evaluation of the property, which included a site visit and collecting samples for assay, from which they confirmed that the property has potential for epithermal gold and silver deposits. They noted that these types of deposits generally contain high precious metals values and low or negligible base metals values, and typically occur as vein systems hosting less than a million tonnes of mineralization, although some have been known to contain several tens of millions of tonnes of ore. Grades within the ore tend to be high, with the potential for the presence of very high grade ore shoots. Samples collected by Snowden from within the old mine workings ranged up to 49.20 g/t gold and 385 g/t silver.
Snowden recommended a 2 phase exploration program with a first phase that completes geological mapping, surface sampling, dewatering and sampling of underground workings along with geophysical surveys estimated to cost $495,000. The second phase estimated at $872,000 will complete 3,000 metres of diamond drilling at $250 per metre, along with core sampling, and assaying.
The Company has the right to secure up to an 80% interest and has already acquired a 20% interest by agreeing to pay out $3 million and to issue 5.85 million common shares to Lekona Mining, who will assign their option interest over La Paloma to WestStar, so that WestStar can meet all of the staggered payment terms.
Minera, who is the original vendor, has agreed to the assignment and will receive 650,000 common shares in WestStar. WestStar will also pay $300,000 and issue 1 million shares to Minera to increase its interest in the joint venture to 40%.      
Additional settlement terms include payment of $400,000 and issuance of 1 million shares in WestStar to Minera by October 30, 2011, along with the generation of a NI 43-101 Technical Report that will increase its interest to 60%. A final payment of $2 million and issuance of 2 million shares by October, 2011, will increase this interest to a maximum of 80%.
The Company is also obligated to update the NI 43-101 Technical Report prior to October 30, 2014, or within 12 months of obtaining its 80% interest, and issue the vendor an additional 5 million shares if the resources on the project area exceed 4 million ounces of gold, and 150 million ounces of silver. The agreement is also subject to a 2% Net Smelter Royalty.
The Company has already completed an Environmental Impact Statement and is preparing an application for a mining license, with plans underway to install a 200 tonne per day process and floatation circuit at a cost of $3.2 million.
Michael Michaud has recently been appointed as Executive Chairman, and is a senior geologist with 20 years of experience in developing mines in both North and South America, and will guide WestStar to gold producer status.
He will also manage exploration on the 100% owned Red Chris area, including the Coyote Claim which covers 2,175 acres and abuts Imperial Metal’s (TSX:III)  Red Chris Property in north-western British Columbia, where Imperial have announced 152.5 metres at 4.12% copper and 8.83 g/t gold, averaging 2.00% copper and 3.80 g/t gold over 432.5 metres.
WestStar has launched initial ground reconnaissance on the property, and at the nearby Hans Claim, which will include stream sediment, geochemical and soil sampling and deploy a portable XRF Analyzer to carry out on site assaying of samples. An airborne geophysical survey is also contemplated to clearly define drill targets.  
The Company also acquired a 100% interest in the Sifton Block in northwest Ontario, which is located 7,000 metres northwest of the Rainy River Resource containing Indicated and Inferred Resources of 5.03 million ounces of gold at 1.2 g/t -1.3 g/t gold. Additional holdings include the McKinnon, Golden Fox and Sunrise Properties in the Yukon, along with the Axe Property in British Columbia.
WestStar Resources offers investors dual exposure to a gold explorer that is seeking near term gold production and exploration upside from La Paloma and other exploration properties.  The pace of news is going to step up in the coming months; one to watch.