San José de Gracia is located in the northeast portion of Sinaloa State, Mexico. Goldgroup holds a 50% interest in DynaResource de Mexico, S.A. de C.V., which owns 100% of San José de Gracia. In March 2011, Goldgroup completed its Earn-In/Option agreement for San José de Gracia with DynaResource de Mexico for its 50% equity interest by reaching the expenditure funding requirement of $18,000,000. The project currently consists of 34 mineral concessions covering approximately 69,000 hectares with no outstanding royalty or other interest. In 2009, San José de Gracia was recognized as Sinaloa State's "Most Significant Gold Project".
In November 2011, Goldgroup announced an updated NI 43-101 compliant mineral resource estimate on the San José de Gracia project. This updated NI 43-101 Technical Report hosts an indicated resource of 147,000 oz Au and an inferred resource of 963,000 oz Au. The Company has drilled an additional 135 holes since the initial resource estimate in July 2009 and the updated resource estimate is based on drilling completed up to Sept 5, 2011. The Company is targeting a resource estimate sufficient to sustain 100,000 ounces of annual gold production.
In 2011, a 21,000 metre drill program was completed on San José de Gracia. A total of over 300 holes have been drilled at San José de Gracia to date. The San Pablo shoot has shown positive results and has been mainly delineated to a configuration approximately 550 metres down plunge, 170 metres along strike and a true width averaging approximately 5 metres. The Tres Amigos shoot is approximately 800 metres along strike on the same structure to the north and is currently open down plunge and showing bigger dimensions than San Pablo. Two other shoots at Purisima and La Union have shown positive results and are open in several directions.
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