El Gallo Complex Gearing Up For Next Phase Of Growth  

TORONTO, ON  US Gold reported results from regional drilling at the El Gallo Complex, in Sinaloa, Mexico. Results contained in this release are focused on the Mina Grande area (Fig. 1), where earlier in 2011 drilling discovered several zones of encouraging near-surface gold and silver mineralization. New drill highlights include: 3.2 grams per tonne (gpt) gold over 14.0 meters (m), 1.8 gpt gold over 19.4 m and 7.7 gpt gold, 2070 gpt silver over 1.0 meter.

"Mina Grande is just one of several targets we have been exploring since infill drilling at El Gallo and Palmarito was completed. Recent drilling has intersected several zones of encouraging mineralization. Although early, these results, combined with our recently announced San Dimas discovery are setting the foundation for our next phase of growth in Mexico," stated Rob McEwen, Chairman and CEO.

The Mina Grande area is located approximately 10 km north of the proposed mill site and 15 km north of the heap leach facility that is currently under construction (Fig. 1). US Gold made the decision to explore Mina Grande based on 1) the historical mining that occurred in the area and 2) the belief that a discovery could be transported to one of the central processing facilities under development. Drill highlights from earlier in 2011 included: 2.1 gpt gold over 28.9 m (starting 8 m below surface) and 1.2 gpt gold over 19.7 meters (starting 8 m below surface).

The Mina Grande area is comprised of several parallel, northeast-dipping mineralized zones. Recent drilling focused on three zones (Fig. 2). One of these is a bulk tonnage target that is shallow dipping and near surface. Ten holes were completed in this area. Five holes targeted the other two zones, encountering narrower widths of mineralization but with encouraging gold and silver values.

Drilling to follow up on these results is underway. Currently one core drill is operating at the Mina Grande prospect. The objective is to expand the mineralization encountered in these holes and test other targets within the immediate area. Should further exploration continue to return similar results, US Gold anticipates increasing the size of the drill program.

Phase 1 mining at the El Gallo Complex is expected to commence during the second quarter 2012. The El Gallo Complex includes the El Gallo and Palmarito silver deposits and the Magistral gold deposits, which are all located within a 13 km (8 mile) radius. Phase 1 will focus on the permitted gold deposits and is expected to produce 30,000 ounces of gold per year after initial ramp up. Capital costs have been estimated at $15 million and the projected cash flow will help fund Phase 2, which is forecast to produce an additional 5 million ounces of silver per year, beginning in 2014. Readers should note that mineral resources that are not classified as mineral reserves do not have demonstrated economic viability.