Goldgroup Mining Inc. Provides Corporate and Property Update

TSX: GGA

VANCOUVER, May 10 /CNW/ - Goldgroup Mining Inc. ("Goldgroup" or the "Company") wishes to provide an update of corporate affairs and an overview of the Company's mineral properties in Mexico further to its news release dated April 30, 2010 announcing the closing of the business combination between the Company, formerly known as Sierra Minerals Inc., and Goldgroup Resources Inc. and its news release dated May 7, 2010 announcing the commencement of trading of the consolidated common shares of the Company on the Toronto Stock Exchange under the symbol 'GGA'.

The Company expects to release a regular flow of news to the marketplace including quarterly operating results from its Cerro Colorado gold mine in Sonora, Mexico, results of drilling and exploration advances at its Caballo Blanco project in Veracruz, Mexico and at the San José de Gracia project in Sinaloa, Mexico and a progress update on its El Porvenir project in Aguascalientes, Mexico.

Goldgroup is a junior gold producing company focused exclusively in Mexico, targeting growth in its gold production, mineral resources, profitability and cash flow from a portfolio of development and exploration stage projects.

Management and Directors

Executive management of Goldgroup consists of Keith Piggott, Chief Executive Officer, Gregg J. Sedun, Executive Chairman, Michael H. Farrant, President, John J. Sutherland, Vice President and Chief Financial Officer, Philip C. Davies, Vice President, Mining Operations and Kevin Sullivan, Vice President, Exploration. The Board of Directors is currently comprised of six directors, being Gregg J. Sedun, Keith Piggott, Michael H. Farrant, Dr. Hans von Michaelis, Julian Kemp, and Corry J. Silbernagel. Significant shareholders of the Company include prominent Canadian and US institutional funds, a number of reputable individuals in the mining industry and NGEx Resources Inc. ("NGEx"), the Lundin Group's primary exploration unit.

Keith Piggott, CEO of Goldgroup, stated, "We view this as a very exciting time for all Goldgroup shareholders. We now take the step forward as a new company with immediate upside to a rising gold price through un-hedged gold production from our Cerro Colorado mine and access to near term mine development plus tremendous exploration potential at Caballo Blanco and San José de Gracia. We believe that our current share price does not reflect the Company's significant exploration upside and the ability to grow production organically from our project portfolio and as our company receives more public recognition, we believe this will be remedied. We'd also like to thank all our shareholders that have continued to support us as we embark on building Goldgroup into a premier Mexican gold producer."

Overview of Goldgroup's Mineral Resource Properties

For the National Instrument 43-101 ("NI 43-101") compliant mineral resource estimates, see the table below. For more detailed information on the Company's mineral resource properties, please see the joint management information circular of the Company and Goldgroup Resources Inc. dated March 25, 2010 available on www.sedar.com.

GOLD PRODUCTION:

Cerro Colorado Mine - Sonora, Mexico

Goldgroup's wholly-owned Cerro Colorado gold mine in Sonora, Mexico is an open pit, heap leach operation that commenced production in 2004. During 2009, the mine produced 20,546 ounces of gold. The Company anticipates a rise in annual production to between 25,000 to 30,000 ounces in 2010 with the ultimate goal of sustaining an annual production rate of 30,000 ounces. This is the result of significant capital and operating improvements made during 2009 and the first quarter of 2010.

The following material assumptions have been used to forecast 2010 production:

    
    -   annual mining rate of approximately 6.0 million tonnes (2.7 million
        tonnes of ore plus 3.3 million tonnes waste)
    -   average annual grade of approximately 0.57 g/t Au
    -   average annual metallurgical recovery of 63%
    -   equipment availability remains consistent with 2009 availability
    

DEVELOPMENT STAGE GOLD PROJECTS:

Caballo Blanco - Veracruz, Mexico

Goldgroup's 200 km(2) Caballo Blanco property in Veracruz, Mexico currently hosts three mineralized zones comprising numerous geological targets. The Company recently acquired a 70% interest in Caballo Blanco from NGEx for CDN$15 million, CDN$6.0 million in cash, and 9 million shares of Goldgroup Resources Inc., making NGEx the Company's second largest shareholder. NGEx holds a 1.5% net smelter return royalty on future mine production and upon commercial production, will receive a one-time advance royalty payment in the amount of CDN$5.0 million. The other 30% is owned by Almaden Minerals Ltd. ("Almaden"). The NI 43-101 technical report dated March 22, 2010 addresses only the estimated mineral resource on the La Paila area in the Northern Zone, compiled from 32 diamond drill holes totaling approximately 7,000 meters. The technical report also identifies at least eleven other areas outside of the La Paila area that justify further geological work at Caballo Blanco. These areas include:

    
    -   four large IP resistivity high anomalies on the inner flanks of a 3
        km round magnetic high 'ring structure' in the Northern Zone;
    -   an area of strong 'acid' PH anomalies 1.5 km west of La Paila in the
        Northern Zone;
    -   three separate areas where isolated rock chip samples assayed up to
        14.6 g/t Au along the northwest and south portions of the Caballo
        Blanco property; and
    -   three other separate areas with encouraging 'new' soil anomalies,
        persistent rock alteration, and untested IP chargeability anomalies
        at Red Valley, Highway Zone and Central Grid Zone, respectively.
    

In the immediate term, further exploration is aimed at expanding and upgrading the current mineral resource estimate and testing these other highly prospective areas for mineralization.

Following the completion of a bankable feasibility study, development and mining costs will be shared by Goldgroup and Almaden on a 70/30 basis. It is management's goal to advance the Caballo Blanco property towards a future annual production target of approximately 100,000 ounces of gold.

San José de Gracia - Sinaloa, México

Goldgroup currently has a fully-earned 25% interest in the San José de Gracia property ("San José") through the ownership of 25% of the outstanding shares of DynaResources de Mexico, S.A. de C.V. ("Dyna Mexico"). Goldgroup has the ability to earn an additional 25% by spending approximately US$7.0 million by March 15, 2011 which would result in the Company owning 50% of the outstanding shares of Dyna Mexico. San José is a high-grade advanced exploration project hosting a NI 43-101 compliant mineral resource estimate which was based on the first 140 drill holes at an average depth of 235m (see table below). The estimated mineral resource is hosted in four separate veins: Tres Amigos, San Pablo, La Union area and the La Purisima trend. Historically, in excess of one million ounces of gold have been produced from the property from high-grade veins grading between 30.0 g/t Au to 60.0 g/t Au. Since Goldgroup began its earn-in on San José, 178 diamond drill holes have been completed. The Company intends to expand and upgrade the current mineral resource estimate through the remaining earn-in phase and is ultimately targeting planned annual production of 100,000 ounces of gold.

El Porvenir - Aguascalientes, México

Goldgroup owns a 100% interest in the El Porvenir property which was acquired from Goldcorp Inc. ("Goldcorp") in 2007 at a cost of US$3.0 million. While containing a smaller mineral resource estimate than both Caballo Blanco and San José, this property is the most advanced stage of the development properties and represents near-term production potential. Goldgroup has drilled 80 exploration holes using percussion drilling for a total of approximately 8,700 meters at an average depth of 108m. Goldgroup has recently been in the process of finalizing metallurgical test work with SGS Lakefield to enhance metal recoveries, thereby improving operating margins as part of completing an internal economic assessment of the El Porvenir property. Management expects to make a production decision within the next few months. At a 70:1 silver:gold ratio, management's goal is for El Porvenir to develop annual production of approximately 50,000 gold equivalent ounces.

EXPLORATION STAGE GOLD PROJECTS:

Goldgroup's three exploration projects cover large areas in the Sierra Madre Gold Belt. They are considered early stage, but highly prospective, as they contain many historic workings. To-date, only surface geochemical sampling has been conducted on these properties.

El Candelero, Sinaloa - Mexico

Goldgroup has an option to earn up to a 70% interest from Goldcorp in the El Candelero property, comprised of approximately 25,000 hectares within 10 km of Goldcorp's world-class Tayoltita mine. The property has numerous historic surface workings and initial surface geochemical prospecting and trenching has returned gold and silver indications in a similar geological environment to Tayoltita. Goldcorp retains a back-in right to increase its interest to 60% by meeting certain conditions. To date, 118 surface samples with grades in excess of 1.0 g/t Au have been collected.

Kenya, Chihuahua - Mexico

Goldgroup holds a 90% interest in the Kenya property, comprised of approximately 80,000 hectares located some 50 km east of the San José de Gracia property in the Sierra Madre Gold Belt. The property contains numerous widely scattered historic workings, two of which Goldgroup has followed up with surface sampling and one of which displays encouraging results for gold and silver mineralization. To date, 84 surface samples with grades in excess of 1.0 g/t Au have been collected.

El Cahon, Sonora - Mexico

On November 12, 2009, Goldgroup announced a new grassroots gold discovery approximately 12 km from the Cerro Colorado mine, named the El Cajon Gold Project. Exploration is early stage and ongoing. Goldgroup owns 100% of this project.

2009 MINERAL RESOURCE SUMMARY

    
    -------------------------------------------------------------------------
                                                         Gold (Au)
                                             --------------------------------
                                                                   Goldgroup
                                                             100%      Share
                         Cut-off                        ---------------------
                           Grade     Tonnes      Grade     Ounces     Ounces
    Measured             (g/t Au)    (000's)   (g/t Au)       (Au)       (Au)
    -------------------------------------------------------------------------
    Cerro Colorado          0.25        107       0.63      2,157      2,157
    -------------------------------------------------------------------------
    Indicated
    -------------------------------------------------------------------------
    Cerro Colorado          0.25      9,599       0.54    167,987    167,987
    -------------------------------------------------------------------------
    Caballo Blanco          0.20      6,710       0.65    139,000     97,300
    -------------------------------------------------------------------------
    El Porvenir             0.20     14,831       0.62    297,000    297,000
    -------------------------------------------------------------------------
    Total M+I                                             606,144    564,444
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Inferred
    -------------------------------------------------------------------------
    Cerro Colorado          0.25      5,599       0.41     74,177     74,177
    -------------------------------------------------------------------------
    Caballo Blanco          0.20     27,600       0.58    517,000    361,900
    -------------------------------------------------------------------------
    El Porvenir             0.20        485       0.41      6,000      6,000
    -------------------------------------------------------------------------
    San José de Gracia      2.00      3,441       5.59    618,000    309,000
    -------------------------------------------------------------------------
    Total Inferred                                      1,215,177    751,077
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                        Silver (Ag)
                                             --------------------------------
                                                                   Goldgroup
                                                             100%      Share
                         Cut-off                        ---------------------
                           Grade     Tonnes      Grade     Ounces     Ounces
    Measured             (g/t Au)    (000's)   (g/t Ag)       (Ag)       (Ag)
    -------------------------------------------------------------------------
    Cerro Colorado          0.25        107          -          -          -
    -------------------------------------------------------------------------
    Indicated
    -------------------------------------------------------------------------
    Cerro Colorado          0.25      9,599          -          -          -
    -------------------------------------------------------------------------
    Caballo Blanco          0.20      6,710       1.92    410,000    287,000
    -------------------------------------------------------------------------
    El Porvenir             0.20     14,831      18.80  8,964,000  8,964,000
    -------------------------------------------------------------------------
    Total M+I                                           9,374,000  9,251,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Inferred
    -------------------------------------------------------------------------
    Cerro Colorado          0.25      5,599          -          -          -
    -------------------------------------------------------------------------
    Caballo Blanco          0.20     27,600       1.84  1,630,000  1,141,000
    -------------------------------------------------------------------------
    El Porvenir             0.20        485      11.90    186,000    186,000
    -------------------------------------------------------------------------
    San José de Gracia      2.00      3,441      10.02  1,109,000    554,500
    -------------------------------------------------------------------------
    Total Inferred                                      2,925,000  1,881,500
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Notes:

    1.  The resource categories used here and the preparation of these
        resource estimates are in accordance with the requirements of the
        Canadian Institute of Mining, Metallurgy, and Petroleum's "CIM
        Definition Standards on Mineral Resources and Reserves" as per NI 43-
        101.

    2.  Mineral resource estimates for the Cerro Colorado gold mine were
        initially prepared as part of the NI 43-101-compliant Technical
        Report, by Michelle Stone, Ph.D., P. Geo. of Caracle Creek
        International Consulting Inc. and are as at January 31, 2009. Ms.
        Stone is an independent qualified person as defined under NI 43-101.

    3.  Mineral resource estimates for the Caballo Blanco property were
        prepared as part of a NI 43-101-compliant Technical Report dated
        March 22, 2010, by Jim F. Cuttle, B.Sc., P.Geo. and Gary Giroux,
        MASc., P.Eng. of Giroux Consultants Ltd., both of whom are
        independent qualified persons under NI 43-101 standards.

    4.  Mineral resource estimates for the El Porvenir property were prepared
        as part of a NI 43-101-compliant Technical Report dated August 20,
        2009, by Benjamin Ainsworth, P.Eng., B.C. of Ainsworth-Jenkins
        Holdings Inc. and J. Douglas Blanchflower, P.Geo., B.C., of Minorex
        Consulting Ltd., both of whom are independent qualified persons under
        NI 43-101 standards.

    5.  Mineral resource estimates for the San José de Gracia property were
        prepared as part of a NI 43-101-compliant Technical Report dated
        March 22, 2010, by Jim F. Cuttle, B.Sc., P.Geo. and Gary Giroux,
        MASc., P.Eng. of Giroux Consultants Ltd., both of whom are
        independent qualified persons under NI 43-101 standards. The mineral
        resource estimate also contains 15.2 million pounds of copper and
        13.7 million pounds of Zinc at average grades of 0.20% Cu and 0.18%
        Zn, respectively, in the inferred resource category.

    6.  Mineral resources that are not mineral reserves, do not have
        demonstrated economic viability. The estimate of mineral resources
        may be materially affected by environmental, permitting, legal,
        title, taxation, socio-political, marketing or other relevant issues.

    7.  Mineral Resources on undeveloped properties assumes successful
        permitting allowing mining operations to be conducted.

    8.  Ounces calculated using the following conversion rate: 1 troy ounce
        = 31.103 grams.
    

Technical information in this news release regarding the Cerro Colorado gold mine has been reviewed and approved by Michelle Stone, Ph.D., P.Geo. and regarding the Caballo Blanco, El Porvenir and San José de Gracia properties has been reviewed and approved by Jim Cuttle, B.Sc., P.Geo., each a qualified person as defined under NI 43-101. Ms. Stone and Mr. Cuttle have reviewed the pertinent geological information in sufficient detail to support the applicable data incorporated in the mineral resource estimates.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Certain information contained in this news release, including any information relating to future financial or operating performance may be deemed "forward-looking". All statements in this news release, other than statements of historical fact, that address events or developments that Goldgroup expects to occur, are "forward-looking information". These statements relate to future events or future performance and reflect Goldgroup's expectations regarding the future growth, results of operations, business prospects and opportunities of Goldgroup. These forward-looking statements reflect Goldgroup's current internal projections, expectations or beliefs and are based on information currently available to Goldgroup. In some cases forward-looking information can be identified by terminology such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "projects", "potential", "scheduled", "forecast", "budget" or the negative of those terms or other comparable terminology. Certain assumptions have been made regarding the forecast 2010 production at Cerro Colorado of between 25,000 to 30,000 ounces of gold. Many of these assumptions are based on factors and events that are not within the control of Goldgroup and there is no assurance they will prove to be correct. Such factors include, without limitation: capital requirements, fluctuations in the international currency markets and in the rates of exchange of the currencies of Canada, the United States and Mexico; price volatility in the spot and forward markets for commodities; discrepancies between actual and estimated production, between actual and estimated reserves and resources and between actual and estimated metallurgical recoveries; changes in national and local governments in any country Goldgroup currently or may in the future carry on business; taxation; controls; regulations and political or economic developments in the countries in which Goldgroup does or may carry on business; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits, diminishing quantities or grades of reserves; competition; loss of key employees; additional funding requirements; actual results of current exploration or reclamation activities; changes in project parameters as plans continue to be refined; accidents; labour disputes; defective title to mineral claims or property or contests over claims to mineral properties. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance or inability to obtain insurance, to cover these risks) as well as "Risks and Uncertainties" included in the Annual Information Form and MD&A for Goldgroup available at www.sedar.com. Forward-looking information is not a guarantee of future performance and actual results and future events could differ materially from those discussed in the forward-looking information. All of the forward-looking information contained in this news release is qualified by these cautionary statements. Although Goldgroup believes that the forward-looking information contained in this news release are based on reasonable assumptions, readers cannot be assured that actual results will be consistent with such statements. Accordingly, readers are cautioned against placing undue reliance on forward-looking information. Goldgroup expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, events or otherwise, except in accordance with applicable securities laws.

This news release and the information contained herein does not constitute an offer of securities for sale in the United States and securities may not be offered or sold in the United States absent registration or exemption from registration.



For further information: For further information: on Goldgroup, please visit Goldgroup's website at www.goldgroupmining.com or contact: Keith Piggott, CEO, David Fry, Corporate Development, T: (604) 682-1943; Michael Farrant, President, T: (416) 278-4149


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