Goldgroup Mining has started blasting and tunnel construction operations at the La Paila mineralised zone at the Caballo Blanco project in Veracruz, Mexico.

The project covers an area of around 550 km² and is centered next to the Gulf of Mexico, 65km north-west of the city of Veracruz in the state of Veracruz, Mexico.

The tunnel will be developed to extract large-scale bulk samples for pilot plant onsite metallurgical testing to confirm the suitability of an open-cut, run-of-mine, heap-leach gold operation.

Goldgroup president and CEO Keith Piggott said, "Together with our diamond drilling programme and advanced onsite column leach testing, this tunnel development is consistent with our schedule to commence production at Caballo Blanco in 2012." .