TORONTO (miningweekly.com) – Vancouver-based Farallon Mining expects to have completed a preliminary economic assessment on four satellite deposits at its Campo Morado property, in Mexico, in the first quarter of next year, CEO Dick Whittington said on Tuesday.

Farallon achieved commercial production at its G-9 polymetallic mine, in Mexico, in April, and confirmed this week that its board has approved a C$5,3-million project to expand the existing milling operations from 1 500 t/d to 2 000 t/d.

The mill expansion will be funded from current cash on hand and cash flow generated by operations.

Speaking on a conference call, Whittington said the four satellite deposits, located to the north of G-9, on the 116 km² Campo Morado property, will likely be mined in the future to extend the life of the G-9 operation.

The company has already established indicated resources of 11,2-million tons on the four deposits, “which is obviously a very significant size of resource,” he commented.

“What we are doing through the preliminary economic assessment is essentially bringing our experience from operations and metallurgy and obviously the fact that we now have a mill constructed, paid for and in operation, so that we can look at these deposits in a completely different light and, as a result, use them to extend the life of any mining operation at G-9.”

However, he added that the satellite deposits will only be mined after Farallon is comfortable that exploration at G-9 itself has run its course.

The company believes that there is still a lot to be discovered around G-9 and announced in early October it would spend C$2,7-million on a 20 000-m core drilling exploration programme over the next two quarters, aimed at adding resources to G-9.

“Obviously, if we continue to discover new zones...we will be looking to extend the life of G-9 through the G-9 mineralised material that we discover first,” Whittington said on Tuesday.

“And then we will be adding on the resources from these four [satellite] deposits as a kind of 'back-pocket' insurance policy, to extend the life of operations at G-9.”

RECOVERIES IMPROVE

During the third quarter, Farallon produced 20 462 t of zinc concentrate and 4 894 t of copper concentrate, containing about 22,1-million pounds of zinc, 1,8-million pounds of copper, 301 202 oz of silver and 3 355 oz of gold from the G-9 mine.

Zinc and copper production both increased, from 21,3-million pounds and 1,7-million pounds, respectively, in the second quarter.

Farallon continued to focus on metallurgical recoveries at G-9, and managed to improve zinc recovery to 79% for the three months, compared with 77% in the second quarter.

The trend has continued into the fourth quarter, COO Kevin Weston reported, with average zinc recoveries of 85% achieved during the month of October.

Although copper recovery fell to 46% in the third quarter, down from 55% in the previous three months, there have been some improvements during the current quarter, with an average copper recovery of 55% in October, Weston said.

In the mill, although design capacity of 1 500 t/d was achieved for extended periods of time during the third quarter, mill availability was lower than design, which led to production rates averaging 1 270 t/d, compared with 1 260 t/d in the second quarter.

However, the company has implemented enhanced maintenance programmes and taken other steps to improve availability and throughput, and saw an improvement in October, when the mill processed around 49 600 t of ore, or an average of 1 600 t/d – 107% of design.

Farallon reported a net loss of C$0,6-million in the third quarter, compared with a C$8-million loss in the second quarter.

Shares in the company slid 5,3% on Tuesday, to C$0,45 apiece by 15:36 in Toronto.