JOHANNESBURG (miningweekly.com) – Vancouver-based Farallon Mining plans to open a new mine near its G-9 operation, in Mexico, in 2013.

The TSX-listed miner said on Tuesday it would formally re-evaluate four deposits to assess the feasibility of building a second mine at Campo Morado, which would piggyback on infrastructure already in place at the G-9 polymetallic mine.

The new mine would be "incremental" to the 1 500-t/d underground zinc mine at G-9.

Farallon reported that the contained gold at the Reforma, El Rey, Naranjo and El Largo deposits totalled 960 000 oz, while the contained silver added up to 60-million ounces.

Indicated resources for the deposits total 11,2-million tons of 4,7% zinc, 0,7% copper, 1,4% lead, 165 g/t of silver and 2,7 g/t gold.

"With approximately one-million ounces of contained gold in a gold price environment of $1240/oz and an outlook of continued strength for gold going forward, as well as a fundamental change in the prices of the other metals involved, the value of these deposits has increased significantly since we last looked at them in detail. In combination with mine and mill infrastructure that is already in place and operating costs stabilised, it's time to formally revisit unlocking their value," said president and CEO Dick Whittington.

The company ceased evaluation of these deposits in late 2005, to focus its attention on building the G-9 mine, where it reached full production in the final quarter of last year.

Whittington explained that low metal prices in late 2005, particularly for by-product metals, the need for substantial initial capital investment, and testwork indicating low metallurgical recoveries, rendered the deposits uneconomic at that time.

However, the gold price has since tripled from $425/oz to $1 240/oz.

Farallon has also put in place infrastructure for the G-9 mine and said it was now in a better position to estimate the operating costs for the mining and milling of these deposits, using the established cost profile of G-9.

G-9 is a 1 500-t/d per day zinc mine with copper, gold, and silver as by-products.

The company is targeting to produce 120-million pounds a year of zinc and 15-million pounds a year of copper from the mine.

"Our strong balance sheet and the low-cost profile of the G-9 mine will provide the operating and financial platform upon which to build a second mine at Campo Morado," Whittington stated.

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