TORONTO (miningweekly.com) – Canadian gold miner Timmins Gold on Tuesday announced an updated resource at its San Francisco mine, in Sonora state, Mexico, prompting it to also update the operation’s mining plan.

A recent drilling programme had enabled the company to update its Canadian National Instrument 43-101-compliant proven and probable reserves by 20% net of depletion, compared with the previous July 1, 2011 estimate, to 1.59-million ounces of gold, contained in 91-million tons grading 0.54 g/t.

Since the last resource update, the company had extracted about 314 000 oz of gold.

The company also lifted its measured and indicated resources, including the reserves, by 30% to 1.87-million ounces, contained in 102-million tons grading 0.57 g/t.

The inferred resource swelled 77% to 1.78-million ounces, contained in 122-million tons grading 0.45 g/t.

"Considering the effectiveness of our drilling and the size of our land package, we believe that we can continue to increase reserves and resources beyond their current levels as we have yet to reach the extent of mineralization along strike and at depth.

“The updated reserve underpins a 9.5-year mine life at about 122 000 oz/y of gold. Considering the size of our measured and indicated resources and our inferred ounces, we expect that, with future drilling, the mine life can be further increased,” CEO Bruce Bragagnolo said.

The updated economic projections resulted in pre-tax undiscounted cash flows of $489-million at a constant gold price of $1 350/oz.

The pre-tax net present value, at a 5% discount rate, totalled $381-million.

Over the estimated life of the mine, San Francisco is expected to produce about 1.16-million ounces of gold based on the current reserves. The mine would produce about 122 000 oz/y of gold at estimated life-of-mine costs of $823/oz, including by-products.

The estimated all-in sustaining costs were expected to total $843/oz over the extent of the new mine plan.