TORONTO (miningweekly.com) – Canadian miner Alamos Gold has discovered new mineralised zones at two satellite deposits of its Mulatos mine, in Mexico, adding to the probability that the deposits could extend the Mulatos mine life and reduce costs when they come into production during 2017.

"These satellite deposits are expected to provide our lowest cost production at Mulatos and are a significant source of near term production growth. These remain our highest priority exploration targets at Mulatos. Following up on the strong results to date, we are adding additional rigs to target these new zones of mineralisation through the end of this year," president and CEO John McCluskey stated.

The TSX- and NYSE-listed company early on Monday morning advised that it had found new mineralisation at Cerro Pelon, located only 100 m north of the existing reserve, where highlight drill intercepts included 14.47 g/t over 50.3 m, 9.65 g/t over 34.6 m and 2.46 g/t over 94.2 m. These drill results were showing grades significantly higher than the current reserve grade of 1.64 g/t gold over significant widths.

The early-stage testwork on the metallurgy pointed to the gold being amenable for recovery through heap leaching. Importantly, Alamos noted that the mineralisation tended to widen from a narrow base, and owing to the flaring or conical shape, the true widths of the mineralisation might vary significantly. According to the company, the higher-grade intercepts were located around the 90 m below surface, potentially opening the opportunity to exploit the deposit by openpit.

For the rest of the year, the company planned to drill the next 200 m of strike length, with three rigs expected to complete about 3 000 m of drilling in this zone. Further north, the company would focus on a massive silica outcrop that would be the focus for exploration in 2016.

At La Yaqui, Alamos reported strong drill results only 500 m north-east of the current mineral reserve, where highlight drill holes included 1.36 g/t over 117.4 m and 1.34 g/t over 64 m. Another 750 m along strike, it encountered 5.68 g/t over 15.2 m and 2.03 g/t over 32 m. The current reserve grade at La Yaqui was 1.58 g/t gold.

Alamos stated that the mineralisation remained open along strike, and the company had started follow-up drilling around the intercepts and was undertaking infill drilling along the strike length between the current reserve.

Cerro Pelon and La Yaqui were located about 3 km and 7 km in a straight line, respectively, from the existing Mulatos operation. These deposits hosted a combined mineral reserve of 4.2-million tonnes grading 1.64 g/t gold, containing 220 400 oz of gold. Both deposits were near surface, highly oxidised and amenable to openpit, heap leaching.

Each project would operate with independent heap leach pads and portable crushing circuits and would not displace existing throughput capacity from the main Mulatos crushing circuit and heap leach pad. With a combined mineral reserve grade double the 2015 budget, these projects were expected to provide near-term production growth at Mulatos while significantly reducing the overall cost profile.

Baseline work required for the environmental-impact assessments (EIA) continued in parallel with the ongoing exploration programme. In parallel with completing the environmental baseline studies, the company intended to perform further detailed economic analysis incorporating the latest exploration results.

The EIA's for both deposits were expected to be completed and submitted early in 2016.