Name of the Project
El Gallo Complex – Project Fenix redevelopment plan.

Location
Sinaloa state, Mexico.

Client
McEwen Mining.

Project Description
The project proposes the potential extension of production from the El Gallo Complex.

The project has an updated measured and indicated resource estimate of 13-million tonnes at an average grade of 0.39 g/t gold and 77 g/t silver, containing 591 000 oz of gold equivalent. Inferred mineral resources are estimated at 5.7-million tonnes at an average grade of 0.81 g/t gold and 27 g/t silver, containing 214 000 oz gold equivalent.      

The redevelopment plan called Project Fenix involves a two-stage development process.

Phase 1 includes the reprocessing of material on the gold heap-leach pad at McEwen’s existing El Gallo gold mine, and Phase 2 includes the processing of the openpit gold and silver ores from multiple deposits, including El Gallo Silver, Palmarito, El Encuentro and Carrisalejo. The process plant will use conventional and proven mineral processing and precious metals recovery technologies. Phase 1 will have a throughput of 5 000 t/d. During Phase 2, fresh mineralised material from higher-grade silver deposits (primarily El Gallo Silver) would be processed at 3 250 t/d.

The selected process recovery methods have been based on the separate campaign retreatment of heap-leach material (Phase 1) and the treatment of fresh mineralised material from other deposits (Phase 2).

Phase 1 will target gold recovery from the heap-leach pad material using a conventional ball mill grinding and a hybrid carbon-in-leach (CIL) circuit (hybrid means the first leach tanks are pure leach tanks and the remaining tanks are CIL tanks), to recover gold onto activated carbon.

Industry-standard elution, electrowinning and smelting circuits will be used to produce a doré product. Soluble copper levels will be controlled and suppressed using established methods. Cyanide in the CIL tailings will be detoxified using the sulphur dioxide/air process, and the detoxified tailings will be sent to a tailings storage facility in an existing mined-out openpit. Tailings produced during the operation, starting with Phase 1, will be stored in the mined-out Samaniego pit at the El Gallo gold mine. As part of this, in-pit tailings deposition will include a tailings delivery system designed to maximise tailings consolidation and water recovery. Water will be recovered using surface reclaim pumps, a basin underdrain collection sump, a finger drain network and down gradient contingency pump back wells.

In Phase 2, the process facility will be modified to allow for the treatment of material from the El Gallo Silver deposit to be followed by other deposits in the complex. Phase 2 operation will use conventional flotation technology, intensive leaching of concentrates, with countercurrent decantation washing used to recover solution for zinc precipitation using the Merrill Crowe process for silver and gold recovery.

The Phase 1 CIL plant will be used for cyanide leaching of the flotation tailings to maximise overall silver recoveries during Phase 2. This phase will also use the existing El Gallo gold mine three-stage crushing plant to prepare material for delivery to the grinding circuit.

The available volume in the Samaniego pit will facilitate the Fenix project.

Over the mine life, production will total 17.2-million tonnes of mineralised material at an average head grade 1.17 g/t gold equivalent containing 680 000 oz of gold equivalent, and recovering 573 000 t of gold equivalent.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an estimated after-tax net present value, at a 5% discount rate, of $60-million and an after-tax internal rate of return of 25%, with a payback of four years.

Value
Initial capital for Phase 1 is estimated at $41-million and for Phase 2 $30-million.

Duration
Not stated.

Latest Developments
The current operation at El Gallo Gold is a fully permitted site; however, the Phase 1 project requires amending of the current permits to include the construction of a mill and leach circuit in the location of the existing facilities for the reprocessing of the heap.

The permit amendment will also include the backfilling of the Samaniego pit with mill tailings as part of an integrated concurrent closure plan for the El Gallo gold mine.

Phase 2 project permitting will require authorisation at El Gallo Gold to expand the process plant footprint and the tailings volume to be deposited at the Samaniego pit.

The El Gallo Silver permits require amendments to change the processing location to El Gallo Gold, thus eliminating construction of the process components and the tailings facility at El Gallo Silver.

The Fenix project has approval from the Mexican federal water authority, CONUGUA, to extract groundwater, and land-use permits to construct wells.

Advancing the project will require the filing of permit amendments for Phase 1 and Phase 2.

Key Contracts and Suppliers
GR Engineering Services (metallurgical, process plant capital expenditure and operating expenditure).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
McEwen Mining investor relations, Mihaela Lancu, tel +1 647 258 0395 ext 320 or email info@mcewenmining.com.