TORONTO (miningweekly.com) – TSX- and NYSE-listed Primero Mining this week slashed its 2013 capital expenditures (capex) budget for the Cerro del Gallo gold/silver/copper project, in Guanajuato state, Mexico, by about 75%, while maintaining the project’s expected timeline.

The Toronto-based company on Monday said it now planned top spend only $15-million on the project this year, significantly less than the $50-million to $60-million announced when the company bought the project from Australia-based Cerro Resources for C$119-million in May. Gold major Goldcorp holds a 30.8% interest in the project.

Primero said the reduced budget would take the project to a construction decision, expected in the fourth quarter, and the company expected to complete all outstanding permitting, land acquisition, basic engineering of the mine and processing facilities, and a preliminary exploration programme in this time frame.

Cerro del Gallo could potentially produce about 95 000 gold-equivalent ounces a year, with production expected to start in mid-2015.

"Given the recent profound decline in the gold price we are committed to advancing the project to a construction decision with a limited investment and will make a construction decision based on the market conditions and the return expected from the project at the end of the year.

“We remain opportunistic about our growth alternatives,” Primero president and CEO Joseph Conway said in a statement.

The company said it was weighing various options for the project, including a single-phase heap leach operation, accelerating a second-phase carbon-in-leach (CIL) operation and a CIL-only operation.

Permitting for the heap leach project began in early 2012, with an environmental impact study "nearly complete".

To date, surface rights to 149 ha land had been acquired, out of a total of 363 ha required for the heap leach operation.

The company, which also operates the San Dimas gold/silver mine, in Mexico's Durango state, expected to spend about $4-million of its previously budgeted $15-million exploration budget this year.

The exploration programme included 12 000 m of infill and condemnation drilling, as well as regional mapping and geochemical assessment.

Primero also announced it had appointed Louis Toner as VP for project development and construction, effective from Monday. He who would be responsible for leading development of the Cerro del Gallo project.