VANCOUVER (miningweekly.com) – Empowered by its strategic investment partner Osisko Gold Royalties, Canadian explorer and project developer Minera Alamos is on the hunt for large contiguous mineralised blocks in Mexico and elsewhere in Latin America.

“As markets continue to improve in the short term, we are aiming at putting together a sought-after land package,” Minera Alamos president Darren Koningen tells Mining Weekly Online.

With the acquisition early last year of the flagship Durango-based La Fortuna starter project from Argonaut Gold, on which the company is now working aggressively to formalise a construction decision by early next year, the company quickly picked up the surrounding lands and has assembled a significant land package of close to 6 000 ha.

Koningen explains that the company has gained significant knowledge of that area, which covers a significant historic mining camp that has been neglected in recent years, owing to infrastructure constraints and security concerns.

“We are really kind of first movers back into Sinaloa in a sense. The main La Fortuna deposit was only one of three areas that were mined historically and only one part of the main La Fortuna zone was ever drilled in the nineties, before it was shut down when gold prices really cratered in the late nineties,” he says.

The company is intent on securing big mineralised systems, which have been left out of development in recent years, "for whatever reasons".

“We’ve been looking at the Sinaloa area for a while now and, with the social security continuously improving in the region, we are focused on getting in there before everyone else follows suit.

"One can make some really nice acquisitions now that you just cannot do anywhere else, such as in Sonora state, where everybody is fighting over bits and pieces,” he notes.

According to Koningen, where it used to take about a seven-hour trip from Culiacán, Sinaloa to the project site, state highway expansion is ongoing and the time has now dropped to just more than two hours, he says. The property is in the north-western corner of Durango state, about 70 km northeast of Culiacán.

The La Fortuna gold project includes the historic La Fortuna mine, together with the surrounding concessions, totalling 994 ha. Koningen describes the La Fortuna project as being “hugely prospective” – there are lots of other mine pits and adits south of the river, which is the main fault, where the company has consolidated the land covering the original porphyry rocks exposed at surface.

“But nobody has done any drilling there. So, the strategy over the last couple of years has really been to put together these packages. We expect to make announcements shortly on further land acquisitions,” he advises.

STRATEGIC PARTNERSHIP
Late in May, precious metals royalty company Osisko Gold Royalties took a 19.9% stake in Minera Alamos through a C$3.3-million private placement, giving it access to near-term gold production at the La Fortuna project and a toe-hold for future opportunities in Mexico and Latin America.

Osisko will have the right to buy up to a 4% net smelter return royalty (NSR) for C$9-million, and have a participation right on any future royalties and streams granted by the company. Osisko also has the right to participate in half of any buybacks of existing La Fortuna royalties, and the right to acquire a 2% NSR on any property acquired within a 250 km radius of La Fortuna.

The company intends to seek funding for the overall construction costs through commitments from financial partners, which in Mexico range between about $20-million to $25-million to build similar-sized projects.

Koningen explains that the Osisko partnership provides the foundation for future growth at La Fortuna and through acquisitions in Mexico.

The partners are working to vet project opportunities in the Caribbean and also in certain jurisdictions in South America.

PROJECT PROGRESS
The company is now focused on submitting the permitting applications for a starter operation of about 1 000 t/d at La Fortuna, that can produce about 45 000 oz to 50 000 oz of gold a year. It can “easily” be expanded to double output to within a range of 90 000 oz to 100 000 oz of gold a year.

Koningen advises that the permitting application has been delayed by about a quarter, owing to a delay in obtaining all required legal documentation for submission to Mexican authorities.

The company intends to leverage the resulting cash flow for longer-term growth opportunities and expansion at La Fortuna, while also maintaining the option to sell further royalties on La Fortuna.

Last week, Minera Alamos closed an oversubscribed private placement comprising 36-million common shares at a price of C$0.15 a share, for gross proceeds of C$5.4-million, which the company intends to use for exploration and development at La Fortuna.

Koningen explains that, to date, metallurgical testwork targeting gold recovery optimisation at La Fortuna has resulted in a 50% increase in potential gold production from the La Fortuna gold resource, when compared with typical heap leach recoveries.

The ability to preconcentrate the gold before leaching would allow for further reductions in the scope and capital required for downstream processing equipment, Koningen states.

Gold is mainly found in the form of free grains that are readily recoverable and, based on the samples tested, recoveries averaging about 98% can be achieved through direct cyanidation of the ground mineral samples.

Further, gravity recoverable gold results demonstrated that more than 80% of the gold from the sample materials could be achieved through centrifugal gravity concentration alone.

According to the company, 97% to 98% of the gold reported a high-grade bulk flotation concentrate, representing only 10% (by mass) of the initial sample material, while high gravity/flotation recoveries were maintained at relatively coarse grind sizes larger than 200 microns.

The project hosts measured plus indicated resources of 4.8-million tonnes grading 1.98 g/t gold and containing 308 100 oz of gold, with additional silver credits, currently excluded from the resource calculations.

Koningen adds that the company is still preparing to ship a previously operational grinding/flotation facility for use in the construction of the La Fortuna project. The equipment is still located in Val D’or, Quebec.