VANCOUVER (miningweekly.com) – Mexico-focused gold miner Timmins Gold has completed a new Canadian National Instrument 43-101-compliant technical report on its San Francisco gold mine, extending the mine life out to 2023.
The Vancouver-based company on Monday announced a new mine plan for the asset that is expected to generate the funds necessary for construction of the company’s new cornerstone Ana Paula mine, which it acquired from Newstrike Capital last May for about C$140-million.
Timmins advised that the new mine plan, developed by consulting engineering firm Micon International, incorporates over two years of new exploration, infill and production drilling data, a reinterpretation of certain phases of the deposits, and mining and process engineering optimisations.
Higher gold prices so far this year have given the company breathing room, as it is intent on placing the San Francisco mine on care and maintenance at the end of the year or early next year in favour of processing low-grade stockpiles.
According to the new mine plan, 2016 production is expected to total between 90 000 oz and 100 000 oz gold at cash costs of $750/oz to $800/oz and total capital expenditure of $4-million. In 2017, the company expects to produce between 65 000 oz and 70 000 oz gold at cash costs of $900/oz to $950/oz and total capital expenditure of $4-million. During 2018, Timmins expects to produce between 80 000 oz and 85 000 oz gold at cash costs of $1 000/oz to $1 050/oz and total capital expenditure of $2-million.
Despite processing and production rates being lower from 2019 forward, the associated design and plan result in the lowest all-in costs and highest margin for the mine life.
The lower grades and higher strip in 2019 and 2020 are offset through reduced unit mining and unit processing costs, keeping cash costs favourable. Unit mining costs starting in 2018 and thereafter will benefit from significantly reduced haulage distances and, later on, backfilling scenarios, Timmins explained.
Unit processing costs, from 2019 onward, benefit from lower throughputs (anything less than or equal to 16 000 t/d) as a result of the use of grid power only, as opposed to a combination of grid power and diesel-generated power at higher throughputs, as well as the use of one absorption, desorption and refining plant, compared with two, at higher throughputs.
The technical report includes new reserves and resources, comprising a new combined proven and probable mineral reserve for the San Francisco mine. This includes the San Francisco and the La Chicharra pits, which contain 32.1-million tonnes grading 0.56 g/t gold, for 574 000 oz of contained metal. The San Francisco mine also has a low-grade stockpile of 7.37-million tonnes grading 0.26 g/t for 61 000 oz of gold.
Further, San Francisco holds 55.45-million tonnes grading 0.58 g/t gold for 1.03-million ounces of gold in the combined measured and indicated resource categories.
ANA PAULA PLAN
The Timmins board recently gave approval for the company to proceed with a preconstruction programme, including undertaking a feasibility study for the Ana Paula gold project in Guerrero state.
The programme will involve infill drilling, metallurgical testwork, and environmental baseline and permitting activities.
With an investment of $9.2-million, the company expects to complete the feasibility study by the third quarter of 2017 and to have all permits in place to start construction by the first quarter of 2018. Timmins has contracted M3 Engineering & Technology to lead the feasibility study.
The company reported that it had completed the disassembly of the El Sauzal facilities, which it acquired for C$8-million in October 2015 from Goldcorp.
“With the improvements in our balance sheet and operations at the San Francisco mine, we can begin to unlock the value of Ana Paula. With its higher grade, low cash costs, high capital efficiency and industry-leading internal rate of return, Ana Paula will be a very profitable mine,” interim CEO Mark Backens said at the time.
The company announced results of an updated preliminary economic assessment in March for the project. The project has an expected average yearly output of 11 000 oz of gold and 239 000 oz of silver over an eight-year mine life.
Capital costs have been estimated at $121.7-million, including contingency costs of $19.8-million.
"Expected cash flow from [San Francisco] operations will comfortably fund the preconstruction work programme at Ana Paula while meaningfully contributing to the company's treasury. Gold production at San Francisco should continue well through the expected start of production at Ana Paula,” Backens added on Monday.