Alio Gold Inc, today announced that it has awarded GDI STRACON GyM S.A. de CV the contract for developing the underground decline at the high grade, high margin Ana Paula project in Guerrero, Mexico. In addition, the Company has engaged JDS Energy and Mining (“JDS”) to manage the contract and underground mining operation.
“GDI STRACON is a highly respected mining contractor and we are pleased to be working with them on the Ana Paula project,” said Greg McCunn, Chief Executive Officer. “The underground decline at Ana Paula is expected to be completed in mid-2018 after which we will be able to commence an exploration program that has the potential to significantly enhance the value of the Project.”
Under the terms of the contract, the 1,200 metre decline is expected to take 7 months after mobilization to complete at a cost of approximately $10 million, including development of underground drill stations. GDI STRACON anticipates development of 5-7 meters per day. Mobilization of the contractors to site is expected in November 2017 with the establishment of the first camp and permanent infrastructure at Ana Paula. Decline construction is expected to follow in January 2018.
The underground decline will be driven from a portal site located in the adjacent valley from the proposed pit and approximately 400 meters from the proposed mill site. The decline is being advanced to provide access for a drill program that is targeted to confirm the continuity and shape of the high-grade gold mineralization below the proposed pit that is hosted in the complex breccia. It will also provide access to explore the gold mineralization indications at depth hosted in hornfels skarn, typical of the Guerrero Gold Belt.
A definitive feasibility study (“DFS”) is currently underway and expected to be completed in the second quarter of 2018 followed by a construction decision on the project. With the exploration program targeted to commence after the DFS is completed positive results would be incorporated into an optimized mine plan.