May 18 2013
McEwen Mining Inc. is pleased to announce that the Company will be expanding the El Gallo 1 Mine in Sinaloa, Mexico. The Company expects this expansion will significantly increase gold production for a small amount of capital.
El Gallo 1 Mine Expansion Highlights
(Stated in U.S. Dollars)
- Production Increasing: El Gallo 1 mine to be increased from 3,000 to approximately 4,500 tonnes of ore per day. This, along with improvements in ore grade, would increase gold production from an estimated 27,300 ounces in 2013 to approximately 37,500 ounces in 2014 and 75,000 ounces in 2015.
- Limited Capital Required: Initial capital cost estimated at approximately $5 million. No need for debt or equity financing. Growth to be financed internally.
- Upgrades: Additional carbon columns, pumps, spare parts inventory, heap leach pad expansion and upgrades to the process plant. Mining rate to be increased as required using current mining contractor.
- Time: Equipment additions and plant upgrades expected to be completed in 9 months. Heap-leach pad expansion is expected to be completed in 12 months. Existing capacity on current heap-leach pad could potentially accelerate ramp-up.
- Exploration: Primary driver behind expansion is the new Central Zone discovery. Recent drill holes include: 5.7 gpt gold over 23 meters and 3.9 gpt gold over 21 meters, which has expanded the mineralization at the mine and increased management's confidence.
- El Gallo 2 Alternative: Evaluating potential to ship ore from El Gallo 2 to El Gallo 1, using current heap leaching facilities. Review will focus on silver recoveries (early column tests returned between 45-62% silver) and crushing/processing costs. If successful, this would eliminate approximately $170 million in capital expenditures.
"With today's lower gold and silver prices and capital markets effectively shut to junior mining companies, one is forced to look closer at low cost alternatives in order to grow profitability. One of the most attractive features of a heap leach mine in Mexico is that it can be expanded fairly quickly, with modest capital. Even without El Gallo 2 or Gold Bar, production from our existing operations is set to ramp-up from 130,000 gold equivalent ounces this year to 175,000 gold equivalent ounces by 2015," stated Rob McEwen, Chief Owner.
Crushing Capacity
The crushers at El Gallo 1 were originally designed to operate at 3,000 tonnes per day. During construction the Company decided to purchase equipment with extra capacity. Since commercial production was declared on January 1st, the Company has been able to steadily increase capacity. During Q1, the crushers averaged 3,275 tonnes per day. In April, that was increased to 3,700 tonnes per day. In May, the crusher has operated up to 4,500 tonnes per day. In order to continue at this rate on sustained basis improvements will be made to the equipment availability through an enhanced maintenance program and a larger inventory of spare equipment.
Process Plant
The current ADR (adsorption-desorption-recovery) process plant at the mine is able to accommodate an average of 4,000-4,300 tonnes per day. In order to expand this capacity the Company will be installing a new series of pumps, generators, carbon columns and making upgrades to the electro-winning cells. This process is expected to be completed in approximately 9 months.
Heap Leach Pad
In order to accommodate the increased throughput, expansion of the heap leach pad will be moved forward in the mine plan. In order to expand the size of the heap leach pad, additional permits are required. Work on these permits has been underway since the beginning of the year and the Company expects to have them submitted by the end of Q3. There is currently capacity on the leach pad that could handle the increased production for approximately one year, which is located within the existing mine permit.
El Gallo 2 - Heap Leach Potential
With the planned expansion at El Gallo 1, the Company will review the potential to process ore from El Gallo 2 at the current heap leach facilities. The two sites are separated by approximately 5 kilometers. Review will focus on silver recoveries (early column tests returned between 45-62% silver), transportation, crushing and processing costs. Although this would reduce recoverable silver, it would eliminate approximately $170 million in capital expenditures.
Technical Risks
There are significant risks and uncertainty associated expanding production without a feasibility or pre-feasibility study. The proposed El Gallo 1 production expansion has not been explored, developed or analyzed in sufficient detail to complete an independent feasibility or pre-feasibility study and may ultimately be determined to lack one or more geological, engineering, legal, operating, economic, social, environmental, and other relevant factors reasonably required to serve as the basis for a final decision to complete the development of all or part of the El Gallo 1 expansion.
Source: http://www.mcewenmining.com/