McEwen Mining announced in mid-May that it plans to expand mine production at its El Gallo 1 gold-silver mine in Sinaloa, Mexico, from 3,000 to approximately 4,500 mt/d of ore. The expansion, along with improvements in ore grade, is expected to increase the mine’s production from an estimated 27,300 gold equivalent oz in 2013 to approximately 37,500 oz in 2014 and 75,000 oz in 2015.

El Gallo 1 poured its first gold in September 2012 and achieved commercial production on January 1, 2013. During the first quarter of 2013, the mine produced 6,673 oz of gold and 5,640 oz of silver (6,781 gold equivalent oz).

Initial capital cost for the expansion to 4,500 mt/d is estimated at about $5 million, which McEwen can finance internally.

The primary driver of the El Gallo 1 expansion is the mine’s recently discovered Central Zone. Drill intercepts in the zone have included 23 m of 5.7 g/mt gold and 21 m of 3.9 g/mt gold.

McEwen is also evaluating the potential for shipping ore from the El Gallo 2 deposit, 5 km from El Gallo 1, to El Gallo 1 for processing. The company had previously contemplated building a stand-alone processing operation at El Gallo 2 and completed a feasibility study for such an operation in September 2012. Capital cost for a stand-alone El Gallo 2 plant was estimated at about $170 million.

The current evaluation will focus on silver recoveries and crushing/processing costs. Early column processing tests have indicated recoveries of 45% to 62% silver from El Gallo 2 ore processed at El Gallo 1, while agitated cyanide leaching tests performed during the El Gallo 2 feasibility study showed recoveries greater than 80%.

The McEwen announcement of the El Gallo 1 expansion stated, “There are significant risks and uncertainty associated with 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, or 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.”

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