Timmins Gold has initiated a $9.2 million pre-construction program, including work on a feasibility study, at its Ana Paula gold project in Guerrero, Mexico. Development of the program is based on a positive preliminary economic assessment (PEA) completed in March that indicates that Ana Paula represents a robust, high-margin, open-pit mining project at a $1,200 gold price.
Early-stage work has begun at the Ana Paula project, where Timmins Gold plans to build a medium-sized gold and silver mine for roughly $121 million. (Photo: Timmins)
In addition to the feasibility study, pre-construction activities at Ana Paula will include infill drilling, metallurgical test work, and environmental baseline and permitting activities. The feasibility study is scheduled for completion in the third quarter of 2017, and Timmins expects to have all permits required to start construction by the first quarter of 2018.
In October 2015, Timmins acquired the complete process plant and select auxiliary equipment used in the operation of Goldcorp’s El Sauzal mine in Chihuahua, Mexico, for relocation to the Ana Paula project. Disassembly of the El Sauzal plant is complete, and relocation to Ana Paula is in progress.
The Ana Paula PEA assumes average annual production of 116,000 oz of gold and 239,000 oz of silver over an 8.2-year mine life. Construction capital costs are estimated at $121.7 million, including contingency costs of $19.8 million. All-in sustaining cash costs of gold production are estimated at $507/oz.
Timmins has contracted M3 Engineering & Technology to lead the Ana Paula feasibility study.
Timmins interim CEO Mark Backens said, “We continue to view Ana Paula as one of the best development-stage gold projects in North America. 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. Further, the El Sauzal facilities will provide us a head start to rapidly advance the project to construction-ready status.”
Ana Paula is located in the north-central part of Guerrero state, roughly half way between Mexico City and Acapulco. The project lies within the Sierra Madre mountain range, where topography can range from moderate to rugged, with elevations varying from 900 m to more than 1,460 m above sea level. The land is largely non-arable and uninhabited. The property is accessible by paved highway and gravel roads.