Agnico-Eagle Mines has approved the development and construction of the La India mine in Sonora, Mexico. Agnico-Eagle acquired La India, located approximately 70 km from Agnico-Eagle’s Pinos Altos mine, in November 2011 as part of the transaction with Grayd Resource Corp. In addition to La India, the large 54,981 hectare property position contains an early-stage exploration project named Tarachi, which is 10 km to the north.
The La India mine will be developed as an open-pit, heap leach operation with commercial production expected in the second half of 2014. Construction costs for the project are expected to total approximately $158 million, with sustaining capital costs forecast to total approximately $25 million over the eight-year life of the mine.
The feasibility study estimates that the La India project will generate an internal rate of return of approximately 31% assuming a gold price of $1,379/oz. Metallurgical recoveries are estimated to average approximately 80%, resulting in average gold production of 90,000 oz/y. The waste to ore stripping ratio in the open-pit mine is estimated at approximately 1:1. Life-of-mine total cash costs at La India are expected to average $500/oz.
“The acquisition and development of the La India project is consistent with Agnico-Eagle’s strategy of delivering measured, low-risk, quality gold production growth in areas supportive of mining,” said Sean Boyd, president and CEO. “We are pleased to be able to bring this high-return project on board in a relatively short period of time. This project should add meaningful operating cash flows and provide us with opportunities to create additional value as we explore our large land package surrounding the deposits.”
The initial probable reserves at La India total approximately 44.6 million metric tons grading 0.65 g g/mt of gold, containing 930,000 oz. These amounts are based on drilling completed before the end of May, 2012. Infill and step-out exploration drilling will continue at La India in an effort to further delineate and expand the mineral resources and reserves.
Site preparation work was initiated in the third quarter of 2012. Construction of the project will begin immediately.