Minera Alamos said it met its initial thresholds for commercial production at Santana during 2022 including criteria related to gold recoveries from the heap leach pad as well as monthly mining rates in the second half of 2022. Final approvals are pending for the next phase of pad expansion that should more than triple the leach pad capacity at the Santana mine.

Operational plans are currently being modified following a temporary shutdown over the Christmas break. The company said the drought conditions experienced in northern Mexico since 2020 remain a challenge. Current forecasts call for warmer/drier conditions related to a La Nina event now entering an unprecedented third straight winter to dissipate in the first half of 2023. Until the outlook for regional water conditions improves, Minera Alamos said it remains cautious with respect to short-term mine planning activities.

“We are pleased with the results from the Santana gold project during our first year of operations in 2022,” said Darren Koningen, CEO, Minera Alamos. “Despite the difficulties that presented themselves during the year, both capital and operating costs continue to meet our expectations.”

With a little money in the bank, Minera Alamos has placed a priority on waste removal (pre-stripping) activities during early 2023 which are not reliant on water availability. In addition, the company is currently mobilizing for further exploration drilling to better define previously identified gold-bearing breccia pipes outside of the currently mined areas. These activities combined with ongoing planning discussions with the mining contractor aim will prepare the Santana operations for growth beyond the starter pits and initial leach pad. Minera Alamos has been working to procure adequate supplies including pad liner to allow construction to begin rapidly upon receipt of the new permits which should avoid major disruptions as the expansion is commissioned.

The Santana project was envisioned as a classic “bootstrapped” operation with multiple phases of planned pit and pad expansion. Built for roughly $10 million, 2022 operational performance has already paid back most of the start-up capital. In determining whether commercial production thresholds had been reached, the company considered milestones associated with the first phase Santana operation focused on mining rates and gold recovery. In the second half of 2022, the operation demonstrated the ability to operate at the initially targeted 10,000 metric ton per day (mt/d, ore and waste combined). In addition, overall gold recoveries have been trending in excess of 70% for material under leach for a minimum of 45 to 60 days with residual leaching ongoing.

In total, approximately 13,000 ounces (oz) of gold were recovered in 2022 following the early ramp up period as leach pad production grew into the second half of the year. Santana’s Q4 2022 recovery (2,834 oz) declined somewhat from Q3 2022 (4,727 oz) because of the shift to additional waste mining. The average grade of the ore stacked on the leach pad was 0.66 g/mt gold for 2022. As of year-end 2022, estimated pad inventory of recoverable gold was roughly 6,950 oz.

Editor’s note: Minera Alamos does not have a feasibility study of mineral reserves, demonstrating economic and technical viability for the Santana project and, as a result, there may be an increased uncertainty of achieving any level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially mineable deposit. Historically, such projects have a much higher risk of economic and technical failure and that would have a material adverse impact on the company’s ability to generate revenue and cash flow to fund operations.