Cerro Resources has announced the findings of an independent definitive feasibility study (DFS) and filed an NI 43-101 technical report for the 4.5-million-mt/y, open-pit, first-stage heap leach component of the Cerro del Gallo gold-silver project in Guanajuato state, Mexico. The project is owned 67% by Cerro Resources and 33% by Goldcorp. The DFS outlines an initial seven-plus-year mine life, which could potentially be extended to about 14 years through a second-stage carbon-in-leach (CIL)/heap leach mill expansion. The second-stage expansion will be the subject of a separate DFS, expected in year three of first-stage mining.

                The Cerro del Gallo deposit is located within the larger San Antón property, which Cerro Resources has been exploring since 2004. The DFS calls for first-stage production averaging 94,600 gold equivalent oz/y from open-pit mine production averaging 4.5 million mt/y. Pre-production capital costs for plant and infrastructure plus owner’s costs are estimated at $136 million.

                Cost for an owner-operated mining fleet is estimated at $18.8 million, but no decision has been made as to whether the mine will be owner or contractor operated. Tender documents to invite mining contractors working in Mexico to bid on mining at Cerro del Gallo have been drafted and will be issued in coming months. Following that and based upon financing, a decision will be made.

                Development of the Cerro del Gallo project for gold and silver production requires the processing of three different material types: weathered, oxidized, and sulphide. A 2011 study determined that to fully develop the project for gold and silver recovery, heap leaching should be used for the weathered and oxidized material and CIL should be used for the sulphide material. The proposed first stage of production is based on heap leach processing of the weathered and oxidized material, which forms the relatively higher-grade gold-silver part of a much larger gold-silver-copper resource at Cerro del Gallo.