Argonaut Gold has reported the results of a positive prefeasibility study (PFS) of its 100% owned Cerro del Gallo project 30 kilometers (km) east of the city of Guanajuato, Mexico. The study describes an open-pit, heap-leach project that would produce an average of about 64,000 ounces per year (oz/y) of gold, 1.3 million oz/y of silver, and 2,400 metric tons per year (mt/y) of copper over a mine life of 15.5 years.

Preproduction capital costs are estimated at $134 million. Construction time is estimated at 18 months. Estimated all-in sustaining costs are $597/oz of gold sold. The after-tax pay-back period is estimated at 4.5 years.

Cerro de Gallo ore will be mined by truck-and-shovel, open-pit mining methods at a rate of 6 million mt/y, fine crushed using a system incorporating cone and high-pressure grinding roll crushers, agglomerated with cement, and conveyor stacked on the heap leach pad. Ore will be leached with a dilute cyanide solution at a high solution application rate for the first 40 days and a lower application rate for the remaining 80 days for a total leach cycle of 120 days.

The gold, silver, and copper bearing solution will be collected in a pregnant solution pond and pumped to an SART plant. Pregnant solution will be acidified with sulphuric acid, and copper and silver will be precipitated as sulphides by the addition of sodium hydrosulphide. The precipitate will be thickened and filtered to produce a copper-silver filter cake for shipment to a smelter.

The copper-stripped barren solution from the SART plant will then be processed in a carbon ADR plant to recover gold. The gold will be periodically stripped from the carbon using a desorption process. The gold will be plated on stainless steel cathodes, removed by washing, filtered, dried, and smelted to produce doré bars.

Engineering and design of the processing plant was undertaken by Kappes, Cassiday & Associates for complete crushing, leaching, and recovery systems.

While the PFS assumes Cerro del Gallo will be mined using a contractor, it was planned as an open-pit mine using 91-mt haul trucks and 13-m3 front-end loading equipment. Final equipment selection will be determined by the contractor.

Proven and probable reserves at Cerro del Gallo are estimated at 91.8 million mt, grading 0.56 g/mt gold, 13.3 g/mt silver, and 0.09% copper.