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Timmins Gold to boost daily throughput rate at San Francisco Mine in Mexico to 18,000 tonnes

"The decision to increase the capacity...has been derived from a number of factors including the successful startup of the mine, rising gold prices and the commensurate decrease in cutoff grade,"
Timmins Gold to boost daily throughput rate at San Francisco Mine in Mexico to 18,000 tonnes

Timmins Gold (TSX-V: TMM) announced Friday that it has completed and filed its NI 43-101 compliant technical report for the company's San Francisco Mine in Sonora, Mexico, with plans to increase the throughput rate to 18,000 tonnes per day.

"The technical report confirms the robust economics of the San Francisco Mine," said president Arturo Bonillas.

"The decision to increase the capacity of the crushing system to 18,000 tonnes per day by adding one more module has been derived from a number of factors including the successful startup of the mine, rising gold prices and the commensurate decrease in cutoff grade, and management's conviction that additional reserves will be established in and around the pit as a result of the extensive drilling program planned for 2011."

The report, which was released in November and conducted by Micon International, was completed to provide a base case scenario for increased production at the mine, designed for the 18,000 tonne per day crushing capacity target, expected to be achieved by July this year.

In the study, proven and probable reserves were boosted by 28% to 780,000 ounces at 0.695g/t gold. Meanwhile, measured and indicated resources for the San Francisco mine also went up to 984,000 ounces at 0.72g/t gold, representing a 10% increase.

Micon concluded: "Given the known extent of mineralization on the property, compared to the amount of mining activity, the San Francisco Mine and property has the potential to host further deposits or lenses of gold mineralization, similar in character and grade to those exploited in the past."

The base case net present value of the mine, calculated at a discount rate of 8% and a gold price of USD $1,000 per ounce, was roughly US$163.1 million, after tax.

In addition, total gold production was estimated at 539,699 ounces from 2011 to 2016, with an average annual production of approximately 100,000 ounces of gold. According to the report, life of mine cash costs would be USD 489 per ounce.

However, Bonillas added that he believes the base case scenario to be conservative, and that the company will be able to achieve lower cash costs in actual operations. At a gold price of USD $1,300 per ounce, the net present value of the project after tax was estimated at approximately USD $256 million.

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