Mr. Darren Koningen reports
MINERA ALAMOS ACHIEVES 2022 COMMERCIAL PRODUCTION THRESHOLDS AT SANTANA
Minera Alamos Inc. has provided an update following the completion of the company's 2022 end-of-year planning reviews and meetings. The company 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 in addition to providing full access to the Nicho deposits, which have grown in size as a result of the 2019 and 2020 drilling campaigns, subsequent to the project's initial permit approvals for the start of mining operations. These applications were resubmitted in the second half of 2022 after modifications to comply with new requirements related to reductions in greenhouse gas emissions via programs of surface reforestation.
Operational plans are currently being modified following a temporary shutdown over the Christmas holidays that allowed for a full review of 2022 operational data amongst the operations team and the mining contractor. As mentioned in previous announcements, the drought conditions experienced in northern Mexico since 2020 remain a challenge. Current forecasts call for the 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 such time that there is a clearer outlook on the overall water conditions in the region, the company remains cautious with respect to short-term mine planning activities.
As a result of the continued strengthening of the balance sheet during 2022, the company has given priority to the acceleration of some waste removal (prestripping) activities during early 2023 which are not reliant on water availability. In addition, the company is currently mobilizing for further exploration drilling to be initiated in Q1 to better define previously identified gold-bearing breccia pipes outside of the currently mined areas (delayed during the pandemic period). These activities combined with continuing planning discussions with the company's mine contractor aim to prepare the project for growth of the Santana operations beyond the starter pits and initial leach pad. Minera 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 approximately $10-million (U.S.), 2022 operational performance has already paid back the majority of the start-up capital. In determining whether commercial production thresholds had been reached the company considered milestones associated with the first0phase Santana operation focused on mining rates and gold recoveries from the Santana leach pad. In the second half of 2022, the operation demonstrated the ability to operate at the initially targeted 10,000 tonnes per day (combined mineralized material and waste). In addition, overall gold recoveries have been trending in excess of 70 per cent for material under leach for a minimum of 45 to 60 days with residual leaching continuing.
"We are pleased with the results from the Santana gold project during our first year of operations in 2022. Despite the difficulties that presented themselves during the year, both capital and operating costs continue to meet our expectations and provide a sound basis to inform the company's plans for the development of the upcoming Cerro de Oro project," stated Darren Koningen, chief executive officer. "As we move forward in 2023, the company is taking advantage of the drier months ahead to prioritize waste development activities in advance of the receipt of final approvals related to the next phase of Santana project expansion which should give rise to a stronger second half of the year. The restart of exploration activities at site is especially exciting and will finally allow for better definition of the long-term potential of the area and facilitate planning for future expansion phases."
Note to reader: The company 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 particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially minable deposit. Historically, such projects have a much higher risk of economic and technical failure. Failure to commence production would have a material adverse impact on the company's ability to generate revenue and cash flow to finance operations.
2022 operational summary
As disclosed previously, the focus of mining operations shifted in Q4 2022 and will continue in Q1 2023 with some accelerated waste mining to better prepare for the future planned expansion of operations later this year.
In total, approximately 13,000 ounces of gold were recovered over the full 2022 calendar year following the early ramp-up period as leach pad production grew into the second half of the year. Q4 2023 recovery (2,834 ounces) declined somewhat from Q3 2024 (4,727 oz) as a result of the shift to additional waste mining although higher gold prices offset some of this short-term decline. Other highlights include:
- Total mine production rates exceeded initial target thresholds (over 10,000 tpd) through the second half of the year prior to the December shutdown;
- Combined (run-of-mine (ROM) plus crushed) average grades of mineralization stacked on the leach pad (0.66 gram per tonne Au average for full year) were in line with mine plan expectations;
- Cut-off grade changes implemented from the 2021 end-of-year review to better balance the division between ROM and crushed material from the mine successfully removed bottlenecks related to the site crushing operations;
- The company successfully commissioned its limited on-site analysis facilities for blasthole and process solution samples and continues to expand these capabilities which will be essential for the start of mining operations at the Nicho main zone;
- As of Dec. 31, 2022, estimated pad inventory of recoverable gold was approximately 6,950 ounces.
2023 outlook
Santana
While the company focused its efforts on the construction of the Santana mine during the most challenging parts of the recent pandemic period, it was unfortunately forced to put on hold lesser-priority exploration drilling of the cluster of previously identified gold-bearing breccia pipes that surround the initial Nicho mining areas. With an access agreement in place with the local community, this drilling will be one of the highest-priority initiatives for 2023 with initial holes scoped at the Benjamin, Zata and Divisidero targets. The outcome of the exploration program will assist planning for the future of the project, including potential new leach pad and pit developments as well as decisions related to potential increases in the project production capacity.
Approximately 80 drill holes (over 10,000 metres total) have been located for this phase of exploration (subject to adjustment as drilling advances). The majority of these holes are targeted to test two high-priority targets from those previously identified by Minera during previous regional reviews:
- Benjamin -- located approximately one kilometre northwest of the Nicho area, the zone of potential gold mineralization coincides with a surface outcropping anomaly that appears to extend over a strike length of more than 550 metres. This area displays many characteristics similar to the intrusive-related mineralization currently defined in the Nicho area. Past historical drilling was focused on 17 drill holes (3,277 metres total) located in two sections located approximately 150 metres apart. Intersections from those campaigns included 114 metres of 0.73 g/t Au (SR09-21) and 108 metres of 0.35 g/t Au (SR08-09);
- Zata -- located approximately four km southeast of the current heap leach operations, the zone has never been drilled but is coincident with a surface exposed gold anomaly of approximately 400 m by 400 m. Surface rock chip samples have confirmed mineralization with grades up to two g/t Au and the zone appears to be consistent with the type of feldspar porphyry system exposed at the Nicho Norte starter pit area.
A maiden resource statement that will incorporate the Nicho gold mineralized system is being prepared and anticipated in the second quarter of this year.
Cerro de Oro
The submission of permit applications for the construction of the Cerro de Oro gold mine are scheduled for the end of Q1 2023. These are currently being modified to take into account recently acquired additional surface rights that will allow for a more optimized mine plan than previously envisioned. During Q1 2023 it is expected that some additional minor local surface rights may continue to be acquired (beyond those necessary for permitting) in order to further reduce the possibility of any future neighbourhood problems for the mine related to dust, noise or blasting vibrations.
Hydrological drilling has been continuing since Q4 of 2022 with promising initial results and this work will continue in early 2023.
The company is currently advancing both detailed construction design work and also sourcing critical long-lead items that will allow for fast-track development of the mine upon receipt of permits. Project finance discussions are under way with the goal of ensuring a complete package is in place well in advance of the successful conclusion of permitting activities and which can be drawn upon as required to ensure timely construction of the Cerro de Oro mine.
A 4,000 to 5,000 m drill program is planned at Cerro de Oro in 2023. Objectives for the new program include:
- Resource expansion and infill drilling;
- Samples for additional metallurgical optimization test work (both oxide and deeper transition/sulphide zones);
- Geotechnical evaluations, including in-situ densities, surface cover depths and rock structural parameters utilized for ultimate pit limit designs;
- Improved definition of lower limits of the oxidation zone and depth potential of sulphide mineralization.
Minera copper
The company is continuing discussions both internally and with interested parties to surface value for shareholders from existing copper assets within the company's mineral property portfolio. Minera believes there is significant scope to establish an expanding portfolio of low-capital-intensity copper development and production.
The company's Los Verdes and Poteritos copper projects located in Sonora just north of Santana (past producers within close proximity of each other) are to serve as cornerstone assets in the potential new venture.
Highlights from historical work at the projects are detailed below:
- Eight million to 10 million tonnes of open-pittable resource potential at a grade of over 1 per cent copper equivalent;
- Extensive metallurgical test work and basic engineering design completed for the construction of a two-product (copper and molybdenum) central flotation facility to process material from the surrounding deposits;
- Adjacent to a major state highway leading to mineral concentrate ocean port facilities at Guaymas, Sonora;
- Ability to scale down the initial capital requirements through implementation of commercial ore sorting equipment that has demonstrated the potential to increase processing plant feed grades to the 2 to 3 per cent CuEq range with high recoveries from crushed mine material;
- Additional exploration targets already identified, including a significant induced polarization anomaly corresponding to a zone of intense pyritization and anomalous surface samples (copper/molybdenum) that is located between the two known deposits.
The preliminary economic assessment report for Los Verdes, titled "Los Verdes Cu/Mo Project -- Preliminary Economic Assessment," was prepared by Golder Associates Ltd. for Virgin Metals Ltd. and dated May, 2012, a copy of which is available under Minera's profile on SEDAR (filed May 25, 2012). Mineral resources that are not mineral reserves do not have demonstrated economic viability. The prefeasibility study report for Los Verdes, titled "Pre-Feasibility Study -- Los Verdes Project, Sonora, Mexico," was prepared by The Mines Group Inc., Chlumsky, Armbrust & Meyer LLC (CEM), and Mine and Quarry Engineering Services Inc. (MQes) for Virgin Metals with an effective date of July 28, 2008, a copy of which is available under Minera's profile on SEDAR (filed Sept. 10, 2008).
While the company is not treating these historical estimates as current, it does believe the work of the most recent economic study conducted by Minera's predecessor company, Virgin Metals, and Golder Associates Ltd., is reliable and the information may be of assistance to readers. The company intends to prepare an updated current mineral resource estimate in respect of Los Verdes and Poteritos. Once completed, a copy of the report will be available for review under the company's profile on SEDAR.
More information on these initiatives will be disclosed in due course.
Darren Koningen, PEng, a qualified person as defined under Canadian National Instrument 43-101, is responsible for technical information in this news release.
About Minera Alamos Inc.
Minera Alamos is a gold production and development company undergoing the operational start-up of its first gold mine that produced its first gold in October, 2021. The company has a portfolio of high-quality Mexican assets, including the 100-per-cent-owned Santana open-pit, heap leach mine in Sonora that is currently going through its operational ramp-up. The 100-per-cent-owned Cerro de Oro oxide gold project in northern Zacatecas has considerable past drilling and metallurgical work completed with plans to enter the permitting process. The La Fortuna open-pit gold project in Durango (100 per cent owned) has a robust and positive preliminary economic assessment (PEA) completed and the main federal permits in hand. Minera Alamos is built around its operating team that together brought three mines into successful production in Mexico over the past 13 years.
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