The El Gallo complex is located in Mexico’s Sinaloa State, along the foothills of the Sierra Madres. McEwen Mining announced the initial discovery holes from the El Gallo silver/gold discovery in November 2008. The complex includes the El Gallo and Palmarito silver deposits and the Magistral gold deposit, located within a 13 km (8 mile) radius.
El Gallo 1: El Gallo 1 achieved its first gold pour in September 2012. Commercial production was accomplished on January 1, 2013. In 2014, El Gallo 1 produced a record of 38,212 gold oz and 25,912 silver oz.
Key Operational Facts (El Gallo 1)
||Sinaloa State, Mexico
||350 (including contractors)
|Estimated Mine Life
||Crushing and heap leach
||4500 tonnes per day
||38,212 gold oz & 25,912 silver oz
El Gallo 2: El Gallo 2 is projected to produce an average of 95,000 gold equivalent ounces per year (5.2 million ounces of silver and 6,100 ounces of gold) at an approximate cash cost of $750 per gold equivalent ounce (including all pre-strip and Mexican royalties). All-in sustaining costs have been estimated at approximately $800 per gold equivalent ounce (including an estimated $5 million per year on exploration). Gold equivalent ounces have been calculated by converting silver into gold using a 60:1 exchange ratio.
The final environmental permit required for the potential construction and operation of El Gallo 2 was received from the SEMARNAT in January 2014. Further, we submitted two additional permits in 2014. The first permit is in relation to the mining of the Palmarito deposit, which represents approximately 15% of the projected annual silver production at El Gallo 2. The second permit relates to the right-of-way for a 13 km electric transmission line that would connect the El Gallo 2 processing plant to the national power grid. In the meantime, construction of the mine could begin with power provided by generators with the option of connecting to the grid when the permit is received. Delays in receiving either of these two these permits would not be expected to delay eventual construction from proceeding.
The ball mill is now complete. Pending a decision to proceed with the development of El Gallo 2, we are storing the mill at the manufacturer’s facilities. We expect to disburse the final payment of $1.0 million for the ball mill in the first half of 2015.
We are also conducting cost-saving studies to identify opportunities that would allow us to reduce the initial capital investment required while minimizing the impact on potential production. Potential changes include reducing the number of leach tanks and transformers, building a smaller process plant / refinery, and using modular crushers. An updated feasibility study is scheduled for Q3 2015.
Current resources for the complex total 893,271 ounces of gold in the measured and indicated categories and 78,480 ounces of gold in the inferred. Silver resources total 63.9 million ounces in the measured and indicated categories and 14.5 million ounces in the inferred.
The El Gallo information on this page was derived from: (1) news release titled “McEwen Mining 2014 Operating & Financial lResults", released on March 9, 2015 by McEwen Mining Inc. To access the news release click here. And, (2) technical report titled "Resource Estimate for the El Gallo Complex, Sinaloa State, Mexico" dated August 30, 2013 with an effective date of June 30, 2013, prepared by John Read, C.P.G., and Luke Willis, P. Geo. Both Mr. Read and Mr. Willis are not considered independent of the Company as defined in Section 1.5 of NI 43-101. To access the report click here.
McEwen Mining reports its resource estimates in accordance with standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in Canadian National Instrument 43-101 ("NI 43-101"). These standards are different from the standards generally permitted in reports filed with the SEC. Under NI 43-101, McEwen Mining reports measured, indicated and inferred resources, measurements which are generally not permitted in filings made with the SEC. According to Canadian NI 43-101 criteria, the estimation of measured resources and indicated resources involve greater uncertainty as to their economic feasibility than the estimation of proven and probable reserves. Under SEC Industry Guide 7 criteria, measured, indicated and inferred resources are considered Mineralized Material. The SEC considers that in addition to greater uncertainty as to the economic feasibility of Mineralized Material compared to proven and probable reserves, there is also greater uncertainty as to the existence of Mineralized Material. U.S. investors are cautioned not to assume that measured or indicated resources will be converted into economically mineable reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.
Mineral resources which are not mineral reserves do not have demonstrated economic viability.