In November 2008, the Company announced the initial discovery holes from the El Gallo silver/gold discovery. El Gallo is located in Mexico’s Sinaloa State, along the foothills of the Sierra Madres. The Complex includes the El Gallo and Palmarito silver deposits and the Magistral gold deposits, located within a 13 km (8 mile) radius. Since making the discovery the Company has advanced the project towards production. The El Gallo Complex is being developed in two phases. Phase 1 production is expected to average 30,000 ounces of gold per year. Phase 2, for which a feasibility study is being completed, is expected to contribute an additional 5 million ounces of silver and 5,000-10,000 ounces of gold per year.
Phase 1 Construction: On September 13, 2011 the Company announced it had approved Phase 1 construction. Phase 1 construction is expected to be completed by mid-2012 and cost US$15 million.
Crushing Plant – The crushing plant will process 3,000 tonnes of ore per day. Three-stage crushing will be used in order to achieve optimum gold recovery. Gold recoveries from the heap leach pad are expected to average 65% over the mine life.
Process Plant – Engineering for the ADR process plant, which will produce gold and silver doré, has been completed. The plant is expected to be fully constructed by May-2012.
Mining Fleet – New or slightly used equipment has been contracted for production. All equipment has been shipped to site and assembled. A total of six 100 tonne haul trucks, two front-end loaders, two bulldozers, one production blast hole drill, and one road grader have been secured. Currently pre-stripping and stockpiling of ore is underway.
Phase 2 Feasibility Study: Work related to the Phase 2 Feasibility Study, which is expected to increase production by 5 million ounces of silver and 5,000-10,000 ounces of gold per year, continues to progress. The key areas of work are highlighted below:
Geotechnical drilling for pit slope stability and foundation work related to the mill, heap leach pad and tailings foundation has been completed.
Condemnation drilling to ensure that no mineralization exists beneath the planned facilities or other related infrastructure has been completed.
- Surface rights, as the site layout is currently contemplated, have been secured for all resource areas and proposed facilities. This is an important step towards moving Phase 2 towards production.
- Testing for water sources to supply the operation began on December 13th, 2011. Drilling of an aquifer with excess capacity and within the boundaries of the Company's surface rights is ongoing. The aquifer is located in a “Free Zone” and no additional water rights are required.
- Mill and heap leach engineering studies continue to be refined for final design. The last series of metallurgical test work is underway.
- An updated resource model for the El Gallo and Palmarito deposits, which will include drilling up to November 1, 2011, is nearing completion. The updated resource will be released this spring.
Results from the Phase 2 Feasibility Study are expected to be published mid-2012.
The El Gallo Complex technical information (El Gallo, Magistral and Palmarito) was derived from the report "Preliminary Economic Assessment for the El Gallo District, Sinaloa State, Mexico" with an effective date of February 11, 2011 prepared by Richard Addison, Paul A. Gates, Aaron M. McMahon. To access the report click here.