Alamos accelerating exploration at Mexico mine

Alamos Gold is accelerating exploration at its Mulatos mine in Mexico.

The Toronto-based company increased its 2016 exploration budget 60% to US$16mn, with the focus on the La Yaqui satellite deposit, where the drill program will be tripled.

Alamos has 12 drills operating at Mulatos, with eight of them drilling at La Yaqui and the rest at the Cerro Pelón deposit.

At La Yaqui, the focus is on infill and step-out drilling following a mineralized ridge running about 1km north-west beneath a silica cap, COO Peter MacPhail told the Q1 earnings call.

"We would rather chase that quicker than slower," he said. "We are going after it to see how big the thing is."

Alamos expects to begin production at La Yaqui in mid-2017, following submission of an environmental permit application in April, with a further permit application for Cerro Pelón expected to be submitted in around six months.

The deposits could help make Mulatos a 200,000oz/y gold producer, CEO John McCluskey said in March.

Q1 RESULTS

Alamos produced 94,632oz gold in the first quarter, up from 92,027oz in the prior-year quarter, with output at Mulatos 400oz lower at 37,600oz.

El Chanate, also in Mexico, produced 17,967oz gold, up from 15,929oz, with Young-Davidson in Canada producing 39,065oz, up from 38,098oz.

All-in sustaining costs fell to US$986/oz gold from US$1,093/oz, including US$878/oz and US$1,095/oz at Mulatos and El Chanate, respectively, compared to US$1,008/oz and US$1,043/oz.

Net earnings were US$9.7mn, compared to a net loss of US$35.3mn, with revenue at US$104mn, up from US$64.6mn.

Alamos acquired Young-Davidson and El Chanate in its US$1.5bn merger with AuRico Gold in July 2015.

The company also has the Esperanza gold project in Mexico and projects in Turkey, Canada and the US.

Pictured: Mulatos mine.