Satellite gold deposits to cut Alamos' Mexico costs by 10%
Development of the Cerro Pelón and La Yaqui gold deposits will reduce Alamos Gold's Mexico production costs by about 10%, Scotiabank director of gold and precious metals Trevor Turnbull told BNamericas.
The Toronto-based company announced surface rights agreements for the deposits on Wednesday, which it plans to develop as satellite operations to its Mulatos gold mine in Sonora state, Mexico.
Combined output at the satellites is expected to average 33,000oz/y gold over five years at total cash costs of US$490/oz, which Turnbull said would translate to a 10% cost reduction and push Alamos' output back up to 2013 levels of 200,000oz/y.
Completing environmental impact assessments (EIAs) for the deposits is expected to take 12-15 months, followed by a 6-8 month construction period, with production expected in 2016.
The acquisition of surface rights, which is scheduled to conclude in late June, is not a surprise but does remove uncertainty, Turnbull said.
Development of the deposits will require very low capital (US$21mn according to the company) and offers synergies given their proximity to the main Mulatos operations, he added, with Cerro Pelón located 3km and La Yaqui 7km from the mine.
The company also has the Esperanza gold project in Mexico's Morelos state and projects in Turkey.
Alamos shares were trading at Cdn$9.10 (US$8.36) in Toronto at noon on Wednesday following the announcement, up 2.25% on the previous day's close.
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