Alamos tables Mulatos resource estimate

Vancouver — Alamos Gold(AMI-T) has released a new resource estimate for the Mulatos gold deposit in Mexico as part of its ongoing feasibility study.

A total of 593 drill holes, or 95,000 metres of drilling, in 359 reverse-circulation and 172 core holes, were used to calculate the resource. Alamos states that the new estimate utilized underground drill data as well as a new geologic interpretation.

Using a 0.20 gram per tonne cut-off grade, the measured and indicated resource now stands at 140 million tonnes averaging 0.88 gram gold, or 3.9 million contained ounces. When the cut-off grade is raised to 1.0 gram per tonne the resource works out to be 33 million tonnes averaging 2.17 grams gold, or 2.3 million contained ounces.

At a 0.2 gram gold per tonne cut-off grade, the inferred portion of the resource works out to be 54.6 million tonnes averaging 0.5 gram gold, or 879,000 contained ounces. When the cut-off is raised to 1.0 grams gold, the inferred resource drops to 4.2 million tonnes averaging 1.99 grams gold, or 271,000 contained ounces.

The total resource, measured indicated and inferred, using 0.2 gram and 1.0 gram cut off grades, tallies to 194.8 million tonnes averaging 0.77 gram gold, or 4.8 million contained ounces; and 37.3 million tonnes averaging 2.15 grams gold, or 2.58 million contained ounces, respectively.

The independent resource estimate was prepared by Mike Lechner, president of Resource Modeling of Tucson. Alamos states that the new resource model represents a more conservative estimate since tighter search envelopes and more stringent resource classification criteria were used to calculate it. Arizona-based M3 Engineering and Technology, is performing the feasibility study on the project.

Mineralization consists of a series of high-grade mineralized structures within a broad zone of lower-grade gold mineralization. Alamos reports that the underground drilling program suggests that oxidation within the deposit is more extensive than previously realized. This data will be quantified and integrated into the feasibility study.

Measured resources were defined as blocks within six metres of drilling, indicated resources defined as blocks estimated by holes between seven to 36 metres from the drill-hole data, and inferred resources as blocks within 37 to 74 metres from drilling information, but inside of a 0.25 gram gold per tonne grade envelope. High-grade gold assays were capped at 35 grams gold per tonne prior to compiling the drill-hole data. In addition, selected assay grades from two earlier drill campaigns were reduced after a review of check assay results suggested positive bias in the original assays. This resulted in a more conservative, but higher confidence grade estimate.

The Mulatos deposit lies on the Salamandra property in the Sierra Madre mountain range, 220 km east of Hermosillo in Sinaloa state. The former owners Placer Dome (PDG-T) and Kennecott Minerals, envisioned a 17,500-tonne-per-day open-pit mine. Capital costs were projected to be US$120 million, with operating costs for the heap-leach operation pegged at US$5 per processed tonne at a gold recovery rate of 66%. The 1999 study projected only a marginal profit for a large, bulk-tonnage, heap-leach operation at gold prices below US$325 per oz.

A 2002 scoping study, conducted by Denver-based Pincock Allen & Holt, indicated that the higher-grade core of the deposit, dubbed the Estrella zone, could economically produce 100,000 oz. gold annually over 12 years.

The study envisioned total production of 1.2 million oz. gold at an average cash operating cost of US$169 per oz., with initial capital costs amounting to US$34 per oz. At US$300 per oz. gold, capital costs could be recovered over 2.8-4.3 years. Total initial capital costs ring in at US$40.8 million, including US$3 million for working capital.

The scoping study took into account a development plan for mining the Estrella zone selectively, followed by heap leaching using 3-stage crushing. gold recoveries range from 55% for sulphide-rich material to more than 90% for oxides, averaging out at 67% over the life of the mine.