Alamos to go ahead at Salamandra

Alamos Gold (AGI-T) will put the Mulatos gold deposit in Sonora state, Mexico, into production following a feasibility study that found a 150,000-oz.-per-year mine would be profitable at present gold prices.

Mulatos is part of the Salamandra property, about 220 km east of Hermosillo near Sonora’s border with Chihuahua state. National Gold (which has since merged with Alamos) bought the property from Placer Dome (PDG-T) in 2001.

The study examined the economics of a phased development of the resources at Salamandra, starting with a 10,000-tonne-per-day heap- leach operation fed from an open pit on the Estrella deposit. That pit would mine a reserve of 36.4 million tonnes at an average grade of 1.6 grams gold per tonne, plus a silver credit. The pit, which essentially takes down a hill, would have a stripping ratio near 1.4.

Construction is to start this month, with production scheduled to start in July 2005. The local agrarian co-operative, the Mulatos Ejido, approved an agreement to negotiate the sale of 12 sq. km of land to Alamos’s Mexican subsidiary, covering all the mineral deposits and the area required for the leach pad, plant, and infrastructure.

Another meeting of the Ejido is scheduled for June 29, where the final sale will be put to a vote. Alamos has paid US$780,000 and is scheduled to pay another US$780,000 once the sale is approved.

Resources at Mulatos — which include Estrella and two other deposits, Mina Vieja and Escondida — have been estimated at 62.2 million tonnes grading 1.5 grams gold and 0.6 gram silver per tonne.

Ore would be trucked to a crusher area, crushed and agglomerated, then sent on a 2-km conveyor to a leach pad, located on one of the few areas of flat ground on the property. Gold would be recovered from the leachate in a carbon plant. Based on earlier metallurgical testing, average recoveries have been assumed to be 73%, varying from 96% in oxide material to 68% in sulphides.

The capital cost of the project has been estimated at US$72 million, including the purchase of a used 3-stage crusher circuit from the Rawhide mine in Nevada. Other purchases of used equipment, including fleet from Rawhide and a conveyor from the Brewery Creek mine in the Yukon, are expected to shave that figure, as well as speed up the schedule.

Power would be generated on site and Alamos is currently building a 60-km access road. All the required permits have been approved.

At US$350-per-oz. gold, the project has a net present value of US$41 million, based on a 7% discount rate. Its internal rate of return is 24.1%. Cash production cost has been estimated at US$174 per oz.