Agnico’s Pinos Altos shines in Q2

With record gold production, the Pinos Altos mine stood out from the lot at Agnico-Eagle Mines (AEM-T, AEM-N) for the second quarter.  

Situated in the mountainous Sierra Madre gold belt of northern Mexico, the gold-silver mine produced a record 51,066 oz. gold at total cash costs of US$299 per oz., including the satellite Creston Mascota operation. This represents a 42% increase in production and a US$66 per oz. cost reduction compared to the year ago period. Compared to the previous quarter, Pinos Altos lowered costs by US$13 per oz. and boosted production by 6%. 

Agnico says this improvement was largely due to Creston Mascota and a higher mill throughput.

During the three months ending June 30, 2011, the Pinos Altos mill churned through 4,711 tonnes daily, compared to the previous quarter’s 3,575 tonnes per day.

The company says the mill is performing above the initial 4,000-tonne-per-day design capacity thanks to the installation of two other tailing filters in late 2010.

In late last December, Agnico poured its first gold at Creston Mascota, which is the first satellite deposit to be developed at Pinos Altos. The stand-alone, heap-leach mine reached commercial production in March 2011.

For second quarter, Creston Mascota contributed 9,449 oz. to Pinos Altos’ production.

The mine, including the Creston Mascota operation, has reserves of 3.3 million oz. gold and 92 million oz. silver from 44.2 million tonnes grading 3.2 grams gold per tonne and 64.8 grams silver per tonne.

For 2011, Pinos Altos alone is estimated to produce 168,000 oz. gold and 2.2 million oz. silver, and about 175,000 oz. gold and 2.3 million oz. silver a year from 2012 through 2015. The mine has a 15-year life.

The nearby Creston Mascota mine is anticipated to add another 31,000 oz. gold and 65,000 oz. silver in 2011, and to average 55,000 oz. gold and 120,000 oz. silver per year from 2012 through 2015.  

Mineralization on the property occurs in epithermal low-sulphidation quartz-adularia vein systems with breccias and stockworks carrying gold and silver, which are associated with the Santo Nino and Reyna de Plata structures outlining the main horst structure. Gold-silver mineralization also occurs in quartz-calcite-adularia veins associated with the Mascota-Carola-Bravo structures.

Agnico say the most important mineralization found on the property is in four zones hosted by the Santo Nino fault: the El Apache, Oberon de Weber, Santo Nino and Cerro Colorado zones.

More than 60% of the Pino Altos’ current reserve is in the steeply dipping Santo Nino zone.

Owing to the better mill capacity and more underground ore reserves, Agnico is currently evaluating ways to enhance capacity of the underground Pinos Altos mine either through increased truck haulage or a production shaft. The study is expected to be done in late 2011.

For the year, Agnico says its exploration goal at Pinos Altos includes upgrading resources to reserves and to expand resources and reserves laterally and at dept. The miner will largely focus on the underground portion of the Cerro Colorado zone (adjacent to the main Santo Nino pit), along with satellite Creston Mascota, Cubiro and Bravo zones, and the Reyna de la Plata zone.

Agnico will examine whether the Creston Mascota deposit and the Bravo zone are connected, since drilling continues to show that the deposit extends to the south toward Bravo.

It will also consider doing an underground exploration program and scoping study at Cubiro, because rugged topography has made it too difficult for surface drilling.

Reyna de la Plata, a parallel zone about 1 km north of Santo Nino, could also be developed into another satellite operation.

The company will spend about US$3.1 million this year exploring Pinos Altos.

Agnico acquired the property in 2006, and after completing a positive feasibility study on the past-producing mine it began construction in 2007. A year later, it started pre-stripping the Santo Nino pit. In July 2009, Agnico poured its first gold-silver doré bar from the heap-leach operation, and officially launched the mine in November of that year.