Commercial production at Timmins Gold’s San Francisco mine

Timmins Gold (TMM-V) has started commercial production at the San Francisco gold mine, a past-producing open pit heap leach operation in the Arizona-Sonora desert in the northern portion of the Mexican state of Sonora.

The Vancouver-based company, which acquired the former mine in April 2005 and now owns 100% of it, expects to produce more than 80,000 oz. gold per year at a life of mine cash cost of about US$412 per oz., based on a preliminary feasibility study completed in March 2008.

The company says mining rates and process plant throughput have been built up steadily during the commissioning phase and are now surpassing budget and plan by nearly 10%.

Management believes the mine will reach production of 80,000 oz. this year. Timmins Gold is now drilling along strike to expand the reserves at the San Francisco mine. The San Francisco gold occurrence is in the Sierra Madre Occidental metallogenic province, which extends from the Mexico-U.S. border in the north to Jalisco in the south.

Based on about 8,778 meters of drilling during 2005 and 2006 and another 4,386 meters in 2007, the company released a National Instrument 43-101 resource estimate demonstrating a measured and indicated resource of 27.65 million tonnes grading 0.81 gram gold per tonne. San Francisco also has an inferred resource of 2.51 million tonnes grading 0.79 gram gold per tonne.

The San Francisco deposit consists of the El Manto, the San Francisco, the En Medio, and the El Polvorin deposits. All three deposits were incorporated into the main San Francisco pit. To the west of the pit, another deposit, the La Chicharra zone, was mined during the last two years of production as a second pit.

Placer mining and small scale underground mining began in the San Francisco mine area during the early 1940s. This limited work is what attracted Fresnillo to the area in 1983. Between 1995 and May 2002, the San Francisco mine extracted 13,490,184 tonnes at a grade of 1.13 grams gold per tonne for a total of 488,680 contained oz. gold. (A total of 300,834 oz. gold and 96,149 oz. silver were recovered, with the gold recovery estimated to be 61.4 %.)

During the last two years of operation gold was being recovered from the leach pads only with no mining being conducted within the San Francisco and La Chicharra open pits. The mine was mothballed in 2002 due to poor economic conditions at the time.

On the exploration front, Timmins Gold’s portfolio includes a 45,000-hectare property contiguous to Goldcorp‘s (G-T, GG-N) Peñasquito gold mine (17 million oz. gold) and its Camino Rojo gold project in Zacatecas, about 50 km southeast of Penasquito. (Camino Rojo is a low-cost satellite operation that will augment Peñasquito’s production.)

At presstime Timmins Gold was trading at $1.42 per share. Over the last 52 weeks the company has traded in a range of 38.5¢-$1.56 per share. The company has 109.3 million shares outstanding.