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Feasibility & Exploration Set To Go At Salamandra Property |
5/1/2003 |
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Objectives Set
The Board of Directors of Alamos Gold Inc. ("AGI") recently conducted a meeting to set objectives for the development of the Mulatos Deposit on its 100% owned Salamandra Property in the State of Sonora, Mexico. These objectives include: commissioning an independent feasibility study to be conducted over the next 9 months, taking proactive measures to further develop community relations in the village of Mulatos, improving the local access road and other infrastructure, and developing a $500,000 exploration program.
Estrella Development Alternative
The Mulatos Deposit has seen US$30 million in investment by previous operators and was the subject of a feasibility study completed in 1999 involving the development of the entire Mulatos Deposit. In September 2002, a preliminary assessment and scoping study was prepared by Pincock Allen & Holt (the "Pincock Study") for an alternative development plan (the "Estrella Development Alternative"), a development plan focusing on the higher grade Estrella zone within the core of the Mulatos Deposit.
A summary of the Pincock Study includes the following highlights: The Estrella Development Alternative pit contains a total of 32.0 million tonnes of measured and indicated resources at an average grade of 1.77 g/t of gold containing 1.8 million ounces of gold. Mine life is estimated at 12 years with the nominal production rate for the Estrella Development Alternative during the first 7 years of operation averaging 110,000 ounces of gold per year, and is expected to systematically decline to 90,000 ounces per year from year 8 through year 12. Daily rate: 7,500 t/d crushed heap leach ore, 80% passing half inch. Gold recovery: 66.2%. Operating cost US$6.33/t ore. CAPEX: US$41 million including US$3 million working capital. Sustaining CAPEX: US$10 million. Closure cost: US$5 million. Cash Cost: US$ 169/oz. Full Cost: US$219/oz.
Plan to Improve Economics
AGI intends to evaluate several aspects of the Estrella Development Alternative in an effort to determine ways to improve the economics. These include finer crushing to improve recovery, selective mining and processing of higher grade ores, optimizing the mine plan to increase ore grade and defer waste, re-configuring the site layout to reduce ore haulage cost, consolidating facilities to lower capital cost, investigating reusable heap leach pads to lower pad cost, and decrease reagent and closure cost. The Company plans to retain independent consultants as required to complete this feasibility study to a level of detail and confidence to support bank financing.
The former owners, Placer Dome Inc. and Kennecott Minerals Company, previously brought the Mulatos Deposit to a bankable feasibility stage that is discussed in a qualifying report prepared by Behre Dolbear. Supporting this report is a large data base derived from 511 drill holes (83,000 meters), 994 samples from over 1,700 meters of underground bulk-sample workings, metallurgical tests on 83 composite samples, and detailed engineering. Utilizing a 0.8 g/t cut-off and a US$300 per ounce gold price, proven and probable reserves amounted to 2.22 million ounces of gold in 43.48 Mt with a grade of 1.59 g/t. Much of the data generated through this work can and will be incorporated in the new feasibility study.
Community Relations
The Company is taking a proactive approach to address the concerns of the local Ejido Mulatos and other inhabitants of the village of Mulatos. An agreement with the Ejido Mulatos has been in place since 1995 regarding leasing of the surface area to be used for exploration and exploration and the provision for health care, a medical clinic, educational facilities and utilities for the village of Mulatos. The Company's right to reduce the amount of surface area under lease from the Ejido is being challenged in the Agrarian Court. The Company is devoting management time in an effort to resolve the dispute through increased communication and coordination. A Mexican Ejido coordinator has been hired by the Company to give attention to improving this relationship. The Company continues to supply medical and education benefits to the community as required under the 1995 agreement, and is hopeful that all issues with the Ejido can be resolved amicably.
Infrastructure
In conjunction with the feasibility study and exploration work, the Company plans to undertake several key improvements to the local infrastructure. Work is commencing on upgrading access roads and pioneering haul roads. Survey work is underway for the
construction of a new airstrip located adjacent to future mining operations. In addition to directly benefiting the development of this project, work programs related to infrastructure up-grades and exploration will provide job opportunities to the Ejido Mulatos and other local inhabitants.
Exploration Potential
The Company is of the opinion that the Salamandra district has significant, positive, long-term exploration potential that will enable the Company to expand and develop additional resources in close proximity to and within the existing Mulatos Deposit.
The Mulatos Deposit is a classic high sulfidation/ acid sulfate type deposit similar in origin and occurrence to the Yanacocha, Pierina, Paradise Peak, Goldfield, and El Sauzal deposits. The Alamos Gold 16,083 hectare land position encompasses seven additional large areas of intense acid sulfate alteration that are largely unexplored, five of which have historic gold production and/or previously unreported potentially ore-grade drill intercepts. The various mineralized and altered areas occur at the same stratigraphic horizon, and appear to be part of a large geothermal field with a 30 km x 15km regional extent. Gold deposits occur within large generally stratiform replacement zones and in high-grade structural zones. Potential also exists for bonanza-grade gold mineralization that is frequently encountered in the structural feeder zones of acid sulfate/high sulfidation deposits worldwide, and also for gold-copper porphyry deposits that are spatially associated with these types of deposits.
An exploration plan is being designed to systematically test the entire land package over a number of years. While the various exploration targets that are already defined will be prioritized in coming months, the natural starting point for exploration work this year is in the Mulatos Deposit area. Potential exists to define additional resources both within and external to the existing reserve base. This can potentially benefit the feasibility program underway. The exploration work that will be undertaken this year will be detailed in a future news release.
The Company has a seasoned management team lead by Chester F. Millar, a pioneer in the extraction of gold through open pit heap leach methods, and the founder of Glamis Gold Ltd. and Eldorado Gold Corporation. Mulatos will mark Mr. Millar's second gold mine start-up in the State of Sonora, following La Colorada, which he developed to profitable production in 1993.
The Company is listed on the Canadian Venture Exchange under the symbol AGI. The Company has working capital of $1.7 million and long-term debt of $5.7 million. During the first quarter of this year the Company has seen 4.1 million warrants exercised resulting in an additional $2.1 million in working capital for the Company. AGI owns 100% of the Salamandra property, which it acquired for $8.7 million under an asset purchase agreement completed in February 2003.
ON BEHALF OF THR BOARD OF DIRECTORS
ALAMOS GOLD INC.
"Chester F. Millar"
Chairman and President
For information, contact:
John A. McCluskey
Chief Executive Officer
Tel: 416-925-4880
Fax: 416-925-2264
Email: john.mccluskey@sympatico.ca
Website: www.alamosgold.com
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
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