Mulatos Mine
Mulatos Mine
The Mulatos Mine is located within the Company's 100% owned Salamandra Concessions in the Sierra Madre Occidental mountain range in the east-central portion of the State of Sonora, Mexico. The mine is approximately 220 kilometres by air east of the City of Hermosillo, and 300 kilometres south of the United States of America - Mexico border.
The Salamandra Concessions are over 30,000 hectares and contain the Mulatos deposit plus several major satellite gold systems, including Puerto del Aire, El Halcon, La Yaqui, Puebla, Los Bajios, El Jaspe, Cerro Pelon, El Victor, San Carlos, La Dura, El Carricito, and El Realito, which are mostly located to the west, southwest, and north-east of the Mulatos Mine. An Advanced Exploration Program to develop additional resources for inclusion into an extension of the Mulatos Pit is ongoing. In addition to expanding resources near current mining operations, Alamos has a Regional Exploration Program that is focused on other areas held within the Salamandra group of concessions.
The Mulatos deposit is part of an epithermal, high-sulfidation, disseminated gold system, hosted within an Oligocene rhyodacite flow dome and breccia complex. It is associated with a large hydrothermal alteration zone that covers more than 10 square kilometres. Gold mineralization is closely associated with silicic and advanced argillic alteration occurring near the upper contact of a rhyodacite porphyry and in overlying dacite flows and volcaniclastic rocks.
The Mulatos Mine operates 365 days a year and produces gold on-site as dore containing approximately 60 to 80% gold by weight that is sent to a refinery for final processing prior to sale. Construction of the mine began in Q3-2004 and Phase I of the mine was completed in January 2006 at a cost of approximately $74 million. Although the 2004 Feasibility Study plan called for a 10,000 tonne of ore per day crushing operation, the Company sized the major components of the Mulatos Mine, including the crusher / conveyor and the gold recovery plant, to handle a mining and processing operation with a capacity of approximately 15,000 tonnes per day. In 2005, an expansion budget of $20 million was approved to increase the scale of mining operations from the 2004 Feasibility Study level of 10,000 tonnes of ore per day to between 13,000 and 15,000 tonnes of ore per day, the range of mine's current throughput.
Commercial production at the Mulatos Mine was declared effective on April 1, 2006. Based on current proven and probable reserves and current throughput rates, the Company has an expected mine life of approximately ten years. Initial capital costs incurred to construct the project have been recovered; however, the Company is investing further in its current heap leach operations to improve recoveries, and in a planned mill expansion in order to increase global production. In Q2-2009, the Company also approved the construction of a mill to process high grade ores, such as those found within the Escondida deposit.
Production at the Mulatos Mine has been steadily increasing gold production to the level achieved in 2008 of 151,000 ounces (total cash costs of $389 per ounce), which represented a 42% increase over 2007's gold production of 106,200 ounces. For 2009, the Company is currently guiding for gold production between 145,000 to 160,00 ounces at a total cash cost of $350 per ounce (including a 5% net smelter return royalty payable to Royal Gold).