Canadian Mining Journal


GOLD: Positive PFS for Argonaut’s Cerro del Gallo

Cerro del Gallo site Credit: Argonaut Gold

Cerro del Gallo site Credit: Argonaut Gold

MEXICO – Argonaut Gold has released the results of a prefeasibility study (PFS) on its Cerro del Gallo project in Guanajuato. The study outlines an open pit heap-leach mine producing an average of 64,000 oz. of gold annually with additional silver and copper over a 15-year life at all in-sustaining costs of US$677 per oz and a preproduction capital cost of US$134.2 million.

The associated internal rate of return stands at 20% with a net present value, at a 5% discount rate, of US$175 million. These are based on metal price assumptions of US$1,350 per oz. for gold and US$16.75 per oz. for silver.

“We believe this PFS demonstrates that CDG is a long-life, low-cost asset in an attractive mining jurisdiction, Guanajuato, Mexico. CDG fits well within our team’s abilities as another open pit heap leach project in Mexico and is an asset that supports our transformation strategy from being a high-cost producer to a lower-cost producer,” Pete Dougherty, Argonaut’s president and CEO said in a release.

Argonaut plans to mine the asset using a contractor; the operating cost estimates are based on proposed rates.

Life of mine gold recoveries are currently projected at 60%.

Mexico’s environmental regulations require approval of three studies for the project: an environmental impact statement, an environmental risk assessment and a study for land use change.  Argonaut filed these documents in April and expects a decision in the first quarter of next year.

Based on the PFS, updated reserve numbers total 91.8 million tonnes grading 0.56 g/t gold for a total of 1.64 million oz., compared to 32.2 million tonnes at 0.69 g/t gold previously. The associated measured and indicated resources stand at 201.9 million tonnes grading 0.44 g/t gold for a total of 2.9 million oz.

Argonaut acquired Cerro del Gallo from Primero Mining in 2017 for $15 million. Primero completed a feasibility study on the project in 2012.

The company currently operates the El Castillo and La Colorada heap leach assets in Mexico.

This year, Argonaut expects to produce 190,000 oz. to 200,000 oz. of gold at all in-sustaining costs of US$1,125 to US$1,150 per oz.

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