Mine Plan increased to 9.5 years Updated Mine Plan for the San Francisco Gold Mine; Mine Life Increased to 9.5 Years at 122,000 Ounces of Gold Per Year Based on Reserves (ccnm)
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 5, 2013) - Timmins Gold Corp. (TSX:TMM)(NYSE MKT:TGD) ("Timmins" or "the Company") is pleased to announce the results of the recently completed NI 43-101 Technical Report for the San Francisco Gold Mine in Sonora, Mexico (the "SF Mine") prepared by Micon International Limited of Toronto ("Micon"). The report was prepared to update the previous technical report for the SF Mine dated November 1, 2011, and to provide a base case scenario for production at the SF Mine as a result of a material increase in the estimated Mineral Reserves from the 2012-2013 drill program (43% increase in Reserve gold ounces excluding depletion). For details of the updated Reserve and Resource estimates please refer to our new release dated November 5, 2013 disseminated earlier today. All amounts are presented in United States dollars and the economic evaluation is presented on a pre-tax basis.
Highlights:
- Pre-tax undiscounted cash flows of $489 million at a constant gold price of $1,350/oz
- Pre-tax Net Present Value (NPV) at a 5% discount rate of $381 million at a constant gold price of $1,350/oz
- Estimated Mine Life based on Reserves of 9.5 years (2H 2013-2022)
- Estimated Life-Of-Mine ("LOM") production of 1.16 Moz of gold based on Reserves
- Estimated LOM average annual production of 122,000 ozs of gold from 2014-2022
- Estimated LOM cash costs of $823/oz (including by-products)
- Estimated LOM average site-level all-in sustaining costs of $843/oz (including by-products)
- Estimated LOM site-level all-in costs (cash costs + all capex) of $927/oz (including by-products)
"We are extremely encouraged by the Reserve and Resource growth from our drill program," states Bruce Bragagnolo, CEO of the Company. "The updated Reserve underpins a 9.5-year mine life at approximately 122,000 ozs of gold per year. Considering the size of our Measured and Indicated Resources (279 kozs excluding Reserves) and our Inferred ounces (1.78 Mozs), we expect that with future drilling the mine life can be further increased. Our updated mine plan continues to highlight the free cash flow potential and low all-in cost nature of the San Francisco Mine."
OPERATING PLAN
For 2014 and 2015, all production is planned to be sourced from the San Francisco ("SF") deposit. The average daily throughput is expected to be approximately 24k tonnes per day ("tpd") for 2014 and 2015. Throughputs of 24k tpd have been achieved as of October 2013, therefore we plan to operate at steady-state for the next two years. Minimal development capital expenditures are planned for the next two years during which period we plan to focus on cash accumulation and strengthening the balance sheet. Starting in 2014, lower-grade ore will no longer be stockpiled and average stacked grades will approximate the Reserve grade.
Production from the La Chicharra ("LC") deposit is planned to begin in early 2016. The average daily throughput from 2016 onwards is expected to be 30-32k tpd (24k tpd from SF and 6-8k tpd from LC). The installation of an 8k tpd crushing unit and new leach pad at LC is scheduled to begin in late 2015 and pre-stripping at LC is scheduled to begin in early 2016.
CAPITAL PLAN
Planned capital expenditures over the mine life, including sustaining capital and capitalized deferred strip, is outlined in Table 1 below. The plan for development capital expenditures (i.e. excluding sustaining capital and deferred strip) is summarized below:
- 2014: $3M for LC crushing equipment; $2M for current primary crusher relocation
- 2015: $6M for new leach pad; $3M LC crushing install
- 2016: $12M for LC pre-stripping
- 2017: $2M leach pad expansion
- 2018-2022: $6M leach pad expansion (2019), $3M leach pad expansion (2021)
ECONOMIC EVALUATION
Revenue projections are based on a constant gold price of $1,350/oz in real terms. The constant silver price assumed is $20/oz. The mine plan from 2014-22 is split into three phases and is summarized in Table 1. At a gold price of $1,350/oz, the undiscounted pre-tax cash flow of the mine plan is $489M and the pre-tax 5% discounted NPV is $381M. Table 2 presents the sensitivity of the NPV to various gold prices. The recently proposed Mexican mining taxes/royalties have not been incorporated into the economic evaluation presented here, as the related legislation had not officially been enacted as of the date of this evaluation.
| Table 1 - San Franciso Gold Mine: Mine Plan Summary (2014-22) |
| | Phase 1
(2014-15) | Phase 2
(2016-20) | | Phase 3
(2021-22) |
| Approx. Avg. daily throughput | 24k tpd | 30k tpd | | 30k tpd |
| Ore Source % | SF(100%) | SF(75%)/LC(25%) | | SF(30%)/LC(30%)/stockpile(40%) |
| Avg. Gold Grade | 0.59 gpt | 0.51 gpt | | 0.58 gpt, 0.26 gpt (stockpile) |
| Avg. Operating Strip Ratio | 2.4 | 2.7 | | 1.4 |
| Avg. Total Strip Ratio (Op. + Deferred) | 2.5 | 3.2 | | 1.4 |
| Avg. Gold production | 121 kozpa | 135 kozpa | | 130 koz (2021), 53 koz (2022) |
| Avg. Cash Costs per oz (by-product) | $758 | $895 | | $663 |
| Avg. Sustaining Capex | $2M/yr | $3M/yr | | $2M/yr |
| Avg. AISC per oz, site-level (by-product) | $775 | $918 | | $674 |
| Avg. Deferred Strip Capex | $2M/yr | $9M/yr | | nil |
| Avg. Development Capex | $7M/yr | $4M/yr | | $2M/yr |
| Avg. AIC per oz, site-level (by-product) | $846 | $1,016 | | $686 |
| Gold Price per oz Assumed | $1,350 | $1,350 | | $1,350 |
| Avg. Annual Net Cashflow (excl. taxes, | | | | |
| royalties) | $61M/yr | $44M/yr | | $82M, $37M |
Notes: Assumptions - (1) Avg. total costs of $10.75/t for SF and LC; (2) Avg. life-of-mine heap leach recovery of 68% for SF ore, 70% for LC.
To view Table 2 - San Francisco Gold Mine: NPV(5%) Sensitivity to Gold Price, please visit the following link: https://media3.marketwire.com/docs/tmm115-T2.pdf.