VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 11, 2016) - Timmins Gold Corp. ("Timmins Gold" or the "Company") (TSX:TMM)(NYSE MKT:TGD) is pleased to report that its Board of Directors have approved a pre-construction program, including commencement of a Feasibility Study, for the Ana Paula Gold Project ("Ana Paula") in Guerrero State, Mexico. The Feasibility Study is advancing on the back of a positive Preliminary Economic Assessment ("PEA") that was updated earlier this year and indicates that Ana Paula represents a robust, high-margin, open pit mining project at a $1,200 gold price (all amounts are in US dollars unless otherwise noted).
Pre-construction activities will commence immediately, and will include feasibility work, infill drilling, metallurgical testwork, and environmental baseline and permitting activities. With this $9.2 million budget, the Company expects the Feasibility Study to be complete by Q3 2017 and have all permits required to start construction by Q1 2018.
The Company is also pleased to announce that the disassembly program of the El Sauzal facilities, acquired in October 2015 from Goldcorp is complete, on time and on budget, with zero lost-time accidents.
"We are extremely pleased to commence work on the Feasibility Study," stated Mark Backens, Interim CEO. "With the improvements in our balance sheet and operations at the San Francisco Mine, we can begin to unlock the value of Ana Paula. We continue to view this project as one of the best development-stage gold projects in North America. With its higher grade, low cash costs, high capital efficiency and industry leading Internal Rate of Return ("IRR"), Ana Paula will be a very profitable mine. Further, the El Sauzal facilities will provide us a head start to rapidly advance the project to construction-ready status."
PEA SUMMARY
On March 23, 2016, the Company announced results of an updated PEA for the Ana Paula Gold Project, highlights of which are presented below:
- After-tax NPV5% of $248 million and IRR of 43% at $1,200 per gold ounce; After-tax NPV5% of $295 million and IRR of 48% at $1,300 per gold ounce;
- Average annual production of 116,000 gold ounces and 239,000 silver ounces over a 8.2 year mine life;
- Construction capital costs of $121.7 million, including contingency costs of $19.8 million; and,
- Cash costs of $470 per gold ounce; cash costs of $442 per gold ounce on a by-product basis; and all-in sustaining cash costs of $507 per gold ounce.
PRE-CONSTRUCTION PROGRAM
The estimated budget for the pre-construction program is approximately $9.2 million and includes:
- $2.2 million - Drilling, including soil sampling and trenching; 10,000 meters of core drilling for resource definition, 2,000 meters of core drilling for geotechnical work, and 4,000 meters of reverse circulation drilling for condemnation;
- $3.4 million - Feasibility work program; and,
- $3.6 million - Environmental studies and construction permits.
The Company has contracted M3 Engineering & Technology Corp ("M3") to lead its Feasibility Study. M3 has extensive experience in Mexico. More specifically, M3 was the lead engineering firm responsible for the Feasibility Study and the EPCM for Torex Gold's El-Limon Guajes Mine in Guerrero, which is in close proximity to the Ana Paula Gold Project.
Qualified Persons
Technical information contained in this news release was reviewed and approved by Taj Singh, M.Eng., P.Eng., the Vice President of Engineering and Project Development for Timmins, who is recognized as a QP under NI 43-101.