Timmins Gold Corp T.TMM

Timmins Gold Acquires Process Plant and Infrastructure for

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Timmins Gold Acquires Process Plant and Infrastructure for Ana Paula Project and Announces C$6 million Investment by Goldcorp

Timmins Gold Corp. 35 minutes ago

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sep 18, 2015) - Timmins Gold Corp.(TMM.TO)(NYSE MKT:TGD) ("Timmins Gold" or the "Company") is pleased to announce that it has entered into an agreement with a Mexican subsidiary of Goldcorp Inc. ("Goldcorp") to acquire the complete process plant and select auxiliary equipment ("Plant") used in the operation of Goldcorp's El Sauzal Mine in Chihuahua, Mexico ("the Plant Acquisition"). The El Sauzal Mine was operational until December 2014 when it began its closure.

Timmins Gold's CEO Bruce Bragagnolo states "The purchase of the El Sauzal Plant is projected to save in the range of US$40-60 million in initial capital expenditure when Timmins Gold constructs Ana Paula, not only in terms of equipment and infrastructure direct costs, but also indirect costs and EPCM costs. In addition, it will derisk the project by reducing the risk of both equipment capex overruns and delays in scheduling equipment deliveries. The El Sauzal flowsheet is very similar to the base case flowsheet outlined in the Ana Paula PEA and will require essentially all of the items we have acquired. Some additional items such as a gravity circuit may be required based on the results of ongoing metallurgical studies."

The Plant will be acquired by Timmins Gold for future use at its recently acquired Ana Paula project in Guerrero, Mexico. A preliminary economic assessment ("PEA") completed in 2014 indicates that Ana Paula represents a robust, high-margin, rapid pay-back, 8-year life open pit mining opportunity which once in operation is projected to generate a pre-tax NPV5% of US$332 million and a pre-tax IRR of 41% at a gold price of US$1,200 per ounce. It is anticipated that the capital savings realized by the Plant Acquisition will significantly improve the economics of the project and reduce the remaining pre-production capital required for Ana Paula to approximately US$100 million.

The total purchase price to be paid by Timmins Gold to Goldcorp for the Plant is C$8.0 million to be paid as follows:

1. C$1.0 million in cash payable to Goldcorp immediately;
2. C$3.0 million by the issuance of 10 million common shares in the capital of Timmins Gold at a price of C$0.30 per share.
3. C$4.0 million in cash payable to Goldcorp one year from today's date.

The closing of the Plant Acquisition is subject to, among other things, the completion of a C$6.0 million investment by Goldcorp in Timmins Gold by way of a non-brokered private placement of 20 million units of Timmins Gold (the "Private Placement") at a price of C$0.30 per unit. Each unit will consist of one share and one half of a Warrant, each whole Warrant being exercisable for a term of 24 months into a common share of Timmins Gold at a price of C$0.35 per share. The Warrants are subject to an accelerated exercise period of 10 days if the Company's closing share price meets or exceeds $0.60 per share for 20 consecutive trading days.

As a result of the Plant Acquisition and Private Placement, Goldcorp will hold approximately 9.9% of Timmins Gold's issued and outstanding common shares on an undiluted basis. The closing of the Private Placement is expected to occur on or about September 30, 2015 and is subject to all necessary regulatory approvals, including approval of the TSX. All securities issuable pursuant to the Plant Acquisition and Private Placement will be subject to a statutory four-month hold period. The use of proceeds of the Private Placement will be to pay for the cost of the removal of the plant from the site.

Process Plant & Infrastructure Acquisition

The El Sauzal process plant is a nominal 6,000 tonne per day milling and processing facility with a cyanide circuit and a carbon-in-pulp circuit (CIP). The key items acquired by Timmins are:

• Crushing, grinding and cyclone circuit (including 300 hp jaw crusher, 6 x 21 ft apron feeder, grizzlies, conveyors, ore feeders, 24 x 9 ft 3000 hp SAG mill, 15.5 x 21 ft 3000 hp ball mill, grinding thickener, cyclones);
• Leaching and thickening circuit (including pumps, leach tanks and agitators, complete CIP system, pulp circuit);
• Reagents storage and mixing circuit;
• Carbon adsorption and stripping circuit, and complete refinery;
• Dry-stack tailings circuit (including tailings thickening, filtering and conveyors);
• Cyanide destruction (DETOX) circuit;
• Mine site infrastructure (including all office buildings, warehouses, maintenance shops, complete camp facilities, full on-site laboratory, main substation and four electrical control rooms, standby generators, multiple water storage tanks);
• Significant inventory of mechanical / electrical spares (including spare motors for each mill, extra filter press).

A more comprehensive list outlining the equipment and infrastructure items acquired by Timmins Gold is shown in Schedule A.

Based on extensive due diligence, including reviews by engineering firms and contractors, the capital savings realized by this acquisition compared to purchasing new equipment and facilities is in the range of US$40-60 million. Timmins Gold estimates the remaining pre-production capital required for Ana Paula to be approximately US$100 million. This estimate will continue to be refined as the Company works towards completing its feasibility study over the next year. Timmins Gold plans to immediately begin the dismantling of the plant and its transport to a storage/staging facility. Based on detailed inspection reviews by Timmins Gold and external consultants, the equipment appears in good condition.

Schedule A - Major items acquired by Timmins Gold

• Primary crusher, bin, stock pile conveyor;
• Crushed ore recovery and SAG mill feed conveyor;
• Grinding and cyclone circuit;
• Leaching and thickening circuit;
• Reagents storage and mixing circuit (Cu2SO4, H2SO4, Na2S2O5)
• Carbon adsorption and stripping circuit, complete refinery (incl. rectifiers);
• Tailings thickening and filtering circuit (vertical plate airblow, horizontal pressure filters, driers, screens, overland conveyor, radial stacker, grasshoppers);
• Cyanide destruction (DETOX) circuit
• Process plant office and three auxiliary electrical rooms;
• Process plant laboratory (incl. fusion/fire assay, chemical analysis, metallurgy);
• Standby generators & system;
• Process water storage tank;
• Main electrical room and main substation;
• Plant maintenance shop;
• Filter maintenance shop;
• Reagents storage area;
• Complete camp facilities (incl. living quarters, laundry, kitchen and cafeteria, gym, storage building, food cold storage building, camp water storage tanks);
• Main administration office;
• Plant fuel storage area;
• Mechanical and electrical spare parts and wear parts (liners) related to the facilities listed above excluding mobile equipment spare parts;
• Tools related to the facilities listed above;
• Furniture related to the facilities listed above;
• Scrap material related to the facilities listed above;
• Mine maintenance shop;
• Mine office;
• Fuel storage and dispensing at mine shop;

Technical information contained in this news release was reviewed and approved by Taj Singh, M.Eng., P.Eng., Vice President of Engineering and Project Development of the Company who is recognized as a QP under NI 43-101.

[ryanlast]

BOOOM ana paula just got a whole lot sexier. The IRR should improve quite dramatically. 

[pdcon1]

its better that moving the san fran mill to ana paula , nice surprize   ching ching  goldcorp is showing interest in tmm as well. welcome aboard

[blade86ca]

this is a good sign , after the transaction closes Goldcorp will own 9.9% of outstanding shares of TMM , a good sign IMO as if TMM was gonna be non-stop money losing pit as some bashers constantly state Goldcorp would have demanded for straight cash from TMM only and not taken shares

[pdcon1]

agreed  as goldcorp  a major holder of tmm anything is possible from here .

[ryanlast]

it sure was a clever deal. Drop the capex of ana paula big time, put more money in the coffer  and bring in arguably the best gold mining company as one of your main shareholders. remember goldcorp use to own ana paula before they sold it to newstrike. maybe there is interest in buying it back at some point.  future is starting to look very bright now we just need the price of gold

[Czicfwillgetermit]

This was a grand slam imo.   Goldcorp may be buying this operation at some point or may finance the entire mine for more shares or maybe 50% of ana.  I like these kind of deal with no debt overhang.  In one press release Ana becomes a relevant project adding shareholder value and timmins gets an investment from arguably the best run miner on the planet.  These deals are not

[pdcon1]

Your comment of goldcorp buying tmm at some point may come true but TMM with their experience in Mexico  might just end up running Goldcorps devision in mexico . A few important things in the news release , one is they  waited until the cross of 17 million shares was complete until they released the news . Goldcorp will be the cop on the block possibly buying any dumped shares and

[twonxanity]

Incredible news. Proud of these guys for such a great deal. Finally after much suffering. Its very sad that the stock deteriorated to these levels beforehand though. We are not going bankrupt but, there are a number of gold companies trading within 25% of there 1 and 2 year mid-high levels. Unfortunately we are not one, but a year ago we were right there. Circumstances, particularly the high

[twonxanity]

Also feel a little sad that I did not buy considerablty more shares for sub 40-sub 35 cents. I went in strong at far higher levels and kept buying all the way down but have been buying just trickles lately as I have so much in already. If only I had held back all those purchases to last 2-3 months.