JV Article: Almaden Approaches Production Decision at Ixtaca with Improved Feasibility Study

Almaden Minerals (TSX: AMM; NYSE: AAU) has tabled a feasibility study for its Ixtaca gold-silver project in Puebla State, Mexico, that reduces the mine plan's footprint by shifting to dry stack tailings and improves milling grade through ore sorting.

The company originally used a conventional tailings dam in its 2017 prefeasibility study. Since then, it's studied mixing waste and tailings to eliminate the need for a conventional tailings dam. It says its tailings are suitable for dry stacking and co-disposal with waste, and could even be used to make cement.

"Geochemistry plays a big role, and ours is very special, given that our waste rock is mostly limestone," says Almaden President and CEO Morgan Poliquin. "You're eliminating a tailings dam and a tailings facility, so as a result the footprint is considerably reduced."

Almaden opted for ore sorting because of the swarm of veins that branch and reconnect to define its deposit. Ore sorting has been demonstrated to be very effective in removing the limestone waste which is trapped between the high grade veins which define the Ixtaca deposit, thereby diluting the overall reserve grade.

The project contains 73.1 million proven and probable tonnes at diluted grades of 0.59 gram gold per tonne and 36.3 grams silver per tonne for 1.38 million oz. gold and 85.15 million oz. silver.

The ore sorting would allow Almaden to produce a total 48 million tonnes of mill feed grading 0.77 gram gold and 47.9 grams silver, or 2.03 grams gold equivalent during the mine's first six years and 1.41 grams gold equivalent over its 11 year life.

Per the new feasibility study, Ixtaca would produce 90,000 oz. gold and 6.16 million oz. silver (or 173,000 oz. gold equivalent) per year at all-in sustaining costs (AISCs) of US$850 per oz. gold equivalent over the mine's life. The economics are improved during the mine's first six years, when it would produce 108,000 oz. gold and 7.07 million oz. silver (or 202,000 oz. gold equivalent) per year at AISCs of US$810 per oz. gold equivalent.

The project has a US$310 million after-tax net present value at a 5% discount rate and a 42% after-tax internal rate of return. It would cost US$174 million to build and achieve payback in less than two years.

With the feasibility study complete, the company will submit its environmental permits to the Mexican government in early 2019. Poliquin says Almaden must have its environmental impact statement (EIS) approved before the company will be eligible to receive its other permits.

He says EIS approval typically takes six months in Mexico. The company hopes to have all its permits in a year, at which point it would be in a position to make a production decision.

Almaden Minerals' community meeting in December 2018, with participation by representatives of the new Mexican Federal Government. This was Almaden's ninth large community meeting at Ixtaca in Puebla State since 2012, with total aggregate participation of over 4,100 people. Credit: Almaden Minerals.

As part of preparing for mine permitting, the company has completed a social impact assessment - a study Mexico requires for the oil and gas industry but not for mining.

"We did one voluntarily, with an external, independent group," explains Poliquin.

The study involves sending ethnologists and sociologists to live in local communities and learn about the perception of the company, what excites the community about the project and what worries it.

The study merged into a social investment plan, which the company is using to teach the local community about mining. It hosts monthly meetings called dialogues, where experts on different aspects of mining can talk with the community, and has taken roughly 500 community members on tours of nearby mines.

"Because this isn't an active area with mining, we've done something very unusual over the last four, five years," says Poliquin. "We've asked permission from mining companies in Mexico to allow us to bring 20-30 community members at a time to see an operating mine, to see a tailings dam, to see an open pit and a mill - to see what mining entails so they can get the real facts on mining and see it in operation."

Poliquin adds that the mine plan is also providing a solution to water drainage issues in the area. The local community has no water reservoir. When it rains, the water flash floods through the drainages out to the ocean. The company understands that the community had been soliciting the government for a dam to create a reservoir.

"Our mine plan involves a diversion dam to divert this non-contact water around our mine infrastructure," says Poliquin. "We're going to build the dam in a permanent way so we can hand it over to the community. Essentially we're creating a new water resource for the local communities."

Shares of Almaden are currently trading at 77 ? with a 52-week range of 63 ? to $1.35. The company has an $85 million market capitalization.

"We are located in an area without a lot of opportunity in terms of jobs." says Poliquin. "Even though factories are nearby, people have to move to get work. In our municipality of the state we would be pretty much the most significant thing happening."

- The preceding Joint-Venture Article is PROMOTED CONTENT sponsored by Almaden Minerals Ltd., and compiled in cooperation with The Northern Miner. Visit www.almadenminerals.com for more information.