Minera Alamos (TSXV: MAI) has released an encouraging preliminary economic assessment for its Cerro de Oro gold project in the central Mexican state of Zacatecas. Using a gold price of US$1,600 per oz., the company anticipates an internal rate of return of 111% and an after-tax net present value (at 5% discount) of $150.5 million.
The life of mine all-in sustaining cost will be US$873 per oz., averaging even less - US$763 per oz. - in the first four years.
Cerro de Oro has a low initial capital requirement of US$28.1 million and a payback period of only 11 months. Alamos has already purchased a used crushing plant. The property has several historical pits and underground workings.
Average annual gold output will be 60,000 to 70,000 oz. in years one through four, and about 60,000 oz. annually over the life of the project. The open pit life is to be 8.2 years at a mining rate of 20,000 tonnes per day. A total of 477,000 oz. gold will be recovered following leaching, carbon loading and dor?(C) production.
The project has a total, updated inferred oxide resource of 67 million tonnes grading 0.37 gram gold per tonne, or 780,000 contained oz. when a gold price of US$1,700 was used.
Alamos also hopes to take advantage of a significant upside at Cerro de Oro. The deposit appears open in multiple directions and at depth. Moreover, deeper gold-containing sulphide zones are known, and more metallurgical testing will be done to determine if it is suitable for leaching.
Minera shares were trading at 53 ? apiece on Monday afternoon in Toronto. Its shares have traded in a 52-week window of 41 ? and 73 ?. It has a market cap of $237 million.