VANCOUVER, British Columbia, Aug. 04, 2021 (GLOBE NEWSWIRE) -- Mexican Gold Mining Corp. (the “
Company
” or “
Mexican Gold
”) (TSX-V:MEX) is pleased to announce a positive Preliminary Economic Assessment (PEA) for its 100% owned Las Minas Project in southeastern Mexico. Summary economic results are as follows:
Las Minas PEA Financial Highlights, including Metal Prices Sensitivity
|
Base Case
(BC) |
Spot Price
(Jul 29, 2021) |
Upside | Downside | |
| Au (US$/oz) | 1625 | 1830 | 2000 | 1200 |
| Ag (US$/oz) | 20 | 25.5 | 28 | 14 |
| Cu (US$/lb) | 3.25 | 4.45 | 4.75 | 2.25 |
| Magnetite Concentrate (US$/dmt) | 100 | 213.5 | 220 | 65 |
| Cumulative Cash Flow (US$M) | $ 99 | $237 | $276 | -$22 |
| After Tax NPV @ 5% (US$M) | $ 55 | $157 | $187 | -$37 |
| After Tax NPV @ 8% (US$M) | $ 35 | $122 | $148 | -$43 |
| After Tax IRR (%) | 16 % | 31% | 35% | -5% |
| Capex Payback (Years) | 4.4 | 2.8 | 2.6 | n/a |
| EBITDA for First Year of Full Production (US$M) | $ 43 | $70 | $77 | $19 |
Notes:
Metal prices for Upside and Downside cases represent the individual metal historical 3-year highs and lows.
The PEA is preliminary in nature and is based on inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The Company also announces a new mineral resource estimate, prepared in accordance with National Instrument 43-101, of 443,000 gold equivalent ounces within indicated resources of 4.13 million tonnes at grades of 1.96 g/t gold, 4.64 g/t silver, 1.08% copper, 14.77% magnetite and 361,000 gold equivalent ounces within inferred resources of 5.20 million tonnes at grades of 1.44 g/t gold, 5.97 g/t silver, 0.95% copper, 17.54% magnetite, all reported at a US$80 per tonne Net Smelter Return (NSR) cut-off .
Philip O'Neill, CEO and Director of Mexican Gold stated: "We are delighted with the economic results for our Las Minas project which is based off our drilling to date at Las Minas. This PEA study demonstrates robust economics with modest initial capital and positive economic returns for the development of an initial mining operation at Las Minas. The Company believes there is significant resource upside with further drilling at Las Minas both in the immediate area of the existing resource and through exploration of multiple other targets on the mine property. In addition to continuing advancement towards development to production and positive cash flow, the Company will continue to aggressively explore with the objective of building a larger resource base. With success we believe there is good potential to significantly increase the project economics above the base we have now established. There are a number of precedent operations in Mexico that have started at a more modest throughput rate based on an initial resource base and then expanded throughput and cash flow as additional resources have been defined through further exploration. Capstone's Cozamin mine is one example."
Exploration Potential of Las Minas
Matt Liard, VP Exploration for Mexican Gold stated: “The resource and stope modelling in the PEA show that there is opportunity to bring further tonnage into the resource and to bring further resource tonnage into the mine plan through infill drilling. Several areas have been identified which show potential for additional tonnes with a tighter drill pattern. In particular, the entire northeast and northwest portions of the El Dorado Zone and almost all of the Santa Cruz Zone require attention, along with multiple smaller discrete enclaves and embayments within the main stoping area.
Near the Las Minas resource (within <1km to the north and northeast) there are several exploration targets on the main El Dorado Zone contact horizon that have only been lightly or partially investigated by drilling. The targets combine either extensive historic mining activity (Cinco Senores and Changarro) or a strong geophysical response (Carboneras) with a geological case for mineral potential. Recent modelling work on the Santa Cruz Zone has provided a breakthrough in the genetic and morphological understanding of this deposit. This new knowledge should allow for much better definition of the existing deposit and highlights the potential for further similar deposits in the area.
The mineral potential of the region is well known, being positioned over an active continental subduction zone. Similar geological features and dozens of mineral showings appear over an area of >100km 2 centred on Las Minas, and there is strong evidence that the productive El Dorado contact underlies this entire area. The Las Minas area is also surrounded by various mining districts which show every common type of cordilleran mineral deposit.”
PEA Conceptual Design Summary
The concept for recovery of the Las Minas resource is through multiple underground mining methods at a production rate of 1,400 t/d with the mineralized material being hauled via truck to an underground crusher, where it is then crushed and conveyed to the processing plant. Processing will produce a copper concentrate containing gold and silver. Additionally, the tailings would be processed to recover magnetite. Tailings after magnetite recovery would be de-watered and pumped underground as cemented paste backfill. Tailings not placed as paste would be trucked to the tailings storage facility (TSF). Production at the mine would ramp up in year 1, maintain full production to the end of year 8, and decrease in year 9 as the deposit is depleted.
| Las Minas Resource Exploitation - PEA Highlights and Project Performance | |
| Total Tonnes Mined | 4,043 kt |
| Diluted Grades | |
| Gold | 1.84 g/t |
| Silver | 5.53 g/t |
| Copper | 1.06% |
| Magnetite | 15.7% |
| Mine Life | 8.5 years |
| Average Annual Production | |
| Gold Equivalent Ounces | 45,000 |
| Gold Ounces | 21,000 |
| Silver Ounces | 24,000 |
| Copper Pounds | 9,533,000 |
| Magnetite Concentrate Tonnes | 75,000 |
| Average Cash Cost Per Gold Equivalent Ounce | US$786 |
| Average Cash Cost Per Gold Ounce, Net of By-Product Credits | US$158 |
| Average AISC Per Gold Equivalent Ounce | US$928 |
| Average AISC Per Gold Ounce, Net of By-Product Credits | US$145 |
| Initial CAPEX | US$90.4 M |
| Sustaining CAPEX | US$54.7 M |
| Processing Plant Recoveries | |
| Gold | 80% |
| Silver | 70% |
| Copper | 90% |
| Magnetite | 90% |
Notes:
LOM Metal Prices - US$1,625/oz. Au, US$3.25/lb. Cu, US$20.00/oz. Ag, US$100/t Magnetite Concentrate
The following is the projected production for the Las Minas project over the expected life of the mine.
Las Minas PEA Mine Production from Indicated and Inferred Resources
| Production Year | Au (K oz) | Ag (K oz) | Cu (M lbs) | Magnetite (k tonnes) |
| 1 | 32 | 57 | 4 | 32 |
| 2 | 29 | 96 | 13 | 79 |
| 3 | 32 | 76 | 11 | 66 |
| 4 | 34 | 65 | 10 | 62 |
| 5 | 31 | 84 | 13 | 66 |
| 6 | 27 | 91 | 13 | 86 |
| 7 | 23 | 108 | 13 | 103 |
| 8 | 23 | 92 | 12 | 94 |
| 9 | 9 | 48 | 6 | 48 |
| Total | 239 | 719 | 94 | 635 |
Notes:
Assumed metal prices over life of mine: Gold US$1,625/oz - Silver US$20/oz - Cu US$3.25/lb – Magnetite Concentrate US$100/t.
Geology
The Las Minas project is located in southeastern Mexico within the eastern portion of the Trans Mexico Volcanic Belt (TMVB), an east-west belt of Miocene to recent volcanic rocks that transects the country from the Pacific coast to the Gulf of Mexico. The pre-Miocene basement in the Las Minas region consists of a sequence of Jurassic and Cretaceous marine sedimentary rocks including sandstone, siltstone, limestone and shale. These have been intruded by Tertiary and Mesozoic plutonic rocks mapped as dominantly granodiorite and porphyritic dacite, with lesser amounts of granite, diorite and tonalite.
Copper and gold mineralization have been recognized in three settings within the Las Minas property: proximal skarn, distal skarn and quartz veins. Proximal-type skarn is the dominant skarn alteration observed within the Las Minas resource zones (El Dorado and Santa Cruz) while distal and gold-bearing quartz veins occur in the exploration targets to the east and north of the Las Minas resources.
Proximal skarn developed along marble-diorite contacts, both as exoskarn developed within the sedimentary rock, and as endoskarn developed within the intrusion. The skarn alteration has a typical zoning of marble-exoskarn-endoskarn-diorite. The distinction between exoskarn and endoskarn can be very difficult because the skarn alteration (especially garnet replacement) can be texturally destructive.
Proximal skarn alteration is dominantly garnet-rich with lesser amounts of pyroxene, and locally garnet appears to have replaced pyroxene. The skarn contains variable amounts of magnetite and lesser sulfide minerals.
Within the Las Minas resource zones, chalcopyrite is the dominant sulfide mineral with lesser amounts of bornite and pyrite. Sulfide grains usually are associated with magnetite and are present as relatively coarse-grained disseminations while sulfide blebs, bands, and veinlets cutting magnetite are also observed. Pyrite occurs as an accessory mineral in the main resource area.
Gold-silver-copper mineralization at El Dorado zone occurs as two horizons that are separated by a barren north-northwest trending diorite dike. The current modeling indicates that the El Dorado skarn zone on the west side of the diorite dike has an 800 m northwest strike length, extends up to 450 m to the southwest away from the diorite dike, is on average 15 to 20 m thick, and can reach over 50 m in thickness along the northwest-striking contact with the diorite dike. In contrast, the El Dorado zone on the east side of the dike has a strike length of 250 m northwest, extends up to 200 m to the northeast from the diorite dike, and is 5 to 10 m in thickness.
The Santa Cruz zone lies about 0.5 km south of the Las Minas pueblo and is well exposed on a west-facing canyon wall just above a tributary of the Rio Las Minas. Skarn within the Santa Cruz zone lies along the west side of the dike, immediately to the south of and stratigraphically higher than the El Dorado zone. The primarily east-dipping mineralization at Santa Cruz is more complex and discontinuous than observed at El Dorado due to the more variable intrusive-marble contact orientations (both near-vertical dike and east-dipping sills).
Mineral Resource Estimates
The mineral resource estimates for Las Minas were prepared to industry standards and best practices and verified by Garth Kirkham, P.Geo., an Independent Qualified Person for the purposes of NI 43-101.
Within the Las Minas Project, 206 drill holes (32,058 meters) supports the mineral resource estimate. The deposit was segregated into multiple estimation domains based on geologic models for each of the mineralized units. The estimated mineral resources occur within the Las Minas gold-copper-silver-magnetite skarn deposit, which consists of the mineralized endo-skarn and exo-skarn units within the El Dorado and Santa Cruz zones. The mineral domains were then used to code the block model, and assays within the modeled domains were evaluated geostatistically to establish estimation parameters. Assays were composited into 2-meter lengths. MineSight TM , a commercially available geologic modeling and mine planning software package, was used to produce a three-dimensional block model while LeapFrog TM Software was utilized to produce the solids models for the estimation domains.
The gold, copper, silver and iron grades were estimated into a three-dimensional, 12 m by 12 m by 3 m block model which was sub-blocked to 0.5 m in three dimensions. Gold (Au g/t), copper (Cu%), silver (Ag g/t) and total iron (Fe%) block grades were estimated from capped composited samples in a single pass. The mineral resources were estimated using ordinary kriging interpolation for the continuous mineralized domains. Search ellipse anisotropy and orientation were guided by the orientation of the domain solids models and omni-directional ellipsoids were employed in the individual zones.
Magnetite estimates were based on applying mathematical regression, as derived from SATMAGAN testing results, to the Total Fe% estimates. A total of 2,601 specific gravity readings were derived from measurements within individual rock types and estimated on a block-by-block basis using inverse distance.
Mineral resources are classified in accordance with the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves, and the 2019 CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines.
Mineral Resources are classified under the categories of Indicated and Inferred according to CIM guidelines. Mineral Resource classification was based primarily on drill hole spacing and on continuity of mineralization. There are no measured resources at Las Minas. Indicated resources were defined as blocks with a distance to three drill holes of less than ~30 m to nearest composite and occurring within the estimation. Inferred resources were defined as those with a drill hole spacing of less than ~60 m.
Final resource classification shells were manually constructed on plan sections and all resources are constrained within lithological domains and by the continuous solids. Final Resource classification shells were manually constructed on sections. These interpreted boundaries were created for the indicated and inferred thresholds in order to exclude orphans and reduce potential “spotted dog” effect.
This estimate is also based upon the reasonable prospect of eventual economic extraction using estimates of reasonable operating costs and price assumptions. The mineral resources do not represent an attempt to estimate Mineral Reserves.
The Las Minas resources are reported in the following Table at a base case cut-off of US$80 NSR.
Las Minas Deposit Indicated and Inferred Mineral Resource Estimate at a US$80 NSR
| Class | Tonnes |
NSR
(US$) |
Au
(g/t) |
Au ('000
ounces) |
Ag
(g/t) |
Ag ('000
ounces) |
Cu
(%) |
Cu ('000
lbs) |
Fe
Magnetite (%) |
Fe
Magnetite ('000 tonnes) |
AuEQ
(g/t) |
AuEq
('000 ounces) |
| Indicated | 4,133 | 138.58 | 1.96 | 260 | 4.64 | 617 | 1.08 | 98,311 | 14.77 | 610 | 3.34 | 443 |
| Inferred | 5,200 | 112.83 | 1.44 | 241 | 5.97 | 997 | 0.95 | 108,802 | 17.54 | 912 | 2.16 | 361 |
Notes:
-
Mineral Resource Statement prepared by Garth Kirkham (Kirkham Geosystems Ltd.) in accordance with NI 43-101.
-
Effective date: July 27, 2021. All Mineral Resources have been estimated in accordance with Canadian Institute of Mining and Metallurgy and Petroleum (“CIM”) definitions, as required under NI 43-101.
-
Mineral resources reported demonstrate reasonable prospect of eventual economic extraction, as required under NI 43-101. Mineral resources are not Mineral Reserves and do not have demonstrated economic viability.
-
Underground Mineral Resources are reported at a cut-off grade of US$80 NSR. Cut-off grades are based on a price of US$1,700/oz gold, US$20/oz silver, US$3.50/lb copper and US$100/tonne magnetite concentrate and a number of operating cost and recovery assumptions, including a reasonable contingency factor.
-
Numbers are rounded.
-
An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
-
The Mineral Resources may be affected by subsequent assessment of mining, environmental, processing, permitting, taxation, socio-economic and other factors.
The table below illustrates the sensitivity of the indicated and inferred mineral resource estimate to changes in cut-off grade. The base case at a cut-off grade of US$80 NSR is highlighted in bold. The table suggests that the mineral resource estimate is moderately sensitive to cut-off grade in terms of estimated contained metal.
Sensitivity of Las Minas Indicated and Inferred Mineral Resource Estimate to Cut-Off Grade (base case is highlighted)
| Class |
NSR
COG (US$) |
Tonnes |
NSR
(US$) |
Au
(g/t) |
Au ('000
ounces) |
Ag
(g/t) |
×
|