Announces Updated El Gallo 2 Resource Estimate
Toronto, Aug 8, 2013 AEST (ABN Newswire) - McEwen Mining Inc. (
NYSE:MUX) (TSE:MUX) is pleased to announce an updated Canadian National Instrument 43-101 resource estimate for the El Gallo 2 project in Sinaloa State, Mexico. The main objective of the Company's drilling during the past year was to convert Inferred Resources to the Measured and Indicated categories. This was done in order to begin work on an updated El Gallo 2 reserve estimate and mine plan. McEwen Mining's drilling has been successful at upgrading a large portion of the previously classified Inferred Resource.
El Gallo 2 Resource Highlights
- Measured and Indicated silver and gold resources grew by 20% and 215% respectively, to 63.9 million ounces silver and 201,750 ounces gold (34.3 million tonnes at 58.0 gpt silver and 0.18 gpt gold). Measured and Indicated Resources on a gold equivalent* (AuEqv) basis totaled 1.4 million ounces (34.3 million tonnes at 1.30 gpt AuEqv). The average gold equivalent grade decreased by 8%.
- Measured and Indicated resources for El Gallo 1 and 2 on a gold equivalent basis now total 2.1 million ounces (48.2 million tonnes at 1.37 gpt AuEqv).
- The Inferred Resource equals 14.5 million ounces silver and 66,550 ounces gold (8.5 million tonnes at 52.7 gpt silver and 0.24 gpt gold). Inferred Resources on a gold equivalent basis equal 345,042 ounces (8.6 million tonnes at 1.26 gpt AuEqv).
* Gold equivalent calculated by converting silver into gold using a 52:1 exchange ratio. This ratio was established on January 30, 2013 and was used to budget the company's 2013 gold equivalent production. The silver/gold ratio does not take into account metallurgical recoveries.
El Gallo 2 Resource Estimate
El Gallo 2 is comprised of several mineral deposits (Chapotillo, CSX, El Gallo, Haciendita, Las Milpas, Los Mautos, Mina Grande, Palmarito and San Jose Del Alamo) that are located outside of the El Gallo 1 mine. In 2012, McEwen Mining published a NI 43-101 compliant Feasibility Study that envisioned processing the previous reserves through a conventional mill (El Gallo 1 mine is a heap leach operation). The estimated annual production was to be 5.2 million ounces silver and 6,100 ounces gold (105,000 gold equivalent ounces) over a 6-year mine life. The Feasibility Study is no longer current under NI 43-101, as the new Technical Report supersedes it. The Technical Report will be filed on SEDAR in order to support the updated mineral resource.
Block models for the main El Gallo and Palmarito deposits are relatively unchanged since the last resource update in June 2012. Cut-off grades at El Gallo have been increased to 14 gpt silver from 12 gpt silver and Palmarito increased to 33 gpt silver equivalent from 30 gpt silver equivalent. Changes to the cut-off grades were based on lower precious metal price assumptions of $23.50 silver/$1,425 gold versus $28.50 silver/$1,500 gold. These price assumptions and updated metallurgical recovery data slightly reduced the respective resources. Resource classification was modified for the El Gallo deposit, which resulted in a small portion of the Inferred Resource being upgraded. Also, the resource for Palmarito has been changed to include both open pit and underground resources. Previously all resources at Palmarito were stated solely as open pit. This change represents less ounces but at a higher silver grade for the deeper portions of the deposit.
Since the last El Gallo 2 resource was published in June 2012, infill and exploration drilling has been completed on several of the other resource areas (Chapotillo, CSX, Haciendita, Mina Grande, and San Jose Del Alamo). These areas were previously classified as Inferred and excluded from the Feasibility Study. Today, the majority of these Inferred Resources has been converted to the Measured and Indicated categories and will be studied as part of an updated reserve estimate and mine plan for the project. No infill drilling was completed on Los Mautos nor Las Milpas due to timing restraints and thus they remain in the inferred category.
The San Dimas deposit has been removed from the El Gallo 2 resource estimate because additional metallurgical testing has shown that San Dimas can be processed at the El Gallo 1 mine. Thus the San Dimas resource is now included in the El Gallo 1 resource estimate, which was published on July 17, 2013.
Future Work
In order to upgrade the newly classified Measured and Indicated Resources to Proven and/or Probable Reserves, the Company will need to complete a slope stability analysis for the planned open pits and conduct additional test work in order to better estimate silver and gold recoveries. This work is not expected to start until the Company makes a final determination on the El Gallo 2 process method. Tests are currently being completed to see if the majority of the mineralization could be heap leached in order to reduce capital costs.
Details on the parameters of the El Gallo 2 resource estimates are as follows:
- The resource estimation was based on data from 1,217 holes comprising a total of 163,688 meters of drilling completed by the end of June 2013.
- There were a total of 116,235 samples assayed. The samples were assayed by ALS Laboratory Group for gold, silver and 32 other elements. Gold was assayed by fire assay with atomic absorption finish and silver was assayed with 4-acid digestion with ICP determination; over-limit intervals were analyzed by fire assay with gravimetric finish.
- Both Inverse Distance and Ordinary Kriging were used to calculate the resource estimates.
- All Mineral Resources were estimated by McEwen Mining using the CIM (Canadian Institute of Mining) Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions.
- Mineral resources, which are not mineral reserves, do not have demonstrated economic viability.
- The quantity and grade of reported Inferred resources are uncertain in nature and there has been insufficient exploration to classify these Inferred resources as Indicated or Measured, and it is uncertain if further exploration will result in upgrading them to a Measured or Indicated category.
In order to identify the quantity of metal with a reasonable "prospect of economic extraction" a probable internal cut-off grade was used. These internal cut-off grades were calculated using the following parameters:
- Due to the recent gold price volatility McEwen Mining used a 90-day trailing average which equaled US$1,425/oz. gold and US$23.50/oz. silver.
- Mining costs for mineralized material and waste were estimated at $1.65 per tonne. Costs are based on actual mining costs at the El Gallo 1 mine, located within the El Gallo Complex.
- Milling costs were estimated at $18.50 per tonne. Costs are based on the previously filed El Gallo Complex Phase 2 Project, NI 43-101 Technical Report Feasibility Study (September 2012).
- Heap leaching costs were estimated at $6.50 per tonne. Costs are based on actual processing costs at the El Gallo 1 mine, located within the El Gallo Complex.
- Open pit resources were deemed to be from surface to a maximum depth of 250 meters. Everything below this depth, which was only applicable at Palmarito, was deemed to be underground.
- Gold and silver recoveries and density values were determined based on lab test work. Capping was determined based on geo-statistical analysis.
About McEwen Mining Inc
McEwen Mining (NYSE:MUX) (TSE:MUX) is a gold and silver producer with operations in Nevada, Canada, Mexico and Argentina. McEwen Mining also holds a 48.3% interest in McEwen Copper, which is developing the large, advanced-stage Los Azules copper project in Argentina. The Company's goal is to improve the productivity and life of its assets with the objective of increasing the share price and providing a yield. Rob McEwen, Chairman and Chief Owner, has a personal investment in the Company of US$225 million.
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