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TSX:AGI 8.82 +0.37 +4.38% Volume: 783,083 2017-07-26 20 mins delay | Get full quote
NYSE:AGI 7.08 +0.33 +4.89% Volume: 2,537,050 July 26, 2017
GOLD PRICE 1,262.45 +0.60 +0.05% Volume: July 26, 2017

Esperanza is an open-pit, heap leach gold project located in Morelos, Mexico. Typical of our growth assets, Esperanza is a low capital intensity, low cost, and low technical risk project.

HIGHLIGHTS

Acquired for net cash of $45 million and 7.2 million warrants in August 2013.

 

Low capital intensity, low technical risk open pit, heap leach project

 

Expected to produce more than 100,000 ounces of gold per year at lowest quartile all-in sustaining costs.1

Slide table

Esperanza Gold Project

Ownership 100%
Location Morelos, Mexico
Stage Development
Operation Open Pit, heap leach
Commodity Gold & Silver
Project Summary
Average Annual Production oz Au >100,000
Tonnes Grade Contained Ounces
(000) (g/t Au) (g/t Ag) Au Ag
Measured & Indicated Resources 34,352 0.98 8.09 1,083,000 8,936,000
Inferred Resources 718 0.80 15.04 18,000 347,000

Please see 2016 year end Reserves and Resources statement for additional detail.

FEATURED VIDEO:

In 2012, Alamos achieved a significant milestone at Mulatos with the mine producing both its millionth ounce of production and generating its billionth dollar of revenue.

OVERVIEW

The Esperanza Gold Project (“Esperanza”) is a development stage asset located in south-central Mexico in the state of Morelos, approximately 110 kilometers south of Mexico City and 70 kilometers north of the multi-mine Guerrero Gold Belt. The project was acquired by Alamos as part of the acquisition of Esperanza Resources in August 2013.

A positive preliminary economic study (“PEA”) was completed on the Esperanza Gold Project (formerly “Cerro Jumil”) in September 2011 which contemplated an open pit, heap leach operation expected to produce over 100,000 ounces of gold annually at cash operating costs1 below $500/oz over an initial 6 year mine life.

Work is underway on a feasibility study which will incorporate resource growth since the 2011 PEA. Concurrently, the company is working on compiling the requirements for the submission of the projects EIA.

Through its Mulatos Mine, Alamos has extensive permitting, development and operating experience in Mexico along with an excellent environmental and social track record. The company looks forward to continuing this success at Esperanza.

Location

Esperanza is located in south-central Mexico in the state of Morelos, approximately 110 kilometers south of Mexico City and a 35 minute drive from Cuernavaca, the largest city and capital of the Morelos. The project is comprised of seven adjacent land concessions totaling 15,025 hectares and is situated approximately 70 kilometers north of the 15 million ounce multi-mine Guerrero Gold Belt.

History

The Esperanza Gold Project was acquired as part of the acquisition of Esperanza Resources in August 2013. Alamos paid net cash of approximately C$42 million and issued at total of 7.2 million warrants.

A positive PEA was completed on the project in September 2011. In October 2012, the company entered into a surface rights agreement for land to be used for Esperanza with the communal landowners. The agreement was structured as a surface lease with an initial term of 15 years and allows for continued exploration and development and allows covers substantially all of the land required for the development and operation of the mine.

GEOLOGY AND MINERALIZATION

Geology

The Esperanza Gold Project is located within the physiographic province of the Sierra Madre del Sur, an orogenic belt that extends for around 1100kms NW-SE from the South Pacific coast of Mexico. The Esperanza Gold Project is located at the NW corner of the Mixteco Terrene, which emerges in the central part of the Sierra Madre del Sur, between the Caltepec and Teloloapan faults which represent its limits east and west, respectively. The basement of this terrene consists of deformed metamorphic rocks, represented mainly by migmatites, metasediments, metagranitoids and eclogitized ophiolites, which were grouped into the Acatlan complex metamorphic complex of Grenvillian to Early Triassic age.

Mineralization at the Esperanza Gold Project is associated with the intrusion of a stock of Granodiorite composition into the carbonate rocks of Guerrero-Morelos Platform, specifically the rocks of Xochicalco Formation. Spatially related to the intrusive contact with the carbonate rocks are varying degrees of skarn and marble development. The granodioritic stock, locally referred to as a feldspar porphyry, in hand sample presents a porphyritic texture with the development of phenocrysts of plagioclase (~35% in abundance) and potasic feldspar (~30% in abundance) that can reach up to 3cm in size, phenocrysts of quartz (~25%), and euhedral biotite (~10%) in a fine matrix consisting of very fine quartz-plagioclase. In thin section the plagioclase phenocrysts shows moderate alteration to sericite-clays as well as moderate silicification.

Intruded by the granodioritic stock are the limestone of the Xochicalco Formation of Aptian age (early Cretaceous), that have beds of varying thickness from very thin to medium. The color varies from dark grey to black according to the carbonaceous content or organic matter. Another feature of this formation is the abundance of chert bands. Distal to the intrusive contact the Xochicalco Formation is relatively fresh or unchanged usually having a dark grey colouring due to carbonaceous material, is fine-grained, with moderate calcite veinlet’s as stockwork (<1 mm thick) iron oxides in fractures, and occasional breccia texture that might be related to basin collapse.

Mineralization

Primary mineralization consists of gold, and to a lesser extent silver, associated with the skarn zones spatially related to the intrusive. As noted in the paragenetic mineral sequence the sulfides, iron oxides, and gold are directly associated with retrograde activity. Although sulfides are not commonly observed the abundance of iron oxide indicates that their presence was considerable prior to becoming oxidized. Gold values are often associated with jasperoid that appears to have been post-retrograde. Jasperiod can occur along fractures, in veins, and narrow lenses within the limestone or marble. Jasperoid outcrops from 1m to greater than 30m in thickness have been mapped, although core intercepts generally show that much narrower zones, less than 5m, generally exist. Gold assays in jasperoid have produced grades greater than 12g/t but not all jasperoid contains appreciable gold values, although they are generally strong anomalous (>100ppb). The greater thicknesses of jasperoid observed at the surface, versus what is found in drill core, may indicate that the more pervasive silica flooding represents the top of the hydrothermal system during jasperoid development.

Intense argillic and/or potassic alteration (clays) and epidote development is common within the intrusive near the skarn contact. Although locally anomalous gold may be associated with this zone, the values are generally less than 0.5 g Au/t and thus far appear to be of little economic importance.

MINING AND PROCESSING

The 2011 PEA contemplated two scenarios for the project including a base case two-stage crushing option and run of mine direct heap leaching option. The Base Case assumed a conventional open-pit, heap-leach operation using company-owned mining equipment. Mined rock will be hauled to a stock-pile prior to two stages of crushing to reduce the size to a nominal maximum size of 55mm (~ 2”). From there it will be conveyed to the leach pad and irrigated with recovery solutions. Gold will be recovered from pregnant solutions utilizing carbon adsorption, subsequent electrowinning and on-site smelting to produce a doré. This will be shipped off-site for final refining.

The run-of-mine alternative models a direct mine-feed of assumed maximum size of 610 mm (24”). This is directly fed to the heap leach pads without crushing by mine haul trucks. Material is then distributed on the pad by bull dozers. The mine plan and gold recovery process from pregnant solutions is the same as the Base Case alternative.

A feasibility study is underway which will incorporate resource growth since the 2011 PEA and look for potential avenues for optimize the project.


Slide table

Preliminary Economic Study – September 2011
Base Case
Two-Stage crushing
Average Annual Gold Production (000 oz) 103
Cash Operating Costs1 (net of by-products) (US$/oz) $499
Initial Capex (US$ mm) $114
Sustaining Capex (US$ mm) $7
Gold Recoveries % 75
Silver Recoveries % 25
Life of Mine Strip Ratio 2.2:1
Gold Price Assumption (US$/oz) $1,150
Gold Price Assumption (US$/oz) $21
After Tax NPV (5%) (US$ mm) $122
After Tax IRR % 26

Note Preliminary Economic Study does not incorporate resource increase announced September 2012

Technical Information and Cautionary Notes on non-GAAP Measures and Additional GAAP Measures

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Non-GAAP Information

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Disclaimer

Reconciliation of non-GAAP and additional GAAP measures

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Alamos Gold Inc. ("Alamos" or the “Company”), has taken all reasonable care in producing and publishing information contained in this website, and will endeavour to do so regularly. Material on this site may contain technical or other inaccuracies, omissions, or typographic errors, for which Alamos assumes no responsibility. Alamos does not warrant or make any representations regarding the use, validity, accuracy, completeness, or reliability of any claims, statements, or information on this site. Under no circumstances, including but not limited to, negligence, shall Alamos be liable for any direct, indirect, special, incidental, consequential, or other damages, including but not limited to, loss of programs, loss of data, loss of use of computer or other systems, or loss of profits, whether or not advised of the possibility of damage, arising from your use, or inability to use, the material on this site. The information is not a substitute for independent professional advice before making any investment decisions. Furthermore, you may not modify or reproduce in any form, electronic or otherwise, any information on this site, except for personal use, unless you have obtained our express written permission. The TSX and NYSE have not reviewed and do not accept responsibility for the adequacy or accuracy of information on this website.

Cautionary Notes – Forward Looking Statements

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Certain statements in this website are “forward-looking statements”, including within the meaning of the United States Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this website, including without limitation statements regarding forecast gold production, gold grades, recoveries, waste-to-ore ratios, total cash costs, potential mineralization and reserves, exploration results, and future plans and objectives of Alamos, are forward-looking statements based on forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management that involve various risks and uncertainties. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be “forward-looking statements.” Alamos cautions that forward-looking information involves known and unknown risks, uncertainties and other factors that may cause Alamos' actual results, performance or achievements to be materially different from those expressed or implied by such information, including, but not limited to, gold and silver price volatility; fluctuations in foreign exchange rates and interest rates; the impact of any hedging activities; discrepancies between actual and estimated production, between actual and estimated reserves and resources or between actual and estimated metallurgical recoveries; costs of production; capital expenditure requirements; the costs and timing of construction and development of new deposits; and the success of exploration and permitting activities. In addition, the factors described or referred to in the section entitled “Risk Factors” in both Alamos Gold Inc.’s Annual Information Form for the year ended December 31, 2014 and the Annual Information Form for the year ended December 31, 2014 of AuRico Gold Inc., (each a predecessor to Alamos Gold Inc.), along with each of these entities’ subsequent public filings available on the SEDAR website at www.sedar.com, should be reviewed in conjunction with the information found in this website. Although Alamos has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in forward-looking information, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management’s expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking information.

Note to U.S. Investors

Alamos prepares its disclosure in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. Terms relating to mineral resources in this website are defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources and Mineral Reserves. The United States Securities and Exchange Commission (the “SEC”) permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Alamos may use certain terms, such as “measured mineral resources”, “indicated mineral resources”, “inferred mineral resources” and “probable mineral reserves” that the SEC does not recognize (these terms may be used in this website and are included in the public filings of Alamos, which have been filed with the SEC and the securities commissions or similar authorities in Canada).

Cautionary non-GAAP Measures and Additional GAAP Measures

Note that for purposes of this section, GAAP refers to IFRS. The Company believes that investors use certain non-GAAP and additional GAAP measures as indicators to assess gold mining companies. They are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.
Additional GAAP measures that are presented on the face of the Company’s consolidated statements of comprehensive income include “Mine operating costs”, “Earnings from mine operations” and “Earnings from operations”. These measures are intended to provide an indication of the Company’s mine and operating performance. “Cash flow from operating activities before changes in non-cash working capital” is a non-GAAP performance measure that could provide an indication of the Company’s ability to generate cash flows from operations, and is calculated by adding back the change in non-cash working capital to “Cash provided by (used in) operating activities” as presented on the Company’s consolidated statements of cash flows. “Free cash flow” is a non-GAAP performance measure that is calculated as cash flows from operations net of cash flows invested in mineral property, plant and equipment and exploration and evaluation assets as presented on the Company’s consolidated statements of cash flows and that would provide an indication of the Company’s ability to generate cash flows from its mineral projects. Return on Equity is defined as Earnings from Continuing Operations divided by the average Total Equity for the current and previous year. “Mining cost per tonne of ore” and “Cost per tonne of ore” are non-GAAP performance measures that could provide an indication of the mining and processing efficiency and effectiveness of the mine. These measures are calculated by dividing the relevant mining and processing costs and total costs by the tonnes of ore processed in the period. “Cost per tonne of ore” is usually affected by operating efficiencies and waste-to-ore ratios in the period. “Cash operating costs per ounce”, “total cash costs per ounce” and “all-in sustaining costs per ounce” as used in this analysis are non-GAAP terms typically used by gold mining companies to assess the level of gross margin available to the Company by subtracting these costs from the unit price realized during the period. These non-GAAP terms are also used to assess the ability of a mining company to generate cash flow from operations. There may be some variation in the method of computation of these metrics as determined by the Company compared with other mining companies. In this context, “cash operating costs per ounce” reflects the cash operating costs allocated from in-process and dore inventory associated with ounces of gold sold in the period. “Cash operating costs per ounce” may vary from one period to another due to operating efficiencies, waste-to-ore ratios, grade of ore processed and gold recovery rates in the period. “Total cash costs per ounce” includes “cash operating costs per ounce” plus applicable royalties. Cash operating costs per ounce and total cash costs per ounce are exclusive of exploration costs. “All-in sustaining costs per ounce” include total cash costs, exploration, corporate and administrative, share based compensation and sustaining capital costs. Non-GAAP and additional GAAP measures do not have a standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures presented by other companies. For a reconciliation of non-GAAP and GAAP measures, please refer to Alamos’ Managements’ Discussion and Analysis as presented on SEDAR and the Company’s website.

Technical Information

Except as otherwise noted herein, Chris Bostwick, FAusIMM, Alamos Gold’s Vice President, Technical Services, has reviewed and approved the scientific and technical information contained in this website. Chris Bostwick is a Qualified Person within the meaning of Canadian Securities Administrator’s National Instrument 43-101. For more information, please refer to the Alamos Gold Inc. and AuRico Gold Inc. 2014 Annual Information Forms and the technical reports referenced therein and in this website, available on SEDAR (www.sedar.com).

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