Resource World Magazine

44 www.resourceworld.com o c t o b e r / n o v e m b e r 2 0 1 5 miNiNG MineRA ALAMoS adapts to changing circumstances by Ellsworth Dickson Minera Alamos Inc. [MAI-TSXV] has been working on its 100%-owned, advanced-stage, Los Verdes, copper- molybdenum project in Sonora, Mexico. Due to the changing conditions in the min- ing sector, under the leadership of Chris Frostad, CEO, the company has redesigned its 2012 PEA that now features much lower capital expenditures with mine construc- tion targeted to start in 2016. In an interview, discussing the compa- ny's new approach, Frostad told Resource World, "There have been three primary changes. First, our original plan was to have a 3,000 tonne-per-day plant; how- ever, we then took a look at what a 400 tonne-per-day plant would look like. It would cost less, get into production quicker and generate revenue. Second, since we have a high-grade ore deposit – a little over 1% copper equivalent – we were able to design a high-grade starter pit which means that the original resource that we would be mining is closer to 2%. That doubles the amount of concentrate that we could produce, or divides our pro- duction costs in half." Frostad continued, "Third, we will utilize ore sorting technology which our team has used on other projects. Made by TOMRA Sorting, the sorter uses X-rays to separate lower grade from higher grade crushed rock on a conveyor. This has the potential to double the ore grade to about 4%. We can save the lower grade material for processing later." See TOMRA article on page 50. Looking at the math, Frostad noted that the 3,000 tpd operation would have a Capex of $90 million; however, the 400 tpd plant could cost maybe $10 million. Feeding from the high-grade starter pit, the 400 tpd plant would produce twice as much concentrate as the original plan and then it would double again with the ore sorter. "This makes the mine far more prof- itable right out of the gate," said Frostad. "When we took over the project seven years ago, the project only had a seven- year mine life at the larger production level," said Frostad. "So we added more ground – the North deposit that hosts his- toric resources that are now being drilled to be included in our PEA that will be completed by year end. The TOMRA lab in Australia is now testing our samples to optimize the sorting." Frostad noted that there is used min- ing equipment available in Mexico which his team will be examining for suitability. The project was fully permitted back in 2008 with a few permits that need to be updated. Minera Alamos expects to finalize surface rights soon with the local commu- nity of Santa Ana which is anxious to see mining return since the company hopes to be offering employment opportunities. When the drilling of the North deposit is completed, Frostad expects the mine life to be well over 10 years, although none of the numbers are final as there are still some promising exploration targets to be tested. Currently, the Los Verdes South deposit has measured and indicated resources of 7,705,000 tonnes grading 0.64% copper, 0.12% molybdenum, 4.74 g/t silver and 0.07% tungsten. A non-NI 43-101 compli- ant historical indicated resource estimate at the North deposit was 1,102,734 tonnes grading 0.524% copper and 0.121% moly at the Beunavista Mine and 281,664 tonnes indicated grading 0.255% copper and 0.122% moly at the La Providencia Mine. Minera Alamos is bringing in a financial partner to assist with debt financing in order to finance the project's construction. Presently, the company has about $1.6 mil- lion in its treasury after paying its debts. "We hope to start construction early next year and be in production around the end of 2016," said Frostad. "Minera Alamos has significantly rede- fined its copper project to the liking of the market. As a result, we were able to raise them $3.5 million by way of an equity private placement which was 25% more than they asked for," stated Mike White, President and CEO of IBK Capital Corp. "The team is experienced and confident in constructing and operating mines in Mexico and this new plan should see the project cash flowing by the end of 2016. We continue to work with Minera Alamos to raise US $8 million to US $10 million in order to build and start up the mine. We are highly confident we will get this done which should also positively re-rate the value of Minera Alamos' stock price." n Drilling operations at the advanced-stage, Los Verdes copper-molybdenum project in Sonora, Mexico. Photo courtesy Minera Alamos Inc.

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