Issue link: http://resourceworld.uberflip.com/i/882975
48 www.resourceworld.com O C T O B E R / N O V E M B E R 2 0 1 7 With one mine in production and another on the drawing board, Alio Gold [ALO- TSX, NYSE, AMERICAN], (formerly Timmins Gold Corp), is currently sitting in an enviable position with about US $73 million in cash, a tight share structure and no debt. The company's principal assets are the wholly-owned producing San Francisco Mine in Sonora, Mexico and the develop- ment stage Ana Paula Project in Guerrero, Mexico. During the second quarter, the San Francisco Mine produced 22,011 ounces gold and 10,332 ounces of silver at an all-in sustaining cost (AISC) of US $954/ oz gold. The company reports that it remains on track to produce 86,000 to 92,000 ounces of gold in 2017 at AISC of less than US $1,000/oz. This is down from the 100,300 oz gold produced last year at AISC of US $853/oz, mainly since lower- grade ore was processed as per the mine plan. An increase in waste stripping also helped push up cash costs; however, this was expected and was in line with Alio's projections. Alio Gold posted net earnings from operations of US $7.75 million during the second quarter of 2017 and overall net earnings of US $3.5 million. "The San Francisco Mine continued to deliver strong production and cash cost per- formance in the second quarter," said Greg McCunn, Chief Executive Officer. "With the revitalization plan of the mine under- way we are well positioned to continue to generate cash flow which, combined with our recently completely CDN $50.4 mil- lion bought deal financing, significantly strengthens the balance sheet." This revitalization plan was announced during the second quarter and outlines a significant 20-month pre-stripping cam- paign as well as upgrades to the power infrastructure and modifications to the crusher circuit at the San Francisco Mine. Alio Gold expects that the updated mine plan will increase gold production to between 100,000 and 120,000 ounces of gold per year over the next six years and increase reserves by 71.4% to 928,700 con- tained gold ounces (57.97 million tonnes averaging 0.527 g/t gold). These upgrades to the mine infrastructure are expected to be completed by the third quarter 2018 and are anticipated to increase cash flow by US $34 million per year (from 2018 to 2023 based on a US $1,250/oz gold price). The price tag for this increased profitabil- ity is estimated at US $44.9 million over the next three years. The company intends to fund the revitalization plan from cash from its operations. Meanwhile, at the company's Ana Paula Project in the state of Guerrero, a Pre-Feasibility Study was completed and authorization was received for the Environmental Impact Assessment from Mexico's Secretary of Environment and Natural Resources. "We continue to advance our high- grade, high margin, Ana Paula Project and have recently submitted for the change of land use permit and commenced the defin- Alio Gold sets its sights on mid-tier status by Thomas Schuster