Pinos Altos is a gold-silver project located 280 km west of Chihuahua City, Chihuahua, Mexico. Pinos Altos is a gold-silver epithermal deposit situated in the Sierra Madre Occidental Geologic Province, composed of largely volcanic rocks. First recorded accounts of striking gold in the area occurred in 1871. Historical production is estimated at 180 koz gold and 1.8 Moz silver. Artisanal miners continue to operate in the area. Historical underground mining exist in the mineralization of Santo Nino and Oberon de Weber pits.
Pinos Altos consists of open pit and underground operations at its main site and open pit at operations at its satellite Creston-Mascota deposit located 7 km northwest. The 4000 tpd mill at Pinos Altos processes up to 2800 tpd underground ore, with open pit ore either milled or heap leached at the 2000 tpd facility. Creston-Mascota ore is heap leached at a rate of 3700 tpd. Stripping ratios range between 4.7 to 11.9 at Pinos Altos and 4.0 at Creston-Mascota. Underground mining at Pinos Altos uses 30 m high, transverse primariy/secondary longhole stopes, filled with a combination of pastefill and unconsolidated rockfill. 96.5% Au and 52.8% Ag is recovered from milling, and 67.5% Au and 13% Ag is recovered from heap leaching. At a price of US$725/oz Au and US$13.32/oz Ag and exchange rate of MXP/US$ 11.00, a breakdown of NSR cutoff values is summarized below.
| NSR Cutoff Value | Pinos Altos | Creston-Mascota |
|---|---|---|
| Mill | US$21.65/t (Open Pit)US$40.48/t (Underground) | – |
| Heap Leach | US$7.50/t (Open Pit) | US$9.00/t (Open Pit) |
The Technical Report for the Pinos Altos Project states a 22-year mine life, of which the first five years have been presented. An additional 25 Mt ore containing 2.2 Moz Au and 69.5 Moz Ag will be produced through 2030. Pre-tax cash flow is US$1 B, with IRR of 20.58%. NPV is not provided and payback period is just over five years.
| Classification | Tonnes (‘000 t) | Grade (g/t Au) | Grade (g/t Ag) | Ounces (‘000 oz Au) | Ounces (‘000 oz Ag) |
|---|---|---|---|---|---|
| Reserve | 41,766 | 2.68 | 74.48 | 3,593 | 100,010 |
| Resource (M+I) | 12,468 | 1.00 | 26.08 | 399 | 10,455 |
| Inferred | 4,000 | 1.65 | 39.95 | 212 | 5,137 |
Pinos Altos Project has a sizable 3.6 Moz Au and 100 Moz Ag Reserve. Resources are limited to just over 600 koz Au and 15 Moz Ag Measured, Indicated, and Inferred at low grade, limiting opportunities to replenish Reserves. Overall annual ounce production is largely constrained by the short 5-year mine life at Creston-Mascota and the processing capacity at Pinos Altos. Once mining ceases at Creston-Mascota, Pinos Altos has a throughput limit of 6000 tpd. At the average LOM grade of 2.68 g/t, annual throughput is under 200 koz. The strength of Pinos Altos is its low cost ounce production, thanks to a string of shallow pits along strike, allowing relatively little waste movement and high grades. However, mine life is short due to the rapidly increasing strip ratio from steeply dipping ore. The opportunity to transition to underground mining is not particularly exciting as grades are not high. High gold prices and strengthening US$ may unlock mineral value. At the end of the day, Pinos Altos suited Agnico Eagle as a deposit that offered dependable ounces in its adolescent growth phase, but is likely inadequate in the profile of a senior gold producer.
The information presented above does not constitute investment advice. This is a summary from the NI43-101 Technical Report effective Dec 31, 2008 (INSERT), with commentary from the author. Statements above do not represent the views of Agnico Eagle. If any discrepancies arise, the information contained within the NI43-101 are official and final. For latest depletion data, please refer to the AIF update.