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SAN FRANSISCO GOLD PROJECT, Sonora, Mexico The flagship project of Timmins Gold is its 100% owned San Fransisco Mine in Sonora, Mexico. The San Fransisco mine is a past producing, open pit heap leach operation. Timmins Gold anticipates commencing mining in late 2008 or early 2009 with cash flow slated for second quarter 2009. Refurbishment of the gold plant with a capacity in excess of 80,000 ounces per year is nearing completion. Timmins Gold is also refurbishing the primary crusher and has ordered new secondary and tertiary crushers. The permitting process is well underway and major contracts regarding the construction of the new heap leach pads and contract mining will be executed shortly. On January 18, 2007, Timmins Gold announced the independent mineral resource estimate on the San Fransisco property. The estimate, completed by Independent Mining Consultants, Inc. of Tuscon, Arizona (IMC), was prepared using the current CIM definitions for mineral resources as required by National Instrument 43-101. The mineral resource based on a US$500 per ounce gold floating cone with 64% recoveries, US$1.00 per tonne mining cost and 0.23 g/t gold cut-off grade is:
The mineral resource estimate is based on a total of 116,000 meters of core and reverse circulation drilling from 1,133 holes completed by both Timmins Gold and previous operators, most notably Geomaque de Mexico and Fresnillo. Timmins Gold completed approximately 8,778 meters of drilling in 28 core and 43 RC holes during its 2005 and 2006 drill campaigns and 4,836 meters of drilling during its 2007 program. Micon International Limited, along with IMC completed a technical report using the guidelines contained in NI 43-101, supporting the mineral resource estimate. The report has been filed on Sedar. Micon is also in charge of new metallurgical studies designed to increase recoveries. These studies are nearing completion. Preliminary Feasibility Study Micon most recently completed a preliminary feasibiltiy study on the San Francisco Gold Project dated March 31, 2008. Management is very pleased with the results of the study as it demonstrates the strong economics of the project and anticipates recommencing production in early 2009. In particular the conclusions and recommendations of Micon state that: Timmins should proceed with development of the San Francisco open pit mine, crushing, heap leaching and gold recovery plant as described in the preliminary feasibility study...Given the amount of work conducted previously at the San Francisco project on the known exploration and areas of mineralization, the property should be regarded as an advanced-stage exploration project with significant economic potential. Mineral Reserves Mineral Reserves of the San Francisco Project are reported to be:
Stripping ratio (waste:ore) is estimated to be 2.0:1 on average over the life of the mine. Capital & Operating Costs and Project Economics Significant capital and operating costs associated with re-commissioning operations at the San Francisco Gold Property over the life of mine (LOM) are reported by Micon to be: Initial capital costs: US$33.8 million (including a 20% (US$5.6 million) contingency); Sustaining capital costs: US$12.7 million; Total cash operating costs: US$412 per oz gold. Net present value and sensitivity analysis of pre-tax cash flows are reported by Micon to be:
As previously reported, the Company believes the economics of the San Francisco operations will be particularly sensitive to gold recoveries. From January to September 2007, the Company completed a comprehensive metallurgical testing program. Micon and PRA Labs of Richmond, BC, were contracted to complete bottle roll and column leach tests on the four principal lithologies that host the gold mineralization at the San Francisco Mine Property. By relative tonnage these lithologies include leucocratic granite, gneissic granite and leucogranite, gabbro and pegmatite. The recoveries for each were 83.2%, 93.9%, 50.7% and 78.5% respectively. These results are significantly higher than historical recoveries and appear to be largely attributable to crush size. Testing has determined that crushing ore to ½ to ¼ inch is critical in maximizing recoveries. A review of historical data indicates a crush size of only ¾ inch or greater was achieved during Geomaque's tenure. This may partially explain historical recoveries of only approximately 61%. The Company is confident lab results can be replicated on a commercial scale provided appropriate controls are present. The Company has reconfirmed PRA's results with its own testing program on both 2.5 meter and 6 meter columns at its lab facilities at the San Francisco mine site. Recovery of 70% for all ore domain for purposes of the preliminary feasibility study. Management also believes there is significant opportunity to expand the resource both in the immediate area of the current resource and in other satellite deposits and targets on the 43,000 hectare property. Therefore, in the first quarter of fiscal 2008 the Company commenced a surface exploration, geochemical survey, both ground and airborne geophysical surveys and a third drill program with the objective of identifying additional targets. Detailed technical disclosure of the results from these programs will be disclosed shortly. Technical Report
Technical Report
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| © 2008 TIMMINS GOLD CORP. ALL RIGHTS RESERVED |