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Oct. 3, 2022, 9:23 a.m. EDT

Minera Alamos Announces Positive Preliminary Economic Assessment for The Cerro de Oro Gold Project

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Toronto, Ontario--(Newsfile Corp. - October 3, 2022) - Minera Alamos Inc. (TSXV: MAI) ("Minera" or the "Company") is pleased to announce the positive results of an independent Preliminary Economic Assessment ("PEA") for its Cerro de Oro Project (the "Project") in Zacatecas, Mexico. The PEA was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") by Scott Zelligan, P.Geo., Lawrence Segerstrom, M.Sc.,CPG, Peimeng Ling, P.Eng., Alex Duggan, P.Eng. and Toren Olsen, PG. A Technical Report with the details of the PEA will be filed on SEDAR under the Company's profile within 45 days of the date of this news release. (Note to reader: Unless stated all currency references are in US dollars).

Highlights of PEA

"Leaning on our team's collective experience in mine building in Mexico with capital and operating costs informed by the recent construction and ramp up of the Santana gold mine, the Cerro de Oro PEA is a game changer for Minera as we strive to reach our initial target of a +100,000 oz/y gold producer," commented Doug Ramshaw, President. "Given the rampant inflationary pressures across the industry, it is a testament to Minera's smart and nimble business model that a new mine could be developed at Cerro de Oro for the low capital intensity presented in the PEA."

Table 1 - PEA Economic Parameters Summary


PEA Cautionary Note:

Readers are cautioned that the PEA is preliminary in nature and includes inferred resources that are considered too speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA results will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Additional work is needed to upgrade these mineral resources to mineral reserves.

Capital Cost Estimates

Total pre-production capital costs at the Cerro de Oro Project are estimated at $28.1 million. Sustaining capital costs over the LOM are estimated at $14.7 million for a total Project capital cost of $42.8 million. The pre-production capital cost estimate includes the construction of a stand-alone gold recovery (to carbon) facility, Phase 1 of the heap leach pad construction and all necessary site infrastructure to bring the mine into production.

Preliminary site layouts for the project were completed and included suitable areas for life of mine leach pad areas, required pond volumes and other infrastructure items in addition to the process plant and crushing operations. Cost estimates are primarily based on cost factors/data obtained from the company's recent project construction experience in Mexico including the Santana gold project completed in 2021. To reduce initial capital requirements all open pit mining operations and associated capital costs are the responsibility of an independent mining contractor. In addition, the company plans to utilize (with some modifications) an existing crushing plant purchased previously and personnel will stay in the local municipality eliminating the requirement for any significant mine site camp facilities.

Table 2 - Initial and Sustaining Capital Costs (CAPEX)

Operating Cost Estimates

The total unit operating cost for the Project is estimated at US$ 6.66/t of mineralised material (including general and administrative costs - "G&A"). Operating costs were developed based on first principles where possible including estimated staffing levels, reagent consumptions and power requirements. Unit costs and allowances for G&A, maintenance supplies, etc. are based on data from current Minera Alamos facilities (Santana gold project) and other similar heap leach operations in Mexico. Power requirements for the process operation (excluding crushing) were estimated based on operating equipment motor sizes and plant availability, and costs assume diesel generation with a delivered diesel fuel cost of US$1.10/litre (approx. US$ 0.30/kWh). Power for the crushing system is assumed to be taken from the nearby power grid at a price of US$ 0.13/kWh. An overall contingency of 20% was applied to the operating cost totals to account for additional cost items such as outside contractors, laboratory consumables, vehicle fuel requirements, etc.

All mine operating activities are assumed to be the responsibility of a third party mining contractor. Contractor rates include drilling, blasting and transportation of the waste/ore. Costs for the Company mine services group were prepared separately and included. LOM operating costs are summarized in Table 3 below. Actual annual costs in the economic models for the project will vary based on the proposed annual mine schedule and utilize the unit costs detailed below.

Table 3 - Operating Costs (OPEX)


Mineral Resources

As part of the PEA an updated Cerro de Oro project Mineral Resource Estimate was completed to reflect a higher gold price of US$1,700/oz which is more reflective of the three-year trailing average price. This reflects a change in the "reasonable prospects for eventual economic extraction" due to the current market conditions. Other than the change to the gold price assumption, the remainder of the estimate methodology remain identical to that utilized in the previous NI 43-101 report "Mineral Resource Estimate for the Cerro de Oro Project" by Scott Zelligan, P.Geo dated November 16th, 2020 that is currently available on SEDAR. The block model was constrained using an economic pit shell at the updated gold price resulting in the new and current Mineral Resource estimate as presented in Table 4.

Table 4 - Cerro de Oro Project, Estimate of Mineral Resources


The Mineral Resource estimate has been wholly classified as Inferred. The estimate represents the oxidized portion of the Cerro de Oro deposit. Although drill spacing is locally sufficient for Indicated classification, there remain necessary revisions and updates to the geological logs; better definition of the limit between the oxides and fresh rock; understanding of mineralization controls; and bulk density measurements. The reported inferred resources are estimated with an average drilling grid of approximately 85m by 85m.

Table 5 shows the open pit constrained Mineral Resource sensitivity to the gold price. The reader should be cautioned that the figures provided in Table 5 should not be interpreted as a Mineral Resource statement. The reported quantities and grade estimates at different gold prices are presented for the sole purpose of demonstrating the sensitivity of the resource model to the selection of a reporting gold price. The gold price of $1,700/oz that was used to report the Mineral Resources (the base case) for Cerro de Oro is highlighted in bold. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Table 5 - Sensitivity of Mineral Resource to Gold Price

Note: Mineral Resource is shown in bold.


The Cerro de Oro Project is planned as a conventional open pit operation that will utilize 100-t haul trucks and front-end loaders. Material will be drilled and blasted, before being loaded and hauled to a waste dump, crusher, or direct to the heap leach pad. Mining activities will be completed by a contractor who will supply all of the required mine equipment and personnel working under the supervision of the Company's technical staff.

Using a nested pit shell that is based on a gold price of $1,500/oz and the economic parameters applied to the resource estimate as a guide, a full open pit mine plan was completed. Upon completion of the ultimate pit designs a check was completed that considered both revisions to the Company's gold price forecast and its operating cost estimates for the Project. A LOM gold price of $1600/oz was selected for use in the final mine planning economics. Based on available metallurgical data for the project and an evaluation of the host rock lithologies it was assumed that the majority of mineralization mined will be placed directly on the heap leach as run-of-mine ("ROM") with approximately 30% of the mineralization reporting to the crusher for size reduction (equivalent to crushing cut-off grade of approximately 0.40-0.45 g/t Au).

The mine production schedule anticipates that mining starts at the beginning of year 1 following the completion of all required earthworks activities such as road, dump and starter leach pad construction. Due to the low LOM strip ratio (0.30:1) and the size of the mineralization the PEA did not adjust the planned mining physicals to account for mining losses or dilution (magnitude of losses likely similar to dilution). Mine planning efforts going forward will be aimed at cut-off grades and the smoothing of the mining activities later in the mine life that may provide additional economic upside for the project. Over the life of mine of 8.2 years a total of 59Mt of mineralization grading 0.37 g/t gold (700koz of contained gold) are anticipated to be mined.

Table 6 - Cerro de Oro Mine Production Schedule


Pit bench heights were selected at 5m intervals in order to provide good ore/waste selectivity although use of larger bench heights in zones of primarily waste and on final open pit walls should be considered as part of future optimization studies. Overall average pit slopes with the benches/ramps in place range between approximately 30-43 degrees in the north pit and 34 - 38 degrees in the south pit.

It is assumed that all drilling/blasting/loading/hauling operations at the Project are planned to be completed via an open pit mining contractor. Mining costs were developed for the project utilizing recent Mexican cost information for similar heap leach operations and as part of the Company's recent work at its Santana mine. Contractor availability in northern Mexico is currently high and rates are competitive. An additional cost was applied to the mineralized material to account on average for longer hauls to the heap leach pads over the mine life. Mine planning and supervision activities will be performed by Company personnel and these costs are excluded from contractor rates.


The process flowsheet for the Cerro de Oro project is similar to that utilized by the Company at their recently constructed Santana gold heap leach project. Metallurgical testwork completed to date on samples from the Cerro de Oro deposit indicate that the gold mineralization is well disseminated throughout the host rock and that the oxide mineralization responds positively to cyanidation. Residual gold contents following leaching in multiple series of bottle roll tests (conventional and coarse particle) appear to trend towards a typical range of ultimate values near 0.10 g/t Au. Leach kinetics were generally rapid in nature with low to moderate reagent consumptions (lime and cyanide). A limited number of column tests have been completed resulting in leach extractions consistent with those observed from bottle roll studies. Additional studies have been recommended to better define leaching parameters and any variability that may exist between the different mineralized zones and lithologies.

The process design for the Cerro de Oro gold project includes crushing of high grade material to less than 3/4-7/8" (30-35% of total with remaining low grade sent to leach pad as run-of-mine), a heap leaching pad, solution ponds and carbon column recovery of gold from pregnant leach solutions. The current design excludes carbon desorption and gold refining facilities as gold-loaded carbon will be shipped off-site for final dore production. The overall plant design was based on a nominal rate of 7,000,000 tonnes per year of mineralized material stacked to the leach pad at an average grade of 0.4 g/t Au. Sufficient excess capacity is included in the design to allow for expected annual variations in mine production around these nominal values. Base case leach solution flow rate to the carbon column recovery area was set at 800 m(3) /h with allowances to expand to 1,200 m(3) /h to accommodate increases in annual production rates and/or an expansion in the overall project resources.

The overall Cerro de Oro gold recovery facilities consist of the following unit operations and support facilities:



The Cerro de Oro Project is accessible by road from the city of Saltillo in neighbouring Coahuila State, a driving distance of approximately 165 km, about a two-hour drive. The exit to Melchor Ocampo is off Federal Highway 54 approximately 5 km northeast of the town of Concepción del Oro. The site access road is approximately 2.5 km east of Melchor Ocampo, and itself is a 3 km gravel road that provides access to the Project site. All roads to the town are paved and in good condition.

Based on preliminary engineering a total of approximately 11km of new access roads are required for initial site development and early mine production. Roads will consist of gravel surface suitable for the operation of mining trucks and general purpose vehicles. An allowance has also been included for some upgrading of existing roads including the widening of sections that pass through/near the project mining operations in order to better accommodate two-way truck traffic


Details of the complete modifications to the existing crushing system previously purchased by the company have not yet been completed but the arrangement will include a truck dump hopper/feeder, two stage crushing and screening as well as required transfer conveyors and area sufficient for short term material stockpiles. It is planned that "grasshopper" style conveyors will be utilized to transfer crushed rock to a mobile stacker located at the leach pad for final stacking/placement. In total an allowance has been included for a connected load of approximately 1.5 MW to power all the major crusher and transfer equipment unit operations. An existing 2MW backup diesel generator was acquired as part of the overall used crushing circuit equipment and will be installed as a backup.

The nearest federal electricity ("CFE") connection to the planned crushing area is a local line approximately 0.5 km to the east. The main line supplying the town of Melchor Ocampo runs along the primary access road to the town approximately 2 km to the south. The company is currently discussing the project requirements with the CFE to confirm sufficient capacity exists within the local network and to confirm acceptable locations for connection to the power grid.

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