Years of land consolidation and drilling have come to a head for Gammon Lake Resources (GAM-T, GRS-X), with mining and heap leach operations cranking up at the Ocampo gold-silver mine in Chihuahua, Mexico.
Open-pit mining has begun on the Conico deposit, with low-grade and high-grade ore being stockpiled. So far, some 40,000 tonnes of ore have been stacked on the heap leach pad, and is under leach.
High-grade ore is currently travelling from the 20,000-tonne-per-day primary crusher directly to a 6,000-tonne-per-day high-grade secondary and tertiary crushing facility that was commissioned earlier this year. Low-grade material from the pit will be shunted to a 7,000-tonne-per-day secondary crushing line slated for completion in early February. Thereafter, plans call for the daily delivery of 13,000 tonne of crushed ore running 1.8 grams gold equiv. per tonne to the heap leach pad.
Meanwhile, construction of the mill facilities for processing underground ore continues on schedule, with the foundry portion nearing completion.
Late last year, Gammon boosted total reserves at Ocampo by 86% to 61.7 million tonnes running 1.2 grams gold and 55 grams silver per tonne, for 4.2 million contained gold-equivalent ounces.
Of the new reserve, 28.2 million tonnes averaging 1.7 grams gold and 81 grams silver make up the high-grade core of the project’s proposed open pit; a halo of lower-grade reserves total 29.6 million tonnes and run 0.2 gram gold and 9 grams silver. Reserves in the Northeast underground area come to just shy of 4 million tonnes at 4.5 grams gold and 219 grams silver.
Likewise, measured and indicated resources have increased by 68% to 5.1 million ounces of gold equiv. contained in 83.8 million tonnes running 1.1 grams gold and 50 grams silver. Another 29.3 million tonnes of inferred material runs 3.1 grams gold and 172 grams silver, for 5.7 million oz. gold-equiv.
The estimates are based on cutoff grades varying from 0.2 to 3 grams gold equiv.
The increase comes on the back of some 16 months worth of drilling, trenching, and underground development. The work converted to proven and probable reserves a significant portion of the previous indicated and inferred resources located below the proposed open-pit area. Additional inferred resources were also identified in the pit area.
The bigger resource figure also reflects the discovery of the San Ramon, Suerte de Lucas and Dianan structures, which are all believed to represent the same mineral horizon. Cross-cutting around 76 metres below the planned pit bottom confirmed San Ramon’s width and mineral distribution, as did channel sampling in development drives in the upper part of the pit.
All three structures remain open to depth and along strike.
In the end, Gammon says the life of the open pit has been nearly doubled to 13 years, with potential for a further extension with continued exploration below, and to the east and west of San Ramon. The stripping ratio over the life of mine has also been trimmed to 3.2:1 from 5:1.
Meanwhile, in the Northeast underground project area, mining and stope development on the Las Animas structure encountered a very high-grade zone with average grades exceeding 31 grams gold equiv. Las Animas’ resource estimate has not yet been updated. The new zone is currently being stoped for first milling.
Underground resources also benefited from development work on the Chica Rica, Esperanza, Maria and Brenda structures, with the first three returning bonanza grade gold and silver. Development drives on the Brenda structures are planned for 2006.
Ocampo is expected to begin producing an annual average of 170,000 oz. of gold and 6.2 million oz. of silver in the first quarter of 2006. The first phase at Ocampo will entail an underground mine and 1,500-tonne-per-day mill, as well as an open-pit and 13,000-tonne-per-day, heap-leach operation. Cash costs are forecast at US$10 per oz. gold (after silver credits), or US$152 per oz. on a gold-equivalent basis.
Engineering firm Kappes, Cassiday & Associates is currently monitoring the gold and silver concentrations in the heap leach pond in anticipation of the first pour.
Shares in Gammon ended $1.15, or 8%, better at a new 52-week high of $15.55 in Toronto following the news on Jan. 26.
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