Wednesday, 11 April 2012

Timmins Gold reports record gold production in Q1

Timmins Gold Corp. (TSE:TMM)(AMEX:TGD) announced Wednesday record gold production for its first quarter, despite downtime associated with a three-stage, capacity improvement program at its Mexican mine.

The company’s shares rose 2.34 percent Wednesday morning to $2.19.

The gold producer, which generates revenue from its San Francisco gold mine in Sonora, Mexico, said that for its fiscal first quarter that ended March 31, it produced 21,532 gold ounces.

The company said the gold recovery ratio was 69 percent for the period. The recovery ratio is defined as the ratio of gold ounces produced, divided by the number of contained gold ounces stacked over a specific period.

Timmins said it also produced 11,740 ounces of silver during the quarter.

The company said its increased production was achieved even after roughly four days of downtime, related to the completion of the first part of a three-stage capacity improvement program.

The completion of the capacity improvements are meant to take the mine to throughput of 32,000 tons per day (tpd) of processed ore, and annual production of 130,000 ounces of gold beginning in 2013, said Timmins.

The total cost of these improvements is budgeted at approximately U.S. $18 million, of which $5 million has already been paid. The company said that all capital expenses are to be paid out from cash generated by operations.

The first stage of the improvement plan in March was the replacement of an existing tertiary crusher for a higher capacity unit and improvements in blasting process at the pit.

Timmins said that the addition of increased pumping capacity has allowed a higher rate of solutions flow to the leach pads to fully leach the newly stacked ore.

These improvements are projected to be reflected in the company’s second quarter results, when it said higher gold and silver production is expected.

Stage two of the improvements is expected to be completed by the end of the third quarter, including the installation of a rock scalping system to increase the capacity of the existing crushing circuit to between 22,000 to 25,000 tpd of processed ore, and refurbishing and increasing the capacity of the gold plant.

The company said that stage three will consist of the installation of a new 10,000 tpd portable crushing system (80 percent of which is already on site) to process ore from its La Chicharra pit, located 1.5 kilometres from the main San Francisco pit.

Timmins said it has acquired sufficient land and water and is fully permitted to carry out the improvements at La Chicharra, which is expected to be completed by the fourth quarter.

In late 2011, Timmins Gold published a technical report projecting total gold production at San Francisco of 810,065 ounces from 2011 to 2017, with average annual production seen at approximately 130,000 ounces of gold from 2012 to 2017.

Base case life of mine cash costs were estimated at $633 per ounce, with a life of mine operating profit of $455 million.

Focused solely in Mexico, Timmins's San Francisco project is an open pit heap leach operation.

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