First Gold And Silver Production at Cerro Moro
TORONTO, ON - Yamana Gole the first pour of gold and silver doré at Cerro Moro which occurred on May 15, 2018. The Company is also pleased to provide several other updates relating to Cerro Moro including an update on exploration. The Cerro Moro mine is located in Santa Cruz province, Argentina and is a high-grade gold and silver operation sourcing ore from a combination of underground and open pit mining. The production ramp up of Cerro Moro continues to track according to plan with commercial production expected in the second quarter of 2018.
The Company expects most of Cerro Moro’s 2018 production in the second half of the year. With the ramp up of production underway, the Company is focusing on ensuring mill throughput rates reach nameplate capacity of 1,000 tonnes per day, and that grades and recoveries reconcile to plan. As of current date, ramp up of mining and milling is well on track, with the major equipment performing to design during usual performance tests and commencement of operations. While the ramp up remains the primary focus, efforts are already shifting to optimizing the operation and, in particular, ensuring that operating costs reach guidance levels.
The stockpile at Cerro Moro has continued to increase since year-end 2017 and through the first quarter of 2018. As at May 6, 2018, the stockpile was estimated at 42,300 tonnes at 21.5 grams per tonne (“g/t”) gold and 995 g/t silver, providing added flexibility to the mine plan for 2018. The operation has reached the planned six weeks of stockpiled ore, ahead of schedule which was originally the end of this quarter, and the grades are higher than planned.
The exploration program at Cerro Moro and in the mine district commenced in the second half of 2017 after a two-year period in which the primary focus was on mine engineering and construction activities. The Company has set an exploration objective of adding one million gold equivalent ounces ("GEO") to the mineral inventory at Cerro Moro in the next several years. Achieving this goal should provide further options for mine development including the potential to add a dedicated power line and reducing production costs.
To this end, the Company has allocated $11.2 million for exploration in 2018 (expanded from $9 million in the first quarter of 2018). The additional funding will come from a discretionary portion of the exploration budget that was set aside at the beginning of the year and is to be allocated to those mines and assets returning the best results.
The Cerro Moro deposit is located in the Deseado Massif, which is a tectonic block in the central-portion of the Santa Cruz Province, covering an area of approximately 60,000 km2. The deposit consists of a series of low to intermediate sulphidation veins with high-grade gold-silver mineralization. The epithermal veins are relatively narrow sub verticals with horizontal width ranging from 0.1 to 5 m, strike length from 100 to 4,000 meters and depth at 300 meters maximum. Twelve zones have been delineated to date - Escondida, Martina, Zoe, Loma Escondida, Patricia, Nini Esperanza, Gabriela, Carla, Carlita, Deborah, Margarita and Veronica. Cerro Moro is located on prospective ground with significant potential to expand mineral resources and ultimately extend the life of the operation. Moreover, the Company has only begun to explore the regional potential of the 284,900 hectare land package and intends to take a systematic approach toward exploration initiatives to ensure it maximizes the value potential of Cerro Moro.
Drilling relating to the mineral resource conversion objective began in the second quarter as planned. The Company believes that this objective is highly achievable by year-end.
The Company completed approximately 3,000 meters in the first quarter of 2018 in support of the second objective of discovering new inferred mineral resources by year-end. The majority of this drilling focused on the Veronica vein, which was discovered in 2017 and is adjacent to existing infrastructure. While many of the assays are still pending, early results have been encouraging.
Drilling received to date has started to define a near surface open pit high grade target on the west end of the Veronica vein and has expanded the mineralized zones for Martina, Barbara South, Esperanza Splay and Esperanza Parallel. Based on results received to date, the Company believes it will achieve its second exploration objective to add approximately 250,000 GEO of new inferred mineral resources by year-end.
In the first quarter of 2018, approximately 4,250 meters of scout drilling was also completed in support of the objective to define future drill targets. Assays have yet to be received for the majority of the work completed in the first quarter, however early results at Tres Lomas are encouraging and have provided a better understanding to the structural controls of the vein system, follow up drilling is planned throughout 2018 (notable drill holes are presented in Table 4 below). As well, visually impressive results were identified at Veronica (120 meters to the west of the known system), Martina, Esperanza Parallel, Silvia, Seco and Milagros. Additional targets to be tested with scout drilling in 2018 are Gabriel NW, La Negrita Edge and Michelle. Once assays are received for all of these drill holes, follow up drilling will commence on priority targets. In addition, a soil grid was completed in the first quarter comprised of more than 2,200 soil samples focusing on the core mine area. Geological mapping, surface sampling and the completion of a geophysical survey are also planned for 2018 to help identify future targets.
With the exploration effort to date, the Company is now considering ahead of original plans investing in a connection to utility power which would further improve costs. Additional details on the timing of the potential investment and subsequent development timeline plus capital estimates for construction of the necessary infrastructure are expected once the Company has advanced the opportunity to a more detailed level of study.