Minera Alamos Announces Santana Gold Project Operations Update Nicho Main Zone development activities largely complete; Working Capital Facility provides short-term support for expanded mining rates
Minera Alamos Announces Santana Gold
Project Operations Update
Nicho Main Zone development activities largely complete;
Working Capital Facility provides short-term support for
expanded mining rates
Toronto, Ontario and Vancouver, British Columbia--(Newsfile Corp. - May 31, 2022) -
Minera Alamos
Inc.
(TSXV: MAI)
(the "Company" or "Minera Alamos")
is pleased to provide an update on the
continuing progress at the Company's Santana gold mine.
The development of the Nicho Main Zone ("NMZ") is now underway with haulage and access roads
largely completed along with the removal of limited vegetation and surface cover.
Following the initiation
of mining activities and as the pit working areas opens up, the much larger scale of the NMZ compared
to the current starter pit at Nicho Norte will help drive project mining rates to planned levels for the overall
commercial operation.
First mineralized material from the NMZ should be stacked on the Santana leach
pad as operations move into the second half of the year and will help drive gold production rates higher.
"This advancement of the Nicho Main Zone is a significant and positive development and the final major
milestone in the ramp-up of operations at Santana. Th development of the second and larger pit will
provide access to the main source of known mineralization at the project supplementing current starter
pit operations and allowing the Company to ultimately exit the project's pre-commercial phase of
production," stated Darren Koningen, CEO.
Photo 1: Main Haulage Road for the Planned NMZ Open Pit
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Working Capital Facility with Ocean Partners
The Company has agreed to basic terms for a modest US$3 million unsecured working capital facility
with Ocean Partners USA Inc. ("OP") and definitive documentation is in the process of being finalized.
The facility will bolster the Company's existing working capital and provide added financial flexibility to
assist with short-term demands related to the expansion of site mining activities to incorporate
production from both the Nicho Norte and NMZ open pits (cover lags between mining and the receipt of
proceeds from ultimate gold recovery).
Company management have an existing relationship with OP
and anticipate that the new facility will serve as a starting point that can grow in scale as the Santana
project operations expand.
Nicho Norte Operations Update
Gold mined and stacked on the leach pad to date totals approximately 18,000 oz with roughly 7,000 oz
of gold recovered in concentrate. Operations in May have been seasonally impacted from the severe
and ongoing drought that has affected Sonora for much of the last two years.
Typical rainfall in the region
from January to June is in the range of 120-150 mm.
However, in 2021 this totalled 45 mm and in the
current year less than 2 mm has accumulated to date forcing the Company to locate additional local
sources of water to support operations.
The upcoming rainy season (late June-September) is expected
to recharge water reservoirs and allow for an acceleration of the recovery of gold stacked on the leach
pads in Q3.
Following receipt of its explosives storage permit, the Company has now fully transitioned all production
drilling and blasting activities "in-house".
The added flexibility this has provided has been significant in
terms of explosive purchase options as well as better utilization of existing mine contractor personnel for
drilling and blasting operations.
Overall, the changes implemented to date have allowed for a greater
than 80% reduction in overall blasting costs while allowing the Company increased efficiency in
scheduling the sequences between blasting and mining operations.
Efforts continue to further optimize
blasting activities.
The implementation of these improvements were critical prior to decisions related to
the initiation of mining activities at the Nicho Main Zone.
The Company's on-site lab should be complete and operational in the coming weeks in anticipation of
first blasting at the NMZ.
The faster sample assay turnaround provided by these facilities is also a critical
pre-requisite to maintaining effective mine and plant production controls as site mining activities
continue to increase.
Selected Financial Data:
The following selected financial data is summarized from the Company's unaudited condensed interim
consolidated financial statements and related notes thereto (the "Interim Financial Statements') for the
three months ended March 31st, 2022, and the Management's Discussion and Analysis ("MD&A") for
the three months ended March 31st, 2022 (all numbers in Canadian dollars). A copy of the Financial
Statements and MD&A is available on SEDAR at
www.sedar.com
.
In accordance with the adoption of the Amendment to International Accounting Standard ("IAS") 16
Property, Plant & Equipment, Proceeds Before Intended Use, the Company is providing revenues and
costs of goods sold for the period ending March 31st 2022.
A more thorough explanation of this new
accounting rule is outlined in the financial statements (note that these costs pursuant to the IFRS
accounting rule for their treatment do not factor in depletion or depreciation)
Revenues from approximately 65% of gold production in the quarter totalled $5,160,026 with cost
of goods sold amounting to $2,255,305. The remaining gold was sold post quarter end.
Income from operations of $1,529,128 compared with a loss of $4,166,739 in the corresponding
quarter of 2021
Net income of $1,067,853 for the quarter amounted to $0.002/share compared to a Net loss of
$2,790,352 or $0.006/share in the corresponding quarter of 2021.
Cash and Cash Equivalents totalled $8,177,510 compared to $9,379,390 at year end - the
difference reflecting gold sales in process that were recorded after quarter end and a modest
reduction in the marked to market valuation of investment holdings (subsequently sold -
see below
).
Subsequent to quarter end the Company sold its remaining 590,000 shares in Prime Mining at a
price of $3.50/share for gross proceeds of $2,065,000.
Photo 2: Site Preparations Underway at the Nicho Main Zone Breccia Pipe
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Cautionary Statement
The Company made its production decision and has started the development and production of the
Santana gold mine without having completed a feasibility study demonstrating economic and technical
viability. As such, there may be increased uncertainty of achieving planned production levels, estimated
recovery of gold, the costs associated with such recovery, including increased risks associated with
developing a commercially mineable deposit. Historically, such projects have a much higher risk of
economic and technical failure. Failure to commence production would have a material adverse impact
on the Company's ability to generate revenue and cash flow to fund operations.
Mr. Darren Koningen, P. Eng., Minera Alamos' CEO, is the Qualified Person responsible for the
technical content of this press release under National Instrument 43-101.
For Further Information Please Contact:
Minera Alamos Inc.
Doug Ramshaw, President
Tel: 604-600-4423
Email:
Victoria Vargas de Szarzynski, VP Investor Relations
Tel: 289-242-3599
Email:
Website:
www.mineraalamos.com
About Minera Alamos Inc.
Minera Alamos is a gold production and development Company undergoing the operational startup of its
first gold mine that produced its first gold in October 2021. The Company has a portfolio of high-quality
Mexican assets, including the 100%-owned Santana open-pit, heap-leach mine in Sonora that is
currently going through its operational ramp up. The 100%-owned Cerro de Oro oxide gold project in
northern Zacatecas that has considerable past drilling and metallurgical work completed and could enter
the permitting process rapidly. The La Fortuna open pit gold project in Durango (100%-owned) has an
extremely robust and positive preliminary economic assessment (PEA) completed and the main Federal
permits in hand. Minera Alamos is built around its operating team that together brought 3 mines into
successful production in Mexico over the last 13 years.
The Company's strategy is to develop very low capex assets while expanding the projects' resources
and continuing to pursue complementary strategic acquisitions.
About Ocean Partners USA Inc.
Ocean Partners specializes in the trading of precious metal, copper, zinc and lead, as well as related by-
products and secondary materials. The Ocean Partners team has spent over 25 years providing
successful trading services to miners, smelters, and refiners, and has a strong global network of
relationships and contacts in the precious, base metal mining, smelting and refining sector.
Caution Regarding Forward-Looking Statements
This news release may contain forward-looking information and Minera Alamos cautions readers that
forward-looking information is based on certain assumptions and risk factors that could cause actual
results to differ materially from the expectations of Minera Alamos included in this news release. This
news release includes certain "forward-looking statements", which often, but not always, can be
identified by the use of words such as "believes", "anticipates", "expects", "estimates", "may", "could",
"would", "will", or "plan". These statements are based on information currently available to Minera
Alamos and Minera Alamos provides no assurance that actual results will meet management's
expectations. Forward-looking statements include estimates and statements with respect to Minera
Alamos' future plans with respect to the Projects, objectives or goals, to the effect that Minera Alamos or
management expects a stated condition or result to occur and the expected timing for release of a
resource and reserve estimate on the projects. Since forward-looking statements are based on
assumptions and address future events and conditions, by their very nature they involve inherent risks
and uncertainties. Actual results relating to, among other things, results of exploration, the economics of
processing methods, project development, reclamation and capital costs of Minera Alamos' mineral
properties, the ability to complete a preliminary economic assessment which supports the technical and
economic viability of mineral production could differ materially from those currently anticipated in such
statements for many reasons. Minera Alamos' financial condition and prospects could differ materially
from those currently anticipated in such statements for many reasons such as: an inability to finance
and/or complete an updated resource and reserve estimate and a preliminary economic assessment
which supports the technical and economic viability of mineral production; changes in general economic
conditions and conditions in the financial markets; changes in demand and prices for minerals; litigation,
legislative, environmental and other judicial, regulatory, political and competitive developments;
technological and operational difficulties encountered in connection with Minera Alamos' activities; and
other matters discussed in this news release and in filings made with securities regulators. This list is not
exhaustive of the factors that may affect any of Minera Alamos' forward-looking statements. These and
other factors should be considered carefully and readers should not place undue reliance on Minera
Alamos' forward-looking statements. Minera Alamos does not undertake to update any forward-looking
statement that may be made from time to time by Minera Alamos or on its behalf, except in accordance
with applicable securities laws.
The Company does not have a feasibility study of mineral reserves, demonstrating economic and
technical viability for the Santana project, and, as a result, there may be an increased uncertainty of
achieving any particular level of recovery of minerals or the cost of such recovery, including increased
risks associated with developing a commercially mineable deposit.
Historically, such projects have a
much higher risk of economic and technical failure. Failure to commence production would have a
material adverse impact on the Company's ability to generate revenue and cash flow to fund operations.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT
TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
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