NEW YORK (Kitco News) - Timmins Gold Corp.'s San Francisco gold mine in Sonora, Mexico, has a potential 10-year mine life, with the possibility of significant exploration and growth in all directions from the main pit, said a company official Monday.
Bruce Bragagnolo, chief executive officer of the Vancouver-based gold mining firm, said the goal is a 10-year mine life producing 100,000 ounces of gold per year. Timmins trades on the Toronto Stock Exchange under the ticker TMM. He made a presentation here at the CPM Group Precious Metals Investment Seminar.
"Usually, this business is full of disappointment…. When you do well on your drill program, you're ecstatic. We're hitting consistently and we're getting better grades in our drill program. We've had a lot of success with a limited budget," he said.
Timmins owns 100% of the open-pit heap leap operation. Bragagnolo said the San Francisco mine is a 45,000-hectare land package with gold reserves of 780,000 ounces and sits in a major structural trend. In addition to the existing mine, Timmins is looking at a new exploration area in the existing land package that's 10 kilometers north of the current pit, which could be a very prospective area. "These zones repeat themselves because of the nature of the deposit," he said.
Bragagnolo said Timmins seeks to build on its early success with a bigger budget and expects a major increase its in resource reserves over the next eight months. While he wouldn't give specifics on how much they are spending, he said if they can reach their target of a 10-year mine life, it would double the life that's stated on their NI43-101. The N143-10 is the Canadian public disclosure of information relating to mineral properties.
Cash costs for the mine have fallen as production picks up, he said, which are targeted to be $489 an ounce.
The mine is located in Mexico, which has experienced increasing violence due to drug trade, but he said that's not a worry. "We're concerned about it of course. It's not something we worry about on a day-to-day basis. It's not a drug-growing area, it's not remote, we're right off a four-lane highway," he said.
Mining company share prices have not kept up with the surging price of precious metals, and Bragagnolo said he thinks it's because the public hasn't stepped into the sector. But he doesn't expect it to last.
"I suspect it won't last much longer. Three things could happen - the price of metals will stay flat and (share) prices will catch up as the public slowly gets into the mining sector. Second, we might see the price of metals take off, that would mean the price of the stocks catch up, or we could see a complete market collapse and that would mean a temporary washing out of the equities," he said.
When asked if there were any clouds on the horizon that bear watching, Brgagnolo said not with gold prices at $1,500 an ounce.
He expects gold prices in the short-term to reach $2,000 and in the longer-term go higher. He's not one to watch the inflation-adjusted all-time high price for gold, which is around $2,300. He said once gold broke through the nominal high of around $850, "there no longer was a psychological barrier for gold," he said.
By Debbie Carlson of Kitco News firstname.lastname@example.org