Canadian-based silver and gold producer GoGold Resources Inc. (TSX: GGD) (OTCQX: GLGDF), has announced the filing of a Preliminary Economic Assessment (PEA) Technical Report for its Los Ricos North Project in Jalisco State, Mexico.
The report, which was previously announced in mid-May, is the company’s second PEA within the Los Ricos District, following the Los Ricos South PEA completed in January 2021.
Jalisco State, where GoGold’s Los Ricos projects are located, is part of Mexico’s Sierra Madre Occidental region, known for its rich silver and gold deposits. The region’s geology, characterized by a vast volcanic complex, has led to the formation of numerous high-grade silver and gold deposits.
The Los Ricos district, in particular, is renowned for its high-grade deposits and favorable mining conditions, making it an ideal location for GoGold’s silver and gold mining projects.
The PEA, based on a silver price of US$23/oz and gold price of US$1,800/oz, reveals promising figures for the project. The After-Tax Net Present Value (NPV) stands at $413 million with an After-Tax Internal Rate of Return (IRR) of 29 per cent.
The project is expected to have a 13-year mine life, producing a total of 110.3 million payable silver equivalent ounces (AgEq) including 68.0 million silver ounces, 221,700 gold ounces and significant quantities of copper, lead and zinc.
The initial capital costs are projected at $221 million, including $29 million in contingency costs, over an expected 18-month build. Additional expansion capital is estimated at $137 million, with sustaining capital costs of $6 million over the life of the mine (LOM).
The average LOM operating cash costs are estimated at $9.50/oz AgEq, with all-in-sustaining costs (AISC) of $9.68/oz AgEq.
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“Los Ricos North forms a pipeline of growth after Los Ricos South, which we see as a high-grade bulk underground mine targeted to be our first deposit advanced to production,” GoGold CEO Brad Langille said in a statement.
He added that the company is well-positioned to develop Los Ricos South, with $100 million in cash and pending the results of upcoming studies.
The PEA was prepared by independent consultants P&E Mining Consultants Inc, with metallurgical test work completed by SGS Canada Inc.’s Lakefield office, process plant design and costing by D.E.N.M. Engineering Ltd., and environmental and permitting led by CIMA Mexico.
GoGold Resources is focused on operating, developing, exploring, and acquiring high-quality projects in Mexico. The company operates the Parral Tailings mine in the state of Chihuahua and has the Los Ricos South and Los Ricos North exploration projects in the state of Jalisco.
GoGold stock stayed flat on Tuesday at CAD$1.52 on the Toronto Stock Exchange.
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Recent mining reforms in Mexico aim to increase government control, promote sustainable practices, and ensure local communities benefit from mining activities. Key changes include a new concession system limiting the size and duration of mining concessions, stricter environmental regulations, and requirements for community consent before starting new projects.
These reforms could significantly impact mining operations, requiring companies like GoGold Resources to adapt to the new regulations.
Several Canadian public companies operate as silver miners in Mexico, including Pan American Silver Corp. (TSX: PAAS), First Majestic Silver Corp. (TSX: FR), Endeavour Silver Corp. (TSX: EDR), Fortuna Silver Mines Inc. (TSX: FVI) and SilverCrest Metals Inc. (TSX: SIL).
