The Company anticipates a steady ramp-up in silver equivalent production during 2013, and preliminary results from January 2013 operations are consistent with these expectations.
MINE DEVELOPMENT AND OPERATIONS
The Company will continue to advance the San Mateo ramp during 2013, with completion of the ramp now expected during the third quarter 2013, moved forward from the previously communicated fourth quarter 2013 estimate. Approximately 1.5 kilometers of the ramp have been completed, with less than 0.5 kilometers remaining to reach the productive Santa Juana mining unit. Completion of the ramp will permit ore removal by 30-ton trucks, rather than by the existing interior hoisting system that is capped at 300 tonnes per day, and should permit the Company to increase output as the mine develops. The ramp has already provided access to the Terneras and San Mateo veins and when completed will provide more efficient and less costly ore haulage from the Santa Juana veins.
A significant portion of the gold in Velardena ores occurs encapsulated in pyrite mineralization which requires oxidation of the pyrites to permit increased gold recovery. Testing continues on an Albion oxidation process and on an autoclave process to improve gold recoveries. Initial test work for the Albion process is encouraging, and the Company believes that installation of an Albion oxidation circuit for recovery of the gold bearing pyrites would require significantly less capital than would an autoclave. Additional testing is required to confirm the potential of the Albion process, and the Company has sent more sample material to Australia to confirm initial test results and to permit the development of engineering parameters and a preliminary construction budget.The Company has also shipped a 300 kilogram sample of tails from the oxide plant to a U.S. testing facility to evaluate whether the addition of a Knelson gravity gold/pyrite recovery circuit could improve gold recoveries at the oxide plant. This type of circuit may also enhance gold recovery at the sulfide plant. If the tests are successful, Knelson concentrators could be installed later in 2013.
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