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Primero Mining Corp.

Cerro del Gallo Project

Jun 28, 2014



Primero acquired 69.2% of the Cerro del Gallo Project from Cerro Resources NL in May 2013 and the remaining 30.8% from Goldcorp Inc. in December 2013. Development of the Cerro del Gallo Project is subject to permitting and a decision to proceed to development.
 
Cerro del Gallo is located within the San Antón property. The San Antón Property is located in the state of Guanajuato in central Mexico, approximately 270 km northwest of Mexico City within a region of well established infrastructure. Access to the property is well serviced by road, rail, and air services, power and water supplies.
 
The San Antón Property covers an area of 25,269 hectares (approximately 15 km north-south by 16 km east-west) and consists of a total of twelve granted, contiguous mining concessions all owned by San Antón de las Minas S.A. de C.V. (SAM). The concessions entirely cover the San Antón de las Minas mining district, including the old mines formerly worked for high grade vein-hosted gold-silver mineralization.
 
Surrounding cities are capable of providing most of the services required for supporting a major mining operation. Guanajuato municipality has a population of 153,364 inhabitants while Dolores Hidalgo C.N.I. has a population of 134,641 inhabitants. The San Antón Property fully incorporates the San Antón de las Minas mining district, centred 23 km east northeast of Guanajuato city and the historic Guanajuato Mining District where production from 1700 to 2004 is reported to be 1.14 billion ounces of silver and 6.5 million ounces of gold.


Geology and Mineralization

The San Antón Property is located within the Mesozoic Sierra Madre Oriental terrane and 80 km north of the west northwest trending Trans-Mexico Neovolcanic Belt. The Sierra Madre Oriental terrane is a thin skinned fold-thrust belt of Laramide age (Late Cretaceous-Early Tertiary). High level felsic intrusions emplaced into the western two thirds of the terrane provided the mechanism for hydrothermal activity and mineral deposition.
 
The San Antón Property is known to host a variety of styles of mineral deposits, including porphyry copper-gold deposits, intrusion-related gold deposits, epithermal silver-gold deposits, and gold-copper skarn deposits. All of these styles of mineralization are known to occur within the property concessions held by SAM. Historic mining within the San Antón de las Minas area concentrated on epithermal veins, however, the main area of present interest is the large low grade bulk mineable gold-copper-silver deposit at Cerro del Gallo where a significant mineral resource has been identified.


Mining and Processing

MINING
On May 30 2012, Cerro Resources NL announced the findings of a Definitive Feasibility Study (DFS) on the Cerro del Gallo deposit completed by independent engineers Sedgman, of Perth, Australia.
 
The DFS outlines an initial 7.2 year mine life. As indicated in an earlier Preliminary Assessment completed by Cerro Resources NL in April 2011, mine life could potentially be extended to approximately 14 years through a Second Stage Carbon-in-Leach (“CIL”)/Heap Leach mill expansion based upon the Measured and Indicated In-pit Resource. The Second Stage expansion will be the subject of a separate feasibility study, expected to be completed by Primero in 20151.
 
The Cerro del Gallo project has been planned as an open-pit truck and shovel operation. The truck and shovel method provides reasonable cost benefits and selectivity for this type of deposit. Only open-pit mining methods are considered for mining at Cerro del Gallo.
 
PROCESSING
The processing plant design has been based on the test work results and information supplied by Cerro Resources and test work managed by Sedgman. The processing plant has been designed to have excess capacity to anticipate higher metal recovery in the future. The design throughput rate was determined by Cerro Resources and is expected to be 4.5 Mt/a.
 
The flow sheet design is broadly based upon a conventional cyanide heap leach and gold on carbon recovery technologies but will incorporate a SART processing stage to facilitate copper removal prior to gold recovery. The plant design is based on the treatment of both fully and partially oxidised ores, with the design grade for oxidised and partially oxidised ore being between 0.60 - 0.75 g/t Au, 13.7 - 16.2 g/t Ag and 562 - 867 ppm Cu, as per the mine plan. The plant is planned to produce annually on average:
 
62,246 oz of Au and 17,185 oz of Ag in doré;
884 t of Cu, 2096 oz of Au and 1,052,604 oz. Ag as a sulphide precipitate.
 
The proposed processing facility comprises the following unit operations:
• Crushing in three stages to -8mm, using a HPGR as a tertiary crusher;
• Agglomeration and stacking;
• Cyanide heap leaching;
• Sulphidation – Acidification – Recycling – Thickening (SART) process to recover a high grade copper/silver precipitate for further processing or sale;
• Gold recovery via carbon in columns adsorption;
• Elution;
• Electrowinning and gold room refining;
• Carbon regeneration;
• Reagent mixing, storage and distribution;
• Water supply, recovery and distribution services;
• Air supply and distribution services.
 
 
FIRST STAGE HEAP LEACH DEFINITIVE FEASIBILITY STUDY (DFS)
(At metal pricing of US$1,341/oz Au, US$25.58/oz Ag and US$7,582/t Cu)
 
The development of the Cerro del Gallo project for gold and silver production requires the processing of three different material types: weathered, oxidized, and sulphide (fresh).
 
A Preliminary Economic Assessment study in April 2011 determined that to fully develop the project for gold and silver recovery, heap leaching should be used for the weathered and oxidized material and CIL for the sulphide (fresh) material.

Source: http://www.primeromining.com/Operations/Cerro-del-Gallo-Project/Overview/default.aspx