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San Francisco Mine

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Key Facts

Location: Sonora, Mexico
Ownership: 100%
Land Position: 33,670 hectares
Status: Production
Mine Type: Open Pit
Metals: Gold
Processing: Crushing, Heap Leach, ADR Plant
Expected Mine Life: Through to Q1 2024
Measured & Indicated Resources*
(inclusive of Reserves): 74.8 Mt @ 0.541 g/t containing 1.3 Moz gold
Proven & Probable Reserves*:
54.8 Mt @ 0.527 g/t containing 0.9 Moz gold

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2017 Outlook

In the first nine months of 2017 the San Francisco Mine produced 67,488 gold ounces. Gold production guidance for 2017 is expected to be between 82,000 - 86,000 ounces.

A NI 43-101 technical report supporting the revised mine can be found here.

San Francisco Mine

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Details

* The Mineral Resource & Reserve estimate is dated April 1, 2017. A NI-43-101 compliant technical report supporting the estimate was filed on SEDAR on May 26, 2017.

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OPERATING DATA 2017E 2016A 2015A
• Gold produced (oz) 86,000-92,000 100,322 93,353
• Gold sold (oz) 86,000-92,000 100,480 93,196
• Gold grade (g/t) 0.48 0.58 0.51
• Ore mined/processed (mt) 8.0 / 8.0 7.5 / 7.7 7.9 / 8.4
• Cash operating cost ($/oz) ~$900 $734 $1,017
• AISC ($/oz) <$1,000 $853 $1,144
• Sustaining capex ($M) $8.2 $4.3 $1.3

 

Location

The San Francisco Mine is located in the north central portion of the state of Sonora, Mexico. It lies 2 km west of the town of Estación Llano, approximately 150 km north of the state capital, Hermosillo and 120 km south of the United States/Mexico border via Highway 15 (Pan-American Highway). The closest accommodations are in Santa Ana, a small city located 21 km to the north on Highway 15.

Geology and Mineralization

The San Francisco property is underlain by rocks belonging to the Precambrian-aged San Francisco unit and younger Jurassic to Cretaceous aged rocks. The San Francisco unit is predominantly made up of banded quartz-feldspathic gneiss, greenschist and amphibolite gneiss. The Precambrian, Jurassic and Cretaceous units were intruded by a suite of Tertiary-aged mafic to felsic igneous rocks, including porphyritic to gneissic textured leucocratic granite. This granitic gneiss unit is the primary host rock for gold mineralization on the property.

Rocks belonging to the San Francisco unit were deformed by the regional northwest-trending Mojave-Sonora Megashear (“MSM”), a large left-lateral transform fault that was active during the Jurassic period. A spatial relationship exists between the MSM and the major Sonoran gold deposits. The age difference between the MSM and the Tertiary-aged gold deposits precludes a direct genetic link; however, this major structural event likely provided significant structural ground preparation in the older rock units, providing conduits for later hydrothermal fluid flow.

The gold-bearing granitic gneiss was emplaced along low-angle, northwest trending shear zones forming stratiform lenses that vary in width from centimeters to more than 40 m. The emplacement of the granite also favored the N30°W fault system, causing the granite to take an elongated form, principally in direction N60°W, but with extensions along the N30°W system.

Mineralization within the granitic gneiss occurred in multiple phases. The mineralized gneiss lenses within the main San Francisco pit range in thickness from 4 to 50 m, extend over 1,500 m along strike and are open ended. Gold occurs principally as free gold and occasionally electrum. The mineralogy, style of mineralization, a possible association with tourmaline and fluid inclusion studies suggest that the deposits are of mesothermal origin.

At the La Chicharra pit located 2 km west of the San Francisco pit, gold mineralization is hosted in pegmatite lenses and veins within highly fractured and sheared gabbro. The gabbro occurs as a tabular body striking approximately 60° west and dipping 30 to 40° to the northeast. The mineralization potentially open both along strike and down dip.

In addition to the San Francisco and La Chicharra gold deposits, the San Francisco unit hosts at least 15 gold occurrences considered to be favorable exploration targets.

Revitalization Project

The Company has updated the life of mine plan for San Francisco as of April 1, 2017. The mine plan is based on Measured and Indicated Resources, including low-grade stock pile material processed at the end of the mine plan. The mine life extends to 2024 with residual gold recovered from the leaching operations following the cessation of mining. The mine planning for the life of mine plan was based on a long-term gold price of $1,250/oz. All figures are US$ unless otherwise stated.

The mining and production is shown in the following table. Note that 2017 is for the 9 months of production remaining in 2017 (April 1 to Dec 31).

San Francisco Mine Table 1

The cash flow from operations estimated from the operations over the life of mine was estimated using current operating costs for mining, processing, site administration, transportation and refining as well as sustaining capital. The following table shows the annual cash flow from operations estimations at a spot gold price of $1,250/oz.

San Francisco Mine Table 2

Expansion Capital

The updated life of mine plan expands production over the remaining estimated life of mine to 694,771 ounces. The previous life of mine plan envisioned production of approximately 340,000 ounces over the same period. To expand production to approximately double the previous life of mine plan, the Company intends to invest expansionary capital over the next three years as show in the following table.

San Francisco Mine Table 3

The expansionary capital is predominantly made up of capital stripping to open up the San Francisco main pit and the La Chicharra pit. In addition, modifications will be made to the crushing circuit to provide finer material to the heap leach pads, leading to enhanced gold recovery. Over the life of mine, the gold recovery is expected to average 73%. An upgrade to the site power distribution system will eliminate the need for a diesel power generator which has been providing power to a portion of the crushing circuit for a number of years.

Operating Costs

The operating costs for the life of mine were based on current operations and updated pricing from the mining contractor, Peal Mexico SA de CV, for the new life of mine plan.

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Area Unit Cost
Mining $/t mined $1.80
Processing $/t processed $3.35
Site Administration $M/year $4.16

A NI 43-101 technical report supporting the revised mine can be found here.

History

Alio Gold (formerly Timmins Gold Corp) or "ALO" acquired an option to earn an interest in the property in early 2005. Upon review of the available data, ALO conducted reverse circulation ("RC") drilling in August-September 2005 and followed up with additional RC and diamond drilling in 2006.

From 2007 to 2009, concurrent with a feasibility study that focused on re-starting the mining operations, ALO conducted in-fill and confirmation drilling in and around the San Francisco and La Chicharra pits. The drilling results as of the end of 2009 indicated that the mineralization extended both along strike and down dip of the known deposit, a situation which led to the decision to accelerate the drilling in the first 6 months of 2010. In combination with the previous drilling campaigns, the results from the 2010 program allowed ALO to update the resource and reserve estimates and the mine plan.

From July 2010 to June 2011, ALO conducted an intensive exploration drilling program that included deeper drilling to explore the mineralization at depth both in and around the La Chicharra and San Francisco pits. The results of this drilling indicated that the mineralization occurred within parallel lenses both along strike and at depth.

From July 2011 to June 2013, 1,464 RC and core holes were drilled for a total of 327,853 m. Most of the drilling was undertaken in and around the San Francisco pit and the La Chicharra pit. The RC drilling included 13,219 m in 62 holes of condemnation drilling and 3,842 m in 20 holes for water monitoring. A further 8 RC holes totaling 107 m were drilled on the low-grade stockpile for grade control.

ALO declared commercial production at the San Francisco Mine in April 2010. Production through 2016 is summarized below.

Year Gold Produced (ounces)
2010 54,011
2011 72,506
2012 94,444
2013 119,655
2014 120,023
2015 93,353
2016 100,322

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