Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
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NEWS-LEADING DEVELOPMENTS The standard is open and available for use by any party involved in the extrac- tion of gold. The World Gold Council's Conflict- Free Gold Standard is available for download in English, French, Spanish and Portuguese at: http://www.gold.org/ about_gold/sustainability/conflict_free_ standard/. Frisco Minera Buying AuRico's Ocampo Mine Frisco Minera and AuRico Gold have entered into a definitive agreement whereby Frisco will acquire AuRico's Ocampo mine and adjacent Venus and Los Jarros exploration projects in Chihuahua state, Mexico, and a 50% interest in the Orion advanced explo- ration project in Nayarit state, Mexico, for $750 million in cash. The transaction is expected to close in December 2012. Ocampo is comprised of an open-pit and two underground mines, with a 3,200-mt/d mill and a 10,000-mt/d heap leach facility. The mine produced 99,478 oz of gold and 4,171,772 oz of silver in 2011. The Venus project is located 3 km north of the Ocampo mine. The Los Jarros project is located directly east of the Ocampo mine and surrounds Ocampo and Frisco's El Concheño mine. The Orion project is an advanced ex- ploration project and includes an exten- sive land package. The project will be developed jointly by AuRico and Frisco. Frisco expects the acquisition to be highly complementary to some of its pro- jects under development and to increase its current installed capacity, as well as providing a strong base of proven and probable reserves that will add to its cur- rent resources. AuRico expects to use the net pro- ceeds from the transaction to eliminate certain debt obligations, invest in inter- nal growth opportunities, provide suffi- cient working capital and liquidity for the company going forward, and under- take a significant return of capital to shareholders. Scott Perry, president and CEO of AuRico said, "Following the transaction, AuRico will be well positioned to meet its key objectives of growing its profitability and cash flow through the long-life, low- cost Young-Davidson and El Chanate operations located in low-risk jurisdic- tions while maintaining a strong organic 6 E&MJ; • NOVEMBER 2012 growth profile primarily driven by increas- ing production at Young-Davidson. In addition, we have gained a solid partner to further evaluate and potentially advance the Orion project in the coming years through the joint venture with Minera Frisco." Argonaut Acquiring Prodigy in Friendly Transaction Argonaut Gold and Prodigy Gold have agreed to the acquisition of Prodigy by Argonaut in a transaction that values Prodigy equity at about C$341 million. Prodigy is a Vancouver-based exploration and development company whose lead asset is the past-producing Magino underground gold mine located 40 km northeast of Wawa, Ontario. The project has an indicated resource of 6.25 million oz of gold in 223.5 million mt grading 0.87 g/mt gold and an inferred resource of 355,190 oz of gold in 13.8 million mt grading 0.80 g/mt gold at a cutoff grade of 0.35 g/mt gold. Argonaut Gold's primary gold assets are located in Mexico and include the El Castillo mine in Durango state, the La Colorada mine and exploration project in Sonora, and the advanced-stage San Antonio exploration project in Baja California Sur, as well as a number of other gold exploration properties. In 2012, El Castillo is expected to produce 84,000 to 85,000 oz of gold, and La Colorado is expected to produce 17,000 to 18,000 oz of gold. A preliminary economic assessment (PEA) of Prodigy's Magino project, com- pleted in December 2011, outlined an ambitious open-pit project that would pro- duce an average of 249,300 oz/y of gold over an 11-year mine life. Year-one gold production was projected at about 350,000 oz at a mined grade of 1.57 g/mt gold. Pre-production capital costs were estimated at C$405.6 million. Payback period was estimated at 1.9 years. The Magino mine was operated by Muscocho Explorations from 1988 until the summer of 1992. An updated PEA for Argonaut's San Antonio project, announced in Septem- ber 2012, outlines an open-pit project that would produce an average of 69,700 oz/y of gold over a 15-year mine life. Capital expenditure to develop the pro- ject is estimated at $84 million. Exploratory drilling activity at Prodigy Gold's Magino property, site of a past-producing underground gold mine located 40 km northeast of Wawa, Ontario. www.e-mj.com