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Mulatos Mine Gold Production

Written By Luke Burgess

Posted December 10, 2007

Alamos Gold Inc. (TSX: AGI ) reported gold production at their 100%-owned Mulatos Mine increased significantly during the third quarter of this year over 2006 gold production levels despite above-average rainfall, a feat that has proved quite difficult in the past.

Mulatos Mine Gold Production Increases 27% in October and 37% in November

Alamos Gold, a Canadian-based gold producer with operational, exploration, and development activities throughout Mexico, said that crusher throughput at the Mulatos Mine was 27% higher in October than the third quarter average, while gold production of ~9,200 ounces was 26% higher.

The company also reported that crusher throughput at Mulatos in November was higher than in October and gold production was approximately 10,050 ounces, 37% higher than the third quarter average and roughly 9% higher than in October.

Alamos Gold aims to produce a total of 30,000 ounces of gold from the Mulatos Mine during the fourth quarter of this year and to complete the stacker-conveyor system in the first quarter of 2008, which will help boost the company’s gold production in the long run.

A Brief History of Gold Production at the Mulatos Mine

The Mulatos gold deposit is part of the Salamandra group of concessions, which encompass a total of approximately 28,500 hectares. These concessions are located in the Sierra Madre Occidental mountain range in the east-central portion of Sonora, Mexico.

Exploration at the Mulatos gold deposit dates back several decades. In 1990, a prefeasibility study was completed based on the drilling of 121 reverse circulation holes over 20,688 meters, 11 diamond core holes over 1,928 meters, and 1,061 meters of exploration drifting. At that time, a mineral resource estimate determined that the Mulatos gold deposit held 15.5 million tons of ore grading 1.83 grams per ton (g/t) gold at a cut-off grade of 1.0 g/t gold. This was only the beginning.

After being owned and passed on by such companies as Placer Dome and Kennecott, Alamos Gold finally earned a 100% interest in the Mulatos deposit earlier this decade.

Alamos Gold began construction of the processing mill at the Mulatos Mine in the third quarter of 2004. In July 2005, Alamos Gold poured their first gold bar at the facility. And by the end of the year the major components of the Mulatos Mine, including the gold recovery plant, phase one of the leach pad, and facilities to accommodate 250 full-time workers were in place.

Construction and commissioning of the Mulatos Mine were completed in December 2005. Overall, the total cost to complete construction of the Mulatos Mine was approximately $74 million.

The process plant currently consists of a conventional crushing plant with a capacity of 17,500 tons per day, a conveyor that can handle up to 20,000 tons per day, a heap leaching facility, and refining plant.

Current Gold Resources and Reserves at Mulatos

In 2004, a feasibility study concluded that the Mulatos gold deposit contained a measured and indicated resource of 75.6 million tons grading 1.34 g/t gold at a 0.5 g/t cut-off, totaling about 3.57 million ounces of gold.

On March 20th of this year, Alamos Gold revised the resource at the Mulatos gold deposit. The updated measured and indicated resource was reported to be 91.2 million tons grading 1.26 g/t at a 0.5 g/t cut-off, totaling about 4.05 million ounces of gold. This was a net increase of about 480,000 ounces of gold. Alamos Gold attributed the increase to the inclusion of three previously excluded mineralized area and says that there are at least three other zones which are not included in the current resource estimate.

As of December 31, 2006, Alamos is reporting a measured and indicated resource of 86.4 million tons of ore grading 1.24 g/t gold, or 3.44 million gold ounces, plus another 74.8 million tons of 1.21 g/t gold, or 2.90 million gold ounces, in the indicated category. See the chart below for the latest resource estimate at Alamos Gold’s Mulatos gold deposit…

mulatos mine resources

In the reserve category, an estimate was calculated as of December 31, 2006 using a gold price of $500 per ounce and indicates proven and probable reserves of 2.1 million contained ounces of gold. This reflects a 7% increase from the reserve estimate calculated in June 2004 of 1.92 million contained ounces of gold. Again, Alamos Gold attributes this increase to the inclusion of the three recently drilled mineralized zones. See the chart below for the most up to date reserve estimates at Alamos Gold’s Mulatos gold deposit below…

mulatos mine reserves

Alamos Gold says that is anticipates growing its reserve base further this year and in 2008 as two more mineralized zones that will be incorporated. I expect the 2007 reserve estimate to proceed the next resource estimate in late 1Q 2008.

Until next time,

Luke Burgess