El Cubo Mine, Mexico

The El Cubo Mine is an underground gold-silver mine located in the El Cubo village, approximately 10km east of the Guanajuato city in Mexico. The mine is owned by Mexgold Gold, a wholly owned subsidiary of Gammon Gold, which acquired the property in 2004.

The property is spread over 8,500ha and consists of 58 exploitation and exploration concessions. El Cubo also took under lease the adjacent lying Las Torres mine and mill complex owned by Industrias Penoles.

The property has been a prolific producer since it was discovered in the late 1700s. As a large part of the property has remained unexplored, the mine continues to have immense potential.

Operations at the mine were suspended for an indefinite period on 3 June 2010 due to a labour dispute by union workers that resulted in the dismissal of 397 employees. A retaliatory strike was launched on 30 June 2010. This strike was declared illegal by the Federal Labour Board on 4 October 2010.

Reserves

The proven and probable reserves of the mine are estimated to be 3.02Mt graded at 3.34g/t gold and171g/t silver as of 2009. Inferred resources at the mine are 2.3Mt grading at 4.84g/t Au and 220g/t Ag.

Measured and indicated resources at the El Cubo and Las Torres mines total 2.5Mt grading at 2.69g/t Au and 56g/t Ag.

Geology

The mine lies within the eastern part of the Guanajuato mining district, a 20km-long and 16km-wide area that represents one of the most productive silver districts in the world. The eastern part of the district lies beneath a sequence of Mesozoic to Cenozoic aged volcano-sedimentary rocks. The sequence is intruded by three main north-west trending silver rich vein systems that extend between 10km and 25km along strike. Known as La luz, Madre and La Sierra, the veins systems host gold and silver in ratios ranging between 1:72 and 1:214.

The veins are not specific to any rock type and occur in all the formations. The project area contains approximately 38 veins that occur from an elevation of 2,650m down to an elevation of 1,730m.

The principal rocks hosting the ore shoots include Guanajuato Conglomerate for the lower ores and Bufa Rhyolite for the upper ores. The fault-associated deposits occur as open-space fillings in fracture zones or as impregnations in the regionally porous wall rocks.

Veins hosted in the relatively open spaces are the primary mining targets. Other viable targets include near-surface weak stockworks that grade into disseminations.

Mineralisation

El Cubo contains a low sulfidation mineralised system with pyrite but no arsenopyrite. Except for trace amounts of chalcopyrite, base metals in the mine area are absent. Mineralisation is known until a depth of 80m. Economic grade mineralisation, however, extends until a depth of 550m.

Mining

El Cubo is mined by conventional drill and blast methods. Access is provided through adits, ramps and shafts. Although long hole stoping is used, the veins are mined through a resuing cut and fill method.

In the cut and fill method, ore is accessed through a ramp and a drift that is driven along the length of the ore zone.

Stope mining begins from the drift by drilling uppers of the ore zone in the back of the drift and then blasting. The broken ore is removed via scoop trams. To operate scoop trams in the narrow ore zone, the wall rocks are drilled and blasted after the broken ore is removed. Waste rock is left in the stope as fill. The stopes are also filled with development waste rock and deliberately mined waste wall rocks.

Processing

Conventional means including crushing, grinding, flotation and cyanidation are adopted to process the ore. Gold and silver recovery is done through the Merrill-Crowe process. Ore processing takes place at the Las Torres mill, which opened in 2007.

Prior to this, the ore was processed in three milling facilities, which included two flotation mills and one cyanidation mill. While the flotation plants were closed, the cyanidation plant is still operative and is used to process the concentrate and produce dore bars.