Advanced stage exploration and development company Minera Alamos has reported positive results of a preliminary economic assessment (PEA) for its La Fortuna gold project in Durango, Mexico.

Prepared in accordance with the National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) by CSA Global Geosciences Canada of Toronto, Canada, the PEA is based on a new mineral resource estimate prepared for the project by Scott Zelligan, P.Geo.

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“Today’s excellent PEA results confirm that the La Fortuna Project provides a robust base for the next phase of gold production.”

The mineral resource estimate is based on the results from 125 core drill holes completed at the project.

The PEA demonstrated an after-tax net present value (NPV) at 7.5% of $69.8m and an internal rate of return (IRR) of 93%.

Minera Alamos chief executive officer Darren Koningen said: “With an after-tax Internal Rate of Return in excess of 90%, today’s excellent PEA results confirm that the La Fortuna Project provides a robust base for the next phase of gold production in the company’s growth pipeline.”

The PEA estimates the average annual production of metal to be around 50,000oz gold equivalent, including 43,000oz Gold, 220,000oz Silver and 1,000t Copper over a five-year mine life.

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The initial “starter pit” has 2.0 Mt of mineralisation including 3.68g/t Au, 20g/t Ag, 0.27% Cu processed at 1,100tpd average processing rate.

The PEA put pre-production capital costs at $26.9m with a payback period of 11 months. It also put the pre-tax NPV at $103.8m at a discount rate of 7.5% and IRR of 122%.

Koningen added: “As our engineering work progresses we continue to find opportunities to reduce the initial project capital requirements and improve overall project economics.

“Coupled with our strategic partnership with Osisko Gold Royalties that includes an option to provide a significant portion of the project capital requirements in return for a Project royalty, these additional optimisations will greatly reduce the upfront funding requirements of this already low capital cost operation.”