Timmins Gold is set to go ahead with a pre-construction programme, including the start of a feasibility study for the Ana Paula gold project in Guerrero State, Mexico.

The programme will also involve infill drilling, metallurgical test-work, and environmental baseline and permitting activities.

With an investment of $9.2m, the company expects to complete the feasibility study by the third quarter of 2017 and have all permits in place to start construction by the first quarter of 2018.

"With the improvements in our balance sheet and operations at the San Francisco Mine, we can begin to unlock the value of Ana Paula."

M3 Engineering & Technology will lead the feasibility study.

Timmins Gold also completed the disassembly of the El Sauzal facilities, acquired in October 2015 from Goldcorp.

The company's interim CEO Mark Backens said: “With the improvements in our balance sheet and operations at the San Francisco Mine, we can begin to unlock the value of Ana Paula.

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“With its higher grade, low cash costs, high capital efficiency and industry-leading internal rate of return (IRR), Ana Paula will be a very profitable mine. 

“Further, the El Sauzal facilities will provide us a head start to rapidly advance the project to construction-ready status.”

The company announced results of an updated PEA on 23 March for the Ana Paula gold project.

The project has an average annual production of 116,000 gold oz and 239,000 silver oz over an 8.2-year mine life.

Capital costs for the construction will total $121.7m, including contingency costs of $19.8m.