Canadian mining company Yamana Gold has announced plans to proceed with the construction of its low-cost gold-silver project Cerro Moro in the Santa Cruz province of Argentina.

According to the company, total capital cost for the life of mine (LOM) is expected to be $398m, which is inclusive of $265m in initial capital and $133m mine sustaining capital.

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This year, project capital is expected to be around $30m while more than half of the spending will occur later when the official start of construction is announced.

Yamana Gold plans to spend the remaining capital during 2016 to 2017. Production at Cerro Moro is expected to begin in the second half of 2017.

"Production at Cerro Moro is expected to begin in the second half of 2017."

Yamana Gold’s construction plan indicates average annual production in the first three years of full production of 135,000oz of gold and 6.7 million ounces (Moz)of silver.

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LOM estimates include annual production of 102,000oz of gold and 5Moz of silver, throughput of 1,000t a day (tpd), cash costs of $380 to $400 per ounce of gold and $5.35 to $5.50 per ounce of silver.

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Prior to making this decision, Yamana completed an evaluation of the original feasibility study and the level of engineering at the plant and mine design was advanced in 2014.

Following these studies, the company decided to pursue a single stage plant scenario, which will have an increased capacity of 1,000tpd and will be considered the optimal project size to increase throughput and value.

Forming the basis for the review of the tax and royalty framework, the project and operations at Cerro Moro are expected to provide benefits to Argentina and the province of Santa Cruz during construction and for the mine’s life.