Canada-based gold producer Agnico-Eagle Mines has gained approval from its board of directors to construct and develop the La India mine in Sonora, Mexico.
The gold mine, located around 70km from Agnico-Eagle's Pinos Altos mine, covers 54,981 hectares and contains an early-stage exploration project named Tarachi.
La India was acquired by the company in November 2011 and will be developed as an open pit, heap leach operation, with commercial production expected in the second half of 2014.
Agnico-Eagle president and CEO Sean Boyd said that, with the acquisition, the company is anticipating low-risk, quality gold production growth at La India in areas supportive of mining.
The company is projected to incur $183m in capital costs over the eight-year mine life operating at 16,000t a day.
New capital of nearly $40m is expected to be added to the company's total capital expenditure for the 2012 fiscal year.
La India mine is projected to produce an average of 90,000oz of gold a year, costing the company $500 per ounce over the life of the mine.
Drilling in May 2012 revealed initial probable reserves total 44.6 million tonnes at 0.65 grams per tonne of gold, containing 930,000oz.
Agnico-Eagle will further delineate and expand the mineral resources and reserves with infill and step-out exploration drilling.
"We are pleased to be able to bring this high-return project on board in a relatively short period of time," Boyd added.
"This project should add meaningful operating cash flows and provide us with opportunities to create additional value as we explore our large land package surrounding the deposits."
Image: Agnico-Eagle president and CEO Sean Boyd. Photo: Agnico-Eagle