Cerro San Pedro

Overview

The Cerro San Pedro open pit gold and silver project located in semi-arid central Mexico in the state of San Luis Potosi some 20 km east northeast of the city of San Luis Potosi.

The Cerro San Pedro Mine is an open pit heap leach mine that commenced commercial production in mid-2007 and is currently mining at full mine plan production rates of 63,000 tonnes per day. Average annual precious metal production over the ten-year mine life is currently projected to be approximately 89,300 ounces of gold and 2.1 million ounces of silver

New Gold, through MSX its wholly-owned subsidiary, controls 100% of the mining project.

Mineral reserves are estimated at nearly 86 million tonnes of ore grading 0.55 g/t Au and 22.5 g/t Ag. Because of the fact that the deposit is characterized by large tonnages and low grades, mineral reserve estimates are sensitive to metal prices, metallurgical recoveries and operating costs.

Location

The 7,969 ha Cerro San Pedro project is located in semi-arid central Mexico in the state of San Luis Potosi approximately 400 km north of Mexico City along the interstate highway connecting Mexico City with Monterrey. The site is located 20 km east northeast of the city of San Luis Potosi, which is the state capital with a population of approximately one million people. The site can be easily reached via a 10 km secondary road extending from the Periferico Oriente to the village of Cerro San Pedro. The San Luis Potosi airport has daily flights to Mexico City and Monterrey.

Climate is semi-arid with average temperatures of 21 deg C on summer time and 7.4 deg C on winter time. The mine site is located in the Sierra de Carro San Pedro. Vegetation consists of various shrubs, cactuses and mesquite.

Geology and Mineralization

The company, through MSX, controls 50 mineral concessions, totaling 3,222 hectares.

The Cerro San Pedro district lies along the boundary between the Sierra Madre Oriental fold belt and the Mesa Central volcanic plateau physiographic provinces. Regional stratigraphy in the area consists of a sequence of Cretaceous-age limestones. As a consequence of multiple deformations, the Cerro San Pedro area is characterized by a series of north-northwest trending folds which are cross-cut by a complex system of normal and reverse faults, drag folds, and thrusts.

The Cerro San Pedro deposit is localized at the intersection of two major conjugate northwest and northeast trending, right-lateral shears.

Mesozoic aged carbonates have been intruded by a sill-like porphyry body. Higher grade mineralization is contained by massive sulfide mantos, breccia pipes and chimneys, which has seen production from surface oxidized portions. The sill-like porphyry contains disseminated mineralization which has been the focus of recent exploration.

The local stratigraphic section at San Pedro has been subdivided into three principal limestone units: Begonia, Hospital and Barreno. Three main zones of mineralization have been identified: The Mendez Zone, the Fresnill ore source, and the Barreno Zone.

Initial mining activity is reported to have begun in 1575 when the Spanish discovered outcropping bonanza-type gold and silver mineralization. Past production was developed over 200 km of underground workings within the oxidized portions of the higher grade bodies.

Mining & Operation

Mine access is via a 2 km haul road beginning at the leach pad extending north to a single open pit located adjacent to the primary waste disposal facility. Pit design encompassed protection of important historical buildings in the village Cerro de San Pedro. The pit was divided into three phases to provide early ore production and attempt to spread stripping throughout the mine life, build to a sustainable annual ore quantity and provide relatively even ore production over the life of the project.

Mine development is performed through conventional drill, blast, load, and haul mining method, typical of open-pit mining.

Large front-end loaders were chosen as primary loading units to reduce loading costs and to increase mobility in the pit. Off-highway 90-tonne haul trucks were selected as the primary hauling unit, although the haul roads and mine working areas will accommodate larger trucks. This fleet selection is used throughout the industry and provides favorable unit costs for operations of this size. Major mine equipment fleet requirements include: 2 Blast Hole Drill (DM45), one secondary Track Drill, 3 Wheeled Loaders (992), one Hydraulic Excavator (375), 13 Haul Trucks (90 t), 2 water trucks, 3 Track Dozers (D8 and 10) and one Motor Grader (16G).

Minera San Xavier (MSX) contracts its mining activities to a mining contractor. As such, this contract represents approximately 50% of the cost of production. Staffing levels for mine are approximately 125 employees and will maintain that level throughout the life of mine. 

In 2011, mining operations removed 91,000 tpd total material, including 46,000 tpd ore material. Ore is carried directly to the heap leach pads.

Processing

Run-of-mine (ROM) ore is hauled directly to the leach pad for processing. Waste mining utilizes the same equipment fleet used to produce ore; however, waste is being deposited in two waste disposal facilities.

Gold and silver recovery is achieved through a typical heap leaching process using dilute cyanide solution to recover metal from the ore on the heaps. The metal enriched solution will be transported to the Merrill-Crowe processing facility where the gold and silver will be extracted from the solution using a zinc precipitation process. The resulting precious metal precipitant collected in the filter presses is refined on-site and poured in to gold/silver doré bars. Under security transport, the doré is delivered to a smelter for further refining to separate the gold and silver.

The design and construction of the leach pad involves two phases. Construction of phase 1 began in 2006 and will be complete in 2007. The first phase will be stacked to 70 meters and will store 57 million tones of ore. The second phase will increase the storage capacity to 100 million tonnes by expanding the leach pad footprint to the east and raising the heap height.

Based on detailed water balance calculations, the project is estimated to require a maximum of one million cubic meters per year for processing and dust control. MSX has developed a water production well near La Zapatilla, some 1.8km southwest of the process building. 

Environment & Community

A number of routine static-type acid-base accounting tests were conducted to determine if rock types present at Cerro San Pedro had the potential for acid generation. As expected, limestone rocks - the major waste rock type - have substantially high neutralization potential, while porphyry rock types - the major ore bearing rock type - have the potential to produce acid.

A plan to encapsulate potentially acid generating waste rock has been incorporated into a waste rock management plan. The dump is also constructed on limestone bedrock.

Closure cost is estimated at $19.4 million.

To ensure protection of the biological resources of the area, particularly the three protected cactus species, MSX has rescued and protected these species - and others - prior to operations. At the end of operations, these species will be re-established at properly prepared sites.

Wildlife species, particularly birds, are being protected from any hazardous ponds by eliminating exposure to process solutions. MSX also established sources of fresh water for wildlife.