Exploration - Turkey
Exploration expenditures in Turkey were $0.9 million in the first quarter of 2013. Up to eight drill rigs were active, drilling a total of 3,344 m in 19 holes.
Resource infill and expansion drilling is ongoing, with 948 m completed in five core holes. The June 2012 inferred mineral resource estimate for Camyurt represents a significant addition to the Company's mineral resource base in Turkey. The average grade of the mineral resource is substantially higher than at the Agi Dagi and Kirazli deposits.
In the first quarter of 2013, two drill holes were completed at Baba and Firetower, for 400 m of drilling. At the Ayi Tepe-Firetower North and Tavasan-Ihlamur zones, located approximately 300 m and one km northwest of the Baba-Deli trend, respectively, four exploration drill holes were completed, for a total of 583 m of drilling.
Three drill holes were completed in the first quarter of 2013, totaling 367 m. In addition, five exploration drill holes were completed in the vicinity of Kirazli at the Iri and Kale targets.
The Company anticipates producing between 180,000 and 200,000 ounces of gold in 2013 at a cash operating cost of $415 to $435 per ounce of gold sold, excluding a 5% royalty. If the 5% royalty is included, total cash costs are expected to be between $500 and $520 per ounce of gold sold. Factoring in exploration spending, corporate and administrative costs, share based compensation and sustaining capital costs, the Company expects to report all-in sustaining costs of between $785 and $825 per ounce of gold sold.
In April 2013, the gold price experienced significant volatility and decreased from over $1,600 per ounce to below $1,400 per ounce. Alamos' disciplined approach to growth and continuous improvement initiatives consistently result in industry-leading operating costs, positioning the Company to generate strong operating margins in a lower gold price environment. As a result, the current downturn in the gold price has not impacted the Company's operating and development plans.
In Mexico, the Company is focused on maintaining crusher throughput at current levels in order to meet 2013 production levels. The Escondida high-grade deposit is expected to continue to provide high-grade mill feed until the end of 2013, at which point the Escondida Deep zone will be accessed to provide mill feed for early 2014. The Company is expecting the permit to begin development of the El Victor and San Carlos deposit areas to be approved in the second quarter, following which development activities will commence in anticipation of processing high-grade from San Carlos in mid-2014. The current focus of exploration at Mulatos is on continuing to delineate high-grade mineral reserves to provide mill feed beyond the life of the Escondida high-grade deposit.
In Turkey, the EIA Report on the Kirazli Project is in the final stage of the approval process. While the approval will not be formally finalized until certain additional signatures are received from Turkish officials, the substantive aspects of the EIA review process have been successfully completed. In the second quarter, Alamos will submit its EIA Report on Agi Dagi, the Company's second late-stage development project in Turkey. Alamos anticipates that a decision from the Turkish Government will be received in a similar time frame to the Kirazli process. Once an EIA Positive Decision certificate is obtained for Kirazli, it is anticipated to take approximately 18 months to complete permitting and construction.
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