The La Arena gold mine is located in northern Perú, 480 km north-northwest of Lima. The mine consists of two types of mineral deposits: high-sulfidation epithermal oxide gold mineralization hosted in brecciated sandstone within the Chimu Formation, and copper-gold sulfide mineralization hosted in multi-stage porphyry intrusives. Operations are currently exploiting the oxide gold reserve by open pit methods using conventional drill/blast, load and haul methods. Ore is truck-dumped onto leach pads with no crushing or agglomeration required prior to leaching. As of January 1, 2017, Measured and Indicated oxide resources totaled 63.8 million tonnes with an average gold grade of 0.39 g/t containing 805,000 ounces of gold and Proven and Probable oxide reserves of 54.1 million tonnes with an average gold grade of 0.41 g/t containing 715,000 ounces of gold. The mine produced 204,400 ounces of gold in 2016 at total cash costs per ounce produced net of byproduct credits of $596 and all-in sustaining costs per ounce produced net of byproduct credits of $837.
In 2017, production at La Arena is targeted at between 145 and 155 thousand ounces, with the reduction from the 2016 level consistent with the mine plan and reflecting lower grades in the final four years of mine life. Total cash operating costs are estimated at $750 to $800 per ounce, while all-in sustaining costs are expected to average between $1,000 and $1,100 per ounce.
As of January 1, 2017, Measured and Indicated sulfide mineral resources for the La Arena deposit totaled 274 million tonnes with average gold and copper grades of 0.24 g/t and 0.33 percent, respectively. Proven and Probable sulfide reserves are reported at 63.1 million tonnes with average gold and copper grades of 0.31 g/t, and 0.43 percent, respectively. These estimates are unchanged from the previous Mineral Reserve and Mineral Resource update as of January 1, 2016. Following the completion of an internal scoping study of the La Arena Phase II Project early in 2017, the Company has commissioned M3 Engineering & Technology to complete a Preliminary Economic Assessment of the project, with completion targeted for the third quarter of 2017.
The La Arena mine is situated in the eastern slope of the Western Cordillera, close to the Continental Divide at an average altitude of 3,400 metres above sea level. The mine is located within the Huamachuco district, the Sánchez Carrión province and the La Libertad region. Access to the mine is via a 165 km national highway from the coastal city of Trujillo. The town of Huamachuco, with a population of approximately 35,000 people, is located 21 km to the east of the mine.
The climatological conditions at the La Arena project correspond to typical climatic conditions found in the northern sierra of Peru. The average annual temperature is 10.6°C, with minimum and maximum temperatures of 0.4°C and 22.6°C recorded at the mine site. Average annual rainfall is about 1120 mm with the majority of precipitation occurring from October to March.