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TIMMINSGOLD www.timminsgold.com

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Timmins Gold brought its San Francisco Gold Mine in Mexico online ear the second quarter of production was on its way to producing 100,000 Greg Andrews explains how the mining concern hopes to expand on its mining-friendly Mexico

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immins Gold Corp. may be based in Vancouver, British Columbia, Canada, but its heart and its future focus clearly lie well to the south. It’s in Mexico that Timmins owns or controls several promising gold properties, including its current flagship, the San Francisco Mine in the state of Sonora.

The San Francisco Mine is a past-producing open-pit mine that Timmins brought back into full-scale commercial production early in 2010. When fully ramped up, the mine is expected to produce between 80,000 and 100,000 ounces of gold annually.

Timmins has staked its claim in Mexico for a number of reasons, including the presence of a government that recognizes the importance of mining to the country’s long-term financial stability, an existing workforce with mining experience, a favorable tax climate and reasonable environmental regulations. Those factors together have helped Mexico earn a rating as a top mining jurisdiction from the Fraser Institute, a leading Canadian think tank.

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In the San Francisco mine, meanwhile, Timmins has 100 percent ownership in a mine that produced more than 300,000 ounces of gold between 1996 and 2001.

Timmins controls a 45,000-hectare land package which it purchased in 2007, giving the property additional potential for exploration and growth.

The company has already done preliminary drilling along known deposits in a bid to grow the reserve and extend the life of the mine beyond the current expected five-plus years, and possibly well into the future. Currently, Timmins has established a known reserve of 780,000 ounces, resources that are locked up in some 34 million tons of ore.

The mine’s location is seen as a strategic and competitive advantage as well. It sits amid welldeveloped infrastructure, some of it built as recently as the late 1990s, with sufficient water rights and concessions and access to power from a modern regional grid. The labor force, too, has long been exposed to a range of mining techniques. Timmins has also built strong community relations on the foundations established by past mining concerns.

Because of those factors, the mine took relatively little up-front capital to restart, with Timmins spending around $40 million, including the land purchase. Timmins is also utilizing a mining contractor, Peal of Spain, that has experience and knowledge in the area and is itself well capitalized. That contractor in turn is drawing local employees from a pool that includes many people with experience in the mine during its earlier operational run.

Much of the rest of the capital expense was directed at building a new secondary and tertiary crushing system that was intentionally built with expansion capabilities. The resulting heap pile will be made up exclusively of rock under ½-inch in size, allowing recovery rates of up to 70 percent.

Timmins also invested in refurbishing a former ADR gold plant on the property that can now handle production rates of up to 120,000 ounces per year.

Timmins saw the first gold poured from the San Francisco mine in December of 2009 and began commercial operations in April of 2010. During the first quarter, more than 11,000 ounces of gold were produced, a number that jumped to 15,000 ounces during the second quarter. Timmins has targeted cash costs of $420 per ounce at San Francisco, a cost profile that gives it a strong profit margin potential in the current bull market

for gold and other precious metals.

Starting commercial production at San Francisco, and the resulting cash flow, mean Timmins Gold can begin to explore its portfolio of other Mexican gold and silver properties and prospects. Among those holdings are claims in Zacatecas, Mexico, where it controls 45,000 hectares of property that is contiguous to Goldcorp’s Penasquito deposit, which has an estimated 17 million ounces of gold in reserves, and just 20 kilometers from Goldcorp’s Camino Rojo project, where that company believes it will be able to mine 3.4 million ounces of gold and more than 60 million ounces of silver.

Elsewhere, Timmins controls the Cocula Property in Jalisco, Mexico, where early exploration drilling has identified a potential bulk tonnage target with a potential low strip ratio. Timmins plans to add to its land holdings in that area and perform additional exploration work as resources permit.

Another key land package is Timmins Gold’s additional Sonora, Mexico properties, which are known as the Norma, Patricia and Picacho holdings.

The Norma and Patricia claims include 20,000 hectares to the west of the San Francisco claim block and were made to help secure mineralized occurrences in old mines. Those properties are along the trend line that forms the mineralization within the San Francisco block and are expected to be the target of drilling exploration in late 2010 or early 2011. The Picacho holding, meanwhile, has shown high grade surface mineralization and exploration targets will include both metamorphic and sedimentary rock.

“The mine sits amid well-devel sufficient water

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loped infrastructure, some of it built as recently as the late 1990s, with r rights and concessions and access to power from a modern regional grid�

The Timmins management team includes CEO Bruce Bragagnolo, an attorney with extensive regulatory and permitting experience, and president Arturo Bonillas, an engineer with more than 23 years’ experience working on mining projects in Mexico. The successful launch of the San Francisco mine in 2010 is part of a long-range plan to build Timmins into a 5-millionounce per year gold company, rivaling some of the strongest players in the market today. www.timminsgold.com

TIMMINSGOLD www.timminsgold.com