TORONTO (miningweekly.com) – Canadian gold miner Yamana Gold on Wednesday announced its maiden indicated resource estimate for its Argentinean development project Cerro Moro, lifting the resource by 44% from the previous estimate before the company acquired the project in 2012.

The company reported a National Instrument 43-101-compliant indicated mineral resource of 1.95-million gold-equivalent ounces (GEO) contained in 4.16-million tons grading 14.6 g/t, and an inferred mineral resource of 490 000 GEO contained in 3.6-million tons with an average GEO grade of 4.2 g/t, both using a 1 g/t cutoff.

Yamana said it had started pre-development work by building a production-ready decline into the largest of the known orebodies, Escondida. While this is expected to advance the timeline for development, this pre-development work would provide a platform for further exploration work and access to the orebody, providing greater certainty and knowledge of its physical properties and grade continuity.

Based on technical and trade-off studies, a feasibility study would consider a mine plan combining both openpit (30%) and underground (70%) mining operations to sustain a process plant with a throughput rate of about 1 000 t/d and an expected recovery of about 200 000 GEO a year. The feasibility study is expected to be completed during 2014 and depending on the outcome of the studies and subsequent construction decision, production could begin in 2016.

Since the mineralisation is broadly similar to the company's Mercedes operation, in Mexico, mining and processing operations at Cerro Moro are expected to employ similar methods. Initial capital costs are expected to be below $400-million and operating costs are expected to be below $450/oz.

Cerro Moro comprises eighteen tenements covering an area of about 177 km². There are eight sectors: Escondida, Loma Escondida, Zoe, Martina, Carla, Esperanza-Nini, Gabriela, and Deborah, all of which are located within the central portion of the Cerro Moro tenements, included in the current mineral resource.

Yamana said it would undertake an extensive $12-million exploration plan in 2013, with the goal of expanding the areas of mineralisation to the La Negrita block and adding to the mineral resource base.

A drill hole had already intercepted three separate vein zones in January, with indications that two of these occur at mineable widths and have the potential for significant GEO grades.

The company’s TSX-listed shares closed C$15.81 apiece on Wednesday.