A pre-feasibility study for Argonaut Gold Inc.'s Cerro del Gallo gold project in Mexico generated a posttax net present value, discounted at 5%, of US$175 million, a 20% internal rate of return and a 4.5-year payback period.

The initial capital expenditure was estimated at US$134.2 million, with total life of mine capital at US$184.6 million, including US$11.1 million in working capital and first fills. All-in sustaining costs are expected at US$677 per gold ounce sold.

The mine is expected to annually produce an average of 64,000 ounces of gold, 1.3 million ounces of silver and 2,400 tonnes of copper during a 15.5-year life of mine.

Construction is expected to take 18 months to complete, according to the Dec. 18 release.

The Cerro del Gallo project increased the company's proven and probable gold mineral reserves by 48%. The project hosts proven and probable reserves of 91.8 million tonnes at 0.56 g/t gold, 13.3 g/t silver, and 0.09% copper containing 1.6 Moz of gold, 39.1 Moz of silver and 85,782 tonnes of copper.