If GoGold (TSX:GGD) keeps to its aggressive – and so far pretty accurate – mine-building plans in Mexico by the end of next year there will be a new gold-silver junior producing, on an annualized basis, nearly 2-million ounces silver-equivalent from one mining project and 56,000 ounces gold from another.

GoGold has recently said that it is on track for full production later this year at its Parral silver-gold tailings project – where it is reprocessing tailings that hold some 35 million ounces silver equivalent in resources – and that numerous aspects of the project from recovery, cyanide consumption to grade reconciliation were turning out, at least so far, better than expected. Here, at full production, GoGold expects to produce 1.2 million ounces silver and 11,000 ounces gold a year, on average, over a 12-year minelife at, net of gold, $6.48/oz Ag in cash costs. By the looks of things so far, it may beat that score.

Multi-mine future takes shapes for GoGold

To this looming production, GoGold has outlined the potential of the Santa Gertrudis project. Recall that GoGold picked this up earlier this year after a takeover of Animas Resources. At Santa Gertrudis – a past producer that failed amidst low gold prices in the early 2000s (i.e. ~$300/oz Au) – GoGold expects yearly production of 56,000 ounces gold over a 12 year minelife. This, like Parral, will be a heap leach operation, but involve actual mining rather than re-mining, with total costs projected @ $622/oz gold. The operation, as set out in GoGold’s preliminary economic assessment, an outline of which the junior released today, is built around multiple open pits that hold about 22 million tonnes in indicated resources @ 1.06 g/t Au in oxides. Assuming $1,200/oz gold GoGold estimated a 53.5% internal rate of return (IRR), after tax, though it headlined 57.8% IRR at $1,250/oz gold, which not so long ago might have been deemed conservative. Not today with gold dipping under that count.

At any rate, the economics as set out are not pie-in-the-sky. The project appears to hold up at much lower gold prices as well, with IRR dipping to a still strong 34 percent at $1,000/oz gold. All this asssumes a strip ratio of about 6:1 and a capital cost of $32 million.

Multi-mine future takes shapes for GoGold

GoGold has set mid-2015 for production at Santa Gertrudis. Couglan told Mineweb he expects permitting on the brownfield’s project to take three months when it starts. If it holds close to that forecast then next year there will be a serious silver-gold junior/intermediate to contend with among gold-silver producers with important Mexican operations, joining the ranks of Argonaut Gold, AuRico, Fortuna Silver, Endeavour Silver and Gold Resource and others. If the plans hold true for GoGold, or at least near to, I would expect GoGold garners quite a bit more attention from the market. GoGold is not exactly flying below the radar – it’s marketcap is over $200 million which for a pre-commercial/ramping up gold producer can’t be sniffed at this days – but then again it will certainly gain greater scrutiny – and possibly respect – with two modest-sized silver and gold mines in production with very decent mine life (for a junior) and low costs on the horizon assuming a plus-$1,000/oz gold world.

Parral’s timeline, for the record, has come close to company projections. Back in mid 2013 GoGold co-founder and President and CEO Terence Coughlan told Mineweb to expect initial production in early 2014 after it received financing from Red Kite and CAT to build the mine. It would, in fact, come a bit later – June – so not quite early 2014 but very close nonetheless. It’s impossible to say if the same fairly accurate scheduling will hold true at Santa Gertrudis, but it can be said Coughlan and GoGold’s other co-founder, Brad Langille, are pretty steady hands at Mexico mining. They have been key backers of several other mining endeavours in Mexico that have sold for substantial sums over the years, including Gammon Gold, Nayarit Gold and Mexgold.