Timmins Gold Corp. (TSX:TMM): New Recommendation

By : Peter Zihlmann

The Timeless Precious Metal Fund

SCHEDULED TO PRODUCE 80,000 OUNCES OF GOLD PER YEAR IN SONORA, MEXICO

Business Summary

Timmins Gold Corp is strategically positioned to become a gold production and development company.

Focused solely in Mexico, Timmins Gold has formulated an aggressive development and acquisition plan which is designed to take the Company into production on its "flagship" project the San Francisco gold mine in Sonora Mexico.

A preliminary feasibility report received this year confirms the "economic viability of the mine" which is scheduled to produce 80,000 oz of gold per year.

The gold plant is on site and has been recently refurbished and tested and the new crushers are being installed. With all permits now complete and in place Timmins anticipates being in production in 2009.

On the exploration front, Timmins has assembled 6 additional gold properties currently under development and or exploration. The most recent is the TIM Claims, a 40,000 hectare gold property located contiguous to Goldcorp's 13,000,000 oz Penasquito Gold Deposit in Zacatecas.

The Company's goal is to utilize future cash flow to expand reserves of the San Francisco Mine, advance its exploration projects and make strategic acquisitions. The commencement of production combined with exploration potential, positions Timmins Gold for exceptional growth and increased shareholder value. Timmins trades on the TSX.V under the symbol TMM.

Projects

SAN FRANCISCO GOLD PROJECT, Sonora, Mexico

The San Francisco Mine is a past producing open pit operation with a gold reserve of 611,000 ounces with potential to expand.

A gold plant with a capacity in excess of 100,000 ounces per year is on site and has been completely refurbished and tested.

Timmins Gold has refurbished the primary crusher, the new secondary and tertiary crushers are being installed and the heap leach pads are being constructed.

With the entire permitting process now complete, Timmins Gold is nearing the completion of its construction activities as it prepares for gold production this year.

On January 18, 2007, Timmins Gold announced the independent mineral resource estimate on the San Francisco property. The estimate was prepared by Independent Mining Consultants Inc. of Tuscon, Arizona (IMC) according to stringent requirements of The National Instrument 43-101.  The mineral resource estimate is based on a US$500 per ounce gold floating cone with 64% recoveries, US$1.00 per tonne mining cost and 0.23 g/t gold cut-off grade.

Preliminary Feasibility Study

Micon completed a preliminary feasibility study on the San Francisco Gold Project dated March 31, 2008 and updated January 2009. Management is very pleased with the results of the study as it demonstrates the strong economics of the project and anticipates recommencing production in 2009. In particular the conclusions and recommendations of Micon state that:

Timmins should proceed with development of the San Francisco open pit mine, crushing, heap leaching and gold recovery plant as described in the preliminary feasibility study...Given the amount of work conducted previously at the San Francisco project on the known exploration and areas of mineralization, the property should be regarded as an advanced-stage exploration project with significant economic potential.

Management also believes there is significant opportunity to expand the resource both in the immediate area of the current resource and in other satellite deposits and targets on the 43,000 hectare property.

Therefore, in the first quarter of fiscal 2008 the Company commenced a surface exploration, geochemical survey, both ground and airborne geophysical surveys and a third drill program with the objective of identifying additional targets.

TIM Claims

During the current period the Company acquired, by staking, a 40,000 hectare land package in the Peňasquito area of Mexico.

The claims are contiguous to the Peňasquito Gold Deposit (Goldcorp) and are approximately 20 km to the northwest of the Camino Rojo project (Canplats Resources). As of June 2007, Goldcorp reported proven and probable gold reserves at Peňasquito of 13.0 million ounces. Canplats Resources has reported drill intercepts of up to 224 metres averaging 1.50 grams of gold and 24.45 grams of silver per tonne from its Camino Rojo project (3.44 million ounces gold and 60.7 million ounces silver).

The Tim claims are located in the northern part of the state of Zacatecas, Mexico, and are located approximately 42 kilometres west of the town of Concepcion del Oro. The northern Zacatecas area is an important mining district in Mexico. The area possesses flat topography and excellent proximity to roads, power, rail, skilled labour and smelters.

The Company acquired the claims because of their proximity and geological similarity to the Peňasquito Gold Deposit. Mineralization generally consists of carbonate replacement bodies located along the intrusive-limestone contact. Ore deposits in the region are formed in skarns, chimneys, and mineralized breccias developed in clastic and permeable rocks of the Caracol formation in contact with intermediate intrusive bodies. Evidence exists of such intrusive and limestone packages on the property. In particular, the Company's geologists have identified a sandstone unit on the property believed to be part of the Caracol formation, the host of the Peňasquito mineralization. Assays from selected grab samples taken by the Company's geologists have returned anomalous gold values in excess of 1gram of gold per tonne.

Recent News: Timmins Gold intersects 1.30 g/t gold and 13 g/t silver across 37.5 meters from surface at Cocula Project, Mexico

 Timmins Gold announces the assay results of a 26 hole, 1,974 meter reverse circulation drill program at its Cocula Project in the state of Jalisco, Mexico.

Highlights of the program include Hole RCC-01 which intersected 1.30 g/t gold and 13 g/t silver across 37.5 meters from surface, including 9.40 g/t gold and 22 g/t silver across 4.5 meters.

Other important intercepts include Hole RCC-02, which intersected 1.22 g/t gold and 34 g/t silver across 4.5 meters, Hole RCC-03 which intersected 0.77 g/t gold and 10 g/t silver across 13.50 meters, Hole RCC-09 which intersected 0.72 g/t gold and 8.7 g/t silver across 54 meters, Hole RCC-10 which intersected 1.20 g/t gold and 13 g/t silver across 37.50 meters from surface, Hole RCC-17 which intersected 1.41 g/t gold across 10.50 meters and Hole RCC-19 which intersected 1.10 g/t gold and 17 g/t silver across 9 meters. All widths are estimated to be true widths.

Fundamental Considerations

2009 OBJECTIVES

SAN FRANCISCO MINE

• Commence production

• Increase reserves

• Explore / develop satellite deposits

EXPLORATION

• Assess first phase drill program on Tequila and define next stage exploration

• Assess first phase drill program on Cocula, confirm continuity of mineralization along strike

• Prepare for drilling on the new TIM Claims

STRATEGIC ACQUSITIONS

• Evaluate acquisitions of other junior mining companies operating in Mexico to take advantage of operational and exploration strengths in the country

A comparison with a company already in production in the same Mexican state (Sonora) emphasizes the undervaluation of Timmins Gold. While the market cap of Capital Gold is 2,000 the annual production, Timmins Gold stands at 300 times.

Technical Considerations

Peter Zihlmann

The Timeless Precious Metal Fund

Peter Zihlman is an independant Swiss asset manager, who manages the Timeless Precious Metal Fund and the Sierra Madre Gold and Silver Venture Fund.

Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the author and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an interest, family and associates may from time to time have positions in the securities or commodities discussed. No part of this publication can be reproduced without the written consent of the author.