(Kitco News) - Alamos Gold (TSX:AGI) today reported results of the Phase 3+ Expansion Study conducted on its Island Gold mine in Ontario, which outlines a larger, more profitable, and valuable operation than outlined in the Phase III Expansion Study released in 2020.
The company said that the Phase 3+ Study assumes higher production, with expected average annual gold production of 287,000 ounces starting in 2026 upon completion of the shaft.
Alamos added that this growth in production represents a 22% increase from the P3 2000 Study and a 121% increase from the mid-point of 2022 production guidance of 130,000 ounces.
Importantly, the company noted that the study demonstrates industry low costs, with average total cash costs of $432 per ounce (average $425 per ounce from 2026), consistent with the P3 2000 Study and 25% lower than the mid-point of 2022 guidance of $575 per ounce.
The project’s average mine-site all-in sustaining costs are expected to be $610 per ounce (average $576 per ounce from 2026), a 30% decrease from the mid-point of 2022 guidance of $875 per ounce.
More importantly, the study demonstrates a 43% increase in mineable resource to 4.6 million ounces of gold grading 10.59 grams per tonne, supporting an 18 year mine life to 2039, which is a four year increase from the P3 2000 Study, while operating at 20% higher production rates of 2,400 tpd.
The project also generates an after-tax net present value (“NPV”) (5%) of $1.6 billion, a 25% increase from the P3 2000 Study (base case gold price assumption of $1,650 per ounce and USD/CAD foreign exchange rate of $0.78:1), and after-tax internal rate of return (“IRR”) of 23%, up from 20% in P3 2000 Study.
The company said that the project’s total capital intensity decreased 4% to $344 per ounce reflecting the larger mineable resource with increased ounces per vertical metre driving the lower capital intensity and contributing to the stronger economics.
Alamos also pointed out a 35% reduction in life of mine GHG emissions relative to the current operation, supporting the company-wide target of a 30% reduction in GHG emissions by 2030.
Alamos added that based on the results of the P3+ Expansion Study, the company is proceeding with an expansion of the operation to 2,400 tonnes per day.
“As a producing mine with a well-understood cost structure, this expansion is low risk from an execution perspective, and has a significantly reduced carbon footprint. The exploration story continues to unfold with a Mineral Reserve and Resource base that has nearly tripled over the past four years, and with the deposit open laterally and down-plunge, we expect Island Gold will be one of the lowest cost and most profitable mines for decades to come,” commented President and CEO John A. McCluskey.
Alamos is a Canadian-based intermediate gold producer with diversified production from three operating mines in North America. Additionally, the company has a significant portfolio of development stage projects in Canada, Mexico, Turkey, and the United States.
