Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Alamos Gold (TSX,NYSE:AGI) has come out of the gate with an impressive feasibility study conducted on its Lynn Lake Gold Project in Manitoba.
Toronto-based Alamos said the reports shows the past-producing gold camp with proven and probable reserves of 26.8 million tonnes graded 1.89 grams per tonne, with contained gold of 1.6 million ounces.
The feasibility study converts the previous measured and indicated resources, which stood at 40.3 million tonnes at 2.03 g/t, and 2.629 Moz contained.
Average gold production would be 170,000 ounces over the first six years, with life of mine production of 1.5 Moz. Alamos would produce gold at $745 an ounce, all-in sustaining costs, and expects to have total capital expenditures including reclamation of $486 million.
“We acquired the Lynn Lake project in 2016 for $20 million and with the completion of the feasibility study, have outlined solid base case economics for the project with an after-tax net present value over $120 million. As we advance the project through permitting over the next two years, we see excellent potential to further enhance its overall economics through a number of avenues, including incorporating recent exploration success,” President and CEO John McCluskey said in a statement. “We expect stronger economics prior to making a construction decision. With its location in one of the best mining jurisdictions in the world, Lynn Lake is an important piece of our longer term growth strategy.”
Lynne Lake has five near-surface deposits including two primary ones: the MacLellan Mine and the Gordon Mine, had preliminary economic assessments (“PEAs”) done on them in 2014.
Both deposits would be mined using conventional truck and shovel open pit mining methods, moving between 20.5 and 27.0 Mt of material over the first seven years. The mill has been designed to handle 7,000 tonnes per day, nominal capacity.
Alamos acquired the project in 2016 through its acquisition of Carlisle Goldfields, which previously had a joint venture with AuRico Metals (TSX:AMI) on Lynne Lake.
In September Alamos bought smaller rival Richmont Mines Inc in a deal valued at about C$905 million ($747 million) to create a top-10 gold producer in North America. The combined company, which will have majority of its production in Canada, is expected to produce 500,000 ounces of gold in 2017.
The deal includes Richmont’s flagship Island Gold Mine in Ontario, known for its high-grade yield and low cost. As a result, Alamos’s production is expected to increase at an average of 25 percent annually, Reuters reported.
Comments
norman davy
i would concider coming back to work in your mill i have lots of years in working in a mill mainly gold i worked in lynn lake i left in 1989 when the mine closed. ive worked on the crusher,grinding,carbon and control room . also the refinery.