Video: Gold mining faces a cliff after 2025, CRU analyst predicts
Global gold production will peak at about 3,250 tonnes (105 million oz.) next year, according to CRU's Oliver Blagden.
Next year, producer Alamos Gold expects the Young-Davidson underground mine in Ontario, where a lower mine expansion was completed in July, to drive a 17% production increase over 2020 levels, to 470,000 to 510,000 gold ounces. The Toronto-based company has released detailed guidance for 2021 and a general production outlook through to 2025.
Production at the Young-Davidson mine is expected to increase by 41% next year, from higher mining rates and increased grades. Approximately 190,000 to 205,000 oz. are expected from this mine next year, compared with this year’s guidance for 135,000 to 145,000 ounces.
In the release, the miner also indicated that it is on track to meet its 2020 guidance of 405,000 to 435,000 gold oz. at all-in sustaining costs of $1,030 to $1,070 per ounce.
The company’s exploration budget for next year has been increased to $50 million, from $36 million this year
Next year’s AISCs on a company-wide basis are expected around $1,025 to $1,075 per ounce. This guidance includes lower total cash costs driven by improvements at Young-Davidson, offset by a higher sustaining capital spend at the Mulatos open pit mine in Mexico.
“This has been a transformational year for Alamos. Operationally, we continue to execute and remain on track to achieve our 2020 production, cost, and capital guidance. We also delivered on several significant catalysts which have solidified our strong outlook. We completed the lower mine expansion at Young-Davidson, transitioned to strong free cash flow generation in the third quarter, and began construction on the high-return La Yaqui Grande project and phase III expansion at Island Gold” John McCluskey, president and CEO of Alamos, said in a release.
McCluskey added that with the ramp up, Young Davidson is expected to be a “key driver of strong ongoing free cash flow generation” to support returns to shareholders and reinvestment into growth opportunities at the Island Gold mine in Ontario and Mulatos.
The capital spend guidance for 2021 stands at $320 to $350 million and includes $210 to $225 million for growth capital, largely for the La Yaqui Grande project in the Mulatos district and the Island Gold expansion. These two projects are expected to be funded by the established operations at current gold prices.
The company’s exploration budget for next year has been increased to $50 million, from $36 million this year.
Alamos has also increased its dividend by 33% to $2¢, or $8¢ annually, supported by a “strong free cash flow outlook at current gold prices.”
Over the longer term, looking forward to 2025, Alamos expects to grow its gold production to 600,000 oz. per year from existing operations, largely driven by the phase III expansion at Island Gold. The company sees potential to increase its gold output to approximately 750,000 oz. a year in 2025 by adding the Lynn Lake project in Manitoba to its portfolio.
Over the next few years, all-in sustaining costs are anticipated to trend downwards, to US$800 per oz. by 2025, as La Yaqui Grande and the Island Gold expansion come on-line.
According to a 2017 feasibility study, Lynn Lake could generate 143,000 oz. of gold annually from open pit operations at AISCs of $745 per ounce. The $13-million 2021 budget for Lynn Lake includes $6 million in development spending, focused on environmental baseline work to support permitting. The Lynn Lake Environmental Impact Statement (EIS) was submitted in the second quarter of this year, starting off an anticipated two-year permitting process. Assuming a positive construction decision, the mine build would take two years.
(This article first appeared in the Canadian Mining Journal)
