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Equinox Gold (TSX: EQX) has released results of a feasibility study (FS) for an expansion at its 100%-owned Los Filos mine complex located in Mexico, which would see the operation extended to 2036 on the back of a substantial increase in its gold reserves.
Currently, the Los Filos operations consist of both run-of-mine and crushed ore heap leach facilities. With continued development of the Bermejal Underground deposit and construction of a 10,000 t/d carbon-in-leach (CIL) processing plant, the Los Filos mine life would be extended to 14.5 years, the FS shows, with life-of-mine (LOM) average annual production increasing to 280,000 oz. of gold (2023-2036) at all-in sustaining costs (AISC) of $1,081/oz.
Total LOM production is estimated at 3.97 million oz. of gold, peaking during 2025-2030 at average production of 360,000 oz. per year. Using the base case $1,675/oz. gold price, the expansion project has an after-tax net present value discounted at 5% of $625 million with an internal rate of return of 26%.
The FS includes an updated mineral reserve and resource estimate, incorporating a revised mine plan and more than 101,000 metres of exploration drilling since October 31, 2018. Factoring 681,000 oz. of mining depletion over almost four years, the Los Filos mineral reserves have increased 44% over the 2018 estimate, totalling 193.2 million tonnes (proven and probable) grading 0.86 g/t gold for 5.4 million oz. of contained gold.
An additional 325.3 million tonnes of measured and indicated resources (exclusive of mineral reserves) grading 0.75 g/t gold for 7.9 million oz. of contained gold, and 135.9 million tonnes of inferred resources grading 0.74 g/t gold for 3.2 million oz. of contained gold have been tabled.
Gold mineralization at Los Filos extends beyond the drilled area, and it is expected that additional drilling along the contact between intrusive and carbonate rock could identify further skarn mineralization. With exploration success and conversion of resources to reserves, considerable potential exists to extend the Los Filos mine life beyond 2036, Equinox says.
The Los Filos mine complex encompasses three main open-pit mining areas: Los Filos, Guadalupe and Bermejal, and three underground mines: Los Filos South, Los Filos North and Bermejal Underground. Bermejal Underground development recommenced in Q2 2021, and the deposit has been contributing higher-grade ore since mid-2022. Ore from all six mining areas is currently processed on heap leach pads.
The FS contemplates construction of a CIL plant commencing in 2023 with an 18-month timeline for construction and commissioning, which would allow higher-grade ore to be directed to the CIL plant commencing in mid-2024. While the economic and production estimates outlined in the FS are predicated on that timeline, Equinox has not approved construction for the CIL plant.
“The feasibility study confirms a path to expand Los Filos to a large-scale, long-life gold mine with a substantial reserve and resource endowment and opportunity for further growth,” CEO Greg Smith said in a press release.
“We are pleased with the results of the feasibility study; however, we have not made a decision to proceed with the expansion. Any decision to proceed with the Los Filos expansion will be made considering the operating stability in the region, market conditions and availability and cost of capital,” Smith cautioned, adding that Equinox is currently focused on construction of its Greenstone mine in Ontario and advancing the permitting to expand its Castle Mountain mine in California.
Since it commenced operations in 2005, the Los Filos mine complex has produced 3.4 million oz. of gold, with ore from all deposits processed using heap leach facilities. Constructing and operating the CIL plant, compared to a heap leach only scenario, would extend the Los Filos mine life by approximately four years, adding more than 1.1 million oz. of gold to LOM production.
