Alamos study extends life of Manitoba gold mine

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Alamos Gold Inc. [AGI-TSX, NYSE] has released results of an updated feasibility study for its Lynn Lake gold project in Manitoba.

The Lynn Lake project consists of the Gordon and MacLellan deposits which are located approximately 30 kilometres apart. The two deposits will be mined using conventional open pit mining methods with a centralized processing plant and tailings management facility to be located at MacLellan.

The 2023 study replaces the previous feasibility study completed in 2017 and incorporates a 44% larger mineral reserve, a 14% increase in the milling rates to 8,000 tonnes per day, supporting a larger, longer-life operation.

The latest study envisages average annual gold production of 207,000 ounces over the first five years and 176,000 ounces over the initial 10 years. The 10-year average marks a 23% increase in comparison to the 2017 study and forsees an average all-in sustaining cost of US$699 an ounce.

Other highlights include a 17-year mine life, up from the previous 10-year estimate.

The longer life operation will be supported by a larger mineral reserve of 2.3 million ounces, grading 1.52 g/t gold (47.6 million tonnes).

However, the new study envisages a modest increase in capital intensity with the larger operation and 46% increase in life of mine production to 2.2 million ounces, plus 5.5 million ounces of silver, up from 1.5 million ounces. Initial capital is pegged at $632 million and life of mine capital, including sustaining capital and reclamation, adds up to $832 million.

Results of the updated study were released after the close of trading on August 2, 2023, when Alamos shares closed at $15.48. The shares are currently trading in a 52-week range of $19.18 and $8.74.

Alamos is a Canadian-based intermediate gold producer with diversified production from four operating mines in North America, including the Young-Davidson, and Island Gold mines in northern Ontario, and the Mulatos and El Chanate mines in Sonora Mexico.

“Through Lynn Lake, Island Gold, and Young-Davidson, we have three high-quality assets that can support over 650,000 ounces of annual production in Canada, at an all-in-sustaining costs below $1,000 per ounce over the long term,’’ said Alamos President and CEO John A McCluskey.

The company recently said its production guidance has increased with 9.0% growth expected in 2023.  Production is expected to increase to between 480,000 to 520,000 ounces in this year and remain at similar levels in 2024 and 2025.

Alamos recently said the Environmental Impact Assessment [EIS] for the project has been completed and approved by the Minister of Environment and Climate Change Canada. The Province of Manitoba has also issued Environment Act Licenses for the MacLellan and Gordon sites [deposits].

As outlined previously, the company does not anticipate spending any significant capital on developing the Lynn Lake project until the Phase 3+ Expansion at Island Gold is well advanced. Development at Lynn Lake is expected to be funded internally.

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