Alamos tables Mexican gold mine development plan
Alamos Gold Inc. [AGI-TSX, NYSE] has announced a development plan for its Puerto Del Aire (PDA) project in Sonora, Mexico.
PDA is a higher-grade underground deposit adjacent to the main pit at the company’s Mulatos mine, and consists of five zones, including PDA1, PDA2, Gap, Victor and Estrella.
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.
The Mulatos mine is Alamos Gold’s founding operation. It was acquired for US$10 million and has produced over 2.0 million ounces of gold, generating US$600 million in free cash flow since 2005. Mulatos is expected to produce between 160,000 and 170,000 ounces of gold this year at an all-in-sustaining cost of US$1,000 to US$1,050 an ounce.
PDA will be accessed via two portals located in the east wall of the Mulatos Pit.
“Given PDA’s attractive economics and proximity to the existing Mulatos infrastructure, the company anticipates starting development of PDA in 2025 with the first production expected by 2027,’’ the company said. “The project is expected to nearly triple the mine life of the Mulatos District, extending production into 2035,’’ it said. Meanwhile, there are excellent opportunities currently being tested that could extend the mine life further and enhance already robust economics through the significant exploration potential of both PDA and Cerro Pelon, as outlined earlier today, the company added.
Higher grade mineralization intersected below the past-producing Cerro Pelon open pit which is expected to support an initial underground mineral resource with the year-end mineral reserve and resource update to be released in February, 2025.
Meanwhile, results of the positive internal economic study completed at PDA envisages average annual gold production of 127,000 ounces over the first four years and 104,000 ounces over the current mine life, based on mineral reserves as of December 31, 2023.
The study also forsees a low-cost profile with cash costs of US$921 per payable ounce and mine-site-all-in-sustaining costs of US$1,003 per payable ounce.
According to the study, Alamos can anticipate payback of two years at a base case gold price of US$1,090 an ounce and 1.5 years at current gold prices. Life of mine capital is expected to total US$231 million, including US$66 million of sustaining capital.
The PDA mine plan and economic analysis are based on mineral reserves as of December 31, 2023 of 5.4 million tonnes, grading 5.61 g/t gold, containing 969,000 ounces of gold. On top of that is an indicated resource of 2.1 million tonnes of grade 3.54 g/t gold, or 240,000 ounces.
“The development of PDA and transition to underground sulphide milling operations will open up additional opportunities for growth in the Mulatos District,’’ said Alamos Gold President and CEO John A McCluskey.
Alamos shares rose 1.2% or 30 cents to $25. The shares trade in a 52-week range of $27.57 and $14.80.