Equinox releases California gold expansion study
Equinox Gold Corp. [EQX-TSX, NYSE American] on Monday March 22 released the results of a feasibility study for the phase two expansion at the company’s Castle Mountain gold mine in southeastern California near the Nevada border.
Castle Mountain achieved Phase 1 commercial production in November 2020, with expected production of 30,000 to 40,000 ounces of gold annually. The current operation consists of a run-of-mine (ROM) heap leach facility, placing 12,700 tonnes of ore per day.
Phase 2 will expand the ROM heap leaching and incorporate milling of higher-grade ore, increasing the production rate to an average 218,000 ounces/year over 14 years, followed by leach pad rinsing to recover the residual gold. The average all-in-sustaining cost is forecast at US$858/oz.
Life-of-mine production, including Phase 1 operations and end of mine life rinsing is estimated at 3.4 million ounces of gold.
Development of Phase 2 is expected to require an overall timeline of approximately four years from the start of permitting to the achievement of fully expanded operations. However, the overall timeline depends largely on the attainment of operating permits form the Bureau of Land Management and County of San Bernardino.
“The Castle Mountain Phase 2 expansion will increase production from the mine to well over 200,000 ounces of low-cost annual gold production and generate nearly US$2 million of net cash flow at current prices,” said Equinox Gold CEO Christian Milau. “Phase 2 will also provide more than 400 jobs during construction and operations and extend the total mine life to more than 20 years,” he said.
The 2021 feasibility study envisages a two-year construction timeline. Total capital costs are estimated at US$389 million, excluding US$121 million for a leased mining fleet or a total of US$510 million.
The total project mine plan is based on proven and probable mineral reserves of 4.2 million ounces of contained gold, grading 0.514 g/t. Equinox has also identified additional near-mine mineralization through exploration with potential to further extend the life of the mine and increase annual production.
Equinox shares advanced on the news, rising 1.5% or 16 cents to $10.61 on volume of 265,890. The shares and now trade in a 52-week range of $17.99 and $6.76.
The company recently agreed to acquire the Premier Gold Mines Ltd. in a friendly all-stock deal worth $612 million.
The transaction is expected to provide a clear path to production for the Hardrock gold project in Ontario.