By Ellsworth Dickson
Since its acquisition of the Los Filos gold mine in Guerrero State, Mexico in early April, Leagold Mining Corp. [LMC-TSX] has reported its gold production figures. Los Filos was acquired from Goldcorp Inc. [G-TSX; GG-NYSE] for $350 million. Leagold’s objective is to become a mid-tier gold producer in Latin America.
The Los Filos Mine produced 89,983 ounces of gold during the six-months ended June 30, 2017, which includes 43,980 ounces following Leagold’s acquisition of the mine on April 7, 2017. The mine has two open pit mines, Los Filos and Bermejal, an underground mine at Los Filos, and the opportunity to develop an underground mine at Bermejal as an expansion project.
It is expected Los Filos will produce 200,000 ounces of gold this year. The Reserves-Only LOM plan has an eight-year mine life producing 1,256,000 ounces of gold at an average AISC of US $803/oz.
Neil Woodyer, CEO, stated “When we acquired Los Filos, we anticipated that it would take us approximately six months – Q2 and Q3 – to transition the mine and to operate it in the way we believed it should be. We also expected that during this transition phase we would plan the development of the Bermejal Underground Mine expansion project. We are now half-way through this period and we have made very good progress. Furthermore, we now expect significant production and cost improvements will be reflected in the results of Q4 and onwards.”
Woodyer noted that whilst both open pit and underground mining activities have shown significant improvements, gold production in Q2 was affected by mine planning and heap leach pad management issues. He said these issues will continue into Q3.
“We are focused on reducing costs, improving accountability, and generating cash flow and we are implementing several sustainable operational changes under a substantially new mine management team at site,” he said.
Leagold has also started two capital investment projects – refurbishing and installing an agglomeration drum at an estimated cost of $1.3 million and extending the conveyors to deliver crushed ore more efficiently to heap leach Pad 2 at an estimated cost of $5 million. These capital projects are expected to improve production and cost performance starting in 2018.
“We are also completing a comprehensive review of the Los Filos current operating plan and expect to be able to provide full guidance on H2 2017 production and costs in mid-August, when we report our Q2 financial results,” Woodyer remarked.
The Bermejal Underground expansion project is progressing well with the positive results being received from the infill and step-out exploration drilling program and with engineering studies preparing for underground development.
Mining magnate, Frank Giustra, Chairman, was one of the founders of Leagold Mining. There are 151,316,959 shares issued and outstanding with 17,131,695 shares reserved for issuance.