Leagold update sees potential for reserve addition at Los Filos

Los Filos open pit gold mine 230 km south of Mexico City, Mexico.

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Leagold Mining Corp. [LMC-TSX; LMCNF-OTCQX] on FridayMarch 9 released an updated technical report for its Los Filos gold mine in Mexico. Notable highlights are as follows:

  • An increase in proven and probable reserves to 2.7 million ounces gold, up from the previous estimate of 1.6 million ounces, net of mining depletion and excluding the Bermejal underground resource.
  • Life of mine sales of 1.9 million ounces gold, up from 1 million ounces.
  • An increase in the open pit gold grade to 1.05 g/t gold, from 0.72 g/t gold.
  • Life-of-mine cash costs are slightly higher, rising to $767/oz from $734/oz. The estimated all in sustaining cost is now US $810/oz, versus $803/oz previously
  • The net effect improves the forecast life-of-mine after-tax cash flow to $550 million, up from $323 million previously.
Leagold Mining’s Los Filos open pit gold mine 230 km south of Mexico City, Mexico. Source: Leagold Mining Corp.

“We view these changes positively as we believe this highlights the potential for additions to Los Filos reserves and production owing to the massive resource base there (11.5 million ounces gold in the measured and indicated category, plus a further 5.7 million ounces in the inferred category),” wrote Scotiabank in a research report.

Furthermore, the latest reserve update excludes upside from the Bermejal underground project and/or better recoveries from a possible carbon in leach processing plant.

By leveraging the proven track record of its management team and strong Latin American relationships, Leagold is aiming to build a mid-tier gold producer with a focus on opportunities in Latin America.

The Los Filos operation is located 230 km south of Mexico City and is accessible by paved roads and private airstrip.

It consists of 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.

The Los Filos open pit operation began production in 2008. Gold is recovered from crushed and run-of-mine ore via a conventional, low-cost heap leach and ADR (adsorption-desorption-recovery) process.

With full-year gold production of 191,195 ounces, Leagold delivered in the mid-point of 2017 guidance range of between 185,000 and 200,000 ounces.

During 2018, Leagold will continue to focus on the advancement of the Bermejal Underground expansion project at the Los Filos mine.  In 2017, Leagold completed a 56,000-metre infill and step-out drilling program, completed a portal and decline trade-off analysis and commenced the development of an exploration portal and ramp.

The Bermejal Underground expansion project has a measured and indicated resource of 2.1 million ounces of gold at an average of 5.96 g/t. Bermejal is currently in the mine design phase in preparation for declaration of reserves in mid-2018.

On Friday, Leagold shares eased 0.35% or $0.01 to $2.82. The 52-week range is $3.48 and $2.27.

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