Following further exploration success, Alamos Gold Inc has upgraded its expansion plans for the Island Gold mine in Ontario, Canada.

In the results of the Phase 3+ Expansion Study for Island, the company outlined a larger, more profitable and valuable operation than the Phase III Expansion Study released in 2020. This 2020 iteration looked to expand throughput to 2,000 t/d, from 1,200 t/d, through a shaft and paste plant build, costing $1.07 billion. It would result in output rising to 236,000 oz/y starting in 2025 at mine-site all-in sustaining costs of $534/oz.

Based on the results of the P3+ Expansion Study, the company says it is now proceeding with an expansion of the operation to 2,400 t/d.

This development would see average annual gold production of 287,000 oz, starting in 2026 upon completion of the sinking and equipping of a 1,373-m-deep shaft. This represents a 22% increase from the previous study and a 121% increase from the mid-point of 2022 production guidance of 130,000 oz.

While the growth capital of $756 million and sustaining capital of $777 million are both up from the 2020 study – reflecting the expansion, a larger mineable resource, and industry-wide inflation – the total capital intensity associated with the new plan has decreased 4% to $344/oz reflecting the larger mineable resource with increased ounces per vertical metre.

This infrastructure was all incorporated into the 2020 study with several scope changes to accommodate the 20% increase in production rates to 2,400 t/d including a larger mill expansion and paste plant, as well as accelerated development to support the higher mining rates. The Phase 3+ Expansion also includes 30% more development over the mine life to accommodate the 43% larger mineable resource.

Following the completion of the expansion in 2026, the operation will transition from trucking ore and waste to skipping ore and waste to surface through the new shaft infrastructure, driving production higher and costs significantly lower.

With no significant capital expected to be spent on the company’s other development project, Lynn Lake, until the P3+ Expansion is well underway, Alamos said it is well positioned to fund the expansion internally while generating strong free cash flow over the next several years.

John A McCluskey, President and Chief Executive Officer, said: “Island Gold continues to grow in every sense with our planned Phase 3+ Expansion driving the value of Island Gold to $2 billion at current gold prices. Mineral reserves and resources have increased to 5.1 Moz, supporting the Phase 3+ increase in production rates, which will create a bigger, longer-life, more profitable and valuable operation.

“As a producing mine with a well-understood cost structure, this expansion is low risk from an execution perspective, and has a significantly reduced carbon footprint. The exploration story continues to unfold with a mineral reserve and resource base that has nearly tripled over the past four years, and with the deposit open laterally and down-plunge, we expect Island Gold will be one of the lowest cost and most profitable mines for decades to come.”