Toronto-listed Alamos Gold is proceeding with an expansion of its Island Gold mine, in Ontario, which will significantly increase output, lower costs and turn it even more profitable.

Alamos points out that Island Gold is already one of the most profitable mines in Canada.

“The Phase 3 expansion study showcases the growing value of Island Gold," says president and CEO John McCluskey, announcing that the company will go-ahead with the $1.07-billion shaft expansion capital project.

The expansion from 1 200 t/d to 2 000 t/d will require $514-million in growth capital and $552-million in sustaining capital. The expansion involves various infrastructure investments, including the installation of a shaft, paste plant, and an expansion of the mill and tailings facility.

Following the completion of the shaft construction in 2025, 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.

The average gold production is expected to increase by about 72% to 236 000 oz/y, while total cash costs will fall by 19% to $403/oz and the all-in sustaining cost will shrink by 30% to $534/oz.

The study calculated an after-tax net present value of $1.02-billion, at a 5% discount rate, and an after-tax internal rate of return of 17%, using a gold price of $1 450/oz.

Based on a mineable resource of 9.6-million tonnes, grading 10.45 g/t gold, the expansion will ensure a 16-year mine life.

“We acquired Island Gold in 2017 at a cost of approximately $600-million when it had 1.8-million ounces of mineral reserves and resources. This high-grade deposit has more than doubled to 3.7-million ounces and we expect further growth yet,” said McCluskey.

Alamos recently completed the lower mine expansion at its Young-Davidson mine, also in Ontario, with the commissioning of the Northgate shaft.

In addition to the Northgate shaft, the underground crusher and conveyor system have also been successfully commissioned. Mining rates are expected to ramp up through the second half of the year to 7 500 t/d by the end of 2020.