TSX- and NYSE-listed Yamana Gold says its Phase 2 expansion project for the Jacobina mine, in Brazil, has reaffirmed the mine as a low-cost and long-life asset with significant value.

The Phase 2 expansion plan builds on the success of the company’s Phase 1 optimisation project, which targeted a sustained throughput of 6 500 t/d and yearly production of 175 000 oz.

Phase 2 outlines an increase in throughput to 8 500 t/d, which will be achieved through the installation of an additional grinding line and incremental upgrades to the crushing and gravity circuits.

The Phase 2 expansion will ramp up yearly gold production to 230 000 oz by 2023, at an average feed grade of 2.40 g/t gold. This represents a 31% production increase compared with Phase 1.

The total project capital costs are estimated at $57-million, of which $35-million relates to the processing plant, $14-million for underground mining and $8-million for infrastructure.

The mine achieved the Phase 1 objective of processing 6 500 t/d in the first quarter of the year, while it will complete an updated Jacobina technical report later in May that provides more details about the Phase 2 expansion project.

Detailed engineering for the Phase 2 expansion is currently scheduled to start during the second half of the year, and would be completed by early 2023.

An incremental increase in throughput to 7 000 t/d can be achieved in 2022 after upgrading the crushing circuit. Yamana says the critical path for the Phase 2 expansion is in the grinding area, as the ball mill is a long lead-time item.

Meanwhile, Yamana has applied for permits and expects them to be issued by late 2021, within the timeframes currently assumed for implementation of Phase 2. The permit application is for higher throughput than contemplated in Phase 2 to ensure further flexibility.

The company is already permitted for throughput of up to 7 500 t/d.

The Phase 2 expansion project’s prefeasibility study is based on the mine’s current mineral reserves and includes a life-of-mine of 11.5 years from the start of 2020. It also cites an after-tax net present value (NPV) of $777-million, assuming a $1 250/oz gold price and a net present value of $1.23-billion at a $1 550/oz gold price.

There is also an extended mine plan option, which considers an additional 9.5-million tonnes of plant feed at an average grade of 2.40 g/t gold, assuming the successful conversion of mineral resources.

In this scenario, the mine life increases to 14.5 years and outlines a NPV of $993-million, assuming a $1 250/oz gold price, or a NPV of $1.54-billion at a $1 550/oz gold price.

Currently, the Jacobina mine has a proven mineral reserve of 20-million tonnes, grading 2.29 g/t gold for a contained 1.5-million ounces.