TORONTO — Shares in Alamos Gold Inc. are trading lower after the miner announced it would proceed with a $514 million expansion of its Island Gold mine in northern Ontario.
It says the decision is based on a study of several options that concluded the best path forward was to proceed with a mill upgrade and shaft expansion to increase ore extraction to 2,000 tonnes per day by 2025.
Alamos says the project will result in a 72 per cent increase in average annual gold production to 236,000 ounces per year starting in 2025.
It says the expansion will result in a 19 per cent decline in average total cash costs to $403 per ounce of gold and a 30 per cent decrease in sustaining costs to $534 per ounce.
The project is expected to double the mine life to 16 years.
Island Gold’s high-grade deposit has more than doubled to 3.7 million ounces, with more growth expected, since Alamos bought it for about $600 million in 2017.
“Already one of the most profitable mines in Canada, the expansion will increase production, lower costs, and make this operation even more profitable. The expansion will also best position the operation to benefit from additional exploration success,” stated president and CEO John McCluskey.
The company’s shares lost 20 cents or 1.4 per cent at $13.95 in morning trading on the Toronto Stock Exchange.
This report by The Canadian Press was first published July 15, 2020.
Companies in this story: (TSX:AGI)
The Canadian Press