Alamos Gold (TSX: AGI; NYSE: AGI) is spending about a billion dollars to become the lowest-cost producer in Canada within three years.
The target is US$576 per oz. all-in sustaining costs at the Island underground mine northeast of Lake Superior in Ontario. As part of a US$756 million phase 3+ expansion, crews are sinking a shaft nearly 1,400 metres deep to slash the time it takes to get to the rock face from nearly an hour and a half to seven minutes. That aims to help double milling capacity to 2,400 tonnes per day.
“It’s the efficiency of being able to get our workforce to the workplace and back on the tools faster,” Luc Guimond, chief operating officer of Alamos, said in an interview at Island, about 80 km north of Wawa. “You centralize your infrastructure, which is your shaft, to your ore body.”
Alamos is investing to take advantage of almost tripling Island’s reserves and resources to 5.3 million oz. since acquiring the site for $US600 million in 2017. It’s part of a larger plan to more than double the company’s annual gold production at Island to 287,000 oz. in 2026 after the expansion. Total output, including the Young-Davidson underground mine in northeast Ontario and the Mulatos mine in Mexico, is forecast at about 600,000 oz. per year after Island’s upgrade.
Free cash flow will rise “significantly” more than the current $150 million a year, chief financial officer Greg Fisher said. Net present value is forecast to jump nearly a third to $2 billion at a 5% discount rate, he said.
