Alamos Gold Announces Updated Feasibility Study for the Lynn Lake Project Outlining Larger, Longer-Life, Low-Cost Operation in Canada with Attractive Economics and Significant Exploration Upside
F O R I M M E D I A T E R E L E A S E
ALAMOS GOLD INC.
Brookfield Place, 181 Bay Street, Suite 3910, P.O. Box #823 Toronto, Ontario, Canada M5J 2T3 Telephone: (416) 368-9932 or 1 (866) 788-8801
All amounts are in United States dollars, unless otherwise stated.
Alamos Gold Announces Updated Feasibility Study for the Lynn Lake Project Outlining Larger, Longer-Life, Low-Cost Operation in Canada with Attractive Economics and Significant Exploration Upside
Toronto, Ontario (August 2, 2023) – Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported results from the updated Feasibility Study (“2023 Study”) conducted on the Lynn Lake project (“Lynn Lake”), located in Manitoba, Canada. The 2023 Study replaces the previous Feasibility Study completed in 2017 (“2017 Study”) and incorporates a 44% larger Mineral Reserve and 14% increase in milling rates to 8,000 tonnes per day (“tpd”) supporting a larger, longer-life, low-cost operation.
The 2023 Study has been updated to reflect the current costing environment, as well as a significant amount of additional engineering, on-site geotechnical investigation work, and requirements outlined during the permitting process with the Environmental Impact Statement ("EIS”) granted in March 2023. All amounts are in United States dollars, unless otherwise stated.
2023 Study Highlights:
Higher production: average annual gold production of 207,000 ounces over the first five years and 176,000 ounces over the initial 10 years
- The 10-year average represents a 23% increase over the annual average of 143,000 ounces in the 2017 Study
Low-cost profile: average mine-site all-in sustaining costs of $699 per ounce over the first 10-years and $814 per ounce over the life of mine
- Average mine-site all-in sustaining costs decreased 6% from the 2017 Study over the initial 10-years with economies of scale provided by the larger operation, and higher average grades, more than offsetting cost inflation
Larger, longer-life operation supported by 44% larger Mineral Reserve with further upside potential
- 44% larger Mineral Reserve totaling 2.3 million ounces grading 1.52 grams per tonne of gold (“g/t Au”) (47.6 million tonnes (“mt”))
- 17-year mine life, up from 10 years in the 2017 Study
- Life of mine production of 2.2 million ounces, a 46% increase from 1.5 million ounces reported in 2017
Modest increase in capital intensity with larger operation and 46% increase in life of mine production partly offsetting inflation
- Initial capital of $632 million, and life of mine capital including sustaining capital and reclamation of $832 million, increased from the 2017 Study reflecting inflation and scope changes with the larger operation and Mineral Reserve
- Total life of mine capital of $381 per ounce increased 17% from $325 per ounce in the 2017 Study with the larger Mineral Reserve and economies of scale partly offsetting the significant industry-wide capital inflation experienced since 2017
Project de-risked given advanced level of engineering, additional geotechnical work, and EIS approval
- Detailed engineering 55% complete; basic engineering 100% complete
- EIS approval and Provincial licenses received in March 2023 with requirements outlined through the permitting process incorporated into the 2023 Study
- Extensive geotechnical drilling, test pits, and ground penetrating radar employed across the project area including the mill, open pits and tailings locations providing higher degree of confidence around required earthworks, tailings design and mine plan
Attractive economics with significant long-term exploration upside potential
- After-tax net present value (“NPV”) (5%) of $428 million (base case gold price assumption of $1,675 per ounce and USD/CAD foreign exchange rate of $0.75:1)
- After-tax internal rate of return (“IRR”) of 17%
- After-tax NPV (5%) of $670 million, and an after-tax IRR of 22%, at current gold prices of approximately $1,950 per ounce
- Payback of less than four years at the base case gold price of $1,675 per ounce and less than three years at current gold prices
Significant near-mine and regional exploration upside potential
- The Lynn Lake project encompasses most of the east-trending, 125 km long, Lynn Lake Greenstone Belt in northwestern Manitoba, with a total of 58,000 hectares of mineral tenure, representing significant exploration potential, including:
- Gordon deposit: higher-grade gold mineralization extended outside of Mineral Reserves and Resources in the northeastern extent of the planned Gordon pit, in an area modeled as waste in the 2023 Study
- Burnt Timber and Linkwood: potential for smaller, higher-grade Mineral Resource that could be trucked and processed at the planned MacLellan mill later in the mine life
- Regional targets: extensive pipeline of highly prospective exploration targets at various stages of exploration across the Lynn Lake greenstone belt. This includes the Maynard and Tulune targets where ongoing drilling continues to intersect gold mineralization. Both targets are within trucking distance of the MacLellan mill
Low Greenhouse Gas (“GHG”) emission intensity
- 18% decrease in GHG emissions per ounce from the 2017 Study reflecting the incorporation of electric shovels and drills at MacLellan, and productivity improvements with the larger operation
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- 58% lower emissions per ounce produced than the industry average. The project will be connected to Manitoba’s electric grid, of which nearly all electricity is produced from clean, renewable power, supporting the company-wide target of a 30% reduction in absolute GHG emissions by 2030
Fully funded growth
- As outlined previously, the Company does not anticipate spending any significant capital on developing the Lynn Lake project until the Phase 3+ Expansion at Island Gold is well advanced
- With $189 million of cash as of June 30, 2023, no debt, strong ongoing free cash flow generation, and significant free cash flow growth expected from Island Gold in 2026 and beyond, the Company is well positioned to fund development of Lynn Lake internally
“The 2023 Study has confirmed Lynn Lake as a long-life, low-cost project in Canada, with attractive economics, and significant upside potential. Good projects are becoming increasingly rare, especially within top jurisdictions like Canada, highlighting the attractiveness of Lynn Lake. We have completed an extensive amount of additional engineering, permitting and other work over the last several years to de-risk the project and assess the exploration potential. We’ve increased Mineral Reserves by 44% since the 2017 Study, and as outlined in the exploration update earlier this week, we see excellent potential for that growth to continue. This includes the Burnt Timber and Linkwood deposits that were not factored into the 2023 Study, and a number of other high-value regional targets where we continue to intersect gold mineralization in proximity to the planned MacLellan mill,” said John A. McCluskey, President and Chief Executive Officer.
“Our current priority is the Phase 3+ Expansion at Island Gold with Lynn Lake an important part of our strong longer-term outlook. Through Lynn Lake, Island Gold, and Young-Davidson, we have three high-quality assets that can support over 650,000 ounces of annual production in Canada, at all-in sustaining costs below $1,000 per ounce over the long-term,” Mr.
McCluskey added.
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| 2023 Feasibility Study Highlights | |
| Production | |
| Mine life (years) | 16.5 |
| Total gold production (000 ounces) | 2,185 |
| Total silver production (000 ounces) | 2,623 |
| Average annual gold production | |
| Years 1 to 5 (000 ounces) | 207 |
| Years 1 to 10 (000 ounces) | 176 |
| Years 1 to 16 (000 ounces) | 135 |
| Total ore mined (000 tonnes) | 47,607 |
| Total waste mined (000 tonnes) | 324,215 |
| Total material mined (000 tones) | 371,822 |
| Total waste-to-ore ratio | 6.81 |
| Average gold grade (grams per tonne) | 1.52 |
| Average silver grade (grams per tonne) | 3.57 |
| Gold Recovery (%) | 93.7% |
| Silver Recovery (%) | 48.0% |
| Average mill throughput (tpd) | 8,000 |
| Operating Costs | |
| Total cost per tonne of ore (C$)1 | $44.21 |
| Total cash cost (per ounce sold)2,3 | $722 |
| Mine-site all-in sustaining cost (per ounce sold)2,3 | |
| Years 1 to 5 (per ounce sold) | $629 |
| Years 1 to 10 (per ounce sold) | $699 |
| Years 1 to 17 (per ounce sold) | $814 |
| Capital Costs (millions) | |
| Initial capital expenditure | $632 |
| Sustaining capital expenditure | $174 |
| Reclamation costs | $27 |
| Total capital expenditure – life of mine | $832 |
| Total capital expenditure (per ounce sold) – life of mine3 | $381 |
| Base Case Economic Analysis: $1,675 per ounce Gold Price | |
| (USD/CAD foreign exchange rate of $0.75:1) | |
| IRR (after-tax) | 17% |
| NPV @ 0% discount rate (millions, after-tax) | $875 |
| NPV @ 5% discount rate (millions, after-tax) | $428 |
| Payback (years) | 3.7 |
| Economic Analysis at $1,950 per ounce Gold Price | |
| (USD/CAD foreign exchange rate of $0.75:1) | |
| IRR (after-tax) | 22% |
| NPV @ 0% discount rate (millions, after-tax) | $1,240 |
| NPV @ 5% discount rate (millions, after-tax) | $670 |
| Payback (years) | 2.7 |
1. Total unit cost per tonne (“t”) of ore includes royalties and silver as a by-product credit
2. Total cash costs and mine-site all-in sustaining costs include royalties and silver as a by-product credit
3. Please refer to the Cautionary Notes on non-GAAP Measures and Additional GAAP Measures
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Mineral Reserves and Resources
An updated Proven and Probable Mineral Reserve totaling 47.6 mt, grading 1.52 g/t Au and 3.57 g/t Ag, containing 2.3 million ounces of gold and 5.5 million ounces of silver has been declared at Lynn Lake. This represents a 44% increase from the 1.6 million ounces included in the 2017 Study, reflecting the successful conversion of Measured, Indicated and Inferred Mineral Resources at the Gordon and MacLellan deposits, and 13% increase from the end of 2022 reflecting the higher gold price assumption. Only Mineral Reserves have been incorporated into the 2023 Study mine plan and economic analysis.
Mineral Reserves – Effective as of June 30, 2023
| Classification | Tonnage (000’s) | Au Grade (g/t) | Ag Grade (g/t) | Au Oz | Ag Oz | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Contained | Contained | |||||||||||
| (000’s) | (000’s) | |||||||||||
| MacLellan | Proven | 16,498 | 1.66 | 5.31 | 883 | 2,815 | ||||||
| Probable | 23,240 | 1.12 | 3.55 | 834 | 2,650 | |||||||
| Proven & Probable | 39,738 | 1.34 | 4.28 | 1,717 | 5,464 | |||||||
| Gordon | Proven | 3,502 | 2.63 | - | 296 | - | ||||||
| Probable | 4,370 | 2.27 | - | 319 | - | |||||||
| Proven & Probable | 7,873 | 2.43 | - | 615 | - | |||||||
| Total Lynn Lake | Proven | 20,000 | 1.83 | 4.38 | 1,179 | 2,815 | ||||||
| Probable | 27,610 | 1.30 | 2.98 | 1,153 | 2,650 | |||||||
| Total Proven and Probable | 47,610 | 1.52 | 3.57 | 2,332 | 5,464 |
- Mineral Reserves reported are consistent with the CIM Definition Standards for Mineral Resources and Mineral Reserves.
• Mineral Reserves are reported to a cut-off grade of 0.796 Au g/t at Gordon and 0.355 Au g/t for MacLellan.
- The cut-off grades are based on a gold price of US$1,250/oz Au at Gordon, US$1,600/oz Au at MacLellan.
- Silver is not used in the cut-off grade calculation.
- Metallurgical Au recovery is 92.4% for Gordon and a feed grade-based formula for MacLellan.
- Totals may not add up due to rounding.
- Chris Bostwick, FAusIMM, Senior Vice President, Technical Services is the Qualified Person for the Mineral Reserve estimate. Mr. Bostwick is a Qualified Person within the meaning of Canadian Securities Administrator's National Instrument 43-101 ("NI 43-101").
Mineral Resources for the Gordon and MacLellan deposits detailed below have not been included in the mine plan but represent potential upside through their incorporation into the mine plan with higher metal prices and additional infill drilling.
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Open Pit Mineral Resources – Effective as of June 30, 2023
| MacLellan | ||||||||
|---|---|---|---|---|---|---|---|---|
| Category | Tonnage (000’s) | Au Grade (g/t) | Ag Grade (g/t) | Au oz | Ag oz | |||
| Contained | Contained | |||||||
| (000’s) | (000’s) | |||||||
| Measured Indicated | 786 3,200 | 1.63 1.52 | 3.09 3.44 | 41 156 | 78 354 | |||
| Measured & Indicated | 3,986 | 1.54 | 3.37 | 197 | 432 | |||
| Inferred | 4,192 | 0.98 | 1.49 | 133 | 201 |
| Gordon | ||||||||
|---|---|---|---|---|---|---|---|---|
| Category | Tonnage (000’s) | Au Grade (g/t) | Ag Grade (g/t) | Au oz | Ag oz | |||
| Contained | Contained | |||||||
| (000’s) | (000’s) | |||||||
| Measured Indicated | 571 1,286 | 0.84 1.20 | - - | 15 50 | - - | |||
| Measured & Indicated | 1,857 | 1.09 | - | 65 | - | |||
| Inferred | 51 | 0.98 | - | 2 | - |
| Total | ||||||||
|---|---|---|---|---|---|---|---|---|
| Category | Tonnage (000’s) | Au Grade (g/t) | Ag Grade (g/t) | Au oz | Ag oz | |||
| Contained | Contained | |||||||
| (000’s) | (000’s) | |||||||
| Measured Indicated | 1,357 4,486 | 1.29 1.43 | 1.79 2.45 | 56 206 | 78 354 | |||
| Measured & Indicated | 5,843 | 1.40 | 2.30 | 262 | 432 | |||
| Inferred | 4,243 | 0.98 | 1.47 | 134 | 201 |
- Mineral Resources reported are consistent with the CIM Definition Standards for Mineral Resources and Mineral Reserves.
- The Mineral Resources are reported at an assumed gold price of US$1,600/oz, and an assumed silver price of US$23.00/oz.
- Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into Mineral Reserves.
- Open pit Mineral Resources are stated as contained within a potentially economic open pit above a 0.355 g/t AuEq cut-off for MacLellan and 0.621 g/t Au for Gordon and includes external dilution at zero grade outside the constraining Au solids.
- Contained Au and Ag ounces are in-situ and do not include metallurgical recovery losses.
- Mineral Resources are exclusive of Mineral Reserves.
- Totals may not add up due to rounding.
- Jeffrey Volk, CPG, FAusIMM, Director of Reserves and Resources for Alamos Gold Inc is the Qualified Person for the Mineral Resource estimate. Mr. Volk is a Qualified Person within the meaning of Canadian Securities Administrator's National Instrument 43-101 ("NI 43-101").
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Economic Analysis
Lynn Lake’s estimated base case after-tax IRR is 17% and after-tax NPV (5%) is $428 million assuming a gold price of $1,675 per ounce and USD/CAD foreign exchange rate of $0.75:1. Payback is expected to be achieved in 3.7 years under the base case scenario.
Assuming spot gold prices of approximately $1,950 per ounce, the after-tax NPV (5%) increases to $670 million and after-tax IRR increases to 22%, with the payback decreasing to 2.7 years.
Lynn Lake’s economics were estimated as part of the Feasibility Study process and incorporate only Proven and Probable Mineral Reserves. The project economics are sensitive to metal price assumptions, foreign exchange, and input costs as detailed in the tables below.
Lynn Lake After-Tax NPV (5%) Sensitivity ($ Millions)
| -10% | -5% | Base Case | 5% | 10% | |||||
| Gold Price | $282.4 | $352.2 | $427.9 | $503.3 | $576.8 | ||||
| Canadian Dollar | $535.9 | $482.8 | $427.9 | $372.5 | $316.1 | ||||
| Capital Costs | $476.3 | $452.8 | $427.9 | $403.8 | $379.9 | ||||
| Operating Costs | $494.5 | $462.1 | $427.9 | $394.5 | $361.2 |
Lynn Lake After-Tax NPV (5%) and IRR Sensitivity to Gold Price
| Gold Price ($/oz) | After-Tax NPV5% ($M) | After-Tax IRR (%) | |||
|---|---|---|---|---|---|
| $1,500 | $275.6 | 12.6% | |||
| $1,600 | $360.3 | 14.8% | |||
| $1,675 | $427.9 | 16.6% | |||
| $1,750 | $495.8 | 18.2% | |||
| $1,850 | $583.5 | 20.3% | |||
| $1,950 | $670.3 | 22.4% |
Project Overview
The Lynn Lake project is comprised of the Gordon and MacLellan deposits which are located approximately 30 kilometres (“km”) apart (straight line). The two deposits will be mined using conventional open pit mining methods with a centralized processing plant and tailings management facility to be located at MacLellan.
The 2023 Study includes a number of scope changes from the 2017 Study to support a larger operation and 44% increase in Mineral Reserves. The scope changes include a larger mobile fleet to support the higher mining rates, and a larger mill with a 14% increase in throughput rates to 8,000 tpd. The larger operation and Mineral Reserve support a significantly longer mine life of 17 years and a 23% increase in average annual production over the first 10 years.
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Annual Gold Production (oz Au)
300,000
250,000
200,000
150,000
100,000
50,000
Y-2 Y-1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
2017 Study 2023 Study
Project Significantly De-Risked Given Advanced Level of Engineering, Permitting and other Geotechnical Work Completed to Date
Since the 2017 Study, a significant amount of additional work has been completed and progress made on the Lynn Lake project, which has significantly de-risked the project and provided a high degree of confidence in the capital and operating cost estimates. This includes:
- Basic engineering 100% complete with detailed engineering underway and 55% complete
- Geotechnical investigations, including drilling and test pitting, to support designs for the MacLellan and Gordon pits, waste stockpiles, tailings dam, process plant, site access roads, and water management infrastructure
- Geophysical (Ground Penetrating Radar) investigations completed to map bedrock depth beneath the process plant infrastructure
- Mill relocated to reduce the haulage distance, allow site access via the existing road, reduce the overall footprint of the site, improve the construction schedule, reduce the flood risk, and minimize the amount of earthworks needed due to the elevated topography and shallow bedrock of the chosen location
- With EIS approval received in March 2023, the 2023 Study incorporates the design and costs associated with the EIS process and Provincial licenses/Federal Decision Statement and associated Conditions, including for:
- Fugitive air emissions
- Noise
- The management of acid-generating and potentially acid generating material
- Site reclamation and restoration
- Surface and groundwater, vegetation and wildlife monitoring and reporting
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- Contact and noncontact water management including the use of lined water collection ponds at both sites
Mining – Expanded Mining Fleet
Relative to the 2017 Study, mining rates have been accelerated over the initial five years of the operation to support access to higher grades earlier in the mine life. The Gordon and MacLellan deposits will be developed using conventional shovel/truck open pit mining methods, with owner mining to be employed over the mine life. Concurrent mining of the Gordon and MacLellan deposits is planned for the first five years, with a two-year preproduction period at MacLellan and one year at Gordon included in capital. Given its higher grades, mining at Gordon will be accelerated with the deposit to be depleted after five years. As the Gordon pit nears depletion, mining equipment will be transferred to MacLellan and utilized over the remainder of its mine life.
The mine plan includes total mining in the range of 4 to 49 million tonnes per annum (“Mtpa”) over 11 years of mining. This includes a peak mining rate of 16 Mtpa at Gordon and 33 Mtpa at MacLellan, up from peak rates of 13 Mtpa and 25 Mtpa, respectively in the 2017 Study. A larger mining fleet will be utilised at both sites to support the higher mining rates. This includes larger 23.5 m3 hydraulic shovels at MacLellan, versus 14 m3 in the 2017 Study, and 16 x 140 t trucks hauling ore, up from 13 trucks in the 2017 Study. A larger fleet of 12 x 70 t trucks will also be utilised at Gordon, compared to 7 x 144 t trucks in the 2017 Study. The larger fleet of smaller trucks will allow for more selective mining.
At MacLellan, two drills and the two 23.5 m3 hydraulic shovels will be electric, lowering operating costs as well as reducing the operation’s carbon footprint. Ore from Gordon will be transported 55 kilometres to the MacLellan mill utilizing 43 t side dump trailers, up from 30 t trucks in the 2017 Study, resulting in fewer trucks on the road. The Company will continue to evaluate opportunities to further electrify the fleet of mobile equipment.
Processing and Infrastructure – Larger, Optimized Mill and Tailings Facility
Lynn Lake’s process plant has been designed as a conventional milling operation with a nominal capacity of 8,000 tpd. The proposed plant design is based on leach/carbon in pulp (“CIP”), and will consist of crushing, grinding, thickening, pre-aeration and leaching, CIP, cyanide detoxification, carbon elution and regeneration, and gold smelting. The size of the mill has been expanded from 7,000 tpd in the 2017 Study with a number of scope changes to support the 14% higher throughput rates. The primary crusher dump pocket has been optimized in order to have dual dump capacity, providing improved reliability and efficiency. The size of, and power to the SAG mill and ball mills have also been increased to accommodate the higher throughput rate. The fine ore storage area will consist of steel bins with apron feeders versus a covered stockpile in the 2017 Study. This will provide improved dust control, operability, and reliability. The plant layout has been optimized and two extra tanks have been added to the leach circuit, increasing circuit retention time, and thereby improving recovery.
The flow sheet incorporates the following major process operations:
- Two-stage crushing and crushed ore silo,
• Semi-autogenous grinding (SAG),
- Ball mill grinding and classification,
- Leaching and CIP adsorption,
- Desorption and gold room,
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- Tailings detoxification and disposal,
- Fresh and reclaim water supply, and
- Reagent preparation and distribution
Mill recoveries are expected to average 93.7% for gold and 48% for silver over the life of mine. This is up from 92.0% recovery for gold and consistent with the 49% recovery expected for silver in the 2017 Study. The increase in gold recovery reflects optimizations to the mill with two additional tanks added to the leach circuit providing increased circuit retention time, as well as an increased proportion of MacLellan ore which has higher recoveries than Gordon. Power to the MacLellan site, which will host all the process facilities and major infrastructure, will be supplied from Manitoba Hydro through the commercial electricity grid. The existing power line to the Town of Lynn Lake will be modified from 69 kV to 138 kV, and an 8 km 34.5 kV overhead line will be built to the MacLellan site. The Gordon site’s electrical demands will be met by two 1,000 kW diesel generators in duty/standby configuration.
The tailings management facility (“TMF”) will be constructed approximately 2 km northeast of the planned open pit and plant site at MacLellan. Additional dam raises are planned for years two, six and 12 to accommodate the life of the mining operation. The majority of operational water required for the process plant will be reclaimed from the TMF.
Electric shovels and drills will be utilized within the MacLellan open pit, and the operation will be connected to Manitoba’s electric grid, of which nearly all electricity is produced from clean, renewable power. Combined with productivity improvements through the larger operation, this is expected to drive an 18% reduction in GHG emissions per ounce relative to the 2017 Study. This will further reduce Lynn Lake’s GHG emission intensity which is expected to be 58% below the industry average and 65% below the open pit average.
Emission Intensity (tCO2e/oz Au)
0.9 0.79
0.67
0.6
0.35 0.28 0.3
0.0 Open Pit Average Industry Average 2017 Study 2023 Study
Source: S&P Global Market Intelligence, ‘Greenhouse gas and gold mines – Emissions intensities unaffected by lockdowns’, https://www.spglobal.com/marketintelligence/en/news-insights/blog/greenhouse-gas-and-gold-minesemissions-intensities-unaffected-by-lockdowns
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Operating Costs
Total cash costs are expected to average $722 per ounce and mine-site all-in sustaining costs $814 per ounce, net of silver as a by-product credit over the life of mine. Over the initial 10years of operations, mine-site all-in sustaining costs are expected to average $699 per ounce, a 6% decrease from the 2017 Study with the economies of scale from a larger, more efficient operation, and higher average grades, more than offsetting cost inflation.
Over the life of mine, mine-site all-in sustaining costs have increased 9% from the 2017 Study with the larger, more efficient operation and economies scale offsetting the majority of cost inflation, and lower average grades over a 44% larger Mineral Reserve.
Total operating costs are expected to average C$44.21 per tonne of ore processed. This includes average mining costs of C$3.04 per tonne of material mined across the Gordon and MacLellan deposits and haulage costs of C$9.43 per tonne of ore from the Gordon deposit. The breakdown of unit costs is summarized as follows.
| Operating Costs1 | C$/t | LOM US$M | ||||
|---|---|---|---|---|---|---|
| Mining2 | C$/t mined | $3.04 | $798.1 | |||
| Mining2 | C$/t ore | $22.35 | $798.1 | |||
| Haulage (Gordon ore)3 | C$/t ore | $9.43 | $55.7 | |||
| Processing | C$/t ore | $14.33 | $511.5 | |||
| G&A | C$/t ore | $7.20 | $257.1 | |||
| Refining, Transport, Royalties and Ag Credit | C$/t ore | ($1.23) | ($43.8) | |||
| TOTAL Operating Costs | C$/t ore | $44.21 | $1,578.7 | |||
| Total Cash Costs4 | US$/oz | $722 | ||||
| Mine-site All-in Sustaining Costs4 | US$/oz | $814 |
1. Operating costs exclude working capital
2. Average mining cost per tonne is for the production years
3. Haulage costs are reported per total tonne of ore from the Gordon deposit – average haulage cost is C$1.56 per tonne of total ore processed
4. Please refer to the Cautionary Notes on non-GAAP Measures and Additional GAAP Measures
Royalty
There is a capped third-party royalty on a portion of production. Based on a $1,675 gold price, the cap is expected to be reached in the first three years and will total approximately $10 million in royalty payments over that period. The project is expected to be unencumbered by third party royalties for the majority of the mine life.
Capital Costs
The initial capital cost for the Lynn Lake project is $632 million. This has increased from $338 million in the 2017 Study with the main drivers being scope changes to support the larger operation, including a 44% increase in Mineral Reserves, as well as the impact of six years of inflation. The scope changes include a larger mining fleet, tailings facility and mill to support a 14% increase in throughput rates to 8,000 tpd. The main components of the initial capital spending include pre-production mining activities, site preparation, construction of the process
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plant and tailings management facility and other onsite and offsite infrastructure. The 2023 Study assumes capital leasing of mobile equipment. The onsite pre-production period is expected to span 27 months.
Camp infrastructure to accommodate the workforce will be located on-site and will be utilized throughout the construction and operations phases.
Combined initial and sustaining capital is expected to total $832 million over the life of mine, or $381 per ounce produced. This represents a 17% increase in capital intensity from $325 per ounce in the 2017 Study with the increase in Mineral Reserves and economies of scale from a larger operation partly offsetting inflation.
A breakdown of the capital requirements is detailed as follows.
| Capital Cost ($ Millions) | |||
|---|---|---|---|
| Mining Infrastructure | $61.6 | ||
| Pre-production Mining | $30.6 | ||
| Mobile Equipment (Initial Lease Payments) | $24.7 | ||
| Process Plant | $141.8 | ||
| Utilities and Services | $34.7 | ||
| Onsite Infrastructure | $105.9 | ||
| Offsite Infrastructure | $26.9 | ||
| Tailings Management | $38.5 | ||
| Indirects | $83.2 | ||
| EPCM | $13.9 | ||
| Owner's Cost | $17.0 | ||
| Contingency | $53.0 | ||
| Total Initial Capital | $631.8 | ||
| Sustaining Capital | $173.7 | ||
| Reclamation and Closure Costs | $27.0 | ||
| Total Capital | $832.4 |
Taxes
The Lynn Lake project will be subject to provincial, federal, and mining taxes. Based on a $1,675 gold price, the operation is not expected to pay cash taxes until its third year of operation. Over the 17-year mine life, the operation is expected to pay total taxes of approximately $374 million for an effective tax rate of approximately 30%.
Permitting
In March 2023, the Company achieved a significant permitting milestone for the Lynn Lake project with a positive Decision Statement issued by the Ministry of Environment and Climate Change Canada based on the completed Federal EIS, and Environment Act Licenses issued by the Province of Manitoba.
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