Alamos Gold to build new mine in Mexico

La Yaqui Grande is located only 7km from the existing Mulatos operation, pictured here. (Image courtesy of Alamos Gold.)

Canadian miner Alamos Gold (TSX: AGI) has decided to go ahead with plans to build La Yaqui Grande gold mine in Mexico, following results from a positive internal economic study.

The announcement comes on the heels of the company’s recent decision to begin phase three expansion at the Island Gold mine in Ontario, which is expected to boost Alamos’ output by 72%. 

Initial production at La Yaqui Grande is slated for the second half of 2022

Initial production at La Yaqui Grande, located 7km from the miner’s existing Mulatos operation, is slated for the second half of 2022.

The study estimates an initial investment of $137 million. At a $1,750 per ounce gold price, Alamos said Mulatos was expected to self-finance La Yaqui Grande’s development.

Average annual gold production at the five-year mine is expected to be 123,000 ounces, with all-in sustaining costs at $578 per ounce.

Low-cost, high-return

Alamos Gold president and chief executive, John McCluskey, said La Yaqui Grande represents the company’s next low-cost, high-return project in Sonora’s Mulatos district.

The project is adjacent to the past-producing La Yaqui Phase I operation and will be developed over the next 24 months with an independent heap leach pad and crushing circuit.

La Yaqui Grande received all necessary permits, including the final environmental impact assessment and a change of land use authorization in 2019.

Gold’s record run to almost $2,000 an ounce has injected fresh cash flows and driven a surge in shares of bullion producers. Analysts believe the ongoing rally will become a new test of discipline for industry actors, who embarked on a spending a spree about decade ago and then paid for it when gold prices nosedived.