Leagold said restarting Santa Luz mine in Brazil requires $82 million

Santa Luz is a fully constructed open pit mine, which originally started production mid-2013 but was placed on care and maintenance in 2014 to focus on optimizing gold recoveries. (Image courtesy of Leagold Mining.)

Canada’s Leagold Mining (TSX:LMC), which acquired the Santa Luz gold project in Brazil after taking over Briogold to build a mid-sized gold producer in Latin America, said restarting the mine would cost $82 million.

Delivering the results of an updated feasibility study for the asset, which has been shut down since 2014, the Vancouver-based miner said Santa Luz could produce 1.06 million ounces of gold annually over an 11-year mine life.

Considering an average price for gold of $1,200 per ounce, the mine could generate net cash flow of almost $302 million during its operative life, the company said.

Santa Luz is a fully constructed open pit gold mine, which originally started production mid-2013 but was placed on care and maintenance in 2014

It would also require ten months of construction and a retrofitting of the plant for gold recovery using resin, rather than carbon.

Resin technology for gold recovery has been used at mines in South Africa, Nevada, Malaysia and in Russia.

Leagold’s priority, however, is to optimize the three operating mines it has in Brazil, before making a decision on Santa Luz.

The Santa Luz plan is to include a phased open-pit mining schedule. This mine schedule starts with a low-strip-ratio pit design that is included within the full mine plan, which allows for future decision points that may also include further upside potential from underground mining.

All necessary licences and permits are in place for construction and the resumption of operations, with only minor adjustments needed with respect to the updated plans for modifying the existing tailings facilities, the company said.

Chief executive officer Neil Woodyer said another key next step for Leagold was the completion of a site-wide review of its Los Filos mine in Mexico, with several studies nearing completion related to the Bermejal underground mine, a potential carbon-in-leach plant, and an enlarged Los Filos open-pit mine plan.

Early this month, the company had to temporarily shut down its Riacho dos Machados (RDM) mine in Brazil as a result of continued drought conditions in the country’s Minas Gerais State.

The Latin America-focused miner plans to resume operations there in early December, with the commissioning of the grid powerline project.