A feasibility study on Alamos Gold Inc.'s Lynn Lake gold project defined an after-tax net present value of US$123.4 million, at a 5% discount rate, and an internal rate of return of 12.5%, according to a Dec. 14 news release.
The Lynn Lake project in northern Manitoba comprises the MacLellan deposit and the Gordon deposit, which forms part of the Farley Lake property.
Total production is pegged at 1.5 million ounces of gold and 1.3 million ounces of silver over a 10.4-year mine life, with all-in sustaining costs of US$745/oz of gold sold, net byproduct credits.
Preproduction CapEx is expected to come in at US$338 million with payback in 4.6 years, assuming a gold price of US$1,250/oz. Sustaining CapEx is estimated at an additional US$126.6 million, with a further US$21.1 million in reclamation costs for total CapEx of US$485.6 million.
The study incorporates an initial reserves estimate, with proven and probable reserves totaling 26.8 million tonnes grading 1.89 g/t of gold and 2.99 g/t of silver for 1.6 million ounces of gold and 2.6 million ounces of silver.
The estimate uses cutoffs of 0.69 g/t of gold for the Gordon deposit and 0.47 g/t of gold equivalent for the MacLellan deposit as well as metal prices of US$1,250/oz of gold and US$15/oz of silver.
Alamos Gold said it has identified several opportunities to boost the project's overall economics through an evaluation of a smaller, higher-grade mine plan, using contract miners and incorporating recent exploration successes.
The company, which is working on an environmental impact study after receiving final guidelines in November, expects the permitting process for Lynn Lake to take two years, with a further two years anticipated for construction.