Equinox Gold sells Koricancha mill, completes Castle PFS

Equinox Gold (TSXV: EQX; US-OTC: EQXGF) is selling its Koricancha mill in Peru to Inca One Gold (TSXV: IO) in a $16.3 million cash and share deal.

The mill is about 50 km from Inca One’s ore processing facility.

Under the agreement, Equinox will receive $9 million in staged payments and $6 million in common shares of Inca One.

In addition, a 3.5% stream on gold production from Koricancha will be terminated with $2.8 million in common shares of Inca One given to the stream holder along with $2.5 million in cash two years after closing.

The carbon-in-leach gold circuit is operating at 150 tonnes per day but is permitted for 350 tonnes per day.

The mill is ten minutes from the Pan American Highway within the Nazca-Ocona gold belt in southern Peru’s Arequipa region.

Koricancha was commissioned in July 2015 and entered commercial production in October of that year.

In other news, Equinox has completed a prefeasibility study on its 100%-owned Castle gold mine project in California.

The study envisioned a heap leach gold operation producing 2.8 million oz. of gold over a mine life of sixteen years. Based on a gold price of US$1,250 per oz., the mine would generate an after-tax net present value at a 5% discount of US$406 million and an after internal rate of return of 20.1%.

The project is forecast to generate average annual after-tax net operating cash flow of US$83 million with cumulative life-of-mine after-tax net cash flow of US$865 million.

All-in sustaining costs in years one to three (Phase 1) would be US$980 per oz. and in years four to sixteen (Phase 2) would fall to US$752 per oz.

Phase 1 capital costs would reach US$52 million and Phase 2 US$295 million, with life-of-mine sustaining costs of US$142 million.

During phase 1, the mine is expected to produce an annual average of 45,000 oz. gold and during phase 2, production will average 203,000 oz. gold a year.

“Castle Mountain is Equinox Gold’s second cornerstone mine that, by itself, will generate more than one billion dollars of pre-tax cash flow at current gold prices,” Ross Beaty, Equinox Gold’s chairman, said in a press release.

Between 1992 and 2004, the Castle Gold Mine produced more than one million ounces of gold. Production was suspended due to low gold prices.