Alamos drilling hints at expansion at Island Gold

New drilling results at Alamos Gold’s (TSX: AGI) Island mine in northern Ontario have returned assays as high as 95.41 grams gold per tonne over 3 metres, the company said Thursday.

That result, from the Island East (E1E) zone included 118.59 grams gold over 2.3 metres from 82.3 metres depth in hole 1015-640-12, 62.09 grams gold over 2.2 metres in hole 840-632-24 from 162 metres depth and 37.33 grams gold over 2.5 metres in hole 840-608-52 from 138 metres depth.

At the mine’s Island West (C-zone), highlights included 40.12 grams gold over 2 metres in drill hole 790-479-29 from 139.1 metres depth, 17.23 grams gold over 3 metres in 790-479-22 from 162.6 metres depth and 23.79 grams gold over 2 metres in 790-479-20 from 189.5 metres.

Mineralization in the results extended outside the reserves and resources in the two zones, which host most of the defined resource at Island Gold.

Alamos president and CEO John McCluskey said in a release that the transition from surface directional drilling to underground drilling this year has been successful as the company leveraged its underground infrastructure.

“We are extending high-grade mineralization across the lateral extent of the main Island Gold deposit while also defining and growing an increasing number of new zones within the hanging wall and footwall,” he said. “This is providing increasing operational flexibility and additional ounces that will be low-cost to develop, some of which are already being mined, highlighting the near-term opportunities,”

The results come as Alamos continues to work on its Phase 3+ expansion, a US$756 million plan that aims to double milling capacity to 2,400 tonnes per day. It includes the sinking of a shaft almost 1,400 metres deep to cut the time needed to go underground from nearly 90 minutes to just seven minutes, an expanded mill, and more electric vehicles and centralized control. Alamos expects to complete the expansion in 2026. 

BMO Capital Markets’ gold analyst Brian Quast wrote in a note on Thursday that Alamos has demonstrated strong potential for adding high-grade mineralization to its reserves and resources.

Though he said the results are a positive development, he said the main focus at Island Gold is its Phase 3+ expansion.

He gave Alamos shares an outperform rating and a price target of $19.00. Its shares were down 1.8% to $17.58 on Friday, valuing the company at $6.9 billion. Its shares traded in a 52-week range of $11.13 and $19.18.

At the Island East footwall zone, noteworthy assays included 168.03 grams gold over 3.14 metres in hole 840-632-21, 43.33 grams gold over 2 metres in hole 840-632-43 and 25.94 grams gold over 3.1 metres in hole 840-632-32.

The Island West Hanging Wall zone featured an assay grading 121.37 grams gold over 2.6 metres in hole 770-475-01.

Strong regional results

And in the region of the mine, drilling at the Pine zone about 4 km northeast of Island Gold returned an assay grading 3,441.64 grams gold over 0.67 metre, including 6,220 grams gold over 0.37 metre in hole 23IGX043; and 29.77 grams gold over 9.3 metres in hole 23IGX057, including 59.15 grams gold over 4.39 metres and 378 grams gold over 0.37 metre.

At the 88-60 zone, 7 km from Island Gold, near the historic Cline and Edwards mines, results returned 14.62 grams gold over 1.5 metres in hole 23IGX066, including 21.8 grams gold over 0.94 metre.

This year, $14 million was budgeted for exploration at Island Gold, Alamos said. A total of 45,000 metres of underground drilling has been planned at the site, with 32,459 metres completed as of Oct. 31. Another 24,649 metres of delineation drilling has been completed.

A total of 8,439 metres of regional drilling has been done this year, with a focus on advancing exploration targets outside the main Island deposit on the recently-expanded 553-sq.-km property.

With a mine life of 17 years, Island hosts 4.2 million proven and probable tonnes grading 10.8 grams gold per tonne for 1.5 million oz. contained metal, according to an update in February. It also has 1.3 million measured and indicated tonnes grading 7.1 grams gold for 291,000 oz. metal. The grade of its 8.1 million inferred tonnes increased to 13.6 grams gold for 3.5 million ounces.

The drill result news comes about a week after Argonaut Gold’s (TSX: AR) neighbouring Magino mine announced the start of commercial production, although a month behind schedule and after construction costs nearly doubled to almost $1 billion.