Equinox feasibility confirms CIL plant could extend Los Filos mine life to 2036

Equinox Gold (TSX: EQX) has released results of a feasibility study for an expansion at its 100%-owned Los Filos mine complex located in Mexico, which would see the operation extended to 2036 on the back of a substantial increase in its gold reserves.

Currently, the Los Filos operations consist of both run-of-mine and crushed ore heap leach facilities. With continued development of the Bermejal Underground deposit and construction of a 10,000 t/d carbon-in-leach (CIL) processing plant, the Los Filos mine life would be extended to 14.5 years, the study shows, with life-of-mine average annual production increasing to 280,000 oz. of gold (2023-2036) at all-in sustaining costs (AISC) of US$1,081 per oz.

Total life-of-mine production is estimated at 4 million oz. of gold, peaking during 2025-2030 at average production of 360,000 oz. per year. Using the base case US$1,675 per oz. gold price, the expansion project has an after-tax net present value (discounted at 5%) of US$625 million with an internal rate of return of 26%. Initial capital costs for the CIL plant and associated infrastructure are estimated at US$318 million.

“The feasibility study confirms a path to expand Los Filos to a large-scale, long-life gold mine with a substantial reserve and resource endowment and opportunity for further growth,” said Greg Smith, president and CEO of Equinox, in a release.

However, while the study projects positive economics, the company says it hasn’t yet decided to move ahead with the expansion.

“Any decision to proceed with the Los Filos expansion will be made considering the operating stability in the region, market conditions and availability and cost of capital,” Smith cautioned, adding that Equinox is currently focused on construction of its Greenstone mine in Ontario and advancing the permitting to expand its Castle Mountain mine in California.

The feasibility study includes an updated reserve and resource estimate, incorporating a revised mine plan and more than 101,000 metres of exploration drilling since October 2018. Factoring 681,000 oz. of mining depletion over almost four years, the Los Filos mineral reserves have increased 44% over the 2018 estimate, totalling 193.2 million tonnes (proven and probable) grading 0.86 gram gold per tonne for 5.4 million oz. of contained gold.

An additional 325.3 million tonnes of measured and indicated resources (exclusive of reserves) grading 0.75 gram gold contain 7.9 million oz. gold, with 135.9 million inferred tonnes grading 0.74 gram gold for 3.2 million ounces.

Gold mineralization at Los Filos extends beyond the drilled area, and it is expected that additional drilling along the contact between intrusive and carbonate rock could identify further skarn mineralization. With exploration success and conversion of resources to reserves, considerable potential exists to extend the Los Filos mine life beyond 2036, Equinox says.

The Los Filos mine complex encompasses three main open-pit mining areas: Los Filos, Guadalupe and Bermejal, and three underground mines: Los Filos South, Los Filos North and Bermejal Underground. Bermejal Underground development restarted in the second quarter of 2021, and the deposit has been contributing higher-grade ore since mid-2022. Ore from all six mining areas is currently processed on heap leach pads.

The feasibility study contemplates construction of a CIL plant beginning in 2023 with an 18-month timeline for construction and commissioning, which would allow higher-grade ore to be directed to the CIL plant starting in mid-2024.

Since it began operations in 2005, the Los Filos mine complex has produced 3.4 million oz. of gold, with ore from all deposits processed using heap leach facilities. Building and operating the CIL plant, compared to a heap leach only scenario, would extend the Los Filos mine life by about four years, adding more than 1.1 million oz. of gold to life-of-mine production.