development strategy
On September 17, 2020, Equinox Gold announced the commencement of Phase 1 operations for Castle Mountain. The project is being developed in a phased ramp-up scenario, starting with run-of-mine heap leaching of stockpile material using existing operating permits, and then a Phase 2 expansion that will include milling of higher-grade ore.
On March 22, 2021, Equinox Gold released the results of a feasibility study for the planned Phase 2 Expansion, which will increase production from the mine to well over 200,000 ounces of low-cost annual gold production and generate nearly $2 billion of net cash flow at current gold prices. Phase 2 will also provide more than 400 jobs during construction and operations and extend the total mine life to more than 20 years.
KEY FACTS
| Mine type | Open pit |
| Access | Paved roads, 120 km south of Las Vegas |
| Strategy | Phase 1: Initial ROM heap leach of stockpile material Phase 2: Expansion with ROM heap leach and milling of higher grade ore |
| Production target | Phase 1: ~40,000 oz/year Phase 2: 218,000 oz/year |
| Reserves | P&P: 4.2 Moz @ 0.51 g/t gold |
| Resources | M&I: 1.5 Moz @ 0.62 g/t gold (exclusive) Inf: 1.4 Moz @ 0.63 g/t gold |
| Status | Phase 1 operations started in Sept 2020 Phase 2 permitting to begin mid-year 2021 |
PRODUCTION STRATEGY
The Castle Mountain Gold Mine produced more than one million ounces of gold as an open-pit heap-leach mine from 1992 to 2004, when the mine was shut down due to low gold prices. Material below 0.50 g/t gold mined from the Oro Belle and Jumbo pits was placed into the JSLA pit.
Phase 1 operations commenced in September 2020, processing stockpile material from the JSLA pit. A feasibility study published in March 2021 contemplates a Phase 2 expansion that will increase production to an average of 218,000 ounces per year and extend the total mine life to 21 years, for total life-of-mine production of 3.4 million ounces of gold.
Phase 1
- Re-established onsite operations
- Initial mining and run-of-mine (“ROM”) heap leach processing of the historical JSLA pit stockpile material
- Production target: ~40,000 oz/year
Phase 2
- Feasibility study completed March 2021
- Higher throughput with milling of higher-grade ore and ROM heap of lower-grade material
- Production target: ~218,000 oz/year
- Permit requirements: Updated Environmental Impact Assessment and expansion permit
PHASE 2 FEASIBILITY RESULTS
On March 22, 2021, Equinox Gold released the results of a feasibility study for the planned Phase 2 Expansion at the Castle Mountain Gold Mine in California, USA. The Castle Mountain Phase 2 expansion will increase production from the mine to well over 200,000 ounces of low-cost annual gold production and generate nearly $2 billion of net cash flow at current gold prices. Phase 2 will also provide more than 400 jobs during construction and operations and extend the total mine life to more than 20 years. With Phase 1 in operations and Phase 2 permitting underway, Castle Mountain will be a significant economic driver in the region and a long-life cornerstone asset for Equinox Gold.
Download the Phase 2 Feasibility Study technical report or read the press release summarizing the results.
feasibility Study Highlights (US$)
| Gold price (base case) | $1,500/oz |
| P&P Reserve | 4.2 Moz Au @ 0.51 g/t Au |
| M&I Resource (exclusive of reserves) | 1.5 Moz Au @ 0.62 g/t Au |
| Mine Life | 14 years, plus 2-3 years of rinsing |
| Heap leach production Mill production |
Avg. 139,000 oz gold / year Avg. 79,000 oz gold / year |
| Heap leach recovery Mill recovery |
74% 94% |
| Total heap leach production Total mill production |
2.1 Moz gold 1.1 Moz gold |
| Total Phase 2 Production | 3.2 Moz gold |
| Initial Capex Infrastructure Leased mining fleet |
$389 M $121 M |
| Sustaining Capex | $147 M |
| Cash Cost (LOM) | $806/oz |
| AISC (LOM) | $858/oz |
| Cash Flow (after tax) (LOM) | $1.3 B ($2.0 B at $1,800/oz gold) |
| NPV 5% (after tax) | $640 M ($1.1 B at $1,800/oz gold) |
| IRR (after tax) | 18% (25% at $1,800/oz gold) |
permitting
The Castle Mountain Mine is located on both public and private land and historically has been permitted by co-lead agencies, the County of San Bernardino at the state level and the United States Bureau of Land Management (“BLM”) at the federal level. Castle Mountain has all permits required to conduct mining for current operations and is permitted to operate within the approved Mine Permit boundary. Phase 2 will operate within the same Mine Permit boundary; however, modifications to mine and reclamation plan elements, including increased land disturbance, mining and water extraction rates, will require updates to existing permits. Phase 2 is expected to require an updated environmental review as well as several new state and federal permits and amendments. Development of Phase 2 is anticipated to require an overall timeline of approximately four years from the start of permitting to achieving full expanded operations.
WATER
Castle Mountain is in a semi-arid region and will be a net zero discharge facility, with most of the water loss occurring via evaporation from the surface of the heap leach pad and filtered tailings facility. Process water needs for the recovery plant will fluctuate seasonally and make-up water required for the heap leach will change with the amount of evaporation and precipitation each month. Water consumption will be mitigated using low evaporation buried drip emitters, limiting the amount of water retained in ponds with larger evaporative losses, using binders and dust collectors that limit water needs for dust suppression, and by using extensive water recycling in the process.
Annual water demand for Phase 2 is estimated to range from 1,150 gpm to 1,900 gpm depending on the season. The current water supply includes three historical wells providing approximately 150 gpm total and two recently installed wells capable of producing approximately 400 gpm total. Additional water for Phase 2 is expected to be extracted from new wells. Recent water exploration has shown very good potential for water both near site and in a neighbouring water basin. Once developed, wells in both areas are expected to produce between 500 and 1,000 gpm of water each. The Phase 2 development plans include the addition of new wells and well pumps in both locations, as well as an overland pipeline and booster pumps to meet the additional water demands.
ADDITIONAL OPPORTUNITIES
There is considerable potential to expand Castle Mountain Mineral Resources and Mineral Reserves by exploring gold anomalies identified at East Ridge, East Flats and Egg Hill. In addition, higher gold prices could make it economic to expand the 2021 Feasibility Mineral Reserve pits and ultimately connect the JSLA and South Dome pits.
Equinox Gold is reviewing opportunities that could result in optimized land use as well as initial capital and operating cost savings. The Company has also completed and is assessing a study examining the potential to use solar power at Castle Mountain. Initial results demonstrate the solar plant levelized cost of electricity would be $0.05/kWh, compared to approximately $0.10/kWh when connected to grid electricity, for net savings per year of $1.9 million based on a capital cost of $12.8 million for a 10 MWAC photovoltaic solar plant providing 40% of the site power requirements.