Los Filos Expansion

Potential to double annual production

The Los Filos expansion project contemplates enlarging the Los Filos open pit, adding a new open pit (Guadalupe), developing a second underground mine (Bermejal), and constructing a new 4,000 t/d CIL plant to complement the existing heap leach facilities.

In March 2019, Leagold completed a feasibility study outlining the potential for development of the Bermejal underground mine, enlargement of the Los Filos open pit mine, re-phasing of the Bermejal open pit into two distinct sections (Bermejal and Guadalupe), and construction of a 4,000 tonnes per day carbon-in-leach (CIL) processing facility to complement the existing heap leach facilities. Leagold commenced the expansion project in Q3-2019, completing an access road to allow the start of stripping from the Guadalupe open pit and commencing work for additional ventilation for Bermejal underground development.

Equinox Gold is evaluating the benefits of constructing a larger CIL plant, which would have an impact on the current feasibility estimate for construction capital which includes the CIL plant, power, a tailings filtration system and the associated deposition area.

Engineering and optimization studies related to the CIL plant will be complete around year-end 2020 after which the Company expects to provide an update on the Company’s plans to increase the size of the CIL plant and costs to construct the plant and will seek Board of Directors approval to commence construction. Furthermore, the mine planning and scheduling is being updated to reflect the larger plant size, optimized plant layout and higher gold prices. This update is expected to allow for conversion of additional ounces from resource to reserve, which would extend the mine life. This information is expected to be available with the updated study.

Initial mining in the Guadalupe open pit and preparatory work for Bermejal underground mining was suspended at the beginning of April in compliance with the Mexican federal government’s decree related to COVID-19. Development activities resumed in mid-June but were suspended again in September as the result of a community blockade.

Leagold commissioned an independent Feasibility Study in March 2019 for the expansion of the Los Filos mine complex in Mexico. The Feasibility Study incorporates the potential for development of the Bermejal underground mine, enlarging the Los Filos open pit mine, re-phasing of the Bermejal open pit into two distinct sections (Bermejal and Guadalupe), and the construction of a carbon-in-leach (CIL) processing facility to complement the existing heap leach facilities.

Highlights include:

  • Gold production of 3.2 million ounces (Moz) over a 10-year mine life (2019 to 2028) at an average AISC1 of $740/oz
  • Post expansion (2021 onwards):
    • Average annual production of 350,000 oz at AISC1 of $694/oz
    • Average annual production exceeding 420,000 oz from 2021 to 2024
  • Proven and Probable mineral reserves of 104.2 Mt at 1.31 g/t containing 4.5 Moz2
  • Capital cost of $180 million to develop the Bermejal underground and construct a new 4,000 tonnes per day (t/d) CIL plant with related infrastructure
  • Current operations to fund capitalized stripping during the initial expansion phase (2019 to 2020) at the Guadalupe and Los Filos open pits, for total initial capital costs of $213 million
  • At $1,250/oz gold price:
    • NPV0% of $884 million
    • NPV5% of $679 million
    • IRR of 86%

(1) AISC is a non-GAAP measure.
(1) Proven reserve of 36.9 million tonnes at 0.76 grams per tonne containing 0.906 Moz gold plus Probable reserve of 74.5 million tonnes at 1.44 grams per tonne containing 3.457 Moz gold (effective date of October 31, 2018, SRK Consulting (Canada) Inc.).

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