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 carbon-in-leach plant to complement the existing heap leach facilities.

In October 2022, Equinox Gold released an updated feasibility study for an expansion at Los Filos. With continued development of the Bermejal underground deposit and construction of a 10,000 tonnes per day carbon-in-leach (CIL) processing plant, the Los Filos mine life would be extended to 14.5 years with life-of-mine (LOM) average annual production increasing to 280,000 ounces of gold (2023-2036) at all-in sustaining costs of $1,081 per ounce. Total LOM production is estimated at 3.97 million ounce of gold. Peak production during 2025-2030 averages 360,000 ounces of gold per year.

Constructing and operating the CIL plant, compared to a heap leach only scenario, extends the Los Filos mine life by approximately four years and adds more than 1.1 million ounces of gold to LOM production.

The feasibility study contemplates construction of the CIL plant commencing in 2023 with an 18-month timeline for construction and commissioning, which would allow higher-grade ore to be directed to the CIL plant commencing in mid-2024. While the economic and production estimates outlined in the feasibility study are predicated on that timeline, Equinox Gold has not approved construction for the CIL plant.

Greg Smith, President & CEO of Equinox Gold, commented: “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. We are pleased with the results of the feasibility study; however, we have not made a decision to proceed 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.”

The updated feasibility study contemplates building and operating a 10,000 tonnes per day CIL processing plant to operate concurrently with the existing heap leach facilities. All underground ore and higher-grade open-pit ore (generally above 0.5 g/t gold) would be directed to the CIL plant, with lower-grade ore going onto the heap leach pads as either crushed or run-of-mine stacked ore. Ore that contains higher levels of copper and sulphur would also be directed to the CIL plant to optimize the economic recovery of gold from all ore types.

Highlights from the feasibility study:

  • After-tax NPV5% of $625 million at base case $1,675/oz gold
  • After-tax IRR of 26% at $1,675/oz gold
  • 5.4 million ounces gold of Proven and Probable Mineral Reserves
  • 7.9 million ounces gold of Measured & Indicated Resources (exclusive of Reserves)
  • 3.97 million ounces LOM gold production
    • 360,000 ounces peak average annual gold production (2025-2030)
    • 280,000 ounces average annual gold production LOM (2023-2036)
    • 1.22 million ounces of gold produced from the heap leach with average recovery of 55%
    • 2.75 million ounces of gold produced from the CIL plant with average recovery of 88%
  • 11.83 million ounces LOM silver production
  • $993 million after-tax LOM cumulative net cash flow
  • $981/oz average LOM cash costs
  • $1,081/oz average LOM AISC
  • $318 million initial capital cost to build the CIL plant and associated infrastructure
  • 14.5-year mine life with extension potential from Mineral Resource conversion and exploration success

Economic Sensitivities

Using the base case gold price of $1,675/oz and incorporating only Proven & Probable Mineral Reserves, the expansion project has an after-tax NPV5% of $625 million and an after-tax IRR of 26%. The expansion project economics are most sensitive to fluctuations in the gold price, followed by changes in operating costs and capital costs. Approximately 40% of capital costs for the expansion project are priced in Mexican Pesos. 

After-tax NPV5% Sensitivity to Economic Changes ($M)

Variation in Parameter Operating Costs Capital Costs Gold Price
−15% 920 755 172
−10% 822 712 323
−5% 724 668 474
0% 625 625 625
5% 526 582 776
10% 427 538 926
15% 328 495 1,076

Capital and Operating Costs

Initial capital costs for construction of the CIL plant are estimated at $318 million, which is included in total LOM non-sustaining capital of $718 million. Closure and reclamation costs of $51 million are also included in non-sustaining capital. LOM sustaining capital is estimated at $349 million. 

Los Filos Life-of-Mine Capital Costs

Item  Non-Sustaining
Capital Costs 
($M)
Sustaining 
Capital Costs 
($M)
Total 
Capital Costs 
($M)
Open pit mobile equipment and workshop upgrade 125 133 252
Los Filos Open Pit - capitalized stripping  112 - 112
Bermejal Open Pit - capitalized stripping  77 - 77
Guadalupe Open Pit - capitalized stripping  - 44 44
Los Filos Underground development   - 16 16
Bermejal Underground development   35 70 106
CIL plant  318 - 318
Heap leach pad expansion  - 86 86
Closure and reclamation  51 - 51
Total  718 349 1,067

Note: Numbers may not sum due to rounding. 

Total LOM operating costs are estimated at $4,015 million. Approximately 83% of the LOM operating costs are related to mining and processing, with the remainder attributable to general and administrative costs, land access payments and social collaboration payments to local communities.

Los Filos Life-of-Mine Operating Costs

Item ($M) $/oz
Mining (Open pit and Underground) 2,072 521
Open pit 1,118 281
Underground 954 240
Processing 1,288 324
General and administrative, community, and land access 655 165
Total operating costs 4,015 1,010
Royalties 34 9
Refining and transport 22 6
Silver credits (172) (43)
Cash costs 3,899 981
Sustaining capital 349 88
Reclamation costs 51 13
AISC 4,299 1,081

Note: Numbers may not sum due to rounding. 

LOM mining costs are estimated at $1.38/t for open-pit mining, including capitalized waste stripping, and $75.70/t for underground mining.

Overall processing costs are estimated to average $7.76/t for crush heap leach, $2.85/t for ROM heap leach and $13.25/t for CIL processing. As with most gold ore processing plants, the three largest cost components are cyanide, grinding media and power.

Los Filos Mineral Reserves & Mineral Resources

The Feasibility Study includes an updated Mineral Reserve and Mineral Resource estimate incorporating a revised mine plan and 101,407 metres of exploration drilling since October 31, 2018. Factoring 681,000 oz of mining depletion over almost four years, Los Filos Mineral Reserves have increased 44% over the 2018 estimate, with 193.2 million tonnes (“Mt”) of Proven & Probable Mineral Reserves grading 0.86 grams per tonne (“g/t”) gold for 5.4 million oz of contained gold. An additional 325.3 Mt of Measured & Indicated Mineral Resources (exclusive of Mineral Reserves) grading 0.75 g/t gold for 7.9 million oz of contained gold, and 135.9 Mt of Inferred Mineral Resources grading 0.74 g/t gold for 3.2 million oz of contained gold demonstrate the potential for mine life extension with successful conversion of Mineral Resources to Mineral Reserves.

A detailed breakdown of Los Filos Mineral Reserves and Mineral Resources is summarized here.

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 Mineral Resources to Mineral Reserves, considerable potential exists to extend the Los Filos mine life beyond 2036.

Infrastructure

The majority of infrastructure requirements for expansion at Los Filos are already in place, including heap leach facilities, an ADR plant, water storage and distribution, maintenance workshop, laboratory, site administration buildings, warehouse and workforce facilities. New infrastructure required includes the 10,000 t/d CIL plant, a new 40 MW electric substation, an extension of the 115kV high voltage transmission line to the new substation, an upgrade of the mobile equipment workshop, additional waste rock storage facilities, and an expansion of the heap leach pads.

Water usage for the Los Filos Mine Complex is currently 1.0 Mm3/a and the permit allows for 1.2 Mm3/a of extraction. An application to increase the water permit to 2.2 Mm3/a is in process. 

Additional power will be required to operate the CIL plant. The current capacity of its existing electrical substation is 20 MW to satisfy a demand of up to 14 MW peak demand. The CIL plant will consume additional energy beyond the capacity of the existing substation; therefore, a larger, 40 MW substation is proposed to provide electrical energy to the expanded mine. An application was made to CENACE (Mexico’s federal electricity commission utility) for the additional energy required, and CENACE completed a study to confirm energy availability and electrical infrastructure upgrades. The study will be updated once a final decision to advance the CIL plant is made.

 

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