Alamos commences construction of La Yaqui Grande project

Alamos recently conducted an internal economic study on the project, which points to it having a yearly production volume of 123 000 oz, with mining set to start in the third quarter of 2022.

Alamos president and CEO John McCluskey says La Yaqui Grande represents the company’s next low-cost, high-return project in the Mulatos district.

This follows the success of the La Yaqui Phase I and Cerro Pelon projects, which were both developed on budget and ahead of schedule. Given its bigger scale and low-cost profile, La Yaqui Grande is expected to drive strong free cash flow growth from the Mulatos district in 2022 and beyond.

La Yaqui Grande is located about 7 km from the existing Mulatos operation and is adjacent to the past-producing La Yaqui Phase I operation. As with La Yaqui Phase I, La Yaqui Grande will be developed with an independent heap leach pad and crushing circuit.

La Yaqui Grande is fully permitted for construction, having received approval of the environmental impact assessment in the second quarter of 2019 and the change of land use permit in the third quarter of 2019. The project will be developed over the next 24 months.

The new project is set to replace the higher cost production from the main Mulatos pit, keeping combined production at about 150 000 oz/y, but reducing all-in sustaining costs.

The project’s after-tax net present value (NPV) is $165-million, which is calculated using a 5% discount rate and an after-tax internal rate of return (IRR) of 41%, using a base case gold price assumption of $1 450/oz and a Mexican peso/US dollar foreign exchange rate of 21:1.

In another scenario, the project’s after-tax NPV increases to $260-million, with an after-tax IRR of 58%, which is calculated using a 5% discount rate, a gold price assumption of $1 750/oz and an exchange rate of 21:1.

At a gold price of $1 750/oz, Mulatos is expected to self-finance the development of La Yaqui Grande, following which La Yaqui Grande is expected to generate strong free cash flow.

La Yaqui Grande’s mine life is expected to be five years, extending production from the Mulatos district to 2027, based on current mineral reserves.

To develop the project, Alamos estimates investing initial capital of $137-million, to be spent over a two-year period starting in the second half of this year.

In terms of processing, a jaw crusher and cone crushers from the past producing El Chanate mine will be relocated to the La Yaqui Grande project area. Ore will be crushed through a three-stage crushing circuit, agglomerated, stacked, and leached on an independent leach pad.

The resulting gold-bearing solution will be processed through carbon columns, following which the loaded carbon will be transported to the existing Mulatos plant for final processing.

The La Yaqui Grande deposit is highly oxidised with expected average recoveries of 85% over the life of the operation. This is based on metallurgical test work which demonstrated recoveries above 85%, and operating experience at La Yaqui Phase I which hosts similar metallurgy and yielded life-of-mine recoveries of 90%.