
OVERVIEW
The Island Gold mine is a high grade, low cost underground mining operation located in Northern Ontario, Canada. The mine began production in October 2007 and has produced over 500,000 ounces of gold to date.
The operation is undergoing a phase I expansion of underground mining and milling rates to 1,100 tonnes per day (“tpd”) as outlined in the May 2017 Expansion Case Preliminary Economic Assessment (“PEA”). The expansion is expected to be completed in the second half of 2018 for minimal incremental capital of approximately $23 million. This is expected to drive strong free cash flow growth reflecting an increase in average annual production rates to approximately 125,000 ounces of gold and decrease mine-site AISC to approximately $550 per ounce starting in 2019.
The main objective of the PEA was to identify the most cost and capital effective approach to mining mineral resources within the main area of focus over four mining horizons and down to a maximum depth 1,000 metres, using existing mine infrastructure. As such, there remains additional opportunities for mine life extension and further expansions incorporating the more than 750,000 ounces of inferred mineral resources (as of December 31, 2016) not included within the PEA and the significant exploration potential with the deposit open laterally and at depth.
LOCATION
The Island Gold Mine is located 83 kilometres northeast of Wawa, Ontario. The mine comprises 217 patented, leased and staked claims covering 7,926 hectares. It is accessible via a four-season road from Highway 519, just west of the town of Dubreuilville.
HISTORY
In 1985, drilling approximately two kilometers south of the Kremzar Mine intersected a series of sub-parallel lenses containing gold mineralization within deformed rocks of the Goudreau Lake Deformation Zone (gldz). These lenses are known as the Lochalsh, Island Gold, Shore, and Goudreau Lake Zones. Over 1989 and 1990, underground access was established into the Island deposit with an adit from the north shore of Goudreau Lake. A bulk sample weighing 4,167 tonnes was extracted and processed at the on-site Kremzar Mill.
Encouraging results were obtained from exploration work conducted from 1996 to 2002 and, in 2004, an exploration program was initiated in order to complete a resource estimate. On January 1, 2005, Richmont Mines became the operator of the project. The project began commercial production on October 1, 2007. Richmont acquired Patricia Mining’s 45% interest in December 2008, becoming 100% owner of the property and operations.
Exploration activities ramped up in 2009 with a minimum of 30,000 metres of drilling completed in each of the next several years, increasing sharply to more than 80,000 metres in 2012. This included drilling below the 400 metre level as part of the Island Gold Deep program which resulted in the discovery and initial inferred mineral resource on the high grade deep C Zone in January 2013. Over the next year, drilling in the Island Gold Deep sectors from the west, below Lochalsh, to the east and below Extension 1 confirmed the presence and continuity of the deep C Zone and some parallel zones. This drove a substantial increase in inferred mineral resources to 3.6 million tonnes grading 9.07 g/t for 1.04 million ounces of gold as of April 2014. This represented an increase of nearly one million ounces at a 46% higher grade from the end of 2012.
Ongoing exploration success continued to add higher grade inferred mineral resources over the next few years while a large portion was converted to mineral reserves. As of the end of 2016, mineral reserves had increased 309% in terms of ounces and 44% in terms of grade, relative to the end of 2014.
Reflecting the growth in mineral reserves and resources, the significant improvement in grades and ongoing operational improvements, Island Gold’s 2017 rate of gold production is expected to nearly triple that of 2013, while mine-site all-in sustaining costs have decreased by more than half. As outlined in the May 2017 expansion PEA, this production growth and decline in costs is expected to continue over the next several years.
In November 2017 Alamos Gold acquired Richmont Mines, and the Island Gold mine.
GEOLOGY AND MINERALIZATION
The property lies within the Michipicoten greenstone belt, which is part of the Wawa subprovince and Superior province of Archean age. The Michipicoten greenstone belt is approximately 140 km long by 45 km wide. The property is stratigraphically positioned in the upper portion of the Wawa Assemblage capped by pyrite-bearing iron formation outcropping in the Morrison and Pine zones.
A 30 km long and 4.5 km wide northeasterly trending, structurally deformed zone, called the Goudreau Lake Deformation Zone (GLDZ), occurs between the two assemblages. Including its subsidiary splays, the GLDZ is believed to be the main control on gold mineralization for the area. East-northeast striking, steeply dipping, sub-parallel zones of gold mineralization are present within the quartz sericite-pyrite-carbonate alteration of the GLDZ. North trending diabase dikes crosscut all stratigraphy.
MINING AND PROCESSING
Island Gold’s underground operations are accessed via a ramp system. The primary mining method is longitudinal retreat long-hole stoping. Ore is hauled by truck to the Kremzar mill located approximately 0.8 km from the portal of the ramp.
Ore is processed through a traditional gold mill using a conventional Carbon in Pulp (“CIP”) process, with circuits for crushing, grinding, gold cyanidation and two electrowinning (“EW”) cells. As part of the PEA expansion to 1,100 tpd, the grinding circuit within the mill is being upgraded, primarily through the addition of another ball mill.
Technical Information and Cautionary Notes on non-GAAP Measures and Additional GAAP Measures