Trident Royalties PLC (AIM:TRR) has highlighted the “tremendous potential” suggested by an updated feasibility study for the Los Filos mine complex owned by Equinox Gold (TSX:EQX), where it holds an offtake agreement.
The mining royalty company’s offtake agreement is for 50% of all refined gold production up to a cap of 1,100,000 ounces from Los Filos.
Equinox’s study contemplates the construction of a carbon-in-leach (CIL) processing plant beginning in the second half of 2023 to process higher-grade ore from Los Filos' six mines, commencing in mid-2024.
Trident pointed out that while the feasibility study estimates are predicated on this timeline, Equinox has not yet approved the expansion.
Based on the construction of the CIL processing plant and continued development of the Bermejal Underground mine, the study outlined peak gold production averaging 360,000 ounces per year from 2025-2030, including production in excess of 400,000 ounces in 2025.
This compares to Equinox's latest guidance for 2022 production at Los Filos of 155,000 to 170,000 ounces.
The study indicates the expansion would extend the Los Filos mine life to 14.5 years at an all-in sustaining cost of US$1,081 per ounce of gold, with NPV5% of US$625 million and an after-tax IRR of 26% at a gold price of US$1,675 per ounce.
In a statement, Trident chief executive Adam Davidson said: “Equinox continues to deliver on its growth plans with the release of this updated feasibility study, which highlights the tremendous potential at Los Filos.
“The potential expansion at Los Filos underscores the organic growth within Trident's gold offtakes portfolio; which includes underlying assets such as Equinox's Santa Luz mine, Blyvoor Gold, and i-80 Gold Corp's Ruby Hill and Granite Creek projects. In addition to this organic growth, delivered at no incremental cost to Trident, we have an attractive pipeline of potential transactions which will deliver further significant value to shareholders.”