Engineering & Mining Journal

MAY 2017

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Page 15 of 59

REGIONAL NEWS - LATIN AMERICA 14 E&MJ • MAY 2017 Leagold Acquires Los Filos Gold Mine from Goldcorp Leagold Mining, a Canadian company headquartered in Vancouver, British Co- lumbia, has acquired the Los Filos gold mine in Guerrero state, Mexico from Goldcorp for $350 million. Los Filos op- erations include two open pits (Los Filos and Bermejal), an underground mine at Los Filos, and the opportunity to develop a new underground mine at Bermejal as an expansion project. During 2016, Los Filos produced 231,000 oz of gold at an all-in sustaining cost (AISC) of $878/oz. The purchase price for Los Filos con - sisted of $279 million in cash and $71 million in Leagold common shares. The transaction was announced on Janu- ary 12, 2017 and closed on April 7. Post-closing, Goldcorp holds a 25.3% eq- uity interest in Leagold, and Russell Ball, Goldcorp's executive vice president cor- porate development and CFO, has joined Leagold's board of directors. Leagold has an announced goal of becoming a new, mid-tier gold produc- er, with a focus on opportunities in Latin America. Los Filos is the company's first acquisition. Proven and probable miner- al reserves at Los Filos currently stand at 40.7 million mt at grades of 1.12 g/ mt gold and 7.44 g/mt silver for 1.466 million oz of contained gold and 9.734 million oz of contained silver. Subsequent to closing the Los Filos acquisition, Leagold announced recent drill results from the Bermejal Under- ground deposit, including intercepts of 18.5 g/mt gold over 29.2 m and 12.4 g/mt over 21.6 m. Leagold CEO Neil Woodyer commented, "The infill drill- ing results are exceptional and confirm the widths and grades in the widest and higher-grade portion of the Bermejal Un- derground deposit. We are initiating a $7.7-million step-out and infill drilling program of 56,000 m to add more re- sources to Bermejal Underground." The Bermejal Underground deposit is located entirely below and separate from the current Bermejal open-pit mineral re- serves. The deposit would be developed and mined concurrently with other Los Filos mining operations. A preliminary economic assessment (PEA) has select- ed a combination of sublevel caving and mechanized cut-and-fill as the mining methods, with a ramp serving as the pri- mary mine access. The PEA estimates that Bermejal Un- derground production could add 1.392 million oz of gold to Los Filos production at an average AISC of $439/oz. The PEA estimates up-front capital costs to devel- op the underground mine at $47 million, primarily for access ramp construction and equipment purchases. Los Filos' current reserves-only life- of-mine plan calls for an eight-year mine life, producing a total of 1.256 million oz of gold at an average AISC of $803/oz. Montagne d'Or Study Calls For 237,000 oz/y of Gold Nordgold and Columbus Gold have report- ed the results of an independent bankable feasibility study of their Montagne d'Or gold project in French Guiana that antici- pates development of an open-pit mining operation producing 237,000 oz/y of gold during its first 10 years of operation. The study was funded by Nordgold, pursuant to which it earned a 50.01% interest in the project. Nordgold has also acquired an additional 5% interest as the result of a share purchase agreement dated Janu- ary 12, 2016 and now holds a 55.01% interest in the project. The Montagne d'Or feasibility study es- timates total initial capital costs to devel- op the project at $361 million, including pre-stripping and contingency and minus surplus tax credit refunds. The after-tax payback period is estimated at 4.1 years. Project development is based on prov- en and probable mineral reserves of 2.75 million oz of gold contained in 54.1 mil- lion mt at a grade of 1.58 g/mt. These reserves are a subset of measured and indicated resources totaling 3.85 million oz in 85.1 million mt grading 1.41 g/mt gold at a cut-off grade of 0.4 g/mt and a $1,300/oz gold price. The mine production schedule is based on feeding an ore processing facil- ity operating at a rate of 4.5 million mt/y; however, ore would be mined in excess of this rate so that marginal low-grade can Los Filos, one of the largest Mexican gold operations, uses a conventional, low-cost heap leach process to recover gold.

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