Canadian Mining Journal


GOLD: Alamos to acquire Island Gold royalty for $75M

Island Gold mine Credit: Alamos

Island Gold mine Credit: Alamos

TORONTO – Alamos Gold has announced that it has entered into an agreement to acquire a 3% net smelter return (NSR) royalty on production from four claims at its Island Gold mine in Ontario for $75 million, reducing its company-wide cost guidance for this year by US$13 per oz.

The royalty, acquired from a private company, covered 71% of the current project reserves and a further 1.1 million oz. of inferred resources.

At the site level, Alamos expects all-in sustaining costs to decrease by US$40 per oz., to US$740 to US$780 per oz.

As a result of this transaction, the effective NSR on Island Gold reserves will decrease to 2.2%, down from 4.4% previously.

“The acquisition of the royalty further reduces costs at what is already a low-cost operation while also increasing our exposure to the tremendous exploration upside,” John McCluskey, the company’s president and CEO, said in a release. “Since we acquired Island Gold in 2017, the mineral reserve and resource base has doubled with the deposit approaching four million oz. across all categories. With the deposit open laterally and down-plunge across several areas of focus, we see excellent potential for this growth to continue at a greatly reduced royalty on future production.”

In January, the company released exploration results from Island Gold, with high-grade intercepts outside of resource limits.

This year, the asset is expected to contribute 130,000 oz. to 145,000 oz., out of a total of 425,000 oz. to 465,000 oz. on a company-wide basis.

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