A junior miner is examining whether it makes sense to revive gold mining in Lynn Lake, injecting a dose of optimism into northern Manitoba’s battered resource sector.
Alamos Gold Inc. will reportedly soon begin work on a feasibility study at its Lynn Lake gold project. The site includes five near-surface deposits along with infrastructure remaining from a past mine.
Alamos expects the study to be completed by September 30, 2017. With the results in hand, the Toronto-based company would then decide whether to restart mining operations.
Cliff Cullen, provincial minister of Growth, Enterprise and Trade, welcomed the news.
“The decision by Alamos Gold Inc. to undertake a feasibility study of the geologic potential of their Lynn Lake project represents a significant step forward for this project and highlights the excellent opportunities that exist in Manitoba for expansion of the mining industry,” Cullen said in a news release.
Alamos is just as enthused.
“Lynn Lake remains one of the company’s top development priorities given its favourable location, Canadian dollar exposure, and strong project economics,” the company said in a news release.
On its website, Alamos called the project “one of the highest grade open pit deposits in Canada with significant exploration potential.”
Alamos recently referred to its cash position and balance sheet as “strong” with about $285 million in cash and cash equivalents and available-for-sale securities.
The company also said it has generated positive free cash flow at its three active gold projects, including one in northern Ontario and two in Mexico.
Though mining ceased in Lynn Lake in 2000, the town has remained on the radar of prospectors.
Between March 2011 and March 2013, then-owner Carlisle Goldfields commissioned 61,000 m of drilling at the Lynn Lake gold project, a company official told the Northern Prospector. Alamos acquired the property in January 2016 when it purchased Carlisle.
In 2014, Carlisle released a preliminary economic assessment (PEA) for the site. The report found that an open pit mine would require an initial capital investment of $185 million and yield an average annual production of 145,000 ounces of gold.
Going by existing resource estimates, the PEA suggests a mine at the site would last between 14 and 18 years. Based on current gold prices, revenues would be about $250 million a year.
Those numbers are not final. Alamos’ feasibility study is expected to build upon the PEA and update estimates for costs and production volumes.
Baseline environmental studies are already underway within the study area, according to the provincial government.
Lynn Lake was founded on a nickel discovery in the 1940s. With a population that once reached 3,500,
the town has dwindled to 675 residents.
By road, Lynn Lake is 322 km northeast of Thompson.
