Equinox Gold has reported results from a positive preliminary economic assessment (PEA) of development of an underground mine at the company’s Aurizona gold mine in Maranhão state, northeast Brazil. The mine would operate concurrently with the existing open-pit mine and has the potential to deliver an additional 740,500 ounces (oz) of gold, $1 billion in revenue, and $204 million in after-tax net cash flow over a 10-year mine life at a base case gold price of $1,350/oz.

The open-pit mine is forecast to produce about 120,000 oz of gold in 2020. Underground ore would be processed through the existing 8,000-metric-ton-per-day (mt/d) plant and would benefit from existing surface infrastructure. At steady-state operation, the underground mine would provide 2,800 mt/d of mill feed.

The PEA underground mine plan incorporates 2.8 million mt of indicated resources grading 2.73 grams/mt gold and 6.2 million mt of inferred resources grading 2.89 g/mt gold. Initial capital costs to develop the underground mine are estimated at $69.7 million. All-in sustaining costs of production are estimated at $925/oz.

The PEA contemplates development of an underground mine along a total strike length of 3.3 kilometers (km) to access an initial eight separate mining areas. The internal ramps will be accessed from surface by a common main double ramp arrangement developed directly into fresh rock from within the existing open pit. All mine development is in more stable rock units located on the hangingwall side of the mineralized body.

Long-hole stoping was selected as the mining method due to the good ground conditions and the steep dip of the deposit. The PEA contemplates owner mining of stopes and underground development. Completed stopes would be filled by rockfill from underground development or open-pit waste. The addition of cement to rockfill is confined to higher-grade areas, where mining recovery can be maximized by eliminating the need for rib pillars and above-sill pillars.

First mill feed from the underground mine would be expected approximately 2.25 years after the start of underground mine development, with steady-state production of 2,800 mt/d achieved at the end of year four and continuing through year eleven within the currently defined mineral resource. The mine plan schedules higher-grade areas earlier in the underground mine life to enhance mine economics.

Equinox is continuing to advance studies focused on underground development and intends to complete a prefeasibility study for the underground mine in 2021. The company has commenced a 17,000-m drill program aimed primarily at converting underground inferred resources to indicated resources in support of the prefeasibility study. Future drilling will also target expansion of the underground deposit at depth and along strike.

Equinox Gold CEO Christian Milau commented, “This PEA demonstrates the substantial opportunity for both mine life extension and increased annual gold production at Aurizona through development of an underground mine. With the potential for expansions to the current open-pit, additions of other near-surface resources, and further opportunities for underground resource expansion at depth and along strike, Aurizona is expected to be a long-life cornerstone asset for Equinox Gold.”