Alamos Gold Inc. has announced a significant expansion of its Island Gold District operations in Ontario, Canada, positioning the mining complex to become one of the nation’s largest and most cost-efficient gold producers. The comprehensive expansion study, completed in February 2026, details plans to increase processing capacity to 20,000 tonnes per day, substantially boosting reserves, production, and profitability. This expansion is expected to solidify Alamos Gold’s position in the Canadian mining landscape and deliver considerable economic benefits.
The expansion builds on the Base Case Life of Mine Plan from June 2025, centering on a substantial increase in proven and probable mineral reserves now projected at 8.3 million ounces with an average grade of 2.01 grams per tonne across 128.2 million tonnes of material. A key component involves enlarging the Magino mill to process 20,000 tonnes daily, fed by 3,000 tonnes per day from the Island Gold underground operation and 17,000 tonnes per day from the Magino open pit.
Following completion of the expansion in 2028, the Island Gold District is forecasted to achieve average annual production of 534,000 ounces over the subsequent ten years. This represents a 27 percent increase compared to the previous plan and a 113 percent rise from 2025 production levels. For a fifteen-year operational window encompassing both underground and open pit mining, average annual production is estimated at 490,000 ounces.
The operation is strategically positioned to become one of Canada’s lowest-cost gold producers. During the initial ten-year period post-expansion, average all-in sustaining costs are projected at $1,025 per ounce, a 31 percent decrease from 2025 levels. Total cash costs are estimated at $682 per ounce over the same timeframe, with a fifteen-year average of $717 per ounce.
The expanded operation demonstrates attractive financial metrics across various gold price scenarios. At a long-term gold price assumption of $3,200 per ounce and a USD/CAD exchange rate of $0.74:1, the project is estimated to yield an after-tax net present value of $8.2 billion at a five percent discount rate and an after-tax internal rate of return of 53 percent. Should the gold price reach $4,500 per ounce, these figures are projected to increase to $12.2 billion in net present value and a 69 percent internal rate of return.
The operation is anticipated to generate significant free cash flow and self-finance all growth capital requirements. Under the $3,200 per ounce gold price assumption, average after-tax free cash flow is projected at $800 million annually over the ten-year period commencing in 2028. At the higher $4,500 per ounce price point, annual free cash flow is expected to reach $1.3 billion.
The capital investment required for this expansion is estimated at $542 million, primarily allocated to mill expansion, accelerating underground development, and acquiring new mobile equipment. When combined with remaining Phase 3+ Expansion spending, total growth capital expenditure reaches $704 million, with the majority scheduled over the next three years. Sustaining capital expenditures throughout the mine’s life are projected at $2.342 billion, equating to $302 per ounce produced.
Critical infrastructure developments support the expansion. These include completion of a 5.0-meter diameter concrete-lined shaft extending to 1,379 meters depth, construction of a paste plant for underground backfill operations, and installation of a 115-kilovolt powerline connecting the Magino mill to the electrical grid, slated for completion by late 2026. These upgrades are designed to enhance operational efficiency and reduce costs.
The expansion incorporates significant environmental benefits, particularly in reducing greenhouse gas emissions. The Island Gold District’s current emissions intensity is already 30 percent lower than industry averages. Upon completion of the Phase 3+ Expansion and connection to grid power, greenhouse gas emissions per ounce are projected to decrease by an additional 56 percent, resulting in an emission intensity approximately 70 percent below industry standards.
Exploration potential within the Island Gold District remains substantial, covering a 60,000-hectare land package within the Michipicoten Greenstone Belt. Measured and indicated mineral resources not included in the current expansion study total 2.0 million ounces, with an additional 1.4 million ounces in inferred resources. Regional exploration targets, such as the past-producing Cline-Pick mine, have yielded promising results, with recent drilling intersecting grades averaging 178 grams per tonne gold over 3.5 meters.
The expansion project is substantially de-risked, with several key components already under construction. The Magino mill holds federal permits to operate at 35,000 tonnes per day, exceeding the planned expansion throughput. The tailings management facility is permitted for 150 million tonnes, more than sufficient for the expansion’s needs. The Phase 3+ Expansion remains on schedule for completion in late 2026, with the full district-wide expansion anticipated by early 2028.
Sources
- https://www.globenewswire.com/news-release/2026/02/03/2611826/0/en/Alamos-Gold-Announces-Island-Gold-District-Expansion-to-20-000-tpd-creating-one-of-Canadas-largest-and-lowest-cost-gold-mines.html
