GoGold Resources (TSX: GGD) has received federal approval in Mexico to begin construction of its $227 million Los Ricos South (LRS) mine in Jalisco state.
In a statement on Monday, the Canadian gold-silver miner said Mexico’s environmental department (SEMARNAT) has granted all permits required for the bulk-tonnage underground mine. The construction is expected to take 24 months, it added.
The approval, says GoGold, represents “a transformative milestone” for the company, as it paves the way for the company to add a second-producing asset to its Mexico-focused portfolio.
CEO Brad Langille also highlighted the company’s “commitment to responsible resource development that prioritizes environmental stewardship and community benefit.” According to GoGold, the project has been designed with rigorous environmental protections and sustainability practices at its core.
Shares of GoGold jumped more than 10% to a three-month high of C$3.73 apiece on this positive development. The Nova Scotia-headquartered company has a market capitalization of C$1.52 billion ($1.1 billion).
15-year underground mine
Acquired in 2019, LRS is envisioned to be a 15-year mine with the capacity to produce of 80 million oz. of payable silver-equivalent, including 7.3 million per year over the first five years, according to published in 2025.
The report, using a base-case silver price of $26.80/oz. and gold price of $2,330/oz., gave the project an after-tax net present value (at a discount rate of 5%) of $355 million with an After-Tax IRR of 28% (Base Case). Its initial capital was pegged at $227 million, while sustaining capital would require another $100 million.
LRS is one of two projects located within GoGold’s broader Los Ricos property, which comprises 45 mining concessions covering over 240 sq. km and is home to several historical mining operations. The other project is Los Ricos North (LRN) located 25 km away. LRN was launched in 2020 and has so far advanced to the preliminary economic assessment (PEA) stage.
In addition to the Los Ricos projects, the company also has the Parral operation in Chihuahua, which hosts an agglomerated heap leach facility that is processing historic tailings to produce saleable silver, gold, and copper at a low cost.
In the most recent quarter, Parral produced 394,605 silver-equivalent oz., boosting the company’s cash balance by $16 million to $261 million. This amount, GoGold said in its Q2 results release, makes it fully funded for the LRS build.
