GoGold approved to build $227M mine in Mexico

GoGold Resources (TSX: GGD) has received federal approval in Mexico to begin construction of its $227 million (C$316 million) Los Ricos South (LRS) underground mine in Jalisco state. Shares of the company soared.

Mexico’s environmental department has granted all permits required for the bulk-tonnage underground mine, the Canadian gold-silver miner said Monday. The construction is expected to take 24 months.

The approval represents “a transformative milestone” as it paves the way for GoGold to add a second-producing asset to its Mexico-focused portfolio, the company said.

CEO Brad Langille 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 13% to C$3.43 apiece in early afternoon Toronto trading Monday, giving the Halifax-based company a market capitalization of about C$1.5 billion ($1.1 billion). Earlier the stock touched a three-month high of C$3.73.

15-year 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. This includes 7.3 million oz. per year over the first five years, according to a feasibility study published in 2025.

The report, using a discount rate of 5%, a base-case silver price of $26.80 per oz. and a gold price of $2,330 per oz., gave the project an after-tax net present value of $355 million with an internal rate of return of 28%. 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 advanced to the preliminary economic assessment 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. As a result, GoGold is fully funded to build LRS.