From here. A good place to start. We're largely a Canadian operator. All our operations are in North America. We actually started out in Mexico with the Mulatos mine, which went into production in 2005. Over the years, we've grown our production and diversified our production. At this point, we're producing just over 500,000 ounces of gold a year, but we're on a growth path to 1 million ounces a year by 2030. We're getting there largely through an expansion at our Island Gold project, which will see production climb from current levels, where we're producing in the range of about 150,000 ounces a year. We're ultimately going to build that up to about 540,000 ounces a year. Then we're bringing on the Lynn Lake project in northern Manitoba. It's in full construction right now. That'll add another 200,000 ounces of annual production.
The interesting thing about it's all fully permitted, fully funded, and all the new production we're bringing on will be lower cost than our costs are today. So we're looking forward to a time where we're going to be generating in excess of 1 million ounces of gold a year from our existing operations at cash costs in the range of about CAD 1,200- CAD 1,300 all-in sustaining cost.
Great. Then maybe just to start drilling into some of the operations. Island Gold is, of course, the main growth driver for the company, expected to ramp up to more than 530,000 ounces starting in 2028. Can you talk about underground mining rates at Island Gold and what the upside potential is there, considering the new shaft?
Yeah. So when we took on Island Gold back at the end of 2017, it was sitting with roughly 700,000, and we saw potential for that district to grow. But even the Island deposit itself, one of the operating sort of assumptions that we had is if you went to depth, you would see an improvement in grade. The reason why we thought that is because of the work that had already been done by Richmont Mines. They'd already started to lay that foundation. You could see it from the early workings prior to Richmont, they were mining 4-5 g material up to about the 400 m level. By the time Richmont was running it was running at roughly 9 g , and we could see some drilling that they had at depth that showed grades closer to 11 g, even 13 g.
That really intrigued us. By now, we've invested heavily in exploration, and we've driven our underground reserves there to in excess of 5 million ounces. That's proven and probable reserves. We have seen grades go from roughly 9 g a ton when we acquired it. They're sitting around 11 g per ton now. Still open in all directions, still growing. We could already see from the work we've done this year, we're going to continue to add to reserves and resources based on the work that we're doing in 2026. In addition to that, we saw that in order to match this big growth in reserves, we also had to match it with a growth in production. We undertook in 2022 to sink a shaft. That shaft is now completed. We've essentially put in a shaft down to 1,382 m.
We're in the process now of equipping that shaft. We'll be finished by the end of the year. We'll commission it in Q1, and we'll basically be mining for Island Gold, over the course of 2027 from the shaft, and it will essentially build up to a rate of roughly 2,400 tons a day. So about double our current rate of production from underground today. In addition, we acquired Argonaut Gold, which was our neighbor. They developed an open pit operation. Since we took it over, we've been working on the whole mill complex there, and we finally got it to the point where we've got it mining at 10,000 tons a day, which is its capacity, and that will generate just over 100,000 ounces a year at that rate.
What we're working on now is an expansion of the whole mill complex, taking it to 20,000 tons a day. That work is well underway. It's all permitted. The additional mill is on order. Essentially, what we're going to do is twin the existing line, and at the front end, we're putting in a big gyratory crusher, and that gyratory crusher will feed the two mills. By the time that's completed, that will generate about 400,000 ounces of production from the open pit. Pardon me, from the underground, and about 130,000 ounces or so from the open pit. So significant growth coming from that district, and it's being driven by essentially the big expansion of the underground operation, converting it to a shaft, taking it initially to 2,400 tons a day in 2027.
By 2028, we intend to ramp it up over the course of that year to 3,000 tons a day. Essentially, the only limiting factor is development. It's just going to take us some time to get the development in place to generate the 3,000 tons a day from underground. We will be there as we go through 2028, and by the time we're through that year, that mine will have a run rate of about 535,000 ounces a year. So it's pretty exciting development because the mine grows in a significant way, and we also see the cost coming down.
Great. You referenced that Magino is now reliably at 10,000 tons per day. What has driven the improvement in the reliability, and what lessons have you learned as you think about the next phase, which is doubling the throughput to 20,000 tons per day?
Well, I will start off by saying we didn't build that mill in the first place. By the time we bought it, we knew going in there were some design problems associated with it, but it was particularly the front end. It was designed so that you delivered ore from the open pit to a stockpile, and then a stockpile would feed a grizzly. The grizzly would effectively provide your feed into the primary and secondary crusher, and ultimately into the mill. That was set up to work perfectly well in an environment like Australia or possibly Africa. It was not set up well to work in a northern Canadian climate, and so we could see that going in. It took us a little longer to get it straightened out. When we took it on, it was barely doing 6,000 tons a day.
If I learned my lesson, it is I would've been much more conservative on guiding what that thing could do. It took us a lot longer to sort out the problems than we initially expected. Anyway, you can kind of see what we had to work through, but we got it there. What we should've ultimately guided to is what the mine was capable of doing by the time we took it on and took out the two primary flaws in the way it was set up. The front end, take out the grizzly setup altogether and put in a gyratory crusher, a much larger capacity. On the back end, get rid of that CNG plant. We were already in the process of bringing in grid power, which will be in by first quarter of next year.
With grid power, we won't be dealing with CNG tank deliveries, which, as you could expect, by the time you get into the depths of a Canadian winter and the road closures we have to deal with due to heavy snow and so forth, it made the plant relatively unreliable. So, we ended up with a much heavier snow year in 2025 than anybody had seen in probably the previous decade, and it kind of dogged us, keeping that plant running. Those two issues will be sorted. The gyratory basically gets rid of the grizzly, and on the back end, we get rid of the CNG plant altogether, and effectively, we'll be running off of grid power, cheaper and much more reliable.
Great. I just want to ask one more before we move past Island Gold District. The exploration upside, I think, is maybe underappreciated by the market. I think in some ways people have become just used to really high grades at Island Gold underground. 10 g per ton is incredible if anybody else was talking about it, but you get used to it when it's Island Gold. Just talk about the exploration potential there.
I think I know what you're getting at. I'm even getting inured to it. I'll get a list of drill holes that we're getting ready for press release, and easy, we'll have 5- 10 m true widths, and the grades will be running anywhere from 10- 50 g. Those are extraordinary holes, and in my whole career I've never seen a mine that coughs up great results like that, but Island does. When we put out another batch of holes, and it's sometimes 20, 30 holes that are all running at least well north of 50 gram-meters, and those would include big step-out holes or even greenfields holes. You get spoiled with those kind of results. I think the important thing to say is we've never lost sight of the potential there.
I'm comparing it now to one of the great stories in the early part of my career was Hemlo Gold. When Hemlo was opening up, effectively three mines developed there in fairly short order. The best of them all was Golden Giant, and the biggest that reserve ever got to was 5.7 million ounces of roughly 11 g. Well, that's Island Gold. On either side of it, you had the Page-Williams Mine and the David Bell Mine. Well, next to us, we've got Magino already, and that's already running over 3 million ounces, and it remains open. It's going to grow. Then to the east of us, we've got the Cline-Pick-Edwards area, where we've been aggressively drilling and hitting very similar sort of high-grade mineralization to what we're hitting at Island Gold.
We expect to have a maiden resource on Cline-Pick-Edwards ready for the end of the year, so we'll be announcing it early next year. That is taking shape, and there's very little doubt in my mind that that ultimately turns into a deposit that we're going to mine as well. So the growth potential in this district is extraordinary. If anybody is underestimating the exploration potential at this point in time, you got no excuses because I'm saying right here, I'll stake my reputation on this one. It's easy to do that because the results speak for themselves. We've got much more to come. All the results we've produced to date demonstrate that it's open to the east and west. We stepped out 250 m to the west to test that idea that, we knew the high-grade mineralization did not run underneath the Magino deposit. We knew that.
But we thought if it was going to be picked up to the west, it would be probably about 400 m to the south. And so on that basis, we set up 250 m west of our nearest drill hole, and we put in the first two holes, and we hit. And we hit 12 g over 5 m true width in both of those holes. That's a 250 m step out. Anybody who questions that this thing is going to grow, they need to go back to geology school or something like that, because this one is an absolute obvious case.
Right. I'm going to switch gears to Young-Davidson. It drove a reduction to 2026 guidance following a seismic event earlier in the year. Can you walk through the path to get back to normalized run rates, what that may look like and timelines and the remediation being done underground?
So at Young-Davidson, it's a question of how are we going to mine that deposit over the next 15 years? We've been mining at Young-Davidson, we acquired it in 2015, so we've been mining it for a decade. We completed the lower mine development in 2020, and we had five solid years without. We never missed a single guide. Mostly, we exceeded guidance. We always met guidance. But as we got to below that 1,000 m threshold, in what we call the 9410 level, we already were anticipating that the stresses were getting higher. So we were in the process of improving ground support in the areas where we already had development in place.
And unfortunately, between the mining that we were doing at one end of that level and the rehab work, the upgrading of the ground support that we were doing at the other end of the level, we ended up with the seismic event right in between. So we were sort of working on it, but obviously not fast enough. But what we recognize now is we have to sequence that mine in such a way that we drive the stresses to the outer edges of the mine, and that's somewhat different from what we're doing now. There's a section of the ore deposit in the middle that isn't mineralized. We sort of been utilizing that as a crown pillar. And up until about the 1,000 m level, this has been working very well. But that's not the way we're going to go forward.
We are effectively working on a mine plan now, a resequencing, which will require quite a bit of additional development to allow us more flexibility, to allow us to essentially divert the stresses that we are encountering as we go to depth to the outer parts of the mine. We are very fortunate in the event that happened, in that it was not very serious. It did not quarantine any of that gold. We will effectively be able to go back in and mine the gold on that level. It was more of a warning shot across the bow than, say, a direct hit amidships and sinking the ship. As a result, it gives us the opportunity to effectively go in there and do this, to implement a new plan going forward.
It is not a question of going in and fixing it so that we can operate there for the next three quarters. We have got to think about the next 15 years, and it will probably go a lot longer than that. What really stands to our advantage is the fact that we have really stable ground conditions here. It is not an environment plagued with faulting and high degrees of seismicity. The seismicity we have is caused by the blasting that we do. In normal circumstances, that should not cause any damage to the workings.
But in this particular case, we just did not have it set up in a robust enough fashion. But we are addressing that now, and we are going to be back on track. It is going to be several quarters here of ramping up our production from where we are now. We are basically operating at about 5,000 tons a day.
That will step up in 2027 and throughout 2027 and into 2028. I think ultimately we do get back to north of 7,000 tons a day. In the meantime, even at 5,000 tons a day, the mine remains very profitable.
Great. Lastly, in the few minutes that we have left, one of the common themes in all your answers was just the organic pipeline, how strong it is. In that context and given that backdrop, how do you think about M&A? It has been a core part of the company's history. But how do you think about it at this juncture, where gold prices are and what is out there?
Well, the last transaction we did was the acquisition of Argonaut Gold. You just couldn't fault the logic. It just made nothing but good common sense to acquire that project, the synergies that we realized. It was over CAD 500 million a year that exceeded what we paid for the mine. In addition to that, it had a really good solid reserve. It had lots of upside potential. In other words, lots of growth potential. We had that theory in our back pocket that there might be an extension of Island Gold, but well to the south of Magino. That's turned out to be true. Looking forward to much more drilling from that zone. There was a lot of good reasons for doing that deal. There isn't always as much justification for doing an M&A transaction as there was for that one.
We like to acquire countercyclically, and I think we've demonstrated that very, very well over the 20-odd years I've been Chief Executive Officer of the company. We've effectively taken it, driven by M&A, from a CAD 15 million penny stock to a CAD 20 billion mid-tier producer with tremendous growth potential. We envision getting Alamos to the point where it's a major, and we can do that through our organic growth pipeline. The market's going to present opportunities again. It always does. They're few and far between right now. We don't see a lot of really easy pickings, whatever you want to call it, low-hanging fruit. But when the opportunities present itself, we generally spot it, and we're capable of moving.
Great. I think that's a good place to stop. John, thank you very much. That was excellent.
Thank you. Cheers.