i-80 Gold's Lone Tree Refurbishment: Processing Changes & Margin Implications

• i-80 Gold's Lone Tree refurbishment transitions the company from toll-milling dependency to owner-operator processing economics
• The engineering study completed in December 2025 quantifies capital expenditure at $430 million with a 12–24 month payback period based on margin differential
• Autoclave ownership addresses refractory processing constraints in Nevada, where only two companies operate such facilities
• Margin improvement of $1,000–$1,500 per ounce derives from eliminating toll-milling fees and increasing metallurgical recovery from 57 percent to 92 percent
• Near-term milestones include first quarter 2026 permit submission and mid-2026 recapitalization targeting, with construction timelines estimated at 18–24 months following permit approval

Third-Party Processing Costs in Nevada Refractory Gold Operations

Third-party processing costs and capacity constraints increasingly affect producer economics in Nevada's refractory gold district. The relationship between processing control and margin capture has become more pronounced as toll rates have escalated while autoclave capacity remains limited.

Toll-Milling Arrangements and Payability Structure

i-80 Gold's current toll-milling arrangements provide payability of approximately 57% or refractory material. Processing costs range from $1,000 to $1,500 per ounce, reflecting treatment charges, reagent costs, and facility operator margins. Schedule limitations restrict operational flexibility during favorable pricing periods or when grade optimization requires processing sequence modifications.

Richard Young, President and Chief Executive Officer of i-80 Gold emphasizes the temporary nature of toll-milling costs:

"The flip side with the new toll milling agreement, our processing costs rise reflective of that $1,000 to $1,500 margin. The processing costs are not a true reflection of our cost structure once the process facility at Lone Tree is completed. That's a temporary charge related to the toll milling. It's a bit of a red herring and you can see how high those costs are and why it's limiting the gross profit and free cash flow."

Lone Tree's Existing Infrastructure and Brownfield Status

Lone Tree's refurbishment leverages existing infrastructure and permits to deliver autoclave capacity at lower capital intensity and compressed timelines relative to greenfield development.

Physical Assets and Historical Operations

The Lone Tree complex operated as a producing mine and processing facility until 2017, processing oxide and refractory material through carbon-in-leach and pressure oxidation circuits. The facility is located in Humboldt County, Nevada, with established grid power connections, water rights, and proximity to Battle Mountain-Winnemucca labor markets.

Engineering Scope and Capital Estimate

Hatch Ltd. completed the Class 3 engineering study in December 2025, with detailed engineering now 30 percent complete. Total capital costs are estimated at $430 million, comprising $412 million for refurbishment and $18 million for capital spares.

The engineering scope transitions the facility from alkaline pressure oxidation to acid-based pressure oxidation. Designed throughput capacity is 2,268 tonnes per day (827,806 tonnes per annum), sufficient for projected feed from Granite Creek and Archimedes underground operations with scheduling margin for oxide material from Cove.

Richard Young highlights:

"Hatch has largely completed their engineering work on the refurbishment of the facility and it's in line with expectations… Just given the economics, the refurbishment is roughly $400 million. If you're producing 200,000 ounces a year and you improve your margin by $1,000 to $1,500 there's a very quick payback on that refurbishment."

Processing Cost Structure and Recovery Rate Changes

The refurbishment investment is predicated on quantifiable margin improvement derived from eliminating toll-milling fees and improving metallurgical recovery rates.

Cost Differential Between Toll-Milling and Owner-Operator Processing

Third-party toll arrangements currently impose $1,000–$1,500 per ounce in processing fees. Internal processing reduces these costs to approximately one-third of toll rates, reflecting direct reagent consumption, energy, labor, and maintenance expenses without third-party profit margins or treatment charges.

Metallurgical recovery improves from 57 percent payability under current toll arrangements to approximately 92 percent through acid-based pressure oxidation followed by carbon-in-leach recovery. 

At 200,000 ounces annual production the combined margin improvement from cost reduction and recovery enhancement generates $200–$300 million in incremental earnings before interest, taxes, depreciation and amortization. Applied to the $430 million capital investment, this produces a 12–24 month payback period.

All-In Sustaining Cost and Resource Recovery Implications

Consolidated all-in sustaining costs decline once Lone Tree reaches commercial production, with processing cost reductions flowing directly through operating metrics. The recovery differential provides additional leverage across Granite Creek's 8.4 grams per tonne gold underground resource (resource estimate effective December 31, 2024).

Richard Young notes:

"We expect to pour gold through our own autoclave before the end of 2027. By 2028 we expect to produce about 200,000 ounces per year and generate EBITDA somewhere between 200 and $300 million depending on the price of gold."

Autoclave Capacity in Nevada's Refractory Gold District

Processing infrastructure scarcity affects refractory gold economics across Nevada's mining district.

Current Autoclave Operators and Capacity Allocation

Two companies operate autoclaves in Nevada: i-80 Gold (following Lone Tree refurbishment) and Nevada Gold Mines. This concentration reflects the capital intensity of autoclave construction and the technical complexity of pressure oxidation metallurgy.

As Nevada Gold Mines prioritizes internal feed from Carlin-trend deposits, third-party processing capacity remains limited, supporting elevated toll rates and extended scheduling timelines.

Lone Tree as Processing Hub for Multiple Operations

i-80 Gold's development approach positions Lone Tree as the central processing hub for multiple satellite operations. Granite Creek and Archimedes underground mines provide high-grade refractory feed requiring pressure oxidation, while Cove's oxide and transitional material can flow through carbon-in-leach circuits or bypass autoclave treatment depending on metallurgical characteristics.

Throughput capacity of 2,268 tonnes per day provides scheduling margin beyond initial production targets.

Richard Young:

"We announced 12 months ago a three-phase development plan that would take production from less than 50,000 ounces of gold per year to over 600,000 ounces of gold production annually."

Technology Selection and Construction Parameters

Brownfield refurbishment carries different risk characteristics than greenfield construction due to existing infrastructure, proven technology, and defined permitting pathways.

Pressure Oxidation Metallurgy and Process Configuration

Pressure oxidation followed by carbon-in-leach recovery represents established metallurgy for refractory gold processing, deployed across multiple operations globally. The transition from alkaline to acid-based pressure oxidation improves process efficiency without introducing experimental flowsheet elements.

Metallurgical test work confirms 92 percent gold recovery across expected grade ranges and mineralogical variations. Equipment specifications follow conservative design parameters validated through bench-scale and pilot testing using Granite Creek and Archimedes ore samples.

Labor Requirements and Permitting Framework

The company targets permit application submission in first quarter 2026. Nevada Division of Environmental Protection and United States Environmental Protection Agency review cycles typically span 12–15 months for major source modifications. While Lone Tree maintains valid existing operational permits, the refurbishment requires new or revised permits for air quality, water pollution, mercury abatement, and reclamation.

Richard Young:

"During the third quarter, we installed a permanent dewatering system... Water issue will no longer be a challenge, and the reason why that's so important is it hampered our ability to develop the ore body at depth. At depth, grades get better ground conditions get better, and we expect mining rates to rise."

Processing Economics Across i-80 Gold's Nevada Portfolio

Granite Creek contains measured and indicated resources averaging 8.4 grams per tonne gold as of December 31, 2024. The Granite Creek Open Pit preliminary economic assessment published in February 2025 shows net present value at 5 percent discount rate of $926 million and internal rate of return of 52 percent at $3,000 per ounce gold.

Under toll-milling arrangements with 57 percent payability, Granite Creek's high-grade character is partially offset by processing costs and recovery penalties. Owner-operator processing with 92 percent recovery captures additional value from grade differential.

The company targets feasibility study completion for Granite Creek Underground in first quarter 2026, with Cove Underground feasibility also expected in first quarter 2026 and Archimedes Underground feasibility targeted for first quarter 2027.

Richard Young:

"Between the first quarter of 26 and the first quarter of 27 we'll have three feasibility studies out. You'll see a material increase in the resource envelope being measured, indicated, inferred. You'll see us report reserves for the first time for all three operations and it will be significant and we would expect it will be larger than the cash flows that we ran in the PEAs."

Financing Structure and Recapitalization Timeline

Capital structure optimization precedes construction commencement, with financing structure affecting project timeline and execution risk.

Cash Position and Capital Raising in 2025

i-80 Gold held a cash balance of $133.7 million as of June 30, 2025. The company raised approximately $200 million in 2025 through bought-deal and private placements. A May 2025 offering generated $184 million gross proceeds ($174 million net of fees).

Management targets $350–$400 million in total liquidity through a senior debt facility and recapitalization plan targeting completion by mid-2026. The company has received six term sheets from potential financing parties, with discussions involving senior debt, royalty sales, and non-core asset sales.

Richard Young:

"We're fully funded to be able to move the development plan forward, and by the end of Q2 of next year, we expect to have completed the recapitalization plan that will then fund both phase one and phase two of our development plan... We've got half a dozen term sheets... We've got six term sheets and we're working with the six parties moving everything forward."

The Investment Thesis for i-80 Gold

• Margin Control: Owner-operator processing eliminates $1,000–$1,500 per ounce toll-milling costs while improving metallurgical recovery from 57 percent to 92 percent, compressing all-in sustaining costs and expanding earnings before interest, taxes, depreciation and amortization margins.
• Capital Efficiency: Brownfield refurbishment delivers 12–24 month payback relative to $430 million capital investment through existing infrastructure, established permitting protocols, and proven technology that reduces execution risk below greenfield benchmarks.
• Capacity Structure: Autoclave ownership in Nevada addresses refractory processing constraints as one of two companies with such facilities in the state, providing operational flexibility and removing third-party capacity limitations.
• Timeline Definition: Permit submission targeting first quarter 2026, recapitalization targeting mid-2026 completion, and construction timelines estimated at 18–24 months following permit approval provide defined progression milestones.
• Valuation Transition: Shift from development-stage risk profile toward operating producer metrics as 2028 production targets of 200,000 ounces annually demonstrate cash flow generation capability.
• Portfolio Application: Hub-and-spoke processing model applies owned capacity across Granite Creek, Archimedes, and Cove deposits, with three feasibility studies targeting completion between first quarter 2026 and first quarter 2027 establishing maiden reserves.

Lone Tree refurbishment transitions i-80 Gold from toll-milling dependency to owner-operator processing economics through a $430 million brownfield investment. The engineering study completed in December 2025 quantifies margin improvement at $1,000–$1,500 per ounce derived from eliminating third-party processing fees and increasing metallurgical recovery from 57 percent to 92 percent. The investment is supported by existing infrastructure that reduces capital intensity relative to greenfield development, established permitting protocols, and proven metallurgical technology. Near-term milestones include first quarter 2026 permit submission and mid-2026 recapitalization targeting, with first gold pour targeted before year-end 2027 and 200,000 ounce annual production expected by 2028.

TL;DR

i-80 Gold is refurbishing its Lone Tree processing facility through a $430 million brownfield investment to transition from toll-milling dependency to owner-operator economics. The December 2025 engineering study projects margin improvement of $1,000–$1,500 per ounce by eliminating third-party processing fees and increasing metallurgical recovery from 57 percent to 92 percent. This creates a 12–24 month payback period at 200,000 ounces annual production. The company becomes one of only two autoclave operators in Nevada, addressing refractory gold processing constraints. Key milestones include Q1 2026 permit submission, mid-2026 recapitalization completion, and first gold pour before year-end 2027.

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