Can Amex Gold Mining Turn High-Grade Gold Into A Production Advantage?

When it comes to gold stocks, the key questions are: how cheaply it can produce gold and how much it can sell it for.

While the market sets the sale price, the cost question depends on many factors tied to the mining operations and the mine where the metal is extracted and produced.

One of the key questions relating to a mine's cost of production is the grade of the mine.

If a mine is considered “high-grade”, it could theoretically have an advantage and produce gold at a lower cost than a mine that isn’t.

One company looking to do just that is Amex Gold Mining (TSXV:AMX).

Why gold grades matter to mining costs and profitability

Mining is a simple concept. You have a mine, you extract rock, and then in that rock you hope to find elements of the metal that you are mining. How much of the metal you can expect to find in that rock plays a role in deciding the grade that will be attached to that mine.

It is usually specified in how many grams of metal can be found in a tonne of ore/rock.

While different measurements exist, and it also depends on the type of mine, a mine that has concentrations of 1.0 to 4.0 grams per tonne of extracted ore is generally considered low-grade, while a mine with concentrations above 8.0 grams of gold per tonne of extracted ore is considered high-grade.

A high-grade mine has a production advantage over a low-grade mine. This is largely because of the amount of activity that is required to produce an equivalent amount of gold.

For example, a Troy ounce, a measurement used commonly with precious metals, of gold is made up of around 31 grams.

A mine with a grade of 1.0 grams per tonne needs to extract approximately 31 tonnes of ore. A mine that produces 8.0 grams of gold per tonne, on the other hand, only has to extract just under 4 tonnes of ore. 

The latter involves significantly less activity and therefore is considerably cheaper. 

What makes Amex’s Champagne Zone stand out?

Now, imagine that a mine isn’t graded at 8.0 grams per tonne but 12.1 grams per tonne?

That is what Amex Mining’s Champagne Zone project’s estimated grade is, with a reported 774,000 ounces of proven and probable reserves. Its all-in sustaining cost is estimated to be around US$910 per ounce, which is also significantly below the various averages calculated for the wider industry, such as a 2025 estimate from the World Gold Council of US$1,456 per ounce.

Having such a high-grade mine is an advantage as it supports positive margins, a shorter payback on investment, and is more capital efficient.

Could Amex’s high-grade mine become a production advantage?

The major question for Amex Mining is whether it can turn that potential into a real production advantage.

It will start with a 40,000-tonne underground bulk-sampling program taking place during 2026 and 2027. The aim is for this to provide more information about the ore and support further development planning.

The next stage, what Amex calls Phase 1, is planned to commence in 2028 and involves commercial production and will use underground mining and third-party toll milling to process its high-grade ore. The use of existing third-party infrastructure should theoretically help it reduce up-front capital requirements and help bring the project to production sooner. A feasibility study on the project estimates it can produce up to 147,000 ounces of gold annually across the first five years.

A feasibility study into Phase 2, which includes Amex constructing its own on-site production infrastructure, is set to take place in 2028, with hopes that construction could begin in 2031 and operations beginning in 2033. 

Amex still has hurdles to clear before it can reach production, but could the Champagne Zone’s high-grade gold give it an advantage if the company can execute its plans?

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