Alamos Gold (TSX:AGI; NYSE:AGI) on Wednesday said it won approval for an amendment to its existing environmental impact assessment by Mexico's Secretariat of Environment and Natural Resources, allowing for the start of construction on the Puerto Del Aire (PDA) project located within the Mulatos District, Mexico.

The U.S.-listed shares of the company fell 0.4% to US$20.40 in pre-market trading.

"Having achieved this key permitting milestone through long-standing community, state, and federal government support, PDA is expected to significantly extend the mine life of the District, as our next high-return project with significant exploration upside," said Alamos Gold Chief Executive John A. McCluskey.

The company expects annual gold production to average 127,000 ounces over the first four years, and 104,000 ounces over an eight-year mine life based on Mineral Reserves at the end of 2023. At a US$2,500 per ounce gold price, the PDA project has an estimated after-tax net present value (5%) of $492 million and an after-tax internal rate of return of 73%.

The project contains significant exploration upside with PDA open in multiple directions and higher-grade mineralization intersected below the past producing Cerro Pelon open pit, which is expected to support an initial underground Mineral Resource at Cerro Pelon. Cerro Pelon represents upside as a potential source of additional feed to the PDA sulphide mill that could extend the higher rates of production beyond the first four years of the current mine plan.