Argonaut announces $45 million bought deal
Argonaut Gold Inc. [AR-TSX] has arranged a $45 million bought deal offering that will be used for exploration and development at its construction-stage Magino property in northern Ontario.
The funds are being raised by way of a private placement of 3.4 million Canadian exploration expense (CEE) and 13.8 million Canadian development expense (CDE) flow-through common shares for $2.95 per CEE flow-through common share and $2.54 per CDE flow-through common share.
In addition, the company has also granted the underwriters an option, exercisable up to 48 hours prior to closing, to purchase an additional 15% of the number of flow-through4e of the number of flow-through shares, in the same percentage and the same price. Closing is expected to occur on March 3, 2022.
News of the bought deal offering was announced just after the close of trading on February 14, 2022, when Argonaut shares closed at $2.27. The shares are currently trading in a 52-week range of $4.09 and $1.90.
Argonaut recently emerged as a Canadian intermediate gold producer with 2021 production of 244,156 ounces of gold equivalent by completing a friendly merger deal with Alio Gold Inc. [ALO-TSX, NYSE].
The combined entity expects to benefit from an enhanced asset portfolio and improved geographical diversification with assets in Mexico, Canada and the United States.
The Magino mine property is a past-producing underground gold mine located 40 kilometres northeast of Wawa, Ontario, approximately 14 kilometres southeast of Dubreuilville. It is estimated to host proven and probable reserves of 58.9 million tonnes, grading 1.13 g/t gold or 2.13 million ounces.
“We are approximately half way through the construction of a 10,000-tonne-per-day project, and we continue to believe that an expansion, including the existing high-grade underground exploration targets, has the potential to meaningfully increase production,” said Dan Symons, Vice-President, Corporate Development and Investor Relations.
“We view Magino as the flagship asset of the company and look forward to unlocking its value potential as we continue our strategy of transitioning from a higher cost, junior producer to a lower cost, immediate producer with long life assets,” he said.
According to the latest technical report, Magino is expected to produce 142,000 gold ounces during the first five years following ramp up to full run rate. The report envisages a mine life of 19 years and a life of mine all in sustaining cost of US$963 an ounce.
Under an environmental assessment, Magino is authorized to permit for up to 35,000 tonnes per day.
The current 10,000 tonnes per day project was chosen to manage initial capital costs. However, studies have been conducted that contemplate an expansion of the processing facility to 20,000 tonnes per day.