Argonaut enters construction as gold price rallies
Argonaut Gold Inc. [AR-TSX; ARNGF-OTC] said Monday January 4 that it has executed a fixed bid engineering, procurement, construction and commissioning contract for its 100%-owned Magino property in northern Ontario,
The move comes as the price of gold surged close to a two-month high of US$1,945.10/oz on the back of a weaker U.S. dollar index as spiking COVID-19 cases and prospects of tougher restrictions boosted the precious metal’s safe haven appeal. Silver also surged on the first full trading day of 2021, rising 3.42% to US$27.31/oz.
“We are excited for Magino to be one of the first projects entering construction [this month] in the current gold price environment, as we feel first mover advantage is critical when securing a construction team of the highest quality and with a superior track record,” said Argonaut President and CEO Pete Dougherty.
Argonaut shares were active on the news, rising 3.65% or $0.10 to $2.84 on volume of 566,590. The shares are currently trading in a 52-week range of $3.42 and 76 cents.
The EPC contract with Ausenco Engineering Canada Inc. totals approximately 40% of Magino’s initial capital estimate of between $480 million and $510 million (US$360 million).
Argonaut recently emerged as a Canadian intermediate gold producer with annual production of 235,000 ounces of gold equivalent annually by completing a friendly merger deal with Alio Gold Inc.
The combined entity expects to benefit from an enhanced asset portfolio and improved geographical diversification with assets in Mexico, Canada and the United States.
Argonaut’s portfolio of Mexican operations, include the 100%-owned La Colorada Mine in Sonora, and El Castillo Complex in Durango. The company’s advanced development stage projects include the Cerro del Gallo project in Guanajuato, Mexico and Magino project in Canada.
The Magino mine property is a past-producing underground gold mine 40 km northeast of Wawa, Ontario. 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.
A feasibility study released in November, 2017, indicates that the project could yield 2 million ounces of gold over a 17-year mine life with average production of 150,000 ounces during the first five years. The study envisaged an all-in-sustaining cost of US$711 per gold ounce sold.