Argonaut reports first gold pour at Magino mine
Argonaut Gold Inc. [AR-TSX] said Thursday it has achieved the first gold pour at its Magino gold mine in northern Ontario. Process plant ramp-up remains on schedule with commercial production expected to be reached in the third quarter of 2023.
Argonaut emerged as a Canadian intermediate gold producer by completing a friendly merger deal with Alio Gold Inc. [ALO-TSX, NYSE].
By combining with Alio Gold, Argonaut expected to benefit from an enhanced asset portfolio and improved geographical diversification with assets in Mexico, Canada and the United States.
In 2022, the company achieved its production targets by producing 203,155 gold equivalent ounces (GEOS). However, GEO sales were down 17% to 207,158 ounces.
“The Magino mine is key to achieving our vision to become a low cost, mid-tier North American gold producer that creates significant value for shareholders,’’ said said Argonaut CEO Richard Young.
“The commissioning of Magino will be the first step in transforming the company as it enters a pivotal growth stage,’’ he said recently.
Magino 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.
By the end of 2022, the company had incurred approximately $583 million on Magino construction, and estimated that the 10,000 tonne-per-day project was 80% complete.
Magino is expected to produce 72,000 to 81,000 ounces of gold in 2023 at a cash cost of between US$850 and US$950 an ounce. According to a recent technical report, Magino is expected to produce 142,000 gold, in 2024, its first full year of production. The report envisages a mine life of 19 years and a life of mine all in sustaining cost of US$963 an ounce.
The company said it is also pursuing additional growth opportunities at Magino. Argonaut is scheduled to begin a 12-to-15 month exploration and reserve development program in the third quarter to convert open pit resources to reserves within the current resource pit cone, test deep underground high-grade targets, and test open pit targets along strike west of the of the current deposit.
In parallel, a review of mill optimization and expansion opportunities will commence in the third quarter, to potentially raise throughput rates and increase annual production.
On June 14, 2023, Argonaut shares closed at 59 cents and currently trade in a 52-week range of $1.04 and 32.5 cents.
An increase in construction costs at the Magino project required a large capital raise, including debt, equity and the sale of a royalty. Also, inflationary pressures had a significant impact on operating results of our low-grade heap leach operations, resulting in an impairment of the company’s Mexican assets and Florida Canyon mine [in Nevada].