The corporate is concentrating on industrial manufacturing by the top of the quarter, Argonaut CEO Richard Younger informed The Northern Miner in an interview, although its mill start-up has been delayed.
“We’re about 30 days delayed from what we introduced firstly of the 12 months,” stated Younger, who turned CEO final December. “We anticipated first pour in Could somewhat than June. However the mine and mill are coming alongside.”
Younger stated the delay was “typical” for commissioning, citing modifications made as rock was put into the crushing and grinding amenities.
“You simply need to be certain that they get all that proper,” he stated.
Magino is predicted to supply between 72,000 and 81,000 oz. of gold in 2023 at money prices of $850 to $950 per oz., and about 148,000 oz. of gold at a money price of $868 per oz. in 2024, its first full 12 months of manufacturing. Its mine life is pegged at 19 years.
Its Mexican gold-silver mines nevertheless, have shorter lives. La Colorado in Sonora state, which Argonaut acquired in 2011 will attain its finish in 2027. El Castillo (acquired in 2009), and San Agustin (acquired in 2013) – each in Durango – will wrap up in 2023 and 2024, respectively.
Magino hosts confirmed and possible reserves of 63.3 million tonnes grading 1.16 grams gold per tonne for two.4 million oz. gold, based on a useful resource replace in March. Measured and indicated sources whole 150.8 million tonnes grading 0.94 gram gold per tonne for 4.5 million ounces, inclusive of reserves.
Argonaut is now centered on reviewing mill optimization, for which it employed Ausenco Engineering to do a debottlenecking research.
It’s additionally conducting an enlargement plan consisting of a second ball mill and gyratory crusher to lift day by day throughput from the present 10,000-tonne per day nameplate capability to between 17,000 and 20,000 tonnes per day. Argonaut expects the enlargement will likely be accomplished in 2026.
“At 20,000-tpd, [the] reserve grade leads to about 250,000 oz. of gold per 12 months,” Younger stated, including Ausenco’s preliminary estimate for the enlargement is about $75 million.
The corporate can also be engaged on a 12 to 15-month exploration and reserve growth program to boost its geological understanding of the goal’s historic outcomes and convert 750,000 oz. of measured and indicated sources and 250,000 tonnes of inferred sources into confirmed and possible reserves.
“[We want to take] benefit of among the work that our neighbours have accomplished at Island Gold subsequent door to see how their program has progressed and see whether or not or not we will glean something from their program at depth,” Younger stated.
The Island mine, owned by Alamos Gold (TSX: AGI; NYSE: AGI) is situated simply east of Magino and hosts 4.2 million confirmed and possible tonnes grading 10.8 grams gold per tonne for 1.5 million oz. contained metallic, with a mine lifetime of 17 years.
By way of its enlargement plan, it goals to turn out to be the lowest-cost producer in Canada inside three years, concentrating on $576 per oz. in all-in sustaining prices, doubling milling capability to 2,400 tonnes per day and greater than doubling annual manufacturing to 287,000 ounces.
Wanting in the direction of 2024, Younger stated Magino might turn out to be one of many 10 largest and lowest price gold operations in Canada.
“It’s a singular alternative to personal a kind of mines not owned by a senior,” he stated. “We consider that in the end, we’ll have 4-million-plus ounces in reserve open pit, [and] a mill enlargement. And so, the worth of the…asset is likely to be near double that.”
Adios to Mexico?
Argonaut is seeking to promote all its belongings in Mexico, which since 2009 have been its manufacturing mainstay. These operations embody the exploration stage Cerro del Gallo mission in Guanajuato state.
Argonaut offered its growth stage gold-silver Ana Paula mission in Guerrero state to Heliostar Metals (TSXV: HSTR) for $30 million in money and shares, in December 2022.
“The [Mexican] belongings now are greater price, mature and have shorter mine lives,” Younger stated. “They don’t slot in with our general objective of being a low-cost mid-tier gold producer with lengthy life belongings. These belongings could also be higher off in another person’s palms and the proceeds from a sale would permit us to strengthen our stability sheet which I believe shareholders will likely be very supportive of.”
Younger stated assessments of Argonaut’s asset base and their prices revealed extra progress potential at Magino and the Florida Canyon mine in Nevada.
He declined to present a worth estimate for the Mexican belongings, however stated the corporate would start exploring gross sales within the fourth quarter.
“I believe we’re going to be life like with this and do the suitable factor by our staff,” he stated. “Our focus is to place the belongings in the suitable palms. We’re in search of firms and administration teams that share our values and have the stability sheet to execute and proceed to function these belongings.”
Argonaut’s change of coronary heart on the Mexican initiatives comes a number of months after the federal government of President Andres Manuel Lopez Obrador handed a set of contentious mining legal guidelines that critics say will deter funding and hurt the nation’s mining business. Underneath the brand new reforms, juniors will face a more durable course of to acquire mining concessions, which may also be granted by public auctions, and the concessions have been shortened to 30 years from 50 years.
Argonaut didn’t reply to questions as as to whether these legal guidelines influenced the corporate’s determination to evaluate its Mexican operations.
Lengthy, windy highway
Argonaut’s path to manufacturing at Magino has at instances been winding and tough.
It acquired Magino in 2012, and started constructing the mine in 2020, when growth prices had been pegged round C$510 million. Capex would rise three extra instances till 2023, together with in December 2021, prompting the ouster of Argonaut’s founder, president and CEO Peter Dougherty.
In June 2022, Argonaut closed an providing of 434 million frequent shares at C$0.45 apiece, giving it gross money of C$195.3 million for financing building at Magino. It additionally inked a $250 million debt financing settlement with a syndicate of lenders to assist it refinance its current debt and pay for Magino’s growth and enlargement.
The ultimate estimate for Magino now sits at C$980 million, based on Argonaut’s first quarter monetary outcomes, in Could. However Younger stated he doesn’t count on prices to rise once more.
“The mission is finished now,” he stated. “There’s a number of items of infrastructure which can be nonetheless excellent, however the mission is up and working. And in order that capital inflation danger is now behind us.”
Following a current tour of Magino, BMO Capital Markets gold analyst Brian Quast stated in a word on Sept. 10 that the majority metrics on the mine are optimistic though many points require consideration because the mine progresses by commissioning.
Staffing can also be a problem. One truck wasn’t working due to an absence of skilled drivers. Quast stated administration famous there are round 70 open positions at Magino, regardless of efforts to upskill employees and appeal to extra expertise.