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Argonaut Gold closes financing deal to finish Dubreuilville-area mine

Gold miner expects to start production at Magino Mine in early 2023
Argonaut Gold Magino pit photo
(Argonaut Gold photo)

Argonaut Gold has secured financing to finish construction of its Magino open-pit mine near Dubreuilville.

The Toronto mining company announced July 5 that it has raised $195.3 million through a common share offering.

Argonaut announced in December that the cost to complete the open-pit mine had jumped from $510 million to $800 million, attributing the increased costs to inflation and the pandemic.

Over the spring, the company said it was considering its "financing and strategic" options to push the project over the finish line.

In early May, Argonaut said it was at the half-way mark of construction. So far, the company maintains it's on track to start gold production at Magino during the first quarter of 2023. First gold pour will at the end of next March. The operation will create direct mining jobs for 350.

The offering of 434,000,000 common shares involved a syndicate of agents led by BMO Capital Markets, Scotiabank, and Cormark Securities, Canaccord Genuity Corp., RBC Capital Markets, Desjardins Capital Markets, Echelon Wealth Partners, Laurentian Bank Securities, Paradigm, and Stifel GMP.

In addition, Argonaut also announced in June the signing of a binding commitment letter for a US$200 million loan over a six-year period from a syndicate of lenders, plus a three-year revolving credit facility of US$50 million, for a total debt package of $250 million.

Argonaut has four mines in Mexico. Magino, located outside 14 kilometres outside Dubreuilville and 195 kilometres north of Sault Ste. Marie, will be the company's first Canadian mine.

Magino is situated just west of the Island Gold Mine, now undergoing its third wave of expansion under the Alamos Gold flag.

The projected mine life is 19 years but there is a high probability that could be extended. The company is finding high-grade gold below and around the proposed pit.

Magino was once an underground mine of the same name, developed after the First World War. It operated sporadically over the decades, producing 114,319 ounces of gold at 4.43 grams per tonne.