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Construction of Dubreuilville's Magino Mine is good to go

Argonaut Gold board of directors approve January start for US$380-million pit project
Argonaut Magino Mine aerial
Argonaut Gold's Magino Mine project (Argonaut Gold photo)

January will mark the start of construction of a US$380-million open-pit gold mine and processing mill outside Dubreuilville.

In an Oct. 14 news release, Argonaut Gold's board of directors has given the greenlight for the beginning of a two-year construction period commencing in early 2021, following the filing of a closure plan and posting of a financial assurance bond with the province.

The Toronto miner expects to do the first gold pour during the first half of 2023.

Magino is 14 kilometres southeast of Dubreuilville and 195 kilometres north of Sault Ste. Marie. Argonaut acquired the project from Prodigy Gold in 2012.

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Located in an expanding gold belt in northeastern Ontario, Magino is located next to Alamos' Island Gold Mine, considered one of Canada's lowest cost and most productive underground gold mines.

The Magino project could create as many as 550 construction jobs and 350 mining jobs, all good news for the Township of Dubreuilville.

According to an Argonaut news release, Magino is being projected as a "scalable, long-life asset," capable of producing 150,000 ounces a year over the first five years of an estimated 17-year mine life.

That life span will likely be extended as Argonaut continues to do exploration and is finding high-grade gold below and beside the outlined pit configuration.

The company recently raised $11.5 million from selling flow-through shares to keep up the exploration pace.

The 2,200-hectare property hosted a underground mine of the same name which was developed after the First World War. It operated sporadically over the decades, yielding 114,319 ounces of gold at 4.43 grams per tonne.

To date, the deposit has an estimated measured and indicated 4.2 million ounces of gold with an average grade of 0.91 grams per tonne, but that will increase as exploration continues.

A 2017 feasibility study initially placed a $321-million price tag on the project. Factoring in inflation and contingency, that figure has grown to $380 million.

Argonaut has put together a project financing package of more than $400 million through the sale of $50 million in unsecured convertible debentures to BMO Capital Markets and Scotiabank, the sale of its Ana Paul gold project in Mexico, and from cash flow generated from its other producing mines in Mexico and Nevada through to 2022.

The mine project's all-in sustaining cost is US$711 per gold ounce sold.

Argonaut's other operating mines include the El Castillo mine and San Agustin mine in Durango, Mexico, the La Colorada mine in Sonora, Mexico and the Florida Canyon mine in Nevada, USA.

Magino is Argonaut's only Canadian asset in the company's pipeline of mine development and exploration projects in Mexico and across North America.