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Dubreuilville mine builder cashed up to finish Magino open-pit project

Argonaut Gold says first gold pour slated for next April
Argonaut Gold Magino construction drone view
A drone's eye view of construction of the Magino open-pit mine near Dubreuilville (Argonaut Gold photo)

The bosses at Argonaut Gold seem pleased that construction of the Magino Mine, outside Dubreuilville, is back on track after some inflationary turbulence threw a scare into the Toronto gold company.

In an Aug. 11 webcast in releasing its second quarter results, Argonaut officials said development is progressing well, though next spring’s first gold pour will be delayed by a month.

The company dropped a bombshell in December when it announced the cost to complete the open-pit project had risen from $510 million to $800 million due to inflation and pandemic-related issues. Another review in the spring further raised the cost to $920 million.

Argonaut founder Pete Dougherty departed just before Christmas and 35-year mining veteran Larry Radford arrived in March as the new president-CEO to steer Magino over the finish line.

To complete the job, Argonaut raised $595 million this year through a combination of equity and debt financing. About $510 million has been spent at Magino so far.

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“We’ve worked tirelessly to put Argonaut on a solid financial footing to complete the construction of Magino,” said Radford in the webcast. “Magino’s importance to Argonaut cannot be overstated.”

Magino is located 14 kilometres outside Dubreuilville and 195 kilometres north of Sault Ste. Marie.

During the quarter, the company cleared a profit of US$18.4 million on production of 59,192 gold equivalent ounces at its operating mines in Mexico and Nevada. Magino will be Argonaut’s first Canadian mine.

Some construction time was lost at Magino earlier this year after a 23-day strike by unionized construction trades. The company said it’s still figuring out how that will impact the overall schedule, but the first gold pour will be pushed forward a month from March 2023 to April. 

Commercial gold production starts in the third quarter of 2023. Full production will be achieved by next year’s fourth quarter.

When in operation. Magino will create direct mining jobs for 350.

Located in the thick of a historic and revived gold camp, Magino is situated just west of the Island Gold Mine, now undergoing a third wave of expansion by Alamos Gold.

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.

Its projected mine life is pegged at 19 years but there is a high probability that could be extended. The company continues to discover high-grade gold below and around the pit.

Senior management highlighted some project milestones reached as the roof and cladding is finished on the processing plant at the site. 

Construction continues on the tailings facility to store mine waste, which will be done by the time the snow flies. A water containment facility is progressing well. The storage of water is necessary for the processing plant to start up.

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Good progress is being made on a liquid natural gas plant to power the site but there have been supply chain difficulties. Contingencies have been made to rent temporary power generation to be ready for the spring startup.

The company is nearly finished on a fish habitat area and construction is done on a bat hibernaculum.

Argonaut’s stock price sits at $0.54 a share, down dramatically from a one-year high of almost $4 last November.

Radford is hopeful this good news will set things right.

“As we approach commissioning in the next few months. we believe there is a potential opportunity for patient investors willing to see Magino through to completion and to see a re-rating in the stock price.”