Argonaut Gold has started mining and stockpiling gold ore at its open-pit mining project outside Dubreuilville in anticipation of the first gold pour in mid-May.
The Toronto company is in the final stages of construction at its Magino Mine site. The targeted start of commercial mining operations is in the third quarter of this year.
Argonaut released its 2022 fourth-quarter and year-end financials before markets opened on Feb.27.
In a conference call with analysts, president-CEO Richard Young called 2022 a year of progress but also a challenging one with “disappointing financial and operating results.” But that doesn’t diminish their excitement about the future and the progress made at Magino.
Argonaut has high hopes that Magino will become its flagship operation and will become one of the 10 largest and lowest-cost gold mines in Canada. With mines in Mexico and Nevada, Magino will be the mid-tier mining company’s first Canadian operation.
At the end of December, Magino stood at the 80 per cent completion mark.
The projected life of the mine is 19 years. When in operation, Magino will provide direct mining jobs for 350.
The company reports that the site team is in the process of ramping up operations, beginning last month with the stockpiling of ore ahead of the commissioning of the processing plant.
The initial gold pour has been delayed a few times.
A combination of a trades strike a year ago impacted progress made on the concrete work as well as a construction death at the site last November that paused work for a period. It set back the schedule about 45 days.
There have also been been some higher costs incurred with construction, diesel prices, blasting material and power costs.
“Rental power” has been brought onto the site and is being hooked up. Magino is supposed to be powered by a liquid natural gas (LNG) plant, which will be brought online the same time as the mill commissioning. To provide temporary power, the company is hauling in large generators units, like a “security blanket,” said chief operating officer Marc Leduc, until the LNG plant is ready to go.
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Ausenco Engineering, the contractor hired to handle the mineral processing plant, said the mill is on schedule and will be done at the same time as the May gold pour. After that, moving toward commercial production should take three months.
The price tag to finish Magino has increased once again, but not as steeply as in 2021 and 2022. The estimated completion costs have increased from $920 million to $980 million.
But with available cash and credit at hand following a large capital rise in 2022 of debt and equity financing, plus the sale of a royalty, the company said it is ”laser-focussed” on finishing Magino.
In December 2021, costs jumped from $510 million to $800 million, then increased again last May to $920 million with now a further increase to its current cost.
The company said it has the capital in place to complete the project.
Magino is just to the west of Alamos Gold’s very productive Island Gold Mine within a larger northeastern Ontario gold district. The operation is a revival of a former underground gold mine of the same name at the same site that was developed after the First World War. It ran sporadically over the decades, producing more than 114,000 ounces of gold at a healthy 4.43 grams per tonne.
This latest iteration of Magino will be a huge tonnage, low-grade operation but there is the possibility of again going underground. Ongoing exploration has outlined high-grade ore beneath where the pit is being dug out.
Young believes “that things have just begun” on realizing their underground prospects that follow a gold trend running across the property.