Argonaut Gold Declares Commercial Production at the Magino Mine

Argonaut Gold has a bounce in its step these days as the company holds the distinction of being Canada’s newest gold producer. Argonaut poured its first gold bar in June while announcing process plant ramp-ups. Argonaut Gold declared commercial production at the Magino Mine on November 1st, 2023. The Magino is Argonaut’s first Canadian operation and is located in Dubreuilville, Ontario.
“The Board of Directors and Management would like to thank the Magino team for their hard work to achieve the commercial production milestone and celebrate the dedication of all employees, contractors, and community partners that have supported construction of the newest gold mine in Canada as we work to achieve our vision of becoming a low-cost, mid-tier North American gold producer that delivers value to all stakeholders,” stated Richard Young, President and Chief Executive Officer.
“With the first gold pour milestone behind us, we are now focused on completing commissioning and ramping up the mill to steady state. In addition, we are looking to further grow our flagship gold mine as we commence a reserve development drilling program intending to increase reserves in combination with studies to expand and optimize mill throughput, both scheduled to begin later this summer.
Plant commissioning and ramp-up proceeded largely on plan from June through August, ramping up from approximately 50% of nameplate capacity to 80%, placing the plant on track for commercial production in September. However, 20 days of unplanned downtime in September, delayed the ramp-up. This was the result of two events, the first centered on the Ball Mill motor drive and inching system and the second involved the SAG Mill motor. The EPC contractor, equipment suppliers, and specialized contractors were mobilized to assist the site team in facilitating equipment repairs and addressing the various causes of the unplanned downtime. During commissioning, the greatest plant reliability issues centered on the process control system, which is comprised of several disparate systems. As a result, we are systematically centralizing all control functionality. The plant has been largely operating at nameplate capacity since the beginning of the quarter,” stated Marc Leduc, Chief Operating Officer.

Third quarter consolidated production was 53,911 gold equivalent ounces (“GEOs”), including pre-commercial production of 10,693 GEOs from the Magino Mine. Full-year production for the Magino Mine will not meet the guidance set out at the beginning of the year due to the slower than planned ramp-up to commercial production. However, the Company remains on track to meet its full year consolidated production and all in sustaining cost guidance set at the beginning of the year.
As a result of the slower than planned ramp-up of Magino to commercial production, the Company will bolster its balance sheet through the sale to Franco-Nevada Corporation and certain of its subsidiaries (Franco-Nevada) of an additional 1% net smelter return royalty (“NSR”) on its Magino Mine, and its non-core royalty holdings in Canada and Mexico for an aggregate purchase price of US$29.5 million, with the closing of such transactions subject to satisfaction of closing conditions. 

Upon the closing of this transaction, Franco-Nevada will hold an aggregate 3.0% NSR on the Magino Mine.
Argonaut is also pursuing additional growth opportunities at Magino. The company has scheduled a 12 to 15-month exploration and reserve development program, in the third quarter, to convert open pit resources to reserves within the current resource pit cone, test deep underground high-grade targets, and test open pit targets along strike west of the current deposit. The company is also planning a review of mill optimization and expansion opportunities, to potentially raise throughput rates and increase annual production. 

The Magino reserve expansion could drive significant asset growth

• Resource body remains open at depth, along strike to the east towards Alamos’ Island Gold Mine, and west along strike
• Target 0.5 – 1.0 Moz added to reserves
• Conversion of resources to reserves could support an increase to process capacity from 10,000 tpd (current plan) 
• to a range of 15,000 tpd – 20,000 tpd
• Potentially increases production to over 200,000 oz/year
• Fully permitted to process up to 35,000 tpd and TMF to 135Mt

Moving forward as the Magino mine achieves commercial production they look to the Magino in becoming Argonaut’s largest and lowest cost mine. The ramp-up of Magino will be the first step in transforming Argonaut as it enters a pivotal growth stage. The mine has the potential of being not only their largest and lowest cost mine but one of the larger and lowest cost mines in Canada.
The company also has three operating mines including the Florida Canyon mine in Nevada, USA, where it is pursuing potential for redevelopment and additional growth, La Colorada mine in Sonora, Mexico and San Agustin mine in Durango, Mexico. 
In September, the company announced the appointment of Owen Nicholls to Vice President, Exploration. Owen joins the Company at a pivotal phase of growth to continue advancing the expansion of our flagship asset, Magino, and redeveloping the Florida Canyon mine. 
“We will benefit from Owen’s extensive hands-on exploration and management experience as he focuses on expansion of our two cornerstone assets,” said Leduc. Nicholls has considerable experience prioritizing exploration targets, assessing technical reports, resource estimation, feasibility studies, project evaluations, permit applications, and project development. He has successfully led exploration projects at mine sites and greenfield projects for Equinox Gold including resource expansion at the Mesquite mine and at Castle Mountain mine where he worked with Leduc to define 4.3 million ounces of gold resources at this historic mine.
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