Argonaut executes fixed bid contract for Magino gold project

Magino project Credit: Argonaut Gold

Argonaut Gold has executed a fixed bid engineering, procurement, construction and commissioning contract (EPC contract) with Ausenco, an engineering and construction management company. The EPC contract covers construction of the Magino processing facility and other parts of the Magino open-pit pre-development project in Ontario and covers approximately 40% of the $480 to $510-million initial capital cost estimate for the 10,000 t/d project.

“We are excited for Magino to be one of the first projects entering construction in the current gold price environment, as we feel first mover advantage is critical when securing a construction team of the highest quality and with a superior track record,” Pete Dougherty, Argonaut’s president and CEO, said in a release.

Dougherty also added that Argonaut “recently posted the first phase of financial assurance with the province of Ontario and expects the Magino project Closure Plan will be filed by the province of Ontario in January 2021, which will allow for construction to commence.”

In October, the company’s board approved the construction of Magino, with an anticipated two-year construction period and a first gold pour envisioned for the first half of 2023. At the time, the producer also announced US$175 million in debt financing for the project.

A 2017 feasibility study for Magino outlined a 17-year mine, producing an average of 150,000 oz. of gold in the first five years of operation at all-in sustaining costs of US$711 per oz. See CMJ’s December feature on Magino for more details on the project.

Argonaut also announced that it has amended the agreement for the sale of the Ana Paula gold project in Mexico, which was originally announced on Sept. 11. The sale of this asset to AP Mining has been amended to allow for additional time to meet the regulatory and government approvals required for closing. The buyer has agreed to pay an additional US$1 million at 15 months from closing and to reimburse Argonaut for all costs incurred in connection with this asset between Jan. 1 and the closing date, which is expected in the first quarter of this year. The original purchase agreement called for US$30 million at closing with an additional US$ 10 million at the start of construction, in addition to a 1% NSR and 9.9% of the common shares of the acquiring company.

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