Argonaut Gold (TSX: AR) and a syndicate of underwriters co-led by Cormark Securities, BMO Capital Markets and Scotiabank have entered into an agreement involving the sale of 210.5 million common shares of Argonaut at a price of C$0.83 per share for gross proceeds of about C$80 million ($59m).
The underwriters have been granted an option to purchase an additional 13.2 million shares, raising an additional C$5 million.
The net proceeds of the offering will be used to fund development and optimization of Argonaut’s Magino gold mine in Ontario and its Florida Canyon gold mine in Nevada.
The Magino mine achieved commercial production last month. The road to being a mine was a long one – punctuated by doubling capex costs, a milling problem, and the ouster of a chief executive.
The company believes it may well be one of the largest and lowest cost gold mines in Canada producing 148,000 gold equivalent oz. in 2024 (the first full year of operation) at a cash cost of $868 per ounce. Meanwhile, the resource base is being expanded below the reserves in the conceptual pit.
In Nevada, the Florida Canyon mine engineers have optimized processing of oxide ore, with production on pace to produce over 40% more gold equivalent ounces in 2023 than it did in 2022.
The sulphide mineralization below the oxide material is being evaluated to increase both production and mine life. Argonaut is preparing a preliminary economic analysis for mining the sulphide ore.