Argonaut to sell Mexico development project for $30 million

The Ana Paula gold project is located on the northwestern extension of the Guerrero gold belt in southern Mexico. Credit: Alio Gold

Argonaut Gold (TSX: AR) has entered into a definitive agreement to sell its Ana Paula gold development project in the Guerrero gold belt of Mexico.

Total consideration includes a payment of $30 million on closing, as well as an additional C$10 million upon announcement of commencement of construction.

Ana Paula contains an estimated 20.9 Mt of measured and indicated resources at 2.17 g/t for 1.46 million contained gold ounces

Argonaut will also retain a 1% net smelter return royalty on the project and hold a 9.9% stake in the acquiring company, which will be formed by a business combination between AP Mining — a private company registered in British Columbia — and capital pool company Pinehurst Capital II.

Proceeds of this transaction will be used to support the development of Argonaut’s Magino gold project in Ontario, the company said.

The Ana Paula property, comprising a 56,000-hectare land package within the Sierra Madre mountain range, was acquired by Argonaut through its merger with Alio Gold earlier this year.

The project contains an estimated 20.9 Mt of measured and indicated resources at 2.17 g/t for 1.46 million contained gold ounces.

Shares of Argonaut Gold rose 1.4% by 2 p.m. EDT Friday, capping the Nevada-based miner at a market value of C$806 million.

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