Argonaut Announces Successful Completion of Magino Financing Package

Nov 4, 2022 | Ontario Mining News

Argonaut Gold Inc. (TSX: AR) (the “Company”, “Argonaut Gold” or “Argonaut”) announces that the Company has closed its previously announced US$250 million Loan Facilities and drawn down the first tranche of US$80 million of the loan facilities which was used to repay the balance outstanding on the former revolving credit facility.

The Loan Facilities consist of a term loan of US$200 million and a revolving credit facility of US$50 million for the ongoing development and construction of the Magino Project. Pursuant to the Loan Facilities, Argonaut has hedged 25,000 gold ounces per quarter for the six quarters starting in the third quarter 2023 at a gold price of US$1,860/oz and 15,000 gold ounces per quarter for the 10 quarters starting in the first quarter 2025 at a gold price of US$1,860/oz. In addition, the Company has hedged 10,000 gold ounces per quarter for the 10 quarters starting the first quarter 2025 at a gold price of US$1,763/oz.  Argonaut has hedged, via forward contracts, the Canadian dollar exposure at an average rate of 1.334 Canadian dollars per $1 US dollar for the next 24 months.  All conditions precedent for the drawdown of the Loan Facilities have been satisfied.

In addition, Argonaut has closed the sale of a 2% net smelter return royalty on the Magino Project and surrounding land package to Franco-Nevada Corporation (“Franco Nevada”) for US$52.5 million and a US$10 million equity private placement by way of issuance of 34,693,462 common shares of the Company to Franco-Nevada at a price of CA$0.3931 per common share.

“In completing this financing, Argonaut expects to meet all future financial obligations related to Magino construction and banking covenants while also maintaining a high level of financial flexibility,” said Larry Radford, President and CEO of Argonaut Gold. “The financial completion is a testament to the strong project fundamentals of Magino and supported by the leading gold-focused royalty partner, Franco-Nevada and our syndicate of lenders.  As a result, we are confident we have the financial resources to complete the construction of the Magino Project and achieve the milestone of first gold and beyond.”

Update on the Magino Project

Argonaut is continuing construction and has commenced operational readiness activities at the Magino Project.  The status of specific deliverables is described below:

  • Chuck Hennessey has joined Argonaut as Vice President Canadian Operations to take Magino from project to operation;
  • Advancing Stage 1A of the Tailings Management Facility and starting Stage 1B;
  • Reviewing proposed Pit Optimization and Mining Sequence;
  • Received major process equipment for the mill; the mills and tanks are in place;
  • Key leadership positions filled;
  • Formal Operations Readiness Initiative progressing well as are commissioning plans – +72% action items are completed;
  • Pumping, piping, and electrical systems being installed, much of which is inside the enclosed mill building ready for winter conditions;
  • All four permanent generators have been received and are in place.
About Argonaut Gold

Argonaut Gold is a Canadian gold company engaged in exploration, mine development and production.  Its primary assets are the El Castillo mine and San Agustin mine, which together form the El Castillo Complex in Durango, Mexico, the La Colorada mine in Sonora, Mexico and the Florida Canyon mine in Nevada, USA.  The Company also holds the construction stage Magino project, the advanced exploration stage Cerro del Gallo project and several other exploration stage projects, all of which are located in North America.