VANCOUVER (miningweekly.com) – TSX-listed Argonaut Gold has secured 420 ha of land under mineral concessions owned by a subsidiary of Fresnillo, and which covers known projections of mineralisation that are part of its 100%-owned El Castillo mine, in Mexico.
Argonaut subsidiary Minera Real Del Orohas has entered into an agreement with Fresnillo subsidiary Desarrollos Mineros El Aguila to secure the land and has also agreed that portions of other neighbouring concessions may be used by Argonaut for leach pads, ponds and overburden sites, subject to the terms of such agreement.
Under the terms of the transaction, Argonaut has agreed to pay El Aguila $26-million in cash, half of which is payable on signing the agreement and the balance on or before December 15.
Argonaut currently holds the surface rights to the San Juan concession. Over the past three years, Argonaut and Fresnillo have collaborated as Fresnillo completed 34 510 m of exploration drilling in 132 drill holes. The company has found evidence that the El Castillo mineral system continues onto the San Juan concession to the northeast and south of the original El Castillo concession boundaries. Argonaut believes the acquisition of the San Juan concession has the potential to positively impact on its production profile and notes that the recently published three-year production outlook does not include any allowance for the impact of this acquisition.
“We have increased our footprint in the area threefold going from approximately 200 ha to over 620 ha. We believe this is a very strategic acquisition, as it means El Castillo has the potential to be an important part of our future production,” president and CEO Pete Dougherty stated.
Argonaut also on Thursday launched a C$40-million bought-deal financing, at C$2.40 a share, that will be used for the acquisition of properties next to the El Castillo mine and for general corporate purposes.
The company recently outlined it three-year production outlook, targeting production of 115 000 oz to 130 000 oz of gold equivalent in 2017 and 155 000 oz to 170 000 oz of gold equivalent in 2018. In 2019, the company is guiding for production of 170 000 oz to 185 000 oz gold equivalent, which would represent a 45% increase from the mid-point of 2017 guidance.
Argonaut reported current proven and probable reserves of 3.32-million ounces gold grading 0.81 g/t, with measured and indicated resources standing at 7.71-million ounces gold grading 0.66 g/t. Inferred resources total 1.26-million contained ounces grading 0.66 g/t.