Argonaut Gold
What makes a good company? Good management, pure and simple. Argonaut Gold Inc. is a new venture created by former executive management principals of Meridian Gold Corporation. Meridian Gold was purchased by Yamana for $3.8 billion back in 2007.
It looks like the old team from Meridian is trying their magic again in this new venture. Their first order of business, purchase Castle Gold in December 2009. Castle Gold owned a 100% interest in the El Castillo gold mine in Mexico and a 50% interest in the El Sastre gold mine in Guatemala. Castle Gold also was advancing exploration and development work at their La Fortuna gold-silver-copper project in Mexico.
Management – Former Meridian Gold management team
What makes a good company? Good management, pure and simple. Argonaut Gold Inc. is a new venture created by former executive management principals of Meridian Gold Corporation. Meridian Gold was purchased by Yamana for $3.8 billion back in 2007.
It looks like the old team from Meridian is trying their magic again in this new venture. Their first order of business, purchase Castle Gold in December 2009. Castle Gold owned a 100% interest in the El Castillo gold mine in Mexico and a 50% interest in the El Sastre gold mine in Guatemala. Castle Gold also was advancing exploration and development work at their La Fortuna gold-silver-copper project in Mexico.
Management – Former Meridian Gold management team
El Castillo
El Castillo is Argonaut's 100% owned open pit, heap leach gold mine located one hour north of the state capital Durango. El Castillo hosts 750,000 ounces of Proven and Probable Gold Reserves and 1.2 million ounces of Measured and Indicated Resources. The mine commenced construction and operations in 2007 with commercial production reported in 2008. Argonaut is really expanding the production of this mine. They have a new mining contract and fleet, and a new crushing contract and circuit.
Mining Fleet Expansion:
* A total of thirteen 100 ton trucks and three 992 loaders are scheduled for delivery by the end of 3rd quarter.
* Four 100 ton trucks and a 992 loader have already arrived at site and have been assembled allowing for early training and the new equipment is in production.
* Total September mining production is expected to be 1.5 million total tonnes, more than doubling the average mining rate year over year.(2009 Total tonnes per month average ~ 730,000).
West Side Process Improvements – Improvements at existing processing area
Crusher Circuit Replacement:
* In order to increase crushing capacity, the former circuit on the west side of the mine was removed and replaced by a new larger crusher.
* Current run rate has surpassed 200,000 TPM during the first 3 weeks of operation versus the previous 68,000 TPM rate.
* This will effectively triple our crushing capacity on the west side.
West Processing Plant Upgrade:
* A new modern facility is now running with 5 large diameter carbon columns allowing production and efficiency increases. Previously, the processing plant included a total of 24 small columns for processing.
* Flow rates are increasing from 400 cubic meters/hr to a nominal 740 cubic meters/hr, almost doubling the flow rate.
Heap Leach Pad Expansion:
* 10 million tons of heap leach capacity is nearing completion.
* A new process water pond has been constructed to provide for the increased pad capacity.
East Side Expansion Development – New pads and processing facility
Heap Leach Pad Expansion:
* The east side pad has been divided into a three staged expansion design.
* Liner is now being placed on cell 1 and construction of cell 2 is underway.
* A process water pond is under construction and planned to be completed in the coming month.
* 5 million tonnes of capacity on the east side is expected for completion by the end of the year.
Processing Plant:
* Carbon columns are in place for the new plant.
* Processing capabilities will increase up to 1 million ore tonnes per month.
* The new east pad plant facility is scheduled for 3rd quarter completion.
El Castillo is Argonaut's 100% owned open pit, heap leach gold mine located one hour north of the state capital Durango. El Castillo hosts 750,000 ounces of Proven and Probable Gold Reserves and 1.2 million ounces of Measured and Indicated Resources. The mine commenced construction and operations in 2007 with commercial production reported in 2008. Argonaut is really expanding the production of this mine. They have a new mining contract and fleet, and a new crushing contract and circuit.
Mining Fleet Expansion:
* A total of thirteen 100 ton trucks and three 992 loaders are scheduled for delivery by the end of 3rd quarter.
* Four 100 ton trucks and a 992 loader have already arrived at site and have been assembled allowing for early training and the new equipment is in production.
* Total September mining production is expected to be 1.5 million total tonnes, more than doubling the average mining rate year over year.(2009 Total tonnes per month average ~ 730,000).
West Side Process Improvements – Improvements at existing processing area
Crusher Circuit Replacement:
* In order to increase crushing capacity, the former circuit on the west side of the mine was removed and replaced by a new larger crusher.
* Current run rate has surpassed 200,000 TPM during the first 3 weeks of operation versus the previous 68,000 TPM rate.
* This will effectively triple our crushing capacity on the west side.
West Processing Plant Upgrade:
* A new modern facility is now running with 5 large diameter carbon columns allowing production and efficiency increases. Previously, the processing plant included a total of 24 small columns for processing.
* Flow rates are increasing from 400 cubic meters/hr to a nominal 740 cubic meters/hr, almost doubling the flow rate.
Heap Leach Pad Expansion:
* 10 million tons of heap leach capacity is nearing completion.
* A new process water pond has been constructed to provide for the increased pad capacity.
East Side Expansion Development – New pads and processing facility
Heap Leach Pad Expansion:
* The east side pad has been divided into a three staged expansion design.
* Liner is now being placed on cell 1 and construction of cell 2 is underway.
* A process water pond is under construction and planned to be completed in the coming month.
* 5 million tonnes of capacity on the east side is expected for completion by the end of the year.
Processing Plant:
* Carbon columns are in place for the new plant.
* Processing capabilities will increase up to 1 million ore tonnes per month.
* The new east pad plant facility is scheduled for 3rd quarter completion.
Argonaut's production:
* 29,000 ounces – 2009
* 47,000 ounces – 2010
* 63,000 ounces – 2011
* 75,000 ounces – 2012
Argonaut currently has 56 million shares outstanding.
Cash and short term investments - $28 million.
Highlights:
* Raised $150 million in capital in November 2009.
* Acquired 100% ownership of Castle Gold Corporation.
* TSX listing on December 31, 2009.
* 2010 production increasing from 29,000 oz to 47,000 oz with further upside.
* Excellent potential exists to add to reserves and resources at El Castillo, potentially enabling a further ramp up to 75,000 oz/year.
* A new 16,000 metre drill program is underway with a new resource calculation expected by year end.
* Initial ramp-up in mine production at El Castillo to 900,000 tonnes per month completed.
* Life of mine cost per ounce of gold at Castillo is expected to be <$400.
* Advanced exploration project at La Fortuna, hosting 308,000 oz gold resource with numerous attractive gold-silver-copper
* Intersections and metallurgical results showing +90% recoveries using various extraction methods.
Conclusion
Never underestimate the power of a good management team. Considering Argonaut is basically all the former members of Meridian Gold, this is definitely one company to keep an eye on. They have already purchased one gold mine and are ramping up production at a pretty swift pace. 75,000 oz in 2012 is very solid for a small company like this. I don't think it wil stay "small" for long.
* 29,000 ounces – 2009
* 47,000 ounces – 2010
* 63,000 ounces – 2011
* 75,000 ounces – 2012
Argonaut currently has 56 million shares outstanding.
Cash and short term investments - $28 million.
Highlights:
* Raised $150 million in capital in November 2009.
* Acquired 100% ownership of Castle Gold Corporation.
* TSX listing on December 31, 2009.
* 2010 production increasing from 29,000 oz to 47,000 oz with further upside.
* Excellent potential exists to add to reserves and resources at El Castillo, potentially enabling a further ramp up to 75,000 oz/year.
* A new 16,000 metre drill program is underway with a new resource calculation expected by year end.
* Initial ramp-up in mine production at El Castillo to 900,000 tonnes per month completed.
* Life of mine cost per ounce of gold at Castillo is expected to be <$400.
* Advanced exploration project at La Fortuna, hosting 308,000 oz gold resource with numerous attractive gold-silver-copper
* Intersections and metallurgical results showing +90% recoveries using various extraction methods.
Conclusion
Never underestimate the power of a good management team. Considering Argonaut is basically all the former members of Meridian Gold, this is definitely one company to keep an eye on. They have already purchased one gold mine and are ramping up production at a pretty swift pace. 75,000 oz in 2012 is very solid for a small company like this. I don't think it wil stay "small" for long.
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