Magino is a property, an object. You can’t blame an object for Argonaut Gold’s management and directors failing to execute their business plan. It’s beyond foolish to make excuses for these failures.
These people gloated about having 10, 20, even 30 years of experience working in the gold mining industry.
The first EAC they released for Magino mine was ~C$500 million, and as of today, they spent ~US$825 million and have allocated an additional US$77 million for CapEx in 2024. An increase in initial, construction, and sustaining capital costs all have an adverse effect on the NPV of the project.
Argonaut Gold’s management and directors failed to address these cost overruns, and as a consequence, according to the mine plan stated in Magino’s tech report, the NPV for the project is now negative.
Argonaut Gold’s management and directors failed to commence the first pour on schedule. They delayed the first pour multiple times, and as a consequence, the company was unable to commence commercial production on time, which resulted in the company missing guidance in 2023.
Like I’ve previously said, the mine does have an 18.5-year lifespan. 18.5 years of exploration could have resulted in a significant increase in resources and reserves. Following the 20k tpd expansion and a new life of mine plan, the project could have had a positive discounted NPV.
We already know Island Gold’s Elbow Central zone is connected to the Magino property, and the official Ontario geology website states high-grade gold 6-7 g/t exists all over the property, from the Elbow Central zone to Web Lake Stock Pile.
This is billions of dollars’ worth of gold. This is not worth US$325 million. It’s crazy to think someone would even suggest this, but we saw Richard Young state that he himself approves of the acquisition offer, which is insane.
The perspective of the hedges creating a ‘zombie mine’ is ignorant, as the life of mine plan stated in the tech report, which the company failed to execute, included annual gold production figures which exceeded the hedges for the particular years. Meaning the average sale price of the gold produced at Magino would have been higher than the price of the forward contracts. If the company was capable of executing the life of mine plan stated in the tech report, the mine would have been profitable.
The hedges wouldn’t have been a problem if Richard Young didn’t increase the cost of TMF by ~US$10 million per Q, and OpEx in general. The 2024 guidance cost per tonne at Magino is substantially higher than the cost per tonne stated in the tech report and almost double the cost per tonne at the FC mine.
As for the concerns regarding the company’s balance sheet. The mining industry’s average debt and net debt is higher than Argonaut Gold’s. Believe it or not, but there are a lot of companies which carry negative working capital balances and have low cash and equivalents, but the market has valued these companies at or above US$1 billion. Good examples are Coeur Mining, Wesdome Gold, Oceana Gold, and IAMGOLD. I would suggest reviewing these companies as their data is worse than Argonaut Gold’s, but yet, the market is pricing these companies at or above US$1 billion. Argonaut Gold’s gross and net profit margins in 2023 were ~10%. New Gold’s gross profit margin was ~12% while their net profit margin was approximately negative 8% in 2023. New Gold has US$396 million worth of debt, 5 million gold resource and reserve ounces, and over US$1 billion market capitalization.
For the mining industry, the enterprise value of the majority of the companies I analyzed was above their book value. The market capitalization of the majority of these companies is at or above their book value, and at or just below their enterprise value. Argonaut Gold’s enterprise value is ~US$300 million less than their book value, their market cap is almost 50% less than their enterprise value, and their market cap is less then 50% of their book value.
Like I said, Richard Young should have done his job and refinanced in December 2023 instead of using equity and debt raises to begin paying down the loan facility. They couldn’t afford the repayments at the time or meet the requirements set out in the financial covenants. They were at risk of defaulting since before December 2023. These issues needed to be addressed promptly, but instead Richard delayed and delayed, which created instability, and as a consequence, the stock price fell to an all-time low.
Richard Young delayed the refinance, as he acquired several waivers to do so. It’s unacceptable to use debt or funds from an equity raise to begin paying down debt. Since the company doesn’t have free cash flows, it’s the only way they’re able to make repayments.
Richard Young told investors the company received term sheets from several potential lenders which are under consideration. The Company is evaluating its options for refinancing and plans to close by the end of April 2024.
Instead of accepting one of the offers, which he gloated about having three of them and would be picking the best one, this guy sold a US$1 billion asset for $325 million, and then diluted share holders further by issuing a C$50 million equity raise. He had a big grin on his face and said this is the best deal for shareholders right now. I spoke with the company about obtaining an additional US$300 million, they acknowledged that they did require the funding and were hoping to obtain the funds through a debt raise which could be included in the refinance. They said they wanted to avoid diluting shareholders.
These people say they have 10, 20, even 30 years of experience working in the gold mining industry. Yet, they couldn’t manage to stay within their budget, schedule and commence the first pour on time, commence commercial production on time, hit 2023 guidance, refinance the loan facility or meet the requirements set out in the financial covenants. There was even a death on site during the construction of the Magino mine.
In regard to the updated tech reports which the company was supposed to be releasing this year. The 20k tpd expansion would have made the hedges look like they didn’t exist at all, as the production would have significantly exceeded the hedges for the particular year. This was the reason why I was invested, as gold price is soaring up towards US$3k per ounce, imagine if they released an updated tech report which included a 250k ounce annual production, as well as, an increase in reserves, and was calculated using a gold price of over US$2k per ounce. I believe this would have been enough to send the stock price back up to its high in 2022. The cherry on the sundae was supposed to come from the company exposing the 5 million ounce oxide deposit at FC and release an updated tech report for FC. The company said during the Q3’23 conference call, they would be doubling production at Florida Canyon. This statement is in the transcript of the call.
Crazy to think, C$17.5 million spent on a drill program, plus whatever else was allocated to the program from the equity raise which insiders purchased in December 2023. Let me remind you about the fat short position miraculously covered during the same period the equity offer closed, and I don’t believe this was a coincidence. The program commenced on August 1, 2023, 9 months later, the company says there is no material information to present. Which is weird because IR told me in April 2023 that Magino reserves were anticipated to increase by 2 million gold ounces, and then in December 2023 Richard Young stated the same thing. They have enough material information to suggest an increase of reserves by 2 million gold ounces but tell investors they don’t have any material information to present? They haven’t presented any drill results since 2022.
These people say they have 10, 20, even 30 years of experience working in the gold mining industry. These people blew through millions of our dollars, commenced a drill program on August 1, 2023, and 9 months later, they have no material information to present. These people sold US$4 billion worth of future cash flows for US$325 million. Imagine how much more gold could have been discovered over the next 18.5 years on the Magino property. If the gold price were to hit US$3k per ounce, the future cash flows of the current resources and reserves would be worth A LOT MORE than US$4 billion. The future cash flows from their resources and reserves could have increased significantly just based on exploration.
As for investors explaining how much you like getting bent over by AGI. Let me remind you, that in order for AR to hit C$.80 per share, this would require AGI’s stock price to increase by 100%. Why is this? The exchange rate implies a correlation. So, in order for AR to increase by ~100%, AGI’s stock price would need to rise to ~C$40 per share. AGI’s price target on the high end is only C$27 per share.
ShitCo shares aren’t worth anything as the Mexican assets are unprofitable and will be out of commission in the near future as 2/3 are processing residual materials in 2024, and FC isn’t profitable either. You require evidence FC isn’t profitable? Go read the company’s 2024 guidance, the AISC ranges from US$2,350 to US$2,450. If you calculate the cost per tonne and then include CapEx, the AISC is like US$3,275, which is insane.
The reason the company was trying to sell the Mexican assets was literally because they weren’t profitable. They can’t acquire additional concessions which they will require in the near future, and the locals are protesting against the open-pit operations. Cerro De Gallo will never produce anything, as the locals would never let that happen and the government will not issue the open-pit operation a concession.
Furthermore, the company has already stated they don’t care about FC mine either, as the operation is unprofitable and the NPV of the project is negative.
If the company was actually capable of exposing the 5 million ounces oxide deposit at FC mine, then maybe the NPV of the project could have flipped to positive
The company’s slogan should be, “If you stumble, don’t bother picking yourself up, just stay down and accept defeat.”.
ShitCo's cash and equivelants will be ~C$10 million. The company and AGI announced this a while back. Argonaut Gold’s working capital will be gone by the end of July and their cash and equivalents will be completely depleted by the end of September. By the end of 2024, AR will have a negative working capital balance of -US$57 million, and a negative cash and equivalents of -US$31 million.
The new ShitCo will also be required to raise the funds for the third leach pad, which none of you seem to have caught on to yet, as you keep posting about how much you love the AGI deal. Right out of the IPO, you will receive a 10-1 reverse split and then the company will most likely issue an equity raise to fund the leach pad.
Why an equity raise you ask? Part of investing is taking a holistic approach and by doing so we can see that the management and directors at Argonaut Gold who will be running ShitCo have diluted Argonaut Gold shareholders significantly, and even diluted shareholders after they sent the stock price tumbling down to an all-time low. Equity raise after equity raise, the dilution is unreal, but yet these heartless scums further diluted shareholders by issuing themselves millions of RSUs following the stock price hitting an all-time low.
The insiders may hold common shares which they purchased on the open market, and their averages may be higher than today’s stock price. Which is actually correct. I’ve heard a few investors talk about this and suggest the stock price will rise above the insiders’ averages, as the insiders are currently underwater. This isn’t correct, as the company has issued themselves millions of RSUs, which they will sell into the open market and the profits will cover any losses they may have incurred selling their common shares which they purchased on the open market. I believe user CrazyTime has mentioned this already. This is true, and I believe this is the company’s plan.
These people gloated about having 10, 20, even 30 years of experience working in the gold mining industry. Yet, the operating data from Q3’23 and Q4’23 suggests these people were incapable of hitting any of the benchmarks outlined in the Magino tech report. They have literally made excuses for their failures and have accused the previous management and directors for their mistakes. Current management and directors insist the previous management and directors are at fault for everything because they set standards too high and current management and directors aren’t capable of meeting these standards.
I’ve heard nothing but excuses from this company. Every NR has been terrible, the last few financial reports have included shockingly bad data which differs from their previous statements and tech reports.
I believe the only positive thing the company released in 2 years was the reserve increase at Magino. Other than that, I have been literally shocked after reading anything these people have presented.
Anything released in their reports which was positive, the company has failed to execute, delayed, or just stopped talking about. For instance, a while back the company was mentioning in their presentations that in-fill drilling would result in the head grade increasing to 1.43 g/t for the first few years and following the installation of a pebble crusher and as a consequence of the over-design of the mill, their operation would process 13k tpd. The company completely stopped talking about the in-fill drill results, head grade increase and throughput increase in regard to the over-design and pebble crusher. Did they think we would just forget about those statements? I think they truly believe that, and then when confronted they hide behind the legal section of their NRs which include a disclaimer pertaining to forward-looking statements. Or they tell investors that the previous management had made those statements and it’s not their fault they’re incapable of meeting the standards set out by previous management.
There are so many red flags here it’s beyond funny. Pretending like the AGI deal was great is just ignorant and wrong.
This isn’t a great deal and the stock price will most likely never hit C$.80. I find it funny, watching investors, whose names I will not mention, trying to lure people into this ‘investment’ by suggesting they could receive a 100% return by buying stock at today’s price.
Like I said, AGI’s price target on the high end is currently C$27 per share. Their stock price just hit an all-time high and for AR shares to hit C$0.80, which is a ~100% increase from today’s price, AGI’s stock price would need to rise to ~C$40 per share, which is a ~100% increase from its all-time high.
These price targets are clearly illusions to some investors as the current price target for AR is C$.40 per share.
I understand there could be discrepancies in these price targets, but I don’t think these analysts are off by 50% or 100%.
These people gloated about having 10, 20, even 30 years of experience working in the gold mining industry. Yet, we've heard nothing but excuses and seen nothing but failures.