Hedging Program...Further Details...We must remember, that when the mill at Magino reaches name plate capacity of 10,000 tonnes per day, cost per ounce will be reduced significantly and the margin will rise accordginly.
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.
The Feasibility Study was centred around an expansion to 20,000 tonnes per day, the Mill was planned in a way that the expansion would be done with minimal additional capital...very nice! The market is forward looking and the stock will be rated accordingly in the near future when expansion plans will be announced...let's get to 10,000 tonnes per day first. I believe we will be at 20,000 tonnes per day by mid 2025. The Hedging Program looks a lot less threatening in that time frame...it will be only 15,000 ounces per quarter by then.
I believe that the San Agustin Mine will be sold or at the least put on care and maintenance until a buyer is found. Management is making the right moves to dispose of non-core assets...the focus will be on the Flag Ship Magino Mine.
All the best!
Digger0144
P.S. 25,000 ounces per quarter @ $1860.00 US hedged for 6 quarters..
leaves 25,000 ounces @ 2050.00 US or higher moving forward.
Not bad...they were forced to hedge in order to get the loan to build
Magino @ 250 million dollars...good deal under the circumstances.