Argonaut Gold Inc.’s goal for the Florida Canyon Mine at Imlay “is pretty simple. We want Florida Canyon to be a long-life mine,” said Pete Dougherty, Reno-based president and chief executive officer of the company.
He said the culture at the mine is changing from the days when Florida Canyon was “limping along” with no new investment in the gold mining operation. Now there is an exploration drilling program, after years with little or no exploration.
“We’re quite excited to turn this operation around by the second half of this year,” Dougherty said.
The mine’s general manager, Shana Blakeley, said “Florida Canyon is a completely different place. Morale and safety are up. Reputationally, we’ve been able to turn things around. We had a reputation for not paying bills and state agencies didn’t trust us.”
She said the changes started before the merger of Alio Gold and Argonaut, and with the merger “Argonaut has allowed us to grow and continue. It’s been challenging but a lot of fun.”
Alio Gold and Argonaut merged on July 1, 2020. Florida Canyon is Argonaut’s only Nevada mine, but the company also has production coming from its El Castillo and San Agustin mines in Durango, Mexico, and La Colorada Mine in Sonora, Mexico. The Magino Project in Canada is permitted for development.
Dougherty said current gold prices are helping Argonaut and are “a breath of fresh air for companies,” although gold stocks have not risen in proportion to the gold price. Gold prices hit more than $2,000 per ounce in August before slipping but mainly staying above $1,800 an ounce.
Record profits for gold producers should bring more investment to the industry and that would mean a stronger industry, Dougherty said in a telephone interview.
“This is a great time to be in the gold sector,” he said.
Florida Canyon has roughly 250 employees, and Blakeley said the mine is hiring, including mechanics, mine operators and electricians.
Doughery said Argonaut would like to see 300 employees at Florida Canyon “when we are up and running full out.”
Current mine life is 10 years, but that is without the new exploration drilling slated for this year. Dougherty said 75,000 feet of drilling are planned this year.
Eye on Standard Mine
The drill program could lead to combining the current seven open pits at Florida Canyon, Dougherty said. Argonaut also is looking at drilling at the nearby Standard Mine, which was mined in the past and still has 130,000 to 140,000 gold ounces remaining on site.
He said that by the end of the year Argonaut would know whether Standard is viable for mining again.
“We have to permit it again,” and there would need to be new leach pads, Blakeley said.
Along with making plans for the drill program, Argonaut has completed and is now using a new heap leach pad at Florida Canyon, and the company is upgrading its fleet. Blakeley said in late January there were four trucks in transit that would joint other 100-ton Caterpillar haul trucks to bring the number of 100-ton Cats to 17.
“We will be at 19 by mid-year,” said Blakeley, who has worked for Newmont Corp. and Rio Tinto but likes the “family feeling” of a small mine.
Florida Canyon, which Pegasus Gold developed in 1986, also is planning an overland conveyor system.
The mine — visible from Interstate 80 roughly 45 miles southwest of Winnemucca — has always been a low-grade deposit, so “we have to keep costs managed and run very, very lean,” Blakeley said.
Florida Canyon also has had to cope with COVID-19 and continues to do so. She said the mine went from March to October without a COVID-19 case but in mid-January one mine employee died of the coronavirus.
Contact tracing and people forced to stay home awaiting test results have been rough on the small mine, Dougherty said.
He said in the company’s Jan. 19 production report that in 2021 Argonaut will be “taking a cautious approach to guidance when considering potential productivity challenges due to COVID-19 protocols and contact tracing, as the health and safety of our workforce is paramount.”
Guidance is for roughly 210,000 to 250,000 gold equivalent ounces in 2021 at a cash cost of between $950 and $1,050 per gold ounce sold and an all-in sustaining cost of $1,250 to $1,350 per ounce.
Argonaut reported the company’s fourth-quarter production totaled 56,986 gold equivalent ounces, up 20% over the fourth quarter of 2019 and including 11,294 ounces from Florida Canyon. The Nevada mine produced 47,064 ounces in 2020.
For all of 2020, Argonaut produced 203,483 ounces of gold, and the company reported a cash balance of roughly $214 million at the end of 2020. Dougherty said 2020 was “a spectacular year for Argonaut,” with the Alio Gold merger, a financing plan for developing Magino and record fourth-quarter production.
The company announced on Jan. 21 that Ontario had approved a future-closure plan for Magino, so Argonaut has begun site preparation and would begin mine construction after the site work. The company is predicting the first gold production in the first half of 2023.
“We are humbled by the tremendous community support that has enabled this important project milestone to pass. We will continue to coordinate closely with our indigenous and municipal partners as we develop this investment into a world class mining operation,” Argonaut’s director of environment and community relations, Kyle Stanfield, said.
Magino is expected to produce 150,000 ounces of gold per year in the first five years, and there is potential for underground mining.
Dougherty said Argonaut’s mines in Mexico have increased production and increased revenue, and there is a chance that development could start in the second half of the year on the Cerre del Gallo gold and silver project in Mexico. Ana Paul is another development-stage project in Mexico.
With the share-exchange with Alio Gold, Argonaut closed the Vancouver office but maintains the Toronto office, as well as the headquarters in Reno.