Blackwater mill bill jumps by a fifth

Artemis Gold (TSXV: ARTG; US-OTC: ARGTF) has raised the cost of its first Blackwater mill expansion to $120 million (US$85.3 million), an increase of as much as 20%, while keeping plans to start the larger plant by year-end.

The company had budgeted $100 million to $110 million before firming the scope and adding spare equipment to lift designed processing capacity by a third to 8 million tonnes a year. The work at site, about 450 km northeast of Vancouver, was 57% complete at June 30, the company said in a Tuesday update.

“In the context of 2026 growth capital of $670-$745M funded from operating cash flow, the additional capital is not material,” Haywood Securities analyst Pierre Vaillancourt wrote in a note Tuesday.

The overrun is modest beside Artemis’ planned $1.44-billion second expansion. Cost control on the smaller job will shape confidence in a plan to more than triple Blackwater’s processing rate and lift annual gold output above 500,000 oz. by 2029.

The higher Blackwater budget comes amid a wider central British Columbia mine-building push. Centerra Gold (TSX: CG; NYSE: CGAU) has permits for as much as $400 million in spending at Mount Milligan near Fort St. James, while Osisko Development (TSXV, NYSE: ODV) is advancing its $881-million Cariboo gold project near Wells, where recent drilling extended high-grade gold zones below the current resource envelope.

Artemis shares listed in Toronto on Tuesday last traded 5% higher at $35.31 apiece. That gave the company a market capitalization of $8.3 billion (US$5.9 billion).

Build advances

The revised budget equals $60 for each tonne of added annual processing capacity, up from the company’s previous estimate of $50 to $55. The cost remains competitive despite the increase, Haywood’s Vaillancourt says.

Crews have finished civil work for a new vertical mill and advanced the building’s structural steel. Mill parts have begun arriving, while workers have erected a pre-aeration tank and completed foundations for oxygen equipment, the company said. A new cyclone cluster is being shipped to the site.

Mechanical installation and connections to the operating plant now drive the schedule. Artemis expects to start the expanded circuit in the fourth quarter, leaving most of the production gain for next year.

Haywood expects Blackwater to produce more than 300,000 oz. in 2027, helped by the higher processing rate and grades above the mine’s reserve average. Artemis plans to issue next year’s production and cost guidance early in 2027 after updating its resource model and mine plan.

Production base

Blackwater enters the buildout with improving plant performance. The mine produced a record 74,063 oz. in the second quarter, 20% more than in the first, bringing first-half output to 135,986 ounces.

Artemis kept intact its full-year forecast of 265,000 to 290,000 ounces.

Higher grades and recoveries helped offset the operating risk exposed in March, when a failed ball mill gearbox forced an unplanned shutdown. The plant recovered quickly enough for Artemis to post record output in the following quarter.

Blackwater poured its first gold in January last year and reached commercial production that May. It produced 192,808 oz. last year at an all-in sustaining cost of US$869 per oz. sold after commercial production began.

Larger bet

The next build would add a separate 13-million-tonne-a-year plant beside the existing mill, lifting total designed capacity to 21 million tonnes by late 2028. Artemis has started earthworks, placed construction camp buildings and ordered the main grinding mills.

The company expects the larger operation to produce more than 500,000 oz. annually during its first 10 years. That would rank Blackwater among Canada’s largest gold mines.

Artemis held $175 million in cash and an undrawn $700-million revolving credit line at March 31. Blackwater generated $128 million in operating cash flow during the first quarter, giving the company room to absorb the higher cost of the first expansion without changing its schedule.