Argonaut Gold (TSX: AR) has reported that the sale of its Ana Paula gold project in Mexico, approximately 180 km south of Mexico City, has fallen through as the purchasing company, AP Mining, could not fulfil its financial and certain regulatory and other approvals.
Argonaut’s president and CEO Peter Dougherty stated in a press release that “after extending the agreement once already, we feel we are better off pursuing other options for Ana Paula at this time.”
The two companies entered into a definitive agreement in September. Under the deal, Argonaut would have sold all of the issued and outstanding shares of Aurea Mining Inc. and its wholly-owned subsidiary Minera Aurea S.A. de C.V, the project’s developer, to AP Mining.
On closing the deal, Argonaut would have received $30 million in cash, a further $10 million upon construction, and a 1% net smelter return (NSR) royalty for the project.
It would also have received 9.9% of the shares of the acquiring company, which would have been formed by a business combination between AP Mining and capital pool company Pinehurst Capital II.
Dougherty noted that Ana Paula has “the ability to be a foundational asset in time,” and said Argonaut expects to release an updated prefeasibility study for the project in the second quarter of 2021, which “will demonstrate a relatively low capital cost, low operating cost, high-grade open pit project with future underground potential.”
The project contains 21 million measured and indicated tonnes grading 2.17 grams gold per tonne for 1.5 million contained oz. of gold and inferred resources of 870,000 tonnes of 1.84 grams gold for 51,000 oz. of gold.
Argonaut also announced that Lowe J. Billingsley will join the company as senior vice president of operations on April 12. Billingsley previously was mine manager for Sibanye-Stillwater’s (NYSE: SBGL) Stillwater East Mining complex in Montana.
“Lowe is an accomplished international mining professional with a demonstrated track record of vision, leadership, engagement, sound judgement and execution,” Dougherty said in the press release. “His wealth of experience will be a tremendous asset to the company.”
In other news, Argonaut reported a 43% year-on-year increase in mineral reserves and a 26% increase in measured and indicated resources. Company-wide Argonaut has 323.4 million proven and probable tonnes grading 0.66 gram gold per tonne for 6.9 million contained oz. of gold and measured and indicated resources of 658.9 million tonnes grading 0.62 gram gold for 13.1 million oz. of gold.
The company’s primary assets in Mexico include the El Castillo mine and San Agustin mine, which form the El Castillo complex, the La Colorada mine, and the Cerro del Gallo project. The company also owns the Florida Canyon mine in Nevada, the construction stage Magino project in Ontario, and several other exploration-stage projects in North America.