While Canadian gold miner Argonaut is still reviewing the final cost estimate for the Magino project, in Ontario, CEO Larry Radford warned on Wednesday that the project's costs could increase by a further C$120-million.

This compares with the C$800-million estimate that Argonaut provided before Radford stepped in as CEO in March. Radford was brought in after the previous CEO quit in the wake of the first major cost overrun at Magino in December. The project was initially expected to cost C$510-million and the latest preliminary estimate means that the costs have surged 80%.

“The mining industry is experiencing extraordinary cost pressures and Magino is no exception,” said Radford, whose focus since his appointment has been primarily on the construction project.

“We have looked at costs internally and with the assistance of outside experts and are looking at all aspects of the project to understand risks and opportunities.”

Argonaut was busy advancing financing options, in parallel with strategic alternatives to keep Magino on schedule for its first gold by the end of March next year.

“Our goal is to have a solution in place by the end of the second quarter 2022,” Radford said.

Should neither a financing, nor a strategic alternative be available promptly, Argonaut might have to amend or adjust its plans for the construction project.

Further, Argonaut warned that certain subcontractors were exposed to current and threatened labour actions, which could give rise to delays.

“While the scope of such delays remains uncertain, these events are developing and to this point have not led to any change to the overall project schedule,” the company said.

At March 31, 2022, Argonaut had committed about C$605-million, had incurred C$400-million, and estimates the project is about 50% complete. 

Meanwhile, Argonaut reported that the group’s first-quarter production of 55 516 gold-equivalent ounces and cashflow of C$25-million were in line with its operational budget.

Adjusted net income increased by 17% year-on-year to C$8.2-million and adjusted earnings a share rose by 28% to C$0.03.

“We continue to advance financing options in parallel with strategic alternatives and, in order to continue to advance the Magino construction project on schedule, our goal is to have a solution in place by the end of the second quarter 2022."