Argonaut Gold Inc (TSX:AR) shares slid 12% to $0.38 in late-morning trading on Monday after the gold producer with a portfolio of operations in North America announced plans to raise gross proceeds of about C$80 million, via a bought deal public offering, by issuing 210,527,000 company common shares at a price of C$0.38 per share.
Argonaut said net proceeds of the offering will be used to fund development and optimization of its Magino mine in Ontario and Florida Canyon mine in Nevada as well as for general working capital purposes.
"There is significant value to be realized at Magino and Florida Canyon and this financing provides us with the ability to unlock that value," Argonaut Gold CEO Richard Young said in a statement.
"We remain on track to meet the lower end of full-year consolidated production guidance, and now with a stronger cash position, we are better positioned to achieve our vision to become a low-cost, mid-tier North American gold producer delivering value to shareholders," he added.
Argonaut noted that the underwriters have also been granted an option, exercisable in whole or in part for a period of 30 days following the closing of the offering, to purchase an additional 13,158,000 offered shares at the offering price, for additional gross proceeds of up to approximately C$5 million.
The financing is expected on or about December 12, 2023.
The company achieved commercial production at its Magino mine in November after construction costs almost doubled to nearly C$1 billion and a mill problem postponed mining operations by more than a month.
Shares of Argonaut Gold have fallen 35% year to date.
Contact Sean at sean@proactiveinvestors.com