Argonaut Gold subsidiary Minera Real Del Oro has signed an agreement with Desarrollos Mineros El Aguila, a wholly-owned subsidiary of Fresnillo, to acquire 420ha of San Juan Concession in Mexico.

The two companies have also signed an agreement for Argonaut to use portions of other adjacent concessions for leach pads, ponds.

Under the transaction, Argonaut will pay $26m as consideration to El Aguila. Half of the consideration was paid upon signing of the agreement, while the remaining amount needs to be paid on or before 15 December 2017.

Argonaut Gold president and CEO Peter Dougherty said: “We are excited to have entered into an agreement that is beneficial to both parties. We will now be able to mine the remaining mineralisation on our side of the concession boundary as we move the pit wall back onto the San Juan Concession.

“This, coupled with the known mineralization on the San Juan Concession, allows us the opportunity to expand the pit even farther. We have increased our footprint in the area threefold going from approximately 200ha to over 620ha. 

“We believe this is a very strategic acquisition, as it means El Castillo has the potential to be an important part of our future production.”

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"We have increased our footprint in the area threefold going from approximately 200ha to over 620ha."

Argonaut currently has the surface rights to the San Juan Concession. 

In the last three years, Argonaut collaborated with Fresnillo to complete 34,510m of exploration drilling in 132 drill holes. 

Upon evaluation of these results, Argonaut Gold received evidence that the El Castillo mineral system continues onto the San Juan Concession to the north-east and south of the original El Castillo concession boundaries.

With this acquisition, Argonaut Gold expects to improve its production profile.

Canada-based Argonaut Gold focuses on exploration, mine development and production activities in North America. 

El Castillo mine, San Agustin project and La Colorada mine in Mexico are its primary assets.