Artemis Gold inks $312M construction contract for Blackwater plant in BC 

Artemis Gold (TSXV: ARTG) has moved closer to the start of construction at its Blackwater gold project in British Columbia with the award of a $312-million, engineering, procurement, construction and commissioning (EPC) contract for the processing plant and associated infrastructure to Sedgman Canada.  

The contract is expected to be executed by June 30, this year.  

Construction of the plant, which is subject to permits, is expected to begin in the fall, while the first gold pour is expected in the first half of 2024.  

“The award of the EPC job for the process plant at Blackwater is another significant milestone for Artemis, reflecting a competitive process involving multiple bidders,” the company’s CEO Steven Dean said in a press release. “We will work to finalize the design and engineering of the Blackwater project in advance of a start of major development activities.”  

Located in central British Columbia, about 446 km northeast of Vancouver, the Blackwater project is expected to produce an average of 339,000 oz. gold per year at an all-in sustaining cash cost of $850 per oz. during the life of mine period of 22 years, according to the project’s feasibility study. It envisages an open pit mine.  

At a 5% discount rate and using a gold price of US$1,600 per oz., the project would generate a post-tax net present value of $2.2 billion and an internal rate of return of 32%.  

While the parties finalize the definitive EPC contract, in order to maintain the project schedule, an interim services agreement has been signed, which will focus on procurement and pricing of long lead equipment, purchasing raw materials for fabricators and other aspects for pre-construction activities. 

Owned by Australia-based CIMIC Group, Sedgman has worked with four other projects in Canada, including Kirkland Lake Gold’s Macassa water treatment plant in Ontario and Ascot Resources’ (TSX: AOT) Premier gold project in B.C.  

According to Sedgman, the interim services agreement will generate about AU$16 million revenue for the company over a two-month period.  

Haywood Securities analyst Pierre Vaillancourt believes expects inflationary pressures to increase the project’s capital cost from the feasibility study estimate of $645 million.  

“ARTG has executed well on its milestones toward construction,” Vaillancourt wrote in a research note to clients. “Although we expect capex will rise, as with most other construction projects, we are also confident in the operating/construction team’s ability to optimize the project and manage costs to maintain the project’s attractive economics.”  

At press time in Toronto, Artemis Gold was trading at $6.55 per share within a 52-week trading range of $4.86 and $7.93. The company has a market cap of 998.3 million.