Artemis Gold (TSXV: ARTG; US-OTC: ARGTF) has increased the cost of its first Blackwater mill expansion to $120 million (US$85.3 million), representing an increase of as much as 20%, while maintaining its timeline to bring the larger plant online by year-end.

The company had previously budgeted between $100 million and $110 million before finalizing the project scope and adding spare equipment designed to raise processing capacity by one-third to 8 million tonnes per year. Construction at the site, located approximately 450 km northeast of Vancouver, stood at 57% completion as of June 30, according to a company update issued Tuesday.

"In the context of 2026 growth capital of $670-$745M funded from operating cash flow, the additional capital is not material," Haywood Securities analyst Pierre Vaillancourt wrote in a note Tuesday.

The cost overrun is modest compared to Artemis' planned $1.44-billion second expansion phase. Cost management on the smaller project will be closely watched as an indicator of confidence in the company's broader plan to more than triple Blackwater's processing rate and push annual gold production above 500,000 oz. by 2029.

The revised Blackwater budget comes amid a broader mine-building surge across central British Columbia, a region with established infrastructure supporting gold and copper operations. Centerra Gold (TSXV: CG; NYSE: CGAU) holds permits allowing up to $400 million in spending at Mount Milligan near Fort St. James, while Osisko Development (TSXV, NYSE: ODV) is advancing its $881-million Cariboo gold project near Wells, where recent drilling has extended high-grade gold zones below the current resource envelope.

Artemis shares traded in Toronto were last up 5% at $35.31 on Tuesday, giving the company a market capitalization of $8.3 billion (US$5.9 billion).

Construction Progress

The revised budget equates to $60 per tonne of added annual processing capacity, up from the company's prior estimate of $50 to $55. Despite the increase, the cost remains competitive, according to Haywood's Vaillancourt.

Crews have completed civil work for a new vertical mill and progressed the building's structural steel installation. Mill components have begun arriving on site, and workers have erected a pre-aeration tank and finished foundations for oxygen equipment, the company said. A new cyclone cluster is being shipped to site.

Mechanical installation and tie-ins to the operating plant now govern the project schedule. Artemis expects to commission the expanded circuit in the fourth quarter, with most of the resulting production uplift expected in the following year.

Haywood projects Blackwater output exceeding 300,000 oz. in 2027, supported by the higher processing rate and ore grades above the mine's reserve average. Artemis intends to release 2027 production and cost guidance early in the year after updating its resource model and mine plan.

Production Foundation

Blackwater enters the expansion phase with strengthening plant performance. The mine produced a record 74,063 oz. in the second quarter, a 20% increase over the first quarter, bringing first-half output to 135,986 oz.

Artemis has maintained its full-year production guidance of 265,000 to 290,000 oz.

Improved grades and recoveries helped offset operational risk revealed in March, when a failed ball mill gearbox triggered an unplanned shutdown. The plant recovered swiftly enough for Artemis to post record quarterly output in the subsequent period.

Blackwater poured its first gold in January of last year and achieved commercial production that May — roughly four months from first gold pour to commercial output. The mine produced 192,808 oz. in its first year at an all-in sustaining cost of US$869 per oz. sold following the start of commercial production.

Second Expansion Phase

The next expansion would add a separate 13-million-tonne-per-year plant adjacent to the existing mill, bringing total designed capacity to 21 million tonnes by late 2028. Artemis has commenced earthworks, installed construction camp buildings, and ordered the main grinding mills.

The company expects the larger operation to produce more than 500,000 oz. annually over its first 10 years, which would place Blackwater among Canada's largest gold mines, approaching the scale of Agnico Eagle Mines' Canadian Malartic operation in Quebec.

Artemis held $175 million in cash and an undrawn $700-million revolving credit facility as of March 31. Blackwater generated $128 million in operating cash flow during the first quarter, providing the company with sufficient liquidity to absorb the higher cost of the first expansion without altering its construction schedule.