Argonaut Gold Inc. (TSX:AR) (the "Company", "Argonaut Gold" or "Argonaut") is
pleased to announce its financial and operating results for the Second quarter
ended June 30, 2012. All dollar amounts are expressed in United States dollars
unless otherwise specified.
SECOND QUARTER 2012 & RECENT HIGHLIGHTS
Financials
-- Revenue of $37.5 million ($21.6 million in Q2 2011).
-- Net income of $11.3 million, $0.12 per basic share.
-- Cash flows from operating activities before changes in non-cash
operating working capital and other items of $16.4 million ($7.6 million
in Q2 2011).
-- Cash on hand was $21.4 million at June 30, 2012.
Production and Cost
-- Ounces loaded to pads:
-- El Castillo: 35,220 ounces (up 19% from Q2 2011).
-- La Colorada: 10,173 gold ounces and 1,120,716 silver ounces.
-- Production of 24,123 gold ounces in the second quarter of 2012.
-- El Castillo: 19,533 gold ounces (up 12% from Q2 2011).
-- La Colorada: 4,590 gold ounces and 25,796 silver ounces.
-- Overall cash cost per gold ounce sold: $620.
Operational Improvements:
-- Capital expenditures of $12.8 million on mineral properties, plant and
equipment.
El Castillo
-- Construction completed on west side leach pad 7A.
-- Conveying and stacking system on the east side pad in place.
La Colorada
-- New crusher purchased for production of overliner for pad construction.
-- Desorption and refinery circuit fully commissioned.
-- New warehouse for reagent storage completed.
-- Final permits for mining expansion expected in third quarter.
-- Approximately half of Phase 1 run of mine material has been reprocessed.
-- New pad construction started on pads 8, 10 and 11.
Exploration:
-- El Castillo - Sulphide samples obtained for continued metallurgical test
work with results expected in fourth quarter.
-- La Colorada: 24 holes totaling 12,670 metres drilled in Q2; 78 holes
totaling near 28,000 metres drilled in 2012.
-- San Antonio: 4 holes totaling 678 metres drilled in Q2; 4,000 metres
drilled thus far in 2012.
This press release should be read in conjunction with the Company's unaudited
interim condensed consolidated financial statements for the second quarter ended
June 30, 2012 and associated management's discussion and analysis ("MD&A") which
are available from the Company's website, www.argonautgold.com, in the
"Investors" section under "Financial Filings", and under the Company's profile
on SEDAR at www.sedar.com.
Three months ended Six months ended
June 30, June 30,
Financials 2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Revenue ($ millions) $ 37.5 $ 21.6 +74% $ 61.9 $ 47.3 +30%
Net income ($ millions) $ 11.3 $ 5.2 +117% $ 18.6 $ 11.1 +67%
Income per share - basic $ 0.12 $ 0.06 +100% $ 0.20 $ 0.13 +54%
Income per share -
diluted $ 0.11 $ 0.06 +83% $ 0.18 $ 0.13 +38%
Cash flow from operating
activities before
changes in non-cash
operating working
capital and other items
($ millions) $ 16.4 $ 7.6 +116% $ 24.5 $ 16.9 +45%
Gold ounces sold 23,247 14,331 +62% 37,745 32,792 +15%
Gold ounces produced 24,123 17,453 +38% 45,007 35,467 +27%
Average realized gold
sales price $ 1,600 $ 1,507 +6% $ 1,630 $ 1,440 +13%
Overall Cash cost per
gold ounce sold $ 620 $ 578 +7% $ 627 $ 585 +7%
Financial Results - Second Quarter 2012
During the second quarter of 2012, revenue was $37.5 million from gold sales of
23,247 ounces compared to $21.6 million from sales of 14,331 ounces in the
second quarter of 2011. Cost of sales was $19.3 million for the quarter compared
to $11.0 million for the second quarter of 2011. Cash cost per gold ounce sold
was $620 compared to $578 in the same period of 2011. (Cash cost per gold ounce
sold is a non-IFRS measure, see note below).
During the second quarter of 2012, gross profit was $18.2 million compared to
$10.6 million gross profit in the second quarter of 2011. During the quarter,
profit from operations was $15.9 million compared to $8.8 million for 2011. Net
income for the quarter was $11.3 million or $0.12 per basic share versus $5.2
million or $0.06 per basic share in 2011.
Cash on hand increased from $17.8 million at March 31, 2012 to $21.4 million at
June 30, 2012. Capital expenditures in the second quarter were $12.8 million
primarily as a result of expanding operations at the El Castillo and La Colorada
mines. The 2012 capital expenditures and exploration program for Argonaut Gold
includes $38-$48 million at El Castillo, La Colorada and San Antonio which
includes pre-production stripping at La Colorada of approximately $6 million.
Cash flow from operations before changes in non-cash operating working capital
and other items was $16.4 million during the quarter, compared to $7.6 million
for the second quarter of 2011. The cash flow provided by operating activities
in the quarter was $18.3 million.
CEO Commentary
Mr. Pete Dougherty, Argonaut's President and CEO states: "The Company saw
important improvements made at both El Castillo and La Colorada during the
quarter. At El Castillo, a new stacking and conveying system has been
implemented, with the potential to increase tonnes moved in the pit. In
addition, construction on pad 7A was completed. To date, there is capacity to
stack approximately 6.7 million tonnes on the west side and approximately 25
million tonnes capacity on the east pads."
In regards to La Colorada, Mr. Dougherty added: "Reprocessing material at La
Colorada has continued with positive results to date. Preparations at the site
continue in anticipation of receiving final permits for full scale mining in the
third quarter. Upon receiving permits, necessary developments and construction
will lead to full scale mining around year end. During the quarter, the Company
commissioned the new gold recovery circuit at La Colorada. This will allow more
efficient processing of metal for all our Mexican operations.
"Looking forward, we are awaiting permit notifications at La Colorada and are
working towards permits for San Antonio. Both permits represent significant
milestones for the Company. Operations are running smoothly and we anticipate
meeting our full year guidance."
El Castillo Operating Statistics
3 Months Ended June 30, 6 Months Ended June 30,
% %
2012 2011 Change 2012 2011 Change
------------------------------------------------------------
Mining
Total tonnes
mined 5,037,401 4,970,835 +1% 11,002,325 9,730,293 +13%
Tonnes ore mined 2,506,756 2,786,349 -10% 5,557,283 5,324,613 +4%
Heap Leach Pad
Direct ore
tonnes to pad 1,533,188 1,920,657 -20% 3,717,080 3,733,668 0%
Crushed ore
tonnes to pad 1,164,340 860,289 +35% 2,002,718 1,589,393 +26%
Production
Gold grade (g/t) 0.41 0.33 +24% 0.38 0.34 +12%
Gold loaded to
pad (oz) 35,220 29,555 +19% 71,503 57,780 +24%
Gold loaded to
carbon (oz) 19,533 17,453 +12% 37,332 35,467 +5%
Gold sold (oz) 17,949 14,331 +25% 32,447 32,792 -1%
(1) "g/t" is grams per tonne
(2) "oz" means ounce
El Castillo Summary of Production Results
Total tonnes mined in the second quarter 2012 were consistent with 2011
accomplishments. Of note, there was a 35% increase in crushed tonnes during the
second quarter of 2012 over the second quarter of 2011. The total ounces loaded
to the pad were 35,220 in the second quarter; a 19% increase over the second
quarter of 2011.
The strip ratio of waste to ore was 1.01 compared to a strip ratio of 0.78 in
the second quarter of 2011.
Year to date, El Castillo has produced 37,332 ounces of gold at a cash cost per
ounce sold of $635. Third quarter production is expected to be 20,000-21,000
ounces, while 2012 guidance remains at 75,000 to 80,000 ounces for a cash cost
between $625 and $650 per gold ounce.
3 Months Ended
La Colorada Operating Statistics Q2 2012 Q1 2012 % Change YTD 2012
------------------------------------------
Mining
Total tonnes moved 840,241 678,310 +24% 1,518,551
Ore tonnes moved 805,611 678,310 +19% 1,483,921
Heap Leach Pad
Crushed ore tonnes to pad 743,533 680,396 +9% 1,423,929
Production
Gold grade (g/t) 0.43 0.41 +5% 0.42
Gold loaded to pad (oz) 10,173 8,886 +14% 19,059
Gold loaded to carbon (oz) 4,590 3,085 +49% 7,675
Silver loaded to carbon (oz) 25,796 17,182 +50% 42,978
Gold sold (oz) 5,298 0 NA 5,298
(1) "g/t" is grams per tonne
(2) "oz" means ounce
La Colorada Summary of Production Results
Approximately half of the Phase 1 material to be reprocessed has been recrushed
and restacked for leaching. Construction has begun on pads 8, 10 & 11 and one
half of the total stacking capacity is expected to be completed in the third
quarter. During the third quarter the crusher will be down for approximately one
month as it is relocated to a more permanent location, near the new pads
currently under construction.
The next steps at La Colorada will involve reprocessing loose material in the
pit, followed by full scale processing of newly mined material by the first
quarter of next year.
Year to date, the Company has produced 7,675 gold ounces at a cash cost per
ounce sold of $578. Due to the crusher relocation, the third quarter production
expectations are approximately 3,000 ounces of gold. 2012 guidance at La
Colorada remains at production of 13,000-17,000 ounces with a cash cost between
$625 and $650 per gold ounce.
Permitting Status update at San Antonio
Argonaut has received notice that the environmental permit application has been
denied, without objection to the substance of the application, by SEMARNAT.
SEMARNAT requires amendment of the underlying zoning, a process Argonaut had
already begun. Argonaut is engaged with the local communities and government
agencies in addressing the zoning. The Company continues to pursue all necessary
permits for the San Antonio project.
Looking Forward - 2012:
Third Quarter
-- San Antonio - Preliminary Economic Assessment will be released in the
near term and will include an updated resource with revisions to the
capital expenditures and operational costs for the project.
-- La Colorada - Permits necessary for construction to expand mining
operations are expected in the third quarter. Near term projects will
include new heap leach pad construction.
Fourth Quarter
-- San Antonio - The Company continues working towards permits for the
project.
-- La Colorada - Construction to expand to full scale mining will be
initiated, dependent on receiving final permits.
Non-IFRS Measures
The Company included the non-IFRS measure "Cash cost per gold ounce sold" in
this press release to supplement its financial statements which are presented in
accordance with International Financial Reporting Standards ("IFRS"). Cash cost
per gold ounce sold is equal to cost of sales excluding depreciation, depletion
and amortization less silver sales divided by gold ounces sold. The Company
believes that this measure provides investors with an improved ability to
evaluate the performance of the Company. Non-IFRS measures do not have any
standardized meaning prescribed under IFRS. Therefore they may not be comparable
to similar measures employed by other companies. The data is intended to provide
additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with IFRS. Please
see the MD&A for full disclosure on non-IFRS measures.
Technical Information and Mineral Properties Reports
The technical information contained in this document has been prepared under
supervision of, and reviewed and approved by Mr. Thomas H. Burkhart, Argonaut's
Vice President of Exploration, and a qualified person as defined by National
Instrument 43-101 ("NI 43-101"). For further information on the Company's
properties please see the reports as listed below on the Company's website or on
www.sedar.com:
----------------------------------------------------------------------------
El Castillo Mine NI 43-101 Technical Report on Resources and
Reserves, Argonaut Gold Inc., El Castillo Mine,
Durango State, Mexico dated November 6, 2010
----------------------------------------------------------------------------
La Colorada Mine NI 43-101 Preliminary Economic Assessment La
Colorada Project, Sonora, Mexico dated December
30, 2011
----------------------------------------------------------------------------
San Antonio Gold Project Technical Report and Mineral Resource Estimate on
the San Antonio Gold Project, Baja California Sur,
Mexico dated June 30, 2011
----------------------------------------------------------------------------
La Fortuna Property La Fortuna, Durango, Mexico, Technical Report
dated October 21, 2008
----------------------------------------------------------------------------
About Argonaut Gold
Argonaut is a Canadian gold company engaged in exploration, mine development and
production activities. Its primary assets are the production-stage El Castillo
Mine in the State of Durango, Mexico, the La Colorada Mine in the State of
Sonora, Mexico, the advanced exploration stage San Antonio project in the State
of Baja California Sur, Mexico, and several exploration stage projects, all of
which are located in Mexico.
Creating Value Beyond Gold
Cautionary Note Regarding Forward-looking Statements
This news release contains forward-looking statements that involve risks and
uncertainties that could cause results to differ materially from management's
current expectations. Actual results may differ materially due to a number of
factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to
update the forward-looking information contained in this news release.
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