Argonaut Gold Inc. (TSX:AR) ("Argonaut", "Argonaut Gold" or the
"Company") is pleased to announce Company 2013 production guidance,
project initiatives and exploration objectives across the Company's
properties throughout the Americas. Production in 2013 is planned
to increase to between 120,000 and 140,000 ounces of gold up from
108,000 ounces of gold in 2012. Cash cost of production is also
expected to increase slightly to between $630 and $660 per
ounce.
The Company is undertaking an aggressive capital expansion
program in 2013 which should prepare the Company for further
production expansions in 2014 and beyond. This will essentially
complete capital expansion programs at both La Colorada and El
Castillo until 2015, when we will finalize the remaining 15mm tons
of pad capacity at El Castillo.
Exploration drilling totaling 89,000 meters has taken place at
Magino, part of this drilling has revealed a new zone.
Capital Expansion Program for 2013
El Castillo $32 million
La Colorada(1) $14 million
Magino $3 million
San Antonio(2) $3-15 million
Exploration(3) $5-11 million
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TOTAL $57-75 million
Notes: (1) Including $5 million in pre-stripping costs
(2) Subject to permitting process timeline
(3) Subject to exploration results
El Castillo 2013 Capex Initiatives:
The funding can be classified into three main initiatives:
-- $15 mm: New West side pad and ponds with 30mm ton capacity to be built
in 2013
-- $10 mm: Transfer of Contractor mining equipment to the Company
-- $7 mm: New crushing and overland conveying system for the West pad 8
La Colorada 2013 Capex Initiatives:
The funding can be classified into three main initiatives:
-- $7mm: New crushing system capable of producing +4mm tonnes per year at
less than 3/8"
-- $5mm: Pre-stripping of pit
-- $2mm: Plant and pad expansions
Pete Dougherty, Argonaut Gold's President and CEO stated: "2012
was a significant year for the Company; we exceeded gold production
guidance, added La Colorada as a second operation and completed the
acquisition of Prodigy Gold. El Castillo is near a steady state of
production with 2013 guidance of between 90,000 and 100,000 gold
ounces at cash costs of $700 to $725 per ounce. Due to an
anticipated 14% reduction in grade, we will be increasing the
volume of ore tonnes processed to maintain gold ounce production
levels. From a capital perspective we are looking to make
improvements to our cost basis by taking over the mining from our
contractor, and adding an in-pit crushing and conveying system to
deliver to West pad 8."
Mr. Dougherty added "At La Colorada, fresh ore mining has begun.
The mine plan anticipates grades to increase quarter over quarter
with production loaded towards the second half of the year.
Installation of the new crusher and pad construction will be
completed in the second quarter of this year. Full year 2013 gold
production at La Colorada is expected to be between 30,000 and
40,000 ounces of gold at average cash costs for the year of $450 to
$475 per ounce, net of silver credits."
Magino Exploration Update:
Argonaut Gold is pleased to report on exploration results at its
recently acquired Magino project located 40 kilometers northeast of
Wawa, Ontario. In 2012 an additional 89,000 meters of drilling in
340 holes was completed to advance the project toward a proposed
pre-feasibility study. The drilling consisted of in-fill drilling
in the pit and condemnation drilling for site layout. In-fill drill
spacing averaged of 25 meters within the constrained pit. The
drilling campaign also outlined a new zone of mineralization
depicted in the southeast corner of the drilling which we are
calling the PD zone. (See Figure 1 and Holes PD-atm12-002-100).
Prior Resource Drilling Additional Drilling
Meters 220,000 89,000
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Holes 1,210 340
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Drill Spacing (meters) 40 25 in constrained pit
(Note: Prior Resource drilling cut-off was 6-8-2012, the additional 89,000
meters completed since 6-8-2012).
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MAGINO DRILLING SUMMARY SINCE OCTOBER 2012 RESOURCE REPORT BY AREA
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Program Meters # Holes
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Deep Holes 4,963 5
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Condemnation 31,723 127
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Pit Definition 17,643 121
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Infill 33,599 75
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Metallurgical 1,403 12
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TOTAL 89,330 340
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Highlights from the Magino Drill Program
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Drill Hole From (meters) To (meters) Length (meters) Gold Grade
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PD-MA12-002 9.00 50.00 41.00 1.45
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PD-MA12-004 13.00 52.00 39.00 1.35
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PD-MA12-023 93.00 131.00 38.00 2.06
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PD-MA12-027 54.00 96.20 42.20 1.13
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PD-MA12-042 39.00 66.00 27.00 2.31
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PD-MA12-044 105.00 133.00 28.00 3.41
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PD-MA12-060 6.50 29.00 22.50 1.30
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PD-MA12-080 22.00 36.00 14.00 1.41
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PD-MA12-100 75.00 86.00 11.00 1.81
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MA12-364 74.00 162.00 88.00 0.75
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MA12-378 175.00 319.00 144.00 0.45
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including 231.00 265.00 34.00 1.19
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MA12-380 84.00 108.00 24.00 0.87
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MA12-384 180.00 642.00 462.00 0.59
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including 180.00 336.00 156.00 0.99
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MA12-389 157.00 374.00 217.00 0.85
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including 329.00 374.00 45.00 2.16
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MA12-392 54.00 75.00 21.00 0.89
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MA12-414 191.00 235.90 44.90 1.38
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Note: All drillholes were drilled oriented to an azimuth of 165 with dips
ranging from -45 to -60 to the South-east. The Webb Lake Stock zone has a
general ENE strike of azimuth 075 and dips to the North. Its Majority part
is sub vertical but its dip softens in angle to the south-west becoming -30
and even sub horizontal in some parts. The drill holes with a dip around -50
will be closer to the true width of the main mineralized zone at less than
400m depth. Vertical holes will be the most representative of true width in
its sub horizontal portion. Also, the western half of Webb Lake Stock has a
tilt (plunge) towards the west, becoming increasingly deeper in that
direction.
(Please see our website (www.argonautgold.com) for full Magino
drill results).
To view the image associated with this press release, "Figure 1
Drill Map," please visit the following link:
http://media3.marketwire.com/docs/AR2502_Figure1.jpg.
To view the image associated with this press release, "Magino
Block Model Mineralization," please visit the following link:
http://media3.marketwire.com/docs/Magino_Block_Model_Mineralization.jpg.
Conceptually Argonaut Gold anticipates that a constrained pit
would look at a 1 g/t cut-off of the delineated resource.
Tom Burkhart, Argonaut Gold's VP Exploration, noted "We are
pleased with the progress of our exploration efforts at Magino. The
exploration team has advanced the project and a new pre-feasibility
report is expected to be issued later this year. The drilling also
provided noteworthy drill intercepts in the PD Zone. Our latest
drilling continues to demonstrate the robust nature of the Magino
deposit and the potential to expand mineralization on the property.
The optimum 25 meter drill spacing has given us increased
confidence in our geologic interpretations and resource estimates.
We look forward to continuing our evaluations of the property
including further assessment of the new PD discovery."
About Argonaut Gold
Argonaut Gold is a Canadian gold Company engaged in exploration,
mine development and production activities. Its primary assets are
the El Castillo Mine in Durango, Mexico, and the La Colorada Mine
in Sonora, Mexico (both in the production stage), the advanced
exploration stage San Antonio project in Mexico, the recently
acquired advanced exploration stage Magino project in Ontario,
Canada and several exploration stage projects, all of which are
located in North America.
Creating Value Beyond Gold
Non-IFRS Measures
The Company included the non-IFRS measure "Cash cost of
production per ounce of gold" and "Cash cost per gold ounce" in
this press release to supplement its information which is
periodically presented in accordance with International Financial
Reporting Standards ("IFRS"). "Cash cost of production per ounce of
gold" and "Cash cost per gold ounce" is equal to cost of sales less
silver sales divided by gold ounces sold. Silver credits are
included at $30 per ounce of silver. 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.
Cautionary Note Regarding Forward-looking Statements
This press release contains certain "forward-looking statements"
and "forward-looking information" under applicable Canadian
securities laws concerning the proposed transaction and the
business, operations and financial performance and condition of
Argonaut Gold Inc. ("Argonaut"). Forward-looking statements and
forward-looking information include, but are not limited to,
statements with respect to estimated production and mine life of
the various mineral projects of Argonaut; synergies and financial
impact of completed acquisitions; the benefits of the development
potential of the properties of Argonaut; the future price of gold,
copper, and silver; the estimation of mineral reserves and
resources; the realization of mineral reserve estimates; the timing
and amount of estimated future production; costs of production;
success of exploration activities; and currency exchange rate
fluctuations. Except for statements of historical fact relating to
Argonaut, certain information contained herein constitutes
forward-looking statements. Forward-looking statements are
frequently characterized by words such as "plan," "expect,"
"project," "intend," "believe," "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made, and are based on a number of assumptions and subject to a
variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those
projected in the forward-looking statements. Many of these
assumptions are based on factors and events that are not within the
control of Argonaut and there is no assurance they will prove to be
correct.
Factors that could cause actual results to vary materially from
results anticipated by such forward-looking statements include
changes in market conditions, variations in ore grade or recovery
rates, risks relating to international operations, fluctuating
metal prices and currency exchange rates, changes in project
parameters, the possibility of project cost overruns or
unanticipated costs and expenses, labour disputes and other risks
of the mining industry, failure of plant, equipment or processes to
operate as anticipated. Although Argonaut has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Argonaut undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions
should change except as required by applicable securities laws. The
reader is cautioned not to place undue reliance on forward-looking
statements. Statements concerning mineral reserve and resource
estimates may also be deemed to constitute forward-looking
statements to the extent they involve estimates of the
mineralization that will be encountered if the property is
developed. Comparative market information is as of a date prior to
the date of this document.
Qualified Person
All scientific and technical information for the Magino project,
has been reviewed and approved by Tom Burkhart, Argonaut Gold's
Vice President of Exploration, who is a qualified person under the
definitions established by National Instrument 43-101. Drill core
at Magino is boxed, covered, and sealed at the drill rig and moved
to the Prodigy logging and sample preparation facilities by Prodigy
Gold personnel. The core is then split down the center using a
typical table fed circular rock saw normally at one-meter
intervals. One half of the core is sent for assay to Activation
Laboratories Ltd., 33 Iroquois Road, ON, P4N 7C5,, while the other
half is returned to the core box and stored at Prodigy's sampling
facility in a secure, fenced off, area. Activation Laboratories are
ISO/IEC 17025 certified and are at arm's length to Prodigy. Prodigy
QA/QC procedures include the regular use of blanks, standards and
duplicate samples in addition to sending 10% of the samples to ALS
Chemex, 2090 Riverside Dr., Timmins, ON, P4R 0A2 for check assays.
ALS Chemex is at arm's length to Prodigy and is ISO 9001:2008
certified. Samples assaying greater than 3.0 gpt gold are
automatically re-assayed by the metallic screen method. Gold assays
greater than 40 gpt are capped at 40 gpt when calculating composite
intervals in drill holes. Drill holes are directed as much as
possible perpendicular to the strike and dip of the mineralization
at Magino. As a rough estimate the true thickness of the above
intercepts is approximately 76%.
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
discussed herein 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 8,
2011
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La Fortuna Property NI 43-101 La Fortuna, Durango, Mexico, Technical
Report dated October 21, 2008
----------------------------------------------------------------------------
Hercules Technical Review and Mineral Resource Estimate of
the Hercules Property dated May 26, 2010
----------------------------------------------------------------------------
Magino Gold Project NI 43-101 Technical Report and Mineral Resource
Estimate on the Magino Gold Project, Ontario,
Toronto, Canada dated October 4, 2012
----------------------------------------------------------------------------
San Antonio Gold Project NI 43-101 Technical Report and Mineral Resource
Estimate on the San Antonio Gold Project, Baja
California Sur, Mexico dated October 10, 2012
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Contacts: Argonaut Gold Inc. Nichole Cowles Investor Relations
Manager (775) 284-4422 x 101nichole.cowles@argonautgold.com
www.argonautgold.com
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