Argonaut Gold Announces Q1 Production of 30,963 Gold Equivalent
Ounces, an Increase of 4% Over Prior Year
Drilling commences at San Agustin with 11,200 metres (116 holes)
completed to date
TORONTO, ONTARIO--(Marketwired - Apr 15, 2014) - Argonaut Gold
Inc. ("Argonaut", "Argonaut Gold" or the "Company") (TSX:AR)
announced today that the Company had production of 30,963 gold
equivalent ounces ("GEOs") during the first quarter ended March 31,
2014 ("Q1"). This included 22,171 GEOs at its 100% owned El
Castillo Mine ("El Castillo") located in Durango, Mexico and 8,792
GEOs at its 100% owned La Colorada Mine ("La Colorada") located
near Hermosillo, Mexico.
|
1st Quarter |
Change |
|
2014 |
2013 |
Total Gold Equivalent Ounce Production: |
|
GEOs loaded to the pads(1) |
52,605 |
42,451 |
+24 |
% |
GEOs projected recoverable ounces(1), (2) |
29,325 |
25,004 |
+17 |
% |
GEOs produced ounces(1) |
30,963 |
29,881 |
+4 |
% |
GEOs ounces sold(1) |
30,165 |
26,586 |
+13 |
% |
(1) GEOs are based on
conversion ratio of 55:1 for silver to gold (2) Recoverable ounces - see
tables titled first quarter 2014 El Castillo Operating Statistics
and first quarter 2014 La Colorada Operating Statistics
FIRST QUARTER 2014
HIGHLIGHTS:
El Castillo
- GEO production of 22,171 ounces consisting of 21,976 gold
ounces and 10,737 silver ounces (GEOs at 55:1 conversion
rate).
- 39,924 gold ounces loaded on the leach pads equating to 22,278
projected recoverable gold ounces.
- Mining:
- New mining equipment added to increase capacity from 69
thousand tonnes per day ("ktpd") to 87 ktpd, or a 26%
increase.
- Mine plan has moved out of transitional ore into more oxidized
material which should result in improved recoveries in the
future.
- Crushing and conveying:
- West overland conveyor moved a new record of 1,345,339
tonnes.
- East crusher - 1,497,323 tonnes crushed and loaded to pad.
- Pad expansion of cell 8 is ahead of schedule
- Cell portion 2a to be completed in June and cell portion 3c to
be completed in September.
- Renegotiated lease terms for El Castillo mining equipment to
reduce the overall finance costs of the equipment by reducing
interest rates from 10.4% to 5.7%.
La Colorada
- GEO production of 8,792 ounces, consisting of 7,563 gold ("Au")
ounces and 67,579 silver ("Ag") ounces (GEOs at 55:1 conversion
rate).
- An internal assessment of reprocessing old heap leach material
shows positive results incorporating four million tonnes of 0.35
grams per tonne ("g/t") Au and 11.2 g/t Ag, with recoveries
estimated at 50% Au and 30% Ag.
- 10,812 gold ounces and 102,766 silver ounces loaded on the pad;
7,048 projected recoverable GEOs to leach pad.
- An additional secondary crusher was added to the crushing
circuit in March increasing the crushing circuit to five cones from
four cones for a 25% increase in crushing capacity.
- Former El Castillo crusher in place at La Colorada.
Magino
- Two rounds of heap leach metallurgical test work have been
completed at Magino; positive results warranted more test work be
done to analyze the heap leach potential of the lower grade
material at Magino.
San Antonio
- The Company was notified on April 10, 2014 that the appeal to
overturn the MIA ruling from 2012 was denied. The Company plans to
appeal this ruling.
San Agustín
- 11,172 metres of drilling completed to date including 10,173
metres of reverse circulation ("RC") in 103 drill holes and 999
metres of core in 13 drill holes.
- Metallurgical test work:
- Drilling is complete for all PQ core and it has been sent to
Kappes Cassiday & Associates in Reno, Nevada to conduct
metallurgical column tests.
- Run of mine ("ROM") coarse ore samples have been collected and
transported to El Castillo for bulk ROM column testing.
- 2 RC drill rigs operating at site.
- Drill results will be released following completion of analysis
in late second quarter or early third quarter 2014.
CEO Commentary
Pete Dougherty, President and CEO said, "While we had a soft
production profile in the first quarter of 2014, overall production
has begun to improve at both locations (March production was up 18%
over January). The Company expects a stronger second quarter of
production as we continue to ramp up throughput.
The Company is encouraged by the heap leach results at Magino
prompting further studies and evaluation.
At the San Antonio project, we believe that there is broad
community and government support, and we are committed to moving
this project forward.
Drilling at San Agustín is going extremely well and we are happy
with the progress at this time. Our goal is to provide the results
from over 15,000 metres of drilling by late second quarter or early
third quarter."
FIRST QUARTER 2014 EL
CASTILLO OPERATING STATISTICS
|
3 Months Ended March 31 |
|
|
2014 |
2013 |
% Change |
|
Mining |
|
|
|
|
Tonnes ore (000's) |
3,666 |
3,173 |
+16 |
% |
Tonnes waste (000's) |
4,164 |
3,014 |
+38 |
% |
Tonnes mined (000's) |
7,829 |
6,186 |
+27 |
% |
Tonnes per day (000's) |
87 |
69 |
+26 |
% |
Waste/ore ratio |
1.14 |
0.95 |
+20 |
% |
Heap Leach Pad |
|
|
|
Tonnes ore direct to leach pad (000's) |
823 |
1,729 |
-52 |
% |
Tonnes crushed (000's) |
1,497 |
1,432 |
+5 |
% |
Tonnes overland conveyor (000's) |
1,345 |
NA |
NA |
|
Production |
|
|
|
|
Gold grade (g/t)(1) |
0. 34 |
0.35 |
-3 |
% |
Gold loaded to leach pad (oz)(2) |
39,924 |
36,023 |
+11 |
% |
Projected recoverable gold ounces (oz)(3) |
22,278 |
21,534 |
+3 |
% |
Gold produced (oz) |
21,976 |
23,125 |
-5 |
% |
Gold sold (oz) |
20,906 |
19,509 |
+7 |
% |
(1) "g/t" is grams per tonne |
|
|
|
|
(2) "oz" means troy ounce |
|
|
|
|
(3) Recovery rates: ROM oxide 50%, crushed oxide 70%,
ROM transition 40%, crushed transition 60%, crushed sulfides
argilic 30%, crushed sulfides silicic 17% |
|
|
|
Richard Rhoades, Chief Operating Officer, said, "At El Castillo
we have expanded the fleet and increased the mining capacity. This
increase will address a higher strip ratio in 2014 and lower
projected mine grades of 0.315 g/t. The strip ratio was up 20% for
the quarter as the final push back on the north side of the pit was
initiated. The mine plan has moved production out of the
transitional material which saw a reduction from 36% transitional
material in the fourth quarter 2013 to 20% transitional material in
the first quarter of 2014. For 2014, we anticipate 90% of mined
material will be oxides and 10% will be transitional. At the west
overland conveyor system, we have increased production and as a
result the Company anticipates lower per tonne cost as we reduce
the tonnes hauled by truck."
FIRST QUARTER 2014 LA COLORADA OPERATING
STATISTICS |
|
|
3 Months Ended March 31 |
|
|
2014 |
2013 |
% Change |
|
Mining |
|
|
|
|
Tonnes ore (000's) |
560 |
557 |
+1 |
% |
Tonnes waste (000's) |
4,043 |
3,799 |
+6 |
% |
Total tonnes (000's) |
4,603 |
4,355 |
+6 |
% |
Waste/ore ratio |
7.22 |
6.82 |
+6 |
% |
Tonnes rehandled (000's) |
70 |
0 |
- |
|
Heap Leach Pad |
|
|
|
Tonnes ore to leach pad (000's) |
635 |
573 |
+11 |
% |
Production |
|
|
|
|
Gold grade mined (g/t)(1) |
0.57 |
0.27 |
+111 |
% |
Gold loaded to leach pad (oz)(2) |
10,812 |
5,142 |
+110 |
% |
Projected recoverable GEOs loaded(3) |
7,048 |
3,471 |
+103 |
% |
Gold produced (oz) |
7,563 |
5,782 |
+31 |
% |
Silver produced (oz) |
67,579 |
44,879 |
+51 |
% |
GEOs produced(4) |
8,792 |
6,598 |
+33 |
% |
Gold sold (oz) |
7,733 |
5,932 |
+30 |
% |
Silver sold (oz) |
73,211 |
54,269 |
+35 |
% |
GEOs sold(4) |
9,064 |
6,919 |
+31 |
% |
(1) "g/t" is grams per tonne |
|
(2) "oz" means troy ounce |
|
(3) Recovery rates: Gold 60%, Silver 30% |
|
(4) GEOs based on conversion ratio of 55:1 for silver
to gold |
|
|
|
Richard Rhoades said, "At La Colorada, mine grades improved
during the first quarter of 2014 to 0.57 g/t, up 111% over the
prior year. Production saw an improvement to 8,792 GEOs versus
6,598 GEOs in Q1 of the prior year for a 33% increase. We have
completed an internal assessment of reprocessing old heap leach
material which shows positive results incorporating four million
tonnes of 0.35 g/t Au and 11.2 g/t Ag, with recoveries estimated at
50% Au and 30% Ag. This will be incorporated into the mine plans in
the future. In addition to adding material to the mine plan at La
Colorada, the Company has added to the crushing capacity at the
property. An additional secondary cone was added to the new
circuit. We now have five 400 horsepower cones compared to four 400
horsepower cones in the prior circuit. We have also added a
previously utilized crusher at El Castillo in parallel to increase
total crushing capacity. The additional crushing capacity was
installed by the end of March and should increase capacity and
production throughout the year."
Magino Metallurgical Test Work
Two sets of heap leach metallurgical test work were conducted on
the low grade material at Magino with results noted below. These
composites were sent to Kappes, Cassiday & Associates ("KCA")
in Reno, Nevada who completed column tests on the material.
Phase 1 |
Sample # |
Crush Size mm |
Head Grade g/t |
Au % recovery |
|
Days of Leach |
Consumption Cyanide kg/MT |
Consumption Lime kg/MT |
67111 B |
19 |
0.829 |
37 |
% |
94 |
0.56 |
0.50 |
67111 C |
12.5 |
0.649 |
49 |
% |
94 |
0.53 |
1.00 |
67111 D |
9.5 |
0.694 |
52 |
% |
94 |
0.61 |
1.00 |
|
Phase 2 |
Sample # |
Crush Size mm |
Head Grade g/t |
Au % recovery |
|
Days of Leach |
Consumption Cyanide kg/MT |
Consumption Lime kg/MT |
67165 A |
12.5 |
0.725 |
60 |
% |
102 |
0.69 |
1.00 |
67166 A |
12.5 |
0.500 |
57 |
% |
102 |
0.75 |
1.00 |
67167 A |
31.5 |
0.665 |
41 |
% |
102 |
0.75 |
0.50 |
67167 B |
12.5 |
0.610 |
56 |
% |
102 |
0.78 |
1.00 |
67168 A |
12.5 |
0.431 |
48 |
% |
102 |
0.65 |
1.00 |
67169 A |
12.5 |
0.532 |
61 |
% |
102 |
0.89 |
1.00 |
67170 A |
31.5 |
0.409 |
40 |
% |
102 |
0.61 |
0.50 |
67170 B |
12.5 |
0.446 |
57 |
% |
102 |
0.80 |
1.00 |
Based upon KCA's experience with mostly clean
non-reactive ores, cyanide consumption in production heap leach
pads would be only 25 to 33 per cent of the laboratory column test
consumptions. |
Bob Rose, Vice President of Technical Services, said "Results
from the metallurgical test work at Magino are encouraging, and
justify conducting additional test work and analysis of the
material. The metallurgical test results may provide the Company
with an alternative to milling the lower grade portion of the
Magino resource and improve our production and economic
profile."
San Antonio
The Company continues to pursue approvals for its San Antonio
project. As previously disclosed, on August 2, 2012 the Secretary
for Environment and Natural Resources denied the authorization for
an Environmental Impact Assessment ("MIA") for the Company's San
Antonio project due to municipal zoning incompatibility over a
portion of the site.
In response, the Company appealed the determination in
connection with its MIA before Mexican Federal Court. The Company's
appeal regarding the MIA authorization was denied by the Mexican
Federal Court on April 10, 2014. The Company will appeal the
decision of the Mexican Federal Court and is also working with the
local municipality to seek an amendment to the zoning.
Exploration at San Agustín
The majority of the Company's 2014 exploration budget is focused
on the recently acquired San Agustín project, located 10 kilometres
southwest of El Castillo. The two deposits lie on the same regional
mineral trend and are geologically very similar. However, work to
date indicates that the favorable geology that hosts mineralization
may be significantly more extensive at San Agustín than at El
Castillo.
Tom Burkhart, Vice President of Exploration, said "The Company
believes that the San Agustín project is an intrusion related
mineral system. These types of systems are normally low-grade but
host large tonnages mostly contained within intrusive rocks. One
characteristic of this deposit type is that mineral continuity is
usually extremely good. This appears to be the case at San Agustín.
It is our objective to further validate and grow the historic
resource into a current resource. As hoped, our drilling continues
to confirm the continuity and expansion potential of the mineral
system. We are very excited about the potential of this
property.
Argonaut plans to present drilling results by late second
quarter or early third quarter of 2014, with metallurgical results
to be presented in the third quarter. By year-end, we plan to
update historic work with the release of a new resource and a
preliminary economic assessment for San Agustín."
Technical Information and Mineral Properties Reports
The technical information contained in this press release has
been prepared under supervision of, and reviewed and approved by
Mr. Thomas H. Burkhart, Argonaut's Vice President of Exploration, a
qualified person as defined by National Instrument 43-101.
About Argonaut Gold
Argonaut Gold is a Canadian gold company engaged in exploration,
mine development and production activities. Its primary assets are
the production stage El Castillo mine in Durango, Mexico and the La
Colorada mine in Sonora, Mexico. Advanced exploration stage
projects include the San Antonio project in Baja California Sur,
Mexico and the Magino project in Ontario, Canada. The recently
acquired San Agustín project is the primary exploration target for
Argonaut in 2014. The Company also has several exploration stage
projects, all of which are located in North America.
Creating Value Beyond Gold
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" or "Argonaut Gold"). 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; realization of metallurgical testing
results; 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.
These factors are discussed in greater detail in Argonaut's most
recent Annual Information Form and in the most recent Management
Discussion and Analysis filed on SEDAR, which also provide
additional general assumptions in connection with these statements.
Argonaut cautions that the foregoing list of important factors is
not exhaustive. Investors and others who base themselves on
forward-looking statements should carefully consider the above
factors as well as the uncertainties they represent and the risk
they entail. Argonaut believes that the expectations reflected in
those forward-looking statements are reasonable, but no assurance
can be given that these expectations will prove to be correct and
such forward-looking statements included in this press release
should not be unduly relied upon. These statements speak only as of
the date of this press release.
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.
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.
Argonaut Gold Inc.Nichole CowlesInvestor Relations Manager(775)
284-4422 x
101nichole.cowles@argonautgold.comwww.argonautgold.com
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