TORONTO, Feb. 24, 2020 /CNW/ - Argonaut Gold Inc.
(TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut")
announces its financial and operating results for the fourth
quarter and year ended December 31,
2019. The Company reports fourth quarter 2019 adjusted net
income1 of $2.7 million or
adjusted earnings per basic share1 of $0.01 and an unadjusted net loss of $107.5 million or loss per share of $0.60, derived from the sale of 48,843 gold
equivalent ounces2 ("GEO" or "GEOs"), which generated
cash flow before changes in working capital of $27.2 million. For the full year 2019, the
Company reports adjusted net income1 of $13.0 million or adjusted earnings per basic
share1 of $0.07 and an
unadjusted net loss of $93.1 million
or loss per share of $0.52, derived
from the sale of 194,269 GEOs, which generated cash flow from
operations before working capital changes of $73.8 million. All dollar amounts are expressed
in United States dollars unless
otherwise specified.
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CEO Commentary
Pete
Dougherty, President and CEO stated: "During 2019, we
increased our consolidated Mineral Reserves by 48%, GEO production
by 13% and grew our net cash position by over $26 million. As we look to 2020, we are improving
operations to reduce our unit costs by processing run-of-mine
versus crushed ore at El Castillo,
optimizing overburden haul cycle distances and modifying processing
parameters. While this will lead to slightly lower GEO production
in 2020, we expect it will also lead to higher profitability and
stronger cash flow."
The Company has reported adjusted cash cost per gold ounce
sold1 and adjusted all-in sustaining cost per gold ounce
sold ("AISC")1, as it believes these are the most
representative measures of the unit operating and sustaining costs
on a per ounce sold basis for the three months and year ended
December 31, 2019 given the
write-downs taken on work-in-process mineral inventory during 2019.
Adjusted cash cost per gold ounce sold1 was $972 during the fourth quarter 2019 and
$923 during 2019 and, with the
write-down of work-in-process mineral inventory, cash cost per gold
ounce sold1 was $1,441
during the fourth quarter of 2019 and $1,041 during 2019. Adjusted AISC1 was
$1,221 during the fourth quarter of
2019 and $1,181 during 2019 and, with
the write-down of work-in-process mineral inventory,
AISC1 was $1,690 during
the fourth quarter of 2019 and $1,299
during 2019. Key operating and financial statistics for the three
months and year ended December 31,
2019 are outlined in the following table:
|
3 months ended
December 31
|
%
Change
|
Year
ended December
31
|
%
Change
|
2019
|
2018
|
2019
|
2018
|
Financial Data (in
millions except for earnings (loss) per share)
|
Revenue
|
$72.1
|
$51.6
|
40%
|
$268.9
|
$196.1
|
37%
|
Net loss
|
($107.5)
|
($17.5)
|
514%
|
($93.1)
|
($7.6)
|
1125%
|
Loss per
share
|
($0.60)
|
($0.10)
|
500%
|
($0.52)
|
($0.04)
|
1200%
|
Adjusted net
income1
|
$2.7
|
$2.5
|
8%
|
$13.0
|
$16.4
|
(21%)
|
Adjusted earnings per
share – basic1
|
$0.01
|
$0.01
|
-
|
$0.07
|
$0.09
|
(22%)
|
Cash flow from
operating activities
before changes in non-cash operating
working capital
|
$27.2
|
$9.2
|
196%
|
$73.8
|
$58.1
|
27%
|
Cash and cash
equivalents
|
|
|
|
$38.8
|
$15.4
|
152%
|
Net
cash1
|
|
|
|
$28.8
|
$2.4
|
1,100%
|
Gold Production
and Cost Data
|
GEOs loaded to the
pads2
|
101,348
|
95,776
|
6%
|
361,599
|
318,667
|
13%
|
GEOs projected
recoverable2,3
|
46,608
|
59,706
|
(22%)
|
199,436
|
181,638
|
10%
|
GEOs
produced2,4
|
47,521
|
51,658
|
(8%)
|
186,615
|
165,117
|
13%
|
GEOs
sold2
|
48,843
|
42,328
|
15%
|
194,269
|
155,480
|
25%
|
Average realized
sales price
|
$1,484
|
$1,226
|
21%
|
$1,390
|
$1,267
|
10%
|
Adjusted cash cost
per gold ounce sold1
|
$972
|
$945
|
3%
|
$923
|
$792
|
17%
|
Adjusted all-in
sustaining cost per gold
ounce sold1
|
$1,221
|
$1,073
|
14%
|
$1,181
|
$969
|
22%
|
|
1Please
refer to the section below entitled "Non-IFRS Measures" for a
discussion of these Non-IFRS Measures.
|
2GEOs are
based on a conversion ratio of 75:1 for silver to gold ounces for
2019 and 70:1 for 2018.
|
3Expected
recoverable GEOs are based on the assumptions and parameters as set
forth in the El Castillo Complex Technical Report dated March 27,
2018 and the La Colorada Gold/Silver Mine Technical Report dated
March 27, 2018. In periods where the Company mines material not
specifically defined in a technical report (for example: low grade
stockpile material), management uses its best estimate of recovery
based on the information available.
|
4Produced
ounces are calculated as ounces loaded to carbon.
|
2019 and Recent Company Highlights:
- Corporate Highlights:
-
- Set new records for quarterly and annual GEO production during
2019.
- Increased Mineral Reserves by 48% and Measured and Indicated
Mineral Resources, inclusive of Mineral Reserves, by 36%.
- Entered into a zero-cost collar gold price protection program
on 145,500 total ounces to extend the mine life at El Castillo. The monthly gold collars have a
floor price of $1,450 per gold ounce
and a weighted average ceiling price of $1,707 per gold ounce from the fourth quarter of
2019 to the second quarter of 2022.
- Social and Environmental Responsibility:
-
- Received nationally awarded Environmental Socially Responsible
Company recognition at both the El Castillo Complex and
La Colorada mine.
- Launched a program to rebuild homes in the community of
La Colorada for the elderly,
disabled and those in need. To date, 24 homes have been
successfully rebuilt with more to occur in future years.
- Collaborated with international musician Jorge Viladoms and the
Crescendo Music Fund to provide instruments and training to local
youth in communities near the El Castillo Complex.
- Hosted youth events including a summer academic course for more
than 30 primary students in communities near the Cerro del Gallo
project.
- El Castillo Complex:
-
- Increased full year production by 12% to 131,277 GEOs.
- The El Castillo mine increased
full year production by 38% to 66,509 GEOs.
- San Agustin crusher expansion
project completed under budget.
- La Colorada:
-
- Increased full year production by 15% to 55,338 GEOs.
- Cerro del Gallo:
-
- Completed a positive pre-feasibility study.
- Published a maiden Mineral Reserve and Mineral Resource
estimate, which increased the Company's consolidated Mineral
Reserves by 48% and Measured and Indicated Mineral Resources,
inclusive of Mineral Reserves, by 36%.
- Magino:
-
- Completed Federal and Provincial Environmental Assessment
processes with receipt of a positive Decision Statement and
Statement of Completion, respectively.
- Signed Community Agreements with the Batchewana First Nation
and Michipicoten First Nation.
- Confirmed high-grade geological continuity below the planned
pit and identified multiple high-grade structures hosting multiple
veins.
Financial Results – Fourth Quarter 2019
Revenue for
the three months ended December 31,
2019 was $72.1 million, an
increase from $51.6 million for the
three months ended December 31, 2018.
During the fourth quarter of 2019, gold ounces sold totaled 47,073
at an average realized price per ounce of $1,484 (compared to 41,030 gold ounces sold at an
average price per ounce of $1,226
during the same period of 2018).
Production costs for the fourth quarter of 2019 were
$48.0 million, an increase from
$38.0 million in the fourth quarter
of 2018, primarily due to the increase in gold ounces sold and a
slight increase in adjusted cash cost per gold ounce sold (see
"Non-IFRS Measures" section). Adjusted cash cost per gold ounce
sold (see "Non-IFRS Measures" section) for the fourth quarter of
2019 was $972, comparable to
$945 in the same period of 2018.
Depreciation, depletion and amortization ("DD&A") expense
included in cost of sales for the fourth quarter of 2019 totaled
$12.7 million, an increase from
$8.6 million in the fourth quarter of
2018, primarily due to the increase in cost per ounce at the
La Colorada mine, and the increase
in gold ounces sold, as many of the mining assets are amortized on
a unit-of-production basis. Included in the cost of sales in the
fourth quarter of 2019 is an impairment write down of
work-in-process inventory, which is discussed below.
General and administrative expenses for the fourth quarter of
2019 were $3.3 million, comparable to
$3.4 million in the same period of
2018.
Other operating income for the fourth quarter of 2019 was
$2.4 million, an increase from other
operating expense of $3.1 million in
the fourth quarter of 2018, primarily due to the revision of
estimated reclamation costs associated with a section of the
La Colorada mine where mining
activities have ceased.
Losses on derivatives for the fourth quarter of
2019 were $2.4 million, compared
to gains of $0.5 million in the
fourth quarter of 2018, primarily due to unrealized losses on the
Company's outstanding zero-cost collar commodity contracts.
Other income for the fourth quarter of 2019 was
$2.7 million, an increase from other
expense of $0.8 million in the fourth
quarter of 2018, primarily due to proceeds from the disposal of
mineral properties, plant and equipment in the fourth quarter of
2019 and differences in foreign currency translation effects.
There were two significant impairment write downs during the
fourth quarter of 2019: first, a write down of mineral inventory at
the El Castillo Complex ($20.1
million) and La Colorada
mine ($12.1 million) primarily
related to changes in the expected recovery of gold ounces in the
leach pads and second, a non-cash write down of the book value of
the San Antonio project
($111.0 million) following the denial
of the permit application. The associated tax impact of these,
along with other results from operations, was an income tax
recovery of $25.8 million compared to
$1.3 million in the same period of
2018.
Adjusted net income for the fourth quarter of 2019 was
$2.7 million or $0.01 per basic share, comparable to $2.5 million or $0.01 per basic share for the fourth quarter of
2018 (see "Non-IFRS Measures" section). Unadjusted net loss was
$107.5 million or $0.60 per share for the fourth quarter of
2019.
Financial Results – 2019
Revenue for 2019 was
$268.9 million, an increase from
$196.1 million for 2018. Gold ounces
sold totaled 187,802 at an average realized price per ounce of
$1,390 (compared to 149,695 gold
ounces sold at an average price per ounce of $1,267 for 2018). Gold ounces sold for 2019
increased compared to the same period in 2018 primarily due to an
increase in production at the El
Castillo and La Colorada
mines as a result of increases in grade and lower ounces in ending
inventory that were produced but not sold at the El Castillo
Complex.
Production costs for 2019 were $181.0
million, an increase from $122.9
million in 2018, primarily due to the increase in gold
ounces sold and an increase in cash cost per gold ounce sold.
Adjusted cash cost per gold ounce sold (see "Non-IFRS Measures"
section) for 2019 was $923, an
increase from $792 in the same period
of 2018, primarily due to an increase in adjusted cash cost per
gold ounce sold at the San Agustin
mine due to a higher waste to ore ratio and lower gold grades.
DD&A expense included in cost of sales for 2019 totaled
$45.9 million, an increase from
$33.2 million for 2018, primarily due
to the increase in gold ounces sold, as many of the mining assets
are amortized on a unit-of-production basis. Included in the cost
of sales in 2019 is an impairment write down of work-in-process
inventory, which is discussed below.
General and administrative expenses for 2019 were $13.8 million, an increase from $13.0 million for 2018, primarily due to employee
related costs.
Other operating income for 2019 was $2.4
million, an increase from other operating expense of
$3.1 million for 2018, primarily due
to the revision of estimated reclamation costs associated with a
section of the La Colorada mine
where mining activities have ceased.
Losses on derivatives during 2019 were $1.4 million, compared to gains of $1.1 million for 2018, primarily due to
unrealized losses on the Company's outstanding zero-cost collar
commodity contracts in 2019.
Other income for 2019 was $3.5
million compared to other expense of $0.7 million in 2018, primarily due to proceeds
from the disposal of mineral properties, plant and equipment,
proceeds related to a bankruptcy filing and differences in foreign
currency translation effects in 2019.
There were two significant impairment write downs in 2019:
first, a write down of mineral inventory at the El Castillo Complex
($15.4 million) and La Colorada mine ($12.1
million) primarily related to changes in the expected
recovery of gold ounces in the leach pads and second, a non-cash
write down of the book value of the San
Antonio project ($111.0
million) following the denial of the permit application. The
associated tax impact of these, along with other results from
operations, was an income tax recovery of $15.4 million compared to income tax expense of
$6.7 million in the same period of
2018.
Adjusted net income for 2019 was $13.0
million or $0.07 per basic
share compared to $16.4 million or
$0.09 per basic share in 2018 (see
"Non-IFRS Measures" section). Unadjusted net loss for 2019 was
$93.1 million or $0.52 per share.
Operational Results – Fourth Quarter and Full Year
2019
During the fourth quarter of 2019, the Company achieved
production of 47,521 GEOs at an adjusted cash cost per gold ounce
sold of $972 and an adjusted all-in
sustaining cost ("AISC") per gold ounce sold of $1,221, compared to 51,658 GEOs at an adjusted
cash cost of $945 per gold ounce sold
and an adjusted AISC per gold ounce sold of $1,073 during the fourth quarter of 2018 (see
"Non-IFRS Measures" section). Higher adjusted AISC per gold ounce
sold was primarily due to higher deferred stripping, leach pad
construction and crushing, conveying and mining equipment
costs.
In November 2019, the Company
guided to 2019 production of between 190,000 and 200,000 GEOs.
During 2019, the Company achieved annual production of 186,615 GEOs
at an adjusted cash cost per gold ounce sold of $923 and an adjusted AISC per gold ounce sold of
$1,181, compared to 165,117 GEOs at
an adjusted cash cost of $792 per
gold ounce sold and an adjusted AISC per gold ounce sold of
$969 during 2018 (see "Non-IFRS
Measures" section). Lower than anticipated production was primarily
due to water in the pits at the El
Castillo and La Colorada
mines, which led to slower mining rates and suboptimal crushing
throughput rates due to a lack of ore coming from the mines, and
lower than anticipated recoveries at the La Colorada mine. Higher adjusted cash cost
per gold ounce sold was primarily due to an increase in adjusted
cash cost per gold ounce sold at the San
Agustin mine due to a higher waste to ore ratio and lower
gold grades. Higher adjusted AISC per gold ounce sold is primarily
related to higher deferred stripping and crushing, conveying and
mining equipment costs.
Pete Dougherty commented: "We
experienced challenges in delivering ore to the crushers at both
El Castillo and La Colorada during the quarter due to water in
the pits. The lack of ore feed for the crushers led to suboptimal
crusher utilization and fewer tonnes to the leach pads. We have
improved our pit de-watering practices and have experienced a
significant improvement so far in 2020. We took a write-down to our
mineral inventory in the fourth quarter of 2019. At El Castillo, we had previously drilled an old
heap to determine the ounces still in the heap and made recovery
assumptions on these ounces. After initiating a re-leach program in
2019, we now have a better understanding of the amount of ounces we
will ultimately recover from this heap and made the appropriate
adjustment to mineral inventory. At La
Colorada, the height of the lifts on the leach pads led to
channeling and trapped ounces. We've reduced our lift height at all
mines. A key focus of the entire organization in 2020 is lowering
the unit cost per tonne processed and maximizing profitability and
cash flow."
FOURTH QUARTER AND FULL YEAR 2019 EL CASTILLO
COMPLEX OPERATING STATISTICS
|
3 Months Ended Dec
31
|
Year Ended Dec
31
|
|
2019
|
2018
|
%
Change
|
2019
|
2018
|
%
Change
|
Mining (in 000s
except
waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore El
Castillo
|
1,890
|
2,766
|
(32%)
|
8,914
|
8,801
|
1%
|
Tonnes ore San
Agustin
|
2,460
|
2,055
|
20%
|
8,453
|
7,379
|
15%
|
Tonnes
ore
|
4,350
|
4,821
|
(10%)
|
17,367
|
16,180
|
7%
|
Tonnes waste El
Castillo
|
3,052
|
3,105
|
(2%)
|
13,293
|
12,303
|
8%
|
Tonnes waste San
Agustin
|
1,808
|
1,434
|
26%
|
6,166
|
3,216
|
92%
|
Tonnes
waste
|
4,860
|
4,539
|
7%
|
19,459
|
15,519
|
25%
|
Tonnes mined El
Castillo
|
4,942
|
5,871
|
(16%)
|
22,207
|
21,104
|
5%
|
Tonnes mined San
Agustin
|
4,268
|
3,489
|
22%
|
14,619
|
10,595
|
38%
|
Tonnes
mined
|
9,210
|
9,360
|
(2%)
|
36,826
|
31,699
|
16%
|
Tonnes per day El
Castillo
|
54
|
64
|
(16%)
|
61
|
58
|
5%
|
Tonnes per day San
Agustin
|
46
|
38
|
21%
|
40
|
29
|
38%
|
Tonnes per
day
|
100
|
102
|
(2%)
|
101
|
87
|
16%
|
Waste/ore ratio El
Castillo
|
1.61
|
1.12
|
44%
|
1.49
|
1.40
|
6%
|
Waste/ore ratio San
Agustin
|
0.73
|
0.70
|
4%
|
0.73
|
0.44
|
66%
|
Waste/ore
ratio
|
1.12
|
0.94
|
19%
|
1.12
|
0.96
|
17%
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
East leach pads
El Castillo
|
714
|
1,350
|
(47%)
|
3,876
|
4,698
|
(17%)
|
Tonnes crushed to
West leach pads
El Castillo
|
755
|
1,498
|
(50%)
|
4,311
|
4,142
|
4%
|
Tonnes crushed to
leach pads San
Agustin
|
2,382
|
2,073
|
15%
|
8,291
|
7,408
|
12%
|
Tonnes crushed to
leach pads
|
3,851
|
4,921
|
(22%)
|
16,478
|
16,248
|
1%
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach pads El
Castillo (g/t)1
|
0.52
|
0.37
|
41%
|
0.41
|
0.37
|
11%
|
Gold grade loaded to
leach pads San
Agustin (g/t)1
|
0.35
|
0.37
|
(5%)
|
0.38
|
0.39
|
(3%)
|
Gold grade loaded
to leach pads
(g/t)1
|
0.42
|
0.37
|
14%
|
0.40
|
0.38
|
5%
|
Gold loaded to leach
pads El Castillo
(oz)2
|
29,584
|
34,231
|
(14%)
|
118,092
|
106,552
|
11%
|
Gold loaded to leach
pads San Agustin
(oz)2
|
26,815
|
24,658
|
9%
|
100,363
|
93,181
|
8%
|
Gold loaded to
leach pads (oz)2
|
56,399
|
58,889
|
(4%)
|
218,455
|
199,733
|
9%
|
Projected recoverable
GEOs loaded
El Castillo4
|
11,642
|
24,569
|
(53%)
|
66,140
|
66,716
|
(1%)
|
Projected recoverable
GEOs loaded
San Agustin4
|
20,933
|
17,483
|
20%
|
72,981
|
66,937
|
9%
|
Projected
recoverable GEOs
loaded4
|
32,575
|
42,052
|
(23%)
|
139,121
|
133,653
|
4%
|
Gold produced El
Castillo (oz)2,3
|
13,616
|
18,823
|
(28%)
|
65,145
|
47,857
|
36%
|
Gold produced San
Agustin (oz)2,3
|
19,864
|
18,201
|
9%
|
61,842
|
65,323
|
(5%)
|
Gold produced
(oz)2,3
|
33,480
|
37,024
|
(10%)
|
126,987
|
113,180
|
12%
|
Silver produced El
Castillo (oz)2,3
|
20,988
|
11,288
|
86%
|
102,282
|
31,792
|
222%
|
Silver produced San
Agustin (oz)2,3
|
85,449
|
55,463
|
54%
|
219,463
|
244,470
|
(10%)
|
Silver produced
(oz)2,3
|
106,437
|
66,751
|
59%
|
321,745
|
276,262
|
16%
|
GEOs produced El
Castillo3
|
13,896
|
18,984
|
(27%)
|
66,509
|
48,311
|
38%
|
GEOs produced San
Agustin3
|
21,003
|
18,993
|
11%
|
64,768
|
68,815
|
(6%)
|
GEOs
produced3
|
34,899
|
37,977
|
(8%)
|
131,277
|
117,126
|
12%
|
Gold sold El Castillo
(oz)2
|
14,132
|
14,373
|
(2%)
|
68,971
|
41,665
|
66%
|
Gold sold San Agustin
(oz)2
|
20,708
|
14,750
|
40%
|
65,273
|
60,972
|
7%
|
Gold sold
(oz)2
|
34,840
|
29,123
|
20%
|
134,244
|
102,637
|
31%
|
Silver sold El
Castillo (oz)2
|
20,988
|
11,288
|
86%
|
102,282
|
31,792
|
222%
|
Silver sold San
Agustin (oz)2
|
76,599
|
43,088
|
78%
|
221,429
|
228,504
|
(3%)
|
Silver sold
(oz)2
|
97,587
|
54,376
|
79%
|
323,711
|
260,296
|
24%
|
GEOs sold El
Castillo
|
14,412
|
14,534
|
(1%)
|
70,335
|
42,119
|
67%
|
GEOs sold San
Agustin
|
21,729
|
15,365
|
41%
|
68,225
|
64,236
|
6%
|
GEOs
sold
|
36,141
|
29,899
|
21%
|
138,560
|
106,355
|
30%
|
Adjusted cash cost
per gold ounce
sold El Castillo5
|
$1,264
|
$1,007
|
26%
|
$1,030
|
$1,016
|
1%
|
Adjusted cash cost
per gold ounce
sold San Agustin5
|
$829
|
$764
|
9%
|
$842
|
$545
|
54%
|
Adjusted cash cost
per gold
ounce sold5
|
$1,005
|
$884
|
14%
|
$939
|
$737
|
27%
|
|
1"g/t" is
grams per tonne.
|
2"oz"
means troy ounce.
|
3Produced ounces are calculated as
ounces loaded to carbon.
|
4Expected
recoverable GEOs are based on the assumptions and parameters as set
forth in the El Castillo Complex Technical Report dated March 27,
2018. In periods where the Company mines material not specifically
defined in a technical report, management uses its best estimate of
recovery based on the information available.
|
5Please
refer to the section below entitled "Non-IFRS Measures" for a
discussion of this Non-IFRS Measure.
|
Summary of Production Results at the El Castillo
Complex
During the fourth quarter of 2019, the El Castillo
Complex produced 8% fewer GEOs than during the fourth quarter of
2018, due to a 27% decrease in GEO production at the El Castillo mine partially offset by an 11%
increase in GEO production from the San
Agustin mine. At El
Castillo, ore tonnes mined were impacted by water in the
pit, which led to slower mining rates and suboptimal crusher
throughput rates due to a lack of ore coming from the mine. At
San Agustin, ore tonnes mined
increased by 20% compared to the fourth quarter of 2018, due to an
increased mining rate to meet the increased crusher throughput
capacity following an expansion of the San Agustin crushing and stacking system in
the first half of 2019. This led to higher San Agustin GEO
production compared to the fourth quarter of 2018.
During 2019, the El Castillo Complex produced 12% more GEOs than
2018, due to higher GEO production at the El Castillo mine partially offset by a 6%
decrease in GEO production at the San
Agustin mine. Higher 2019 GEO production at El Castillo compared to 2018 was primarily
driven by drawing down ounces placed on the pad late in 2018 and
placing ounces nearer to pad liners. Lower 2019 GEO production at
San Agustin was primarily driven
by the stretch of time in the second and third quarters where there
was a lack of sufficient water to optimize solution flow rates.
This issue was resolved by the end of the third quarter of 2019 and
the Company expects higher production from San Agustin in 2020.
FOURTH QUARTER AND FULL YEAR 2019 LA COLORADA
OPERATING STATISTICS
|
3 Months Ended Dec
31
|
Year Ended Dec
31
|
|
2019
|
2018
|
%
Change
|
2019
|
2018
|
%
Change
|
Mining (in 000s
except for
waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore
|
1,115
|
1,568
|
(29%)
|
4,626
|
4,926
|
(6%)
|
Tonnes
waste
|
5,778
|
6,216
|
(7%)
|
23,445
|
18,416
|
27%
|
Total
tonnes
|
6,893
|
7,784
|
(11%)
|
28,071
|
23,342
|
20%
|
Tonnes per
day
|
75
|
85
|
(12%)
|
77
|
64
|
20%
|
Waste/mineralized
material
ratio
|
5.18
|
3.97
|
30%
|
5.07
|
3.74
|
36%
|
Tonnes
rehandled
|
-
|
-
|
-
|
-
|
38
|
(100%)
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
leach pads
|
1,141
|
1,292
|
(12%)
|
4,478
|
4,764
|
(6%)
|
Tonnes direct to
leach pads
|
5
|
289
|
(98%)
|
239
|
289
|
(17%)
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach
pads (g/t)1
|
0.49
|
0.46
|
7%
|
0.51
|
0.40
|
28%
|
Gold loaded to leach
pads
(oz)2
|
17,872
|
23,342
|
(23%)
|
76,969
|
65,108
|
18%
|
Projected recoverable
GEOs
loaded4
|
14,033
|
17,654
|
(21%)
|
60,315
|
47,985
|
26%
|
Gold produced
(oz)2,3
|
12,144
|
13,052
|
(7%)
|
53,208
|
45,886
|
16%
|
Silver produced
(oz)2,3
|
35,863
|
44,000
|
(18%)
|
159,737
|
147,348
|
8%
|
GEOs
produced3
|
12,622
|
13,681
|
(8%)
|
55,338
|
47,991
|
15%
|
Gold sold
(oz)2
|
12,233
|
11,907
|
3%
|
53,558
|
47,058
|
14%
|
Silver sold
(oz)2
|
35,213
|
36,511
|
(4%)
|
161,344
|
144,674
|
12%
|
GEOs sold
|
12,702
|
12,429
|
2%
|
55,709
|
49,125
|
13%
|
Adjusted cash cost
per gold
ounce sold5
|
$879
|
$1,093
|
(20%)
|
$884
|
$914
|
(3%)
|
|
1 "g/t" refers to grams per
tonne.
|
2 "oz"
refers to troy ounce.
|
3 Produced
ounces are calculated as ounces loaded to carbon.
|
4 Expected recoverable GEOs are based
on the assumptions and parameters as set forth in the La Colorada
Gold/Silver Mine Technical Report dated March 27, 2018. In periods
where the Company mines material not specifically defined in a
technical report (for example: low grade stockpile material),
management uses its best estimate of recovery based on the
information available.
|
5 Please refer to the section
below entitled "Non-IFRS Measures" for a discussion of this
Non-IFRS Measure.
|
Summary of Production Results at La Colorada
During the fourth quarter
of 2019, the La Colorada mine
produced 8% fewer GEOs than during the fourth quarter of 2018,
primarily due to water in the pit, which led to slower mining rates
and suboptimal crushing throughput rates due to a lack of ore
coming from the mine. Changes have been made to the pit de-watering
practices, which have largely resolved this issue.
During 2019, the La Colorada
mine produced 15% more GEOs compared to 2018. Higher production was
primarily driven by a 28% increase in gold grade.
2019 Capital
Total capital spending for 2019 was
$51.8 million, which was near the low
end of the guidance range of between $50
million and $55 million, with
$40.8 million spent at the Company's
operating mines and $11.0 million
spent on its development projects, exploration and other.
2020 Guidance and Plans
The Company anticipates it
will produce between 175,000 and 185,000 GEOs during 2020 at a cash
cost of between $900 and
$1,000 per gold ounce sold and AISC
of between $1,150 and $1,250 per gold ounce sold (see "Non-IFRS
Measures" section).
2020 GEO Production and Cost Guidance
|
|
El Castillo
Complex
|
La
Colorada
|
Consolidated
|
GEO(1)
Production
|
In
000s
|
115 – 120
|
60 – 65
|
175 –
185
|
Cash costs(2)
(3)
|
$ per
oz/Au
|
900 –
1,000
|
900 –
1,000
|
900 –
1,000
|
AISC(2)
(3)
|
$ per
oz/Au
|
|
|
1,150 –
1,250
|
(1)
GEOs are based on a conversion ratio of 80:1 for silver to gold
ounces for 2020. The silver to gold conversion ratio is based on
the three-year trailing average silver to gold
ratio.
|
(2)
Assumes a MXN:USD exchange rate of 18.5:1.
|
(3)
Please refer to section "Non-IFRS Measures" below for a
discussion of these non-IFRS measures.
|
El Castillo Mine
For the El
Castillo mine, the Company evaluated the costs associated
with hauling ore to the crushers and running the crushers, assuming
metallurgical recoveries for various ore types, versus leaching
run-of-mine ore with a lower metallurgical recovery. Based on the
results of this analysis, management determined that ceasing to
operate the crushers and switching to leaching run-of-mine ore
resulted in a higher profitability for the 2020 mine plan.
Consequently, the Company has recently reduced its workforce at
El Castillo by 103 employees and
100 contractors, idled its crushers and switched to a run-of-mine
operation.
During 2020, the Company expects quarterly production at
El Castillo to range from
approximately 10,000 GEOs to 12,000 GEOs. The 2020 mine plan
projects the mining and processing of the following ore types:
- 61% oxide ore;
- 2% transitional ore; and
- 37% sulphide ore.
An overall recovery of 35% is anticipated from run-of-mine
leaching.
By eliminating crushing, the 2020 mine plan is expected to yield
a unit cost savings of more than $2.00 per tonne processed compared to 2019 actual
unit costs of $7.54 per tonne
processed. The majority of these cost savings are in the areas of
crushing and conveying and processing.
San Agustin Mine
Following a review of operations to
maximize profitability from the 2020 mine plan for the San Agustin mine, the Company is estimating a
crusher throughput rate of 27,000 tonnes per day and an additional
3,000 tonnes per day of run-of-mine material.
During 2020, the Company expects quarterly production to range
from approximately 16,000 GEOs to 19,000 GEOs with production
slightly weighted towards the first half of the year (50% to 55%)
compared to the second half of the year (45% to 50%).
The 2020 San Agustin mine plan is expected to yield a unit cost
savings of more than $1.00 per tonne
processed compared to 2019 actual unit costs of $6.90 per tonne processed.
La Colorada Mine
Following a review of operations to
maximize profitability from the 2020 mine plan for the La Colorada mine, the Company will alter ore
beneficiation from three-stage crushing to two-stage crushing for
certain ore from Phase Two of the El Creston pit due to the
softness of the ore. Approximately 12% of the ore tonnes in the
2020 mine plan will require two-stage crushing and 78% will require
three-stage crushing. The Company is estimating a crusher
throughput rate of approximately 13,000 tonnes per day compared to
a crushing throughput rate of approximately 12,300 tonnes per day
during 2019.
During 2020, the La Colorada
mine is expected to have the highest variability of quarterly
production ranging from approximately 12,000 GEOs to 18,000 GEOs
with production weighted to the second half of the year (55% to
60%), particularly the fourth quarter of 2020 (30% to
35%).
The 2020 mine plan is expected to yield a unit cost increase of
approximately $0.60 per tonne
processed compared to 2019 actual unit costs of $11.31 per tonne processed, primarily due to
higher mining costs.
2020 Capital
The Company plans to invest between
$40 million and $50 million in capital expenditures during 2020
with approximately 60% to 65% of the capital spend expected during
the first half of 2020.
2020 Capital Estimate by Project ($M)(1)
|
El Castillo
Complex
|
La
Colorada
|
Magino &
Cerro del
Gallo
|
Consolidated
|
Total
|
12 – 16
|
17 – 20
|
11 – 14
|
40 –
50
|
(1)
Assumes exchanges rates of MXN:USD of 18.5:1 and CAD:USD of
1.3:1.
|
2020 Capital Estimate ($M)(1)
|
|
Sustaining
|
15 – 19
|
Expansion
|
11 – 14
|
Stripping
|
14 – 17
|
Total
|
40 –
50
|
(1)
Assumes exchanges rates of MXN:USD of 18.5:1 and CAD:USD of
1.3:1.
|
Argonaut Gold Fourth Quarter and Year End Financial Results
Conference Call and Webcast
The Company will host a
conference call and webcast on February 24,
2020 at 8:30 am EST to discuss
the results.
Fourth Quarter and Year End Conference Call Information for
February 24, 2020:
Toll Free (North
America):
|
1-888-231-8191
|
International:
|
1-647-427-7450
|
Webcast:
|
www.argonautgold.com
|
Fourth Quarter and Year End Conference Call Replay:
Toll Free
Replay Call (North America):
|
1-855-859-2056
|
International
Replay Call:
|
1-416-849-0833
|
Passcode:
|
1967125
|
The conference call replay will be available from 11:30 am EST on February
24, 2020 to 11:59 pm EST
March 2, 2020.
Non-IFRS Measures
The Company has included certain
non-IFRS measures including "Cash cost per gold ounce sold",
"Adjusted cash cost per gold ounce sold", "All-in sustaining cost
per gold ounce sold", "Adjusted all-in sustaining cost per gold
ounce sold", "Adjusted net income", "Adjusted earnings per share –
basic" and "Net cash" 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 production costs plus the total impact
of impairment write downs related to work-in-process inventory less
silver sales divided by gold ounces sold. Adjusted cash cost per
gold ounce sold is equal to production costs plus only the impact
of non-cash impairment write downs related to the net realizable
value of work-in-process inventory less silver sales divided by
gold ounces sold. AISC per gold ounce sold is equal to production
costs plus the total impact of impairment write downs related to
work-in-process inventory less silver sales plus general and
administrative, exploration, accretion and other expenses and
sustaining capital expenditures divided by gold ounces sold.
Adjusted AISC per gold ounce sold is equal to production costs plus
only the impact of non-cash impairment write downs related to the
net realizable value of work-in-process inventory less silver sales
plus general and administrative, exploration, accretion and other
expenses and sustaining capital expenditures divided by gold ounces
sold. Adjusted net income is equal to net loss less foreign
exchange impacts on deferred income taxes, foreign exchange (gains)
losses, impairment write down (reversal) of work-in-process
inventory, proceeds from legal proceedings, non-cash impairment
loss (reversal) on certain non-current assets, unrealized (gains)
losses on commodity derivatives and other operating expense
(income). Adjusted earnings per share – basic is equal to adjusted
net income divided by the basic weighted average number of common
shares outstanding. Net cash is calculated as the sum of the cash
and cash equivalents balance net of debt as at the statement of
financial position date. The Company believes that these measures
provide investors with an alternative view 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
management's discussion and analysis ("MD&A") for full
disclosure on non-IFRS measures.
This press release should be read in conjunction with the
Company's audited consolidated financial statements for the year
ended December 31, 2019 and
associated MD&A, for the same period, which are available from
the Company's website, www.argonautgold.com, in the "Investors"
section under "Financial Reports", and under the Company's profile
on SEDAR at www.sedar.com.
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 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 permitting and legal processes in
relation to mining permitting and approvals; estimated
production and mine life of the various mineral projects of
Argonaut; the ability to obtain permits for operations; synergies;
the realization of mineral reserve estimates; the timing and amount
of estimated future production; costs of production; 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; 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", "should" 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
variations in ore grade or recovery rates, changes in market
conditions, risks relating to the availability and timeliness of
permitting and governmental approvals; 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's
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.
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, Technical Information and Mineral
Properties Reports
Technical information included in this
release was supervised and approved by Brian Arkell, Argonaut's Vice President,
Exploration and a Qualified Person under National Instrument 43-101
("NI 43-101"). For further information on the Company's material
properties, please see the reports as listed below on the Company's
website or on www.sedar.com:
El Castillo
Complex
|
NI 43-101 Technical
Report on Resources and Reserves, El Castillo Complex, Durango,
Mexico dated March 27, 2018 (effective date of March 7,
2018)
|
La Colorada
Mine
|
NI 43-101 Technical
Report on Resources and Reserves, La Colorada Gold/Silver Mine,
Hermosillo, Mexico dated March 27, 2018 (effective date of December
8, 2017)
|
Magino Gold
Project
|
Feasibility Study
Technical Report on the Magino Project, Ontario, Canada dated
December 21, 2017 (effective date November 8, 2017)
|
Cerro del Gallo
Project
|
Pre-Feasibility Study
Technical Report on the Cerro del Gallo Project, Guanajuato, Mexico
dated January 31, 2020 (effective date of October 24,
2019)
|
About Argonaut Gold
Argonaut Gold is a Canadian gold company engaged in exploration,
mine development and production. Its primary assets are the
El Castillo mine and San Agustin mine, which together form the El
Castillo Complex in Durango,
Mexico and the La Colorada
mine in Sonora, Mexico. Advanced
exploration projects include the Cerro del Gallo project in
Guanajuato, Mexico and the Magino
project in Ontario, Canada. The
Company continues to hold the San
Antonio advanced exploration project in Baja California Sur, Mexico and several
exploration stage projects, all of which are located in
North America.
SOURCE Argonaut Gold Inc.