TORONTO, July 3, 2020 /CNW/ - Argonaut Gold
Inc. (TSX: AR) (the "Company", "Argonaut Gold" or
"Argonaut") is pleased to announce the results of an updated life
of mine ("LOM") plan for the Florida Canyon mine in Nevada, USA, which is now 100% owned by
Argonaut following the closing of the merger with Alio Gold Inc. on
July 1, 2020. A National
Instrument ("NI") 43-101 technical report will be filed within 45
days. All amounts are US dollars unless otherwise
stated.
Pete Dougherty, President &
CEO stated: "We have updated the LOM plan for Florida Canyon to
reflect the way we propose to run the mine to deliver the most
value to shareholders. We envision Florida Canyon will
produce an average of approximately 77,000 gold ounces per annum at
all-in sustaining cost per gold ounce sold1 under
$1,050 over 9.5 years, which yields a
net present value at a 5% discount rate of over $232 million and generates mine site after-tax
free cash flow of approximately $326
million at $1,700 gold.
The second half of 2020 will be dedicated to making the additional
capital investments in the crushing and stacking system and
ancillary equipment to ensure we can to reap the benefits of lower
operating costs in 2021 onward. Beyond the current 9.5 year
LOM plan, we continue to see opportunities where investment in
exploration at both the Florida Canyon mine and the nearby Standard
mine has the potential to add oxide ore, as well as the longer term
potential of evaluating transitional and sulphide ores."
Key LOM plan highlights:
- Average annual production of approximately 77,000 gold
ounces.
- Average cash cost of per gold ounce sold1 of
$880.
- Average all-in sustaining cost per gold ounce sold1
of $1,040.
- Total capital expenditures of approximately $108 million.
- After-tax net present value at a 5% discount rate ("NPV5%") of
approximately:
-
- $85 million at $1,350 gold;
- $148 million at $1,500 gold;
- $232 million at $1,700 gold;
- $357 million at $2,000 gold.
- Mine site after-tax free cash flow ("FCF") of
approximately:
-
- $133 million at $1,350 gold;
- $216 million at $1,500 gold;
- $326 million at $1,700 gold;
- $491 million at $2,000 gold.
- Mining cost per tonne of $1.59.
- Processing cost per tonne of $2.78.
- Mine G&A cost per tonne of $0.49.
- Gold recoveries of 70%.
- Waste to ore ratio of 1.74:1.
|
|
|
1
|
Please refer to the
section below entitled "Non-IFRS Measures" for a discussion of
these Non-IFRS Measures.
|
Florida Canyon LOM Sensitivities to Gold Price
The Company evaluated the LOM plan's sensitivity to gold prices
ranging from $1,000 to $2,000 per ounce. Table 1 below illustrates
the NPV5% and FCF of the Florida Canyon mine under the assumptions
and parameters of the LOM plan.
Table 1: NPV5% and FCF Sensitivities to Gold Price
Florida Canyon Mineral Resource Estimate
A conceptual pit was generated in order to constrain the
estimate of Mineral Resources. A gold price of $1,600 per ounce was used along with other cost,
recovery and slope parameters. Mineral Resources were
estimated in the conceptual pit using cutoff grades between 0.147
g/t and 0.175 g/t depending on mineralized zone. Table 2
outlines undiluted Indicated Mineral Resources and Inferred Mineral
Resources at June 1, 2020.
Table 2: Mineral Resource Estimate (inclusive of Mineral
Reserves)
Resource
Category
|
Tonnes
(Mt)
|
Au
(g/t)
|
Contained Au
Ounces
(koz)
|
Indicated
|
137.0
|
0.38
|
1,667
|
Inferred
|
24.7
|
0.34
|
276
|
Florida Canyon Mineral Reserve Estimate
The Mineral Resource block model was used to determine optimal
mining shells and pit phasing. Indicated Mineral Resources
were included in the pit optimization process. Inferred
Mineral Resources within the designed pit were treated as
waste.
Detailed pit and phase designs were created based on the pit
optimization results. These designs incorporated geotechnical
parameters as well as ramp accesses and formed the basis of the
Mineral Reserve estimate.
Mineral Reserves were estimated based on a practical mine plan
using the design price of $1,350 per
ounce gold. That practical pit was designed with guidance
from pit optimization software that applied $1,100 per ounce gold in order to maximize the
return on investment at the design price.
Gold cutoff grades between 0.171 g/t and 0.206 g/t were used,
depending on mineralized zone, to estimate the Mineral Reserve
estimate at June 1, 2020, which is
summarized in Table 3.
Table 3: Mineral Reserve Estimate
Reserve
Class
|
Diluted Tonnage
(Mt)
|
Diluted Grade
g/t Au
|
Contained Gold
Au (koz)
|
Probable
|
74.5
|
0.43
|
1,019
|
Qualified Persons, Technical Information
The information in the press release for the Florida Canyon LOM
plan was reviewed and verified by Independent Mining Consultants
Inc. ("IMC") and its sub-contractors. Technical information
included in this press release was supervised and approved by John
Marek, P.E. of IMC and James Arnold, P.E, an independent consultant
working as a sub-contractor to IMC.
Non-IFRS Measures
The Company has included certain
non-IFRS measures including "Cash cost per gold ounce sold" and
"All-in sustaining cost per gold ounce sold", which are presented
in accordance with International Financial Reporting Standards
("IFRS"). Cash cost per gold ounce sold is equal to
production costs less silver sales divided by gold ounces sold.
All-in sustaining cost per gold ounce sold is equal to
production costs less silver sales plus general and administrative,
exploration, accretion and other expenses and sustaining capital
expenditures divided by gold ounces sold. 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 most recent
management's discussion and analysis ("MD&A") for full
disclosure on non-IFRS measures.
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, the La Colorada
mine in Sonora, Mexico and the
Florida Canyon mine in Nevada,
USA. Advanced exploration projects include the Magino project
in Ontario, Canada, the Cerro del
Gallo project in Guanajuato,
Mexico and the Ana Paula project in Guerrero, Mexico. The Company continues
to hold the San Antonio advanced
exploration project in Baja California
Sur, Mexico and several other exploration stage projects,
all of which are located in North
America.
For more information, contact:
Argonaut Gold Inc.
Dan Symons
Vice President, Investor Relations
Phone: 416-915-3107
Email: dan.symons@argonautgold.com
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; the
realization of mineral reserve and resource 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.
![Argonaut Gold Inc. (CNW Group/Argonaut Gold Inc.) Argonaut Gold Inc. (CNW Group/Argonaut Gold Inc.)](https://mma.prnewswire.com/media/1199917/Argonaut_Gold_Inc_logo.jpg)
SOURCE Argonaut Gold Inc.