TORONTO, Aug. 10, 2021 /CNW/ - Argonaut Gold Inc.
(TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut") is pleased
to announce its operating and financial results for the second
quarter ended June 30, 2021.
The Company reports record quarterly production of 63,749 gold
equivalent ouncesi ("GEO" or "GEOs"), record quarterly
revenue of $120.2 million, cash flow
from operating activities before changes in non-cash operating
working capital of $39.3 million, net
income of $21.8 million or earnings
per basic share of $0.07 and adjusted
net incomeii of $24.4
million or adjusted earnings per basic shareii of
$0.08. All dollar amounts are
expressed in United States
dollars, unless otherwise specified (C$ refers to Canadian
dollars).
Pete Dougherty, President and CEO
stated: "It was a tremendous operational and financial quarter for
Argonaut Gold. We set new quarterly records for GEO
production and revenue and provided strong cash flow and
earnings. We also continued to advance the construction of
the Magino project, which is tracking on schedule for first gold
pour during the first quarter of 2023. In terms of
operational improvements, we expect to ramp up the new conveying
and stacking system at Florida Canyon to design capacity during the
third quarter and to start reaping the benefits of this investment
during the fourth quarter."
Key operating and financial statistics for the three months and
six months ended June 30, 2021 are
outlined in the following table:
|
3 Months Ended
June 30, 2021
|
6 Months Ended
June 30, 2021
|
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
Financial Data (in
millions except for earnings per share)
|
|
|
|
|
|
|
Revenue
|
$120.2
|
$58.0
|
107%
|
$225.5
|
$124.5
|
81%
|
Gross
profit
|
$39.8
|
$17.7
|
125%
|
$67.4
|
$31.6
|
114%
|
Net income
(loss)
|
$21.8
|
($7.7)
|
383%
|
$48.8
|
($17.2)
|
383%
|
Earnings (loss) per
share - basic
|
$0.07
|
($0.04)
|
275%
|
$0.16
|
($0.10)
|
268%
|
Adjusted net
income1
|
$24.4
|
$8.5
|
186%
|
$32.2
|
$16.9
|
90%
|
Adjusted earnings per
share – basic1
|
$0.08
|
$0.05
|
72%
|
$0.11
|
$0.09
|
16%
|
Cash flow from
operating activities before changes in non-cash operating working
capital
|
$39.3
|
$11.8
|
234%
|
$67.0
|
$26.5
|
153%
|
Cash and cash
equivalents
|
$216.0
|
$65.2
|
231%
|
$216.0
|
$65.2
|
231%
|
Gold Production
and Cost Data
|
|
|
|
|
|
|
GEOs loaded to the
pads2
|
130,414
|
40,309
|
224%
|
244,235
|
137,489
|
78%
|
GEOs projected
recoverable3
|
71,032
|
20,105
|
253%
|
134,319
|
64,389
|
109%
|
GEOs
produced2,4
|
63,749
|
31,531
|
102%
|
123,452
|
73,067
|
69%
|
GEOs
sold2
|
65,650
|
34,196
|
92%
|
124,768
|
76,400
|
63%
|
Average realized
sales price
|
$1,812
|
$1,713
|
6%
|
$1,788
|
$1,642
|
9%
|
Cash cost per gold
ounce sold1
|
$876
|
$885
|
(1%)
|
$936
|
$929
|
1%
|
All-in sustaining
cost per gold ounce sold1
|
$1,187
|
$1,080
|
10%
|
$1,247
|
$1,213
|
3%
|
1 Please
refer to the section below entitled "Non-IFRS Measures" for a
discussion of these Non-IFRS Measures.
|
2 GEOs are
based on a conversion ratio of 85:1 for silver to gold for 2021 and
80:1 for 2020. The silver to gold conversion ratio is based on the
three-year trailing average silver to gold ratio.
|
3 Expected
recoverable GEOs are based on the assumptions and parameters as set
forth in the El Castillo Complex Technical Report dated March 27,
2018, the La Colorada Gold/Silver Mine Technical Report dated March
27, 2018 and the Florida Canyon Technical Report dated July 8,
2020. In periods where the Company mines material not
specifically defined in a technical report (for example:
run-of-mine ore or low grade stockpile material), management uses
its best estimate of recovery based on the information
available.
|
4 Produced
ounces are calculated as ounces loaded to carbon.
|
Second Quarter 2021 and Recent Company Highlights:
- Corporate
-
- Set a new record for quarterly GEO production – the third
consecutive quarter of record quarterly production.
- Set a new record for quarterly revenue – the second consecutive
quarter of record quarterly revenue.
- Social Responsibility
-
- Delivered monthly student scholarship in communities near the
El Castillo Complex.
- Continued elementary student support with the Homework
Club program, which is part of the Community Development
Program in communities near Cerro del Gallo.
- Continued sanitization campaigns in the community near
La Colorada, which included the
delivery of supplies to local business owners.
- Sponsored the Color the Mucc race event hosted by the
Humboldt Chamber of Commerce,
which helps fund community youth scholarships in the communities
near Florida Canyon.
- El Castillo Complex
-
- Second quarter production of 32,663 GEOs.
-
- El Castillo production of
12,929 GEOs.
- San Agustin production of
19,734 GEOs.
- Completed construction of Phase 4 leach pad expansion at
San Agustin on schedule and
budget.
- La Colorada
-
- Second quarter production of 17,288 GEOs.
- Reduction in cash cost per gold ounce sold of 48% compared to
the second quarter of 2020 (see Non-IFRS Measures section).
- Discovered high-grade gold veins below the El Créston open pit,
including 12.2 metres at 98.9 g/t Au and 30.3 g/t Ag and 21.3
metres at 44.6 g/t Au and 274.9 g/t Ag (see press release dated
April 26, 2021).
- Florida Canyon
-
- Second quarter production of 13,798 GEOs.
- Reduction in cash cost per gold ounce sold of 24% from the
previous quarter.
- Received Air Quality Permit modification.
- Completed the construction and installation of a new conveying
and stacking system, which is expected to be ramped up to design
capacity during the third quarter of 2021.
- Magino
-
- Construction
-
- Completed critical path 2021 logging activities;
- Initiated fish capture and relocation program in preparation
for construction water treatment system commissioning;
- Completed reverse circulation (RC) grade control drilling
program;
- Commenced open pit overburden stripping;
- Mobilized crushing and screening plants;
- Opened main office hub in Dubreuilville, Ontario;
- Completed construction of 144-person onsite camp;
- Completed construction of a 458-person camp;
- Installed 12-metre communications tower, server and
repeater;
- Mobilized the concrete batch plant;
- Commenced concrete mixing at the plant site;
- Completed mobilization and installation of fuel attendant
trailer at fuel bay;
- Installed multiple sump systems at plant site and completed all
high density polyethylene piping (HDPE) from plant site to
historical tailings pond; and
- Received the majority of pre-production mining equipment
onsite.
- Community & Permitting
-
- Held ground breaking ceremony with members of the Provincial
and Municipal governments and local Indigenous communities.
- Initiated red spruce seedling grow program with Lakehead University Greenhouse;
- Participated in an Information Session with Métis Nation of
Ontario Education and Training Branch;
- Participated in separate meetings with Missanabie Cree First
Nation, Métis Nation of Ontario
and Batchewana First Nation to provide project and environmental
updates;
- Participated in a virtual presentation hosted by the Société
Économique de l'Ontario et
Association Francophone du Nord Ouest de l'Ontario;
- Hosted a site tour with three members of the Environmental
Stewardship for Michipicoten First Nation; and
- Assisted in community donations to support the Wawa hospital (Lady Dunn Health Centre) and
the Town of Dubreuilville for
training support.
- Exploration
-
- Continued to have exploration success at targeting high-grade
gold mineralization below and adjacent to the planned open pit,
including 7.0 metres at 13.3 g/t Au and 8.0 metres at 7.7 g/t Au
(see press release dated July 8,
2021).
- Monthly newsletter
-
- Argonaut continues to issue a monthly newsletter to provide its
stakeholders with regular Magino project updates. To receive
monthly newsletters, please register your email at
www.argonautgold.com or to view recently issued newsletters, please
visit
https://www.argonautgold.com/English/assets/development/magino/default.aspx
Financial Results – Second Quarter 2021
Record
quarterly revenue was $120.2 million
for the second quarter of 2021, an increase from $58.0 million for the second quarter of
2020. During the second quarter of 2021, the Company sold
63,000 gold ounces at an average realized price per ounce of
$1,812, compared to 32,707 gold
ounces sold at an average realized price per ounce of $1,713 during the same period of 2020. Gold
ounces sold for the second quarter of 2021 increased 93%
compared to the same period in 2020, primarily due to increased
production and gold sales at all Mexican operations due to a
temporary two-month suspension of mining, crushing and stacking
activities during the onset of the COVID-19 pandemic in response to
the Mexican Federal Government decree during the second quarter of
2020 and the acquisition of the Florida Canyon mine on July 1, 2020.
Net income for the second quarter of 2021 was $21.8 million or earnings per basic share of
$0.07, an increase from a net
loss of $7.7 million or
loss per basic share of $0.04
for the second quarter of 2020.
Adjusted net incomeii for the second quarter of 2021
was $24.4 million or $0.08 per basic share, an increase from adjusted
net incomeii of $8.5 million or $0.05 per basic share for the second quarter
of 2020.
Cash flows from operating activities before changes in non-cash
operating working capital totaled $39.3
million during the second quarter of 2021, an increase from
$11.8 million in the second quarter
of 2020. The 234% increase in cash flow compared to the same
period last year was primarily related to increased production and
gold sales from all Mexican operations due to the two month
suspension for COVID-19 during the second quarter of 2020, the
acquisition of the Florida Canyon mine on July 1, 2020 and a higher average realized gold
price.
Financial Results – First Half 2021
Revenue for the
six months ended June 30, 2021 was
$225.5 million, an increase from
$124.5 million for the six months
ended June 30, 2020. During the
first half of 2021, gold ounces sold totaled 119,727 at an
average realized price per ounce of $1,788, compared to 72,876 gold ounces sold
at an average realized price per ounce of $1,642 during the same period of 2020. Gold
ounces sold for the six months ended June 30,
2021 increased 64% compared to the same period in
2020 primarily due to increased production and gold sales at
all Mexican operations due to the two month suspension for COVID-19
during the second quarter of 2020 and the acquisition of the
Florida Canyon mine on July 1,
2020.
Net income for the six months ended June 30,
2021 was $48.8 million or
earnings per basic share of $0.16, an
increase from a net loss of $17.2 million or loss per basic share
of $0.10 for the six months
ended June 30, 2020.
Adjusted net incomeii for the six months ended
June 30, 2021 was $32.2 million or adjusted earnings per
basic shareii of $0.11, an
increase from adjusted net incomeii of $16.9 million or adjusted earnings per
basic shareii of $0.09 for
the six months ended June 30, 2020.
Cash flows from operating activities before changes in non-cash
operating working capital totaled $67.0
million in the six months ended June
30, 2021, an increase from $26.5
million in the six months ended June
30, 2020. The 153% increase in cash flow compared to
the same period last year was primarily related to increased
production and gold sales from all Mexican operations due to the
two month suspension for COVID-19 during the second quarter of
2020, the acquisition of the Florida Canyon mine on July 1, 2020 and a higher average realized gold
price.
Operational Results – Second Quarter 2021
During the second quarter 2021, the Company achieved record
quarterly production of 63,749 GEOs at a cash cost of
$876 per gold ounce sold and all-in sustaining cost ("AISC")
of $1,187 per gold ounce sold
compared to 31,531 GEOs at a cash cost of $885 per gold
ounce sold and AISC of $1,080 per gold ounce sold during the second
quarter 2020 (see "Non-IFRS Measures" section). The 102%
increase in GEO production was primarily related to increased
production from all Mexican operations due to the two month
suspension for COVID-19 during the second quarter of 2020 and the
acquisition of the Florida Canyon mine on July 1, 2020. Cash costs per gold ounce
sold were relatively flat compared to the same period in
2020. The 10% increase in AISC compared to the same period in
2020 is primarily related to the increased sustaining capital spend
at the Florida Canyon mine, which was acquired on July 1, 2020.
SECOND QUARTER 2021 EL CASTILLO COMPLEX OPERATING
STATISTICS
|
3 Months Ended
June 30
|
6 Months Ended
June 30
|
|
2021
|
2020
|
%
Change
|
2020
|
2019
|
%
Change
|
Mining (in 000s
except waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore El
Castillo
|
2,496
|
902
|
177%
|
4,900
|
2,824
|
74%
|
Tonnes ore San
Agustin
|
2,718
|
1,172
|
132%
|
5,588
|
3,881
|
44%
|
Tonnes
ore
|
5,214
|
2,074
|
151%
|
10,488
|
6,705
|
56%
|
Tonnes waste El
Castillo
|
2,473
|
770
|
221%
|
5,610
|
4,184
|
34%
|
Tonnes waste San
Agustin
|
1,738
|
584
|
198%
|
3,512
|
2,453
|
43%
|
Tonnes
waste
|
4,211
|
1,354
|
211%
|
9,122
|
6,637
|
37%
|
Tonnes mined El
Castillo
|
4,969
|
1,672
|
197%
|
10,510
|
7,008
|
50%
|
Tonnes mined San
Agustin
|
4,456
|
1,756
|
154%
|
9,100
|
6,334
|
44%
|
Tonnes
mined
|
9,425
|
3,428
|
175%
|
19,610
|
13,342
|
47%
|
Tonnes per day El
Castillo
|
55
|
18
|
203%
|
58
|
39
|
50%
|
Tonnes per day San
Agustin
|
49
|
19
|
158%
|
51
|
35
|
44%
|
Tonnes per
day
|
104
|
37
|
180%
|
109
|
74
|
47%
|
Waste/ore ratio El
Castillo
|
0.99
|
0.85
|
16%
|
1.14
|
1.48
|
(23%)
|
Waste/ore ratio San
Agustin
|
0.64
|
0.50
|
28%
|
0.63
|
0.63
|
—
|
Waste/ore
ratio
|
0.82
|
0.68
|
21%
|
0.89
|
1.06
|
(16)%
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
East leach pads El Castillo
|
0
|
64
|
(100%)
|
0
|
278
|
(100%)
|
Tonnes crushed to
West leach pads El Castillo
|
0
|
0
|
—
|
0
|
3
|
(100%)
|
Tonnes direct to
leach pads El Castillo
|
2,488
|
903
|
176%
|
4,890
|
2,635
|
86%
|
Tonnes crushed to
leach pads San Agustin
|
2,962
|
1,191
|
149%
|
5,944
|
3,924
|
51%
|
Tonnes to leach
pads
|
5,450
|
2,158
|
153%
|
10,835
|
6,840
|
58%
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach pads El Castillo (g/t)1
|
0.25
|
0.43
|
(42%)
|
0.27
|
0.51
|
(47%)
|
Gold grade loaded to
leach pads San Agustin (g/t)1
|
0.32
|
0.33
|
(3%)
|
0.29
|
0.35
|
(17%)
|
Gold loaded to
leach pads (g/t)1
|
0.29
|
0.37
|
(22%)
|
0.28
|
0.42
|
(33%)
|
Gold loaded to leach
pads El Castillo (oz)2
|
19,973
|
13,386
|
49%
|
42,149
|
47,857
|
(12%)
|
Gold loaded to leach
pads San Agustin (oz)2
|
30,280
|
12,609
|
140%
|
56,190
|
43,864
|
28%
|
Gold loaded to
leach pads (oz)2
|
50,253
|
25,995
|
93%
|
98,339
|
91,721
|
7%
|
Projected recoverable
GEOs loaded El Castillo4
|
10,859
|
5,547
|
96%
|
20,596
|
18,619
|
11%
|
Projected recoverable
GEOs loaded San Agustin4
|
21,454
|
8,951
|
140%
|
40,342
|
31,732
|
27%
|
Projected
recoverable GEOs loaded4
|
32,313
|
14,498
|
123%
|
60,939
|
50,351
|
21%
|
Gold produced El
Castillo (oz)2,3
|
12,723
|
9,151
|
39%
|
24,695
|
23,586
|
5%
|
Gold produced San
Agustin (oz)2,3
|
18,105
|
13,403
|
35%
|
35,376
|
26,238
|
35%
|
Gold produced
(oz)2,3
|
30,828
|
22,554
|
37%
|
60,071
|
49,824
|
21%
|
Silver produced El
Castillo (oz)2,3
|
17,445
|
19,547
|
(11%)
|
39,240
|
43,092
|
(9%)
|
Silver produced San
Agustin (oz)2,3
|
138,470
|
69,242
|
100%
|
280,901
|
144,746
|
94%
|
Silver produced
(oz)2,3
|
155,915
|
88,789
|
76%
|
320,141
|
187,838
|
70%
|
GEOs produced El
Castillo3
|
12,929
|
9,394
|
38%
|
25,157
|
24,123
|
4%
|
GEOs produced San
Agustin3
|
19,734
|
14,268
|
38%
|
38,681
|
28,047
|
38%
|
GEOs
produced3
|
32,662
|
23,662
|
38%
|
63,837
|
52,170
|
22%
|
Gold sold El Castillo
(oz)2
|
12,614
|
11,008
|
15%
|
26,216
|
24,634
|
6%
|
Gold sold San Agustin
(oz)2
|
18,829
|
14,293
|
32%
|
35,495
|
27,754
|
28%
|
Gold sold
(oz)2
|
31,443
|
25,301
|
24%
|
61,711
|
52,388
|
18%
|
Silver sold El
Castillo (oz)2
|
19,093
|
19,547
|
(2%)
|
40,211
|
43,092
|
(7%)
|
Silver sold San
Agustin (oz)2
|
144,867
|
71,042
|
104%
|
273,788
|
156,179
|
75%
|
Silver sold
(oz)2
|
163,960
|
90,589
|
81%
|
313,999
|
199,271
|
58%
|
GEOs sold El
Castillo
|
12,838
|
11,253
|
14%
|
26,689
|
25,173
|
6%
|
GEOs sold San
Agustin
|
20,534
|
15,181
|
35%
|
38,716
|
29,706
|
30%
|
GEOs
sold
|
33,372
|
26,434
|
26%
|
65,405
|
54,879
|
19%
|
Cash cost per gold
ounce sold El Castillo5
|
$1,109
|
$862
|
29%
|
$1,077
|
$988
|
9%
|
Cash cost per gold
ounce sold San Agustin5
|
$801
|
$756
|
6%
|
$804
|
$769
|
5%
|
Cash cost per gold
ounce sold5
|
$924
|
$802
|
15%
|
$920
|
$872
|
6%
|
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 (for example:
run-of-mine ore or low grade stockpile material), 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 –
Second Quarter 2021
During the second quarter of 2021, the
El Castillo Complex produced 38% more GEOs at a cash cost per gold
ounce sold 15% higher than during the second quarter of 2020.
GEO production was higher at both the El
Castillo and San Agustin
mines, primarily related to increased production due to the two
month suspension for COVID-19 during the second quarter of
2020. Cash cost per gold ounce sold were higher, as there
were no costs associated with mining, crushing and stacking for two
months during the second quarter of 2020 in response to the Mexican
Federal Government decree.
SECOND QUARTER 2021 LA COLORADA OPERATING STATISTICS
|
3 Months Ended
June 30
|
6 Months Ended
June 30
|
|
2021
|
2020
|
%
Change
|
2020
|
2019
|
%
Change
|
Mining (in 000s
except for waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore
|
1,150
|
506
|
127%
|
2,377
|
1,453
|
64%
|
Tonnes waste
|
2,173
|
1,737
|
25%
|
6,187
|
6,420
|
(4%)
|
Tonnes mined
|
3,323
|
2,243
|
48%
|
8,564
|
7,873
|
9%
|
Tonnes per
day
|
37
|
25
|
46%
|
48
|
43
|
11%
|
Waste/ore
ratio
|
1.89
|
3.43
|
(45%)
|
2.60
|
4.42
|
(41%)
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
leach pads
|
1,247
|
518
|
141%
|
2,513
|
1,484
|
69%
|
Production
|
|
|
|
|
|
|
Gold loaded to leach
pads (g/t)1
|
0.76
|
0.42
|
81%
|
0.65
|
0.38
|
71%
|
Gold loaded to leach
pads (oz)2
|
30,320
|
7,048
|
330%
|
52,411
|
18,070
|
190%
|
Projected recoverable
GEOs loaded4
|
24,101
|
5,607
|
330%
|
41,735
|
14,038
|
197%
|
Gold produced
(oz)2,3
|
16,721
|
7,537
|
122%
|
32,615
|
19,886
|
64%
|
Silver produced
(oz)2,3
|
48,145
|
26,554
|
81%
|
101,057
|
80,869
|
25%
|
GEOs
produced3
|
17,288
|
7,869
|
120%
|
33,804
|
20,897
|
62%
|
Gold sold
(oz)2
|
16,721
|
7,406
|
126%
|
31,329
|
20,488
|
53%
|
Silver sold
(oz)2
|
53,153
|
28,410
|
87%
|
97,591
|
82,608
|
18%
|
GEOs sold
|
18,324
|
7,762
|
136%
|
32,477
|
21,521
|
51%
|
Cash cost per gold
ounce sold5
|
$608
|
$1,169
|
(48%)
|
$676
|
$1,074
|
(37%)
|
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: run-of-mine ore or 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 – Second Quarter 2021
During the second
quarter of 2021, the La Colorada
mine produced 120% more GEOs at a cash cost per gold ounce sold 48%
less than during the second quarter of 2020 (see "Non-IFRS
Measures" section). Higher GEO production was primarily due
to an 81% increase in gold grade and due to the two month
suspension for COVID-19 during the second quarter of 2020.
Lower cash cost per gold ounce sold was primarily due to the
increase in gold grade, a 45% reduction in strip ratio and 126%
more gold ounces sold.
SECOND QUARTER 2021 FLORIDA CANYON OPERATING
STATISTICS
|
3 Months
Ended
June 30, 2021
|
6 Months Ended
June 30, 2021
|
Mining (in 000s
except for waste/ore ratio)
|
|
|
Tonnes ore
|
2,496
|
4,699
|
Tonnes
waste
|
3,194
|
6,422
|
Tonnes
mined
|
5,690
|
11,121
|
Tonnes per
day
|
61
|
60
|
Waste/ore
ratio
|
1.28
|
1.37
|
Leach Pads (in
000s)
|
|
|
Tonnes crushed to
leach pads
|
1,796
|
3,591
|
Tonnes direct to
leach pads
|
711
|
1,123
|
Production
|
|
|
Gold grade loaded to
leach pads (g/t)1
|
0.31
|
0.32
|
Gold loaded to leach
pads (oz)2
|
25,313
|
49,228
|
Projected recoverable
GEOs loaded4
|
14,619
|
31,646
|
Gold produced
(oz)2,3
|
13,726
|
25,654
|
Silver produced
(oz)2,3
|
6,117
|
13,349
|
GEOs
produced3
|
13,798
|
25,811
|
Gold sold
(oz)2
|
13,954
|
26,884
|
Silver sold
(oz)2
|
8,217
|
16,752
|
GEOs sold
|
13,954
|
26,884
|
Cash cost per gold
ounce sold5
|
$1,110
|
$1,279
|
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 Florida
Canyon Mine Technical Report dated July 8, 2020. In periods
where the Company mines material not specifically defined in a
technical report (for example: run-of-mine ore or 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 Florida Canyon
As
Argonaut did not own nor operate the Florida Canyon mine during the
three and six months ended June 30,
2020, it is not making comparisons to the same period last
year. Florida Canyon produced 13,798 GEOS, a 15% increase in
GEO production compared to the previous quarter. Cash cost
per gold ounce sold of $1,110
represent a 24% decrease compared to the previous quarter (see
"Non-IFRS Measures" section). Higher GEO production and lower
cash cost per gold ounce sold compared to the previous quarter are
primarily related to a 13% reduction in strip ratio and higher
recoveries partially offset by a 9% reduction in gold
grade.
Argonaut has identified potentially significant operating cost
savings once it can eliminate the re-handle on the back end of the
secondary crushing by switching to a conveying and stacking system
to transport crushed ore to the leach pads. All necessary
regulatory approvals, including a modification to the existing Air
Quality permit, to allow for the construction, installation and
operation of a new conveying and stacking system were received
during the second quarter of 2021 (see press release dated
April 28, 2021), and the construction
and installation of the new conveying and stacking system was
completed by the end of July 2021. It is estimated that the
new system will be ramped up to design capacity during the third
quarter of 2021. The capital associated with the convey and
stack project was included in Argonaut's 2021 capital guidance (see
press release dated January 19,
2021).
Pete Dougherty commented: "All
three mines in Mexico have met or
exceeded our expectations over the first half of the year, leading
to record quarterly production and revenue, as well as strong cash
flow and earnings in the second quarter. We experienced
improvements in both production and operating costs at Florida
Canyon quarter-over-quarter and believe these improvements will
continue as we ramp up the new conveying and stacking system to
design capacity over the next couple months. We believe this
new system will significantly reduce operating costs at Florida
Canyon once it is ramped up to design specifications and, given the
recovery cycle at Florida Canyon, we should start to see the
benefits of this investment during the fourth quarter of this
year. On a consolidated basis, we are well on our way to
achieving our production and cost guidance."
Outlook
Argonaut is on track to achieve its 2021 consolidated
production, cost and capital guidance. The table below
outlines the first half of 2021 production and cost actuals
compared to full year 2021 guidance:
2021 PRODUCTION AND COST GUIDANCE
|
First Half 2021
Actuals
|
Full Year 2021
Guidance
|
GEO
production
|
123,452
|
210,000 –
250,000
|
Cash cost per gold
ounce sold1
|
$936
|
$950 –
$1,050
|
AISC per gold ounce
sold1
|
$1,247
|
$1,250 –
$1,350
|
1 Please
refer to the section below entitled "Non-IFRS Measures" for a
discussion of this Non-IFRS Measure.
|
The Magino construction project is tracking on schedule.
During the three and six months ended June
30, 2021, the Company incurred $64.0
million and $103.2 million in
costs, respectively, related to the construction of the Magino
project that were capitalized to assets under construction.
Of this amount incurred, the majority was for securing long lead
time components for the mineral processing plant and for site
development, camp construction and earthworks.
While the Magino construction project remains on schedule,
Argonaut is currently reviewing the impacts of COVID-19, foreign
currency exchange rates, contingencies, potential adjustments to
the development plans and cost inflation to certain inputs related
to the initial capital estimate (excluding ramp-up capital) which
it believes will likely exceed the 15% last disclosed in the press
release dated May 4, 2021.
Argonaut is currently working to optimize its life-of-mine
plans. Following this work, the Company anticipates
publishing updated National Instrument ("NI") 43-101 Technical
Reports for the the El Castillo Complex (El Castillo and San
Agustin mines) and the La
Colorada mine by the end of 2021.
Argonaut also believes there is a potential opportunity to
reduce the near term sustaining capital requirement at its
La Colorada mine, primarily by
deferring some of the capitalized stripping of the Veta Madre
pit. While this evaluation is ongoing, early indications
illustrate a mine plan that is generally neutral in terms of net
present value but provides additional cash flow during 2021 and
2022. More information regarding a new mine plan at
La Colorada will be provided
concurrent with the publication of an updated NI 43-101 Technical
Report, which is expected by the end of 2021.
Full year 2021 capital guidance has not changed. However,
Argonaut now expects to invest approximately an additional
$10 million at the Magino
construction project and decrease capital spending at La Colorada by approximately $10 million during 2021. Updated 2021
capital guidance is provided below:
Updated 2021 Capital Guidance
|
First Half
2021 Accruals
|
Original Full Year
2021 Guidance
|
Updated Full Year
2021 Guidance
|
Capital (including
exploration and excluding Magino construction
capital)1
|
$33.4
million
|
$75 million – $85
million
|
$65 million – $75
million
|
Magino construction
capital1
|
$103.7
million
|
$180 million – $190
million
|
$190 million – $200
million
|
1
Assumes exchanges rates of MXN:USD of 20:1 and CAD:USD of
1.25:1.
|
Argonaut Gold Second Quarter 2021 Operational and Financial
Results Conference Call and Webcast:
Q2 Conference Call Information
Toll
Free (North America):
|
1-888-664-6392
|
International:
|
1-416-764-8659
|
Conference ID:
|
82285249
|
Webcast:
|
www.argonautgold.com
|
Q2 Conference Call Replay:
Toll
Free Replay Call (North America):
|
1-888-390-0541
|
International Replay Call:
|
1-416-764-8677
|
Replay
Entry Code:
|
285249#
|
The conference call replay will be available from 12:00 pm EDT on August 11,
2021 until 11:59 pm EDT on
August 18, 2021.
Non-IFRS Measures
The Company has included certain
non-IFRS measures including "Cash cost per gold ounce sold",
"All-in sustaining cost per gold ounce sold", "Adjusted net
income", and "Adjusted earnings per share – basic" 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 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. Adjusted net income
is equal to net income less foreign exchange impacts on deferred
income taxes, foreign exchange (gains) losses, non-cash impairment
write down (reversal) of work-in-process inventory, unrealized
(gains) losses on commodity derivatives and care and maintenance
expenses. Adjusted earnings per share – basic is equal to
adjusted net income divided by the basic weighted average number of
common shares outstanding. 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 unaudited interim condensed consolidated financial
statements for the three and six months ended June 30, 2021 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 Filings", and under the Company's profile on SEDAR at
www.sedar.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 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 the realization of mineral reserve estimates; the timing and
amount of estimated future production; costs of production;
estimated production and mine life of the various mineral projects
of Argonaut; timing of approval for modifications to existing
permits; permitting and legal processes in relation to mining
permitting and approval; 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 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)
|
Florida Canyon Gold
Mine
|
NI 43-101 Technical
Report on Mineral Resource and Mineral Reserve Florida Canyon Gold
Mine Pershing County, Nevada, USA dated July 8, 2020 (effective
date June 1, 2020)
|
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, the La Colorada
mine in Sonora, Mexico and the
Florida Canyon mine in Nevada,
USA. The Company also holds the construction stage Magino
project, the advanced exploration stage Cerro del Gallo project 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, Corporate Development & Investor Relations
Phone: 416-915-3107
Email: dan.symons@argonautgold.com
Source: Argonaut Gold Inc.
i GEOs are based on a conversation
ratio of 85:1 for silver to gold for 2021 and 80:1 for 2020.
The silver to gold conversation ratio is based on the three-year
trailing average silver to gold ratios. These are the
referenced ratios for each year throughout the press
release.
|
ii Please refer to the section
entitled "Non-IFRS Measures" for a discussion of these Non-IFRS
Measures.
|
SOURCE Argonaut Gold Inc.