Argonaut Gold Inc. (TSX: AR) ("Argonaut" or the "Company") is
pleased to announce fourth quarter gold production at its wholly
owned El Castillo open pit gold mine located in Durango, Mexico
("El Castillo") totaling 18,292 ounces. The 2010 total gold
production of 51,324 ounces exceeded the Company's projection of
47,000 gold ounces by 9%. Quarterly highlights include a 110%
increase in the mineral reserve estimate at El Castillo.
Fourth Quarter Highlights
-- 2010 Q4 compared to 2009 Q4
-- Total Tonnes mined increased +75%
-- Ore Tonnes processed increased +102%
-- Gold Production increased +110%
-- Record ounces loaded on the pad (31,000 ounces)
-- Solution flow increase to pads at the west side to 800 m3/hr
-- Increase in NI 43-101 compliant mineral reserves and mineral resources
-- Increase in mineral reserves to 1,231,000 gold ounces
-- Increase in total measured and indicated mineral resources to
1,730,000 gold ounces
Pediment Merger Updates
-- Institutional Shareholder Services has recommended in favor of the
resolution for both sets of shareholders
-- Shareholder materials were sent to Pediment shareholders on December 23;
materials were sent to Argonaut shareholders on December 24, 2010.
-- 17% Lock-up commitments as of January 7, 2011
-- 9% Pediment shareholder voting as of January 7, 2011; estimated 100%
support
-- Shareholder meeting on January 24, 2011
Fourth Quarter Production 2010
The Company produced over 18,000 ounces of gold in the fourth
quarter 2010. This represents the highest quarterly production to
date at El Castillo. The Company continued at an average mining
rate of over 1.5 million total tonnes per month during the fourth
quarter. Year-to-date production of more than 51,000 ounces of gold
is a 77% increase year over year.
El Castillo Q4 2010(1) Q4 2009(2) % Change
Operating Statistics 12/31/2010 12/31/2009 Year Over Year
--------------- ---------- --------------
Total Tonnes mined 4,897,000 2,799,302 +75%
Tonnes Ore 2,558,000 1,266,400 +102%
ROM Tonnes Ore 2,053,000 932,798 +120%
(direct to leach pad)
Tonnes Crushed 511,000 293,602 +74%
Gold Grade (g/t) 0.38 0.38 0%
Gold Loaded to Pad (oz) 31,000 15,128 +105%
Gold Produced (oz) 18,292 8,724 +110%
Year Ended Year Ended % Change
Operating Statistics 12/31/2010 12/31/2009(i) Year Over Year
--------------- ------------- --------------
Total Tonnes mined 15,989,000 8,766,215 +82%
Tonnes Ore 7,755,000 3,704,226 +109%
ROM Tonnes Ore 6,290,000 2,741,829 +129%
(direct to leach pad)
Tonnes Crushed 1,465,000 962,397 +52%
Gold Grade (g/t) 0.37 0.45 -18%
Gold Loaded to Pad (oz) 92,000 52,940 +73%
Gold Produced (oz) 51,324 28,768 +78%
(1)Fourth Quarter mine production is based upon truck count and is subject
to revision after survey.
(2)Information obtained from Castle Gold Corporation press release dated
April 16, 2010.
Peter Dougherty, President and CEO for Argonaut noted "We are
pleased that we exceeded our production goal in 2010. Fourth
quarter production gives us the confidence that we will be able to
achieve 70,000 - 75,000 ounces of gold production in 2011.
Expansion initiatives along with targeted improvements in operating
efficiencies will continue in 2011."
Mr. Dougherty added "The recently completed NI 43-101 has
significantly increased our reserves at El Castillo. The expansion
changes made in 2010, in addition to the reserve estimation, should
enable Argonaut to plan for even higher production in 2012."
New National Instrument 43-101 ("NI 43-101") Reserve and
Resource Estimation
The mineral reserve was completed by SRK Consulting ("SRK") in
Lakewood, CO. Due to material changes in reserve and resource
estimates over the previously released 43-101 on the El Castillo
property (posted on Sedar under ACA Howe, July 31, 2008), an
updated technical report will be filed on SEDAR within 45 days of
the date hereof.
The stated Proven and Probable mineral reserves have been
prepared in accordance with Canada's National Instrument 43-101
Standards of Disclosure for Mineral Projects. The Qualified Person,
as defined by National Instrument 43-101, for the mineral reserve
update, is Principle Mining Engineer, Bret C. Swanson BE (Mining),
MAusIMM of SRK.
The Mineral Reserve for the El Castillo property is detailed in
Table 1.
Table 1- Mineral Reserve of the El Castillo Pit as of November
8th, 2010.
---------------------------------------------------------------------------
Metric Tonnes Gold Ounces
Classification (000's) Gold g/t (000's)
---------------------------------------------------------------------------
Proven
---------------------------------------------------------------------------
Oxidized 85,470 0.36 994
---------------------------------------------------------------------------
Transition 19,180 0.37 228
---------------------------------------------------------------------------
Sub Total 104,650 0.36 1,222
---------------------------------------------------------------------------
Probable
---------------------------------------------------------------------------
Oxidized 772 0.33 8
---------------------------------------------------------------------------
Transition 73 0.35 1
---------------------------------------------------------------------------
Sub Total 844 0.33 9
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Proven and Probable 105,494 0.36 1,231
---------------------------------------------------------------------------
Footnotes:
Reserves are based on a gold price of US$1000/Oz Au; Full mining
recovery is assumed; Mine reserves are not diluted; An internal CoG
of 0.15 g/t Au was used on Oxide rock within the pit design; An
internal CoG of 0.175 g/t Au was used on Transition rock within the
pit design; In-situ Au ounces do not include metallurgical recovery
losses; Internal CoG determination includes metallurgical gold
recoveries of 70% for oxide if ore is crushed, 50% if not; Internal
CoG determination includes metallurgical gold recoveries of 60% for
Transition if ore is crushed, 0% if not; Oxide and Transition rock
types are interpreted from drill logs to estimate changes in
weathering profile of the orebody; and In Situ reserves based on
end of month survey dated November 8th, 2010.
When comparing to the prior ACA Howe reserves of 752,000 ounces
less mining to date of 165,500 ounces yields 586,000 remaining gold
ounces as of Nov. 8, 2010. This is compared to the SRK estimated
reserves of 1,231,000 contained gold ounces yields a 110%
increase.
"The increase in reserves at El Castillo has added significant
gold ounces and has the potential to expand the mine life and
production profile at El Castillo." noted Tom Burkhart, Vice
President of Exploration for Argonaut. Mr. Burkhart added "We are
planning further exploration at El Castillo and look to forward
continuing our drilling program in 2011."
Measured and indicated resources at El Castillo now stand at
1,730,000 ounces of gold. When comparing to the prior ACA Howe
resource of 1,180,000 ounces less mining to date of 165,500 ounces
yields 1,014,500 remaining gold ounces as of Nov. 8, 2010. This is
compared to the SRK estimated reserves of 1,740,000 contained gold
ounces yields a 70% increase. The updated resource estimate is
found in table 2 below:
Table 2 - Mineral Resource Estimate with Drill Data as of
November 8, 2010
(Includes Mineral Reserves).
---------------------------------------------------------------------------
Metric Tonnes
Resource Category (000's) Gold g/t Gold Ounces(000's)
---------------------------------------------------------------------------
Measured 160,704 0.322 1,661
---------------------------------------------------------------------------
Indicated 7,438 0.290 69
---------------------------------------------------------------------------
Total Measured and Indicated 168,142 O.320 1,730
---------------------------------------------------------------------------
Inferred Sulphides 43,071 0.423 586
---------------------------------------------------------------------------
Mineral resources that are not mineral reserves do not
demonstrate economic viability. The mineral resource estimate was
also completed by SRK and is based on a gold price of US$1,300 per
ounce and a 0.15 g/t gold cutoff grade. SRK's estimated Mineral
Resources are hosted within a Whittle Pit design demonstrating
reasonable chances for economic extraction; whereas previous NI
43-101 resource estimations were report as global resources.
The increased resource results from the 2010 drill program which
included 308 drill holes, spanning more than 35,400 meters of
reverse circulation drilling, completed between December 2009 and
November 2010. The 2010 drill program expanded the extent of known
mineralization approximately 500 meters to the south and 400 meters
to the east. Drilling is still open in some areas to the south and
east of the current El Castillo open pit, providing future upside
potential. We anticipate filing the revised 43-101 in compliance
with the statutory requirements as outlined under 43-101 rules.
Qualified Persons
Preparation of this press release was supervised by Mr. Thomas
Burkhart, Argonaut's Vice President of Exploration and a 'Qualified
Person' as defined by NI 43-101. Mr. Burkhart also supervised the
reverse circulation drill program and on-site sample preparation
procedures at El Castillo. The release was also reviewed by Mr.
Bart Stryhas and Mr. Bret Swanson of SRK, each of them being a
'Qualified Person' as defined by NI 43-101.
The SRK resource estimation is based on information from 512
holes totaling of 83,817m. The average drillhole spacing is
approximately 50m. The geologic model consists of six rock types,
four of which are mineralized and two that are post mineralization.
The primary host rocks consist of granodiorite and meta-sediments
including meta-argilite, hornfels and limestone-marbles. The model
blocks are 10m x 10m x 6m in the x, y, z directions, respectively.
All block grade estimates were made using 6m bench composites. An
Ordinary Kriging algorithm was employed to generate a categorical
indicator grade shell based on a 0.125ppm Au threshold. Ordinary
Kriging was also used for the gold grade estimation. The results of
the resource estimation provided a CIM classified Measured,
Indicated and Inferred Mineral Resource. The quality of the
drilling and data is very good and the Mineral Resource was
classified mainly according to the general drillhole spacing.
About Argonaut
Argonaut is a Canadian gold company engaged in exploration, mine
development and production activities. Its primary assets being the
production-stage El Castillo Mine and the exploration-stage La
Fortuna Project, both located in the State of Durango, Mexico.
Argonaut is a new venture created by former executive management
team members of Meridian Gold Inc.
Creating the Next Quality Mid-Tier Gold Producer in the
Americas.
Cautionary Note Regarding Forward-looking Statements
This news release contains forward-looking statements that
involve risks and uncertainties that could cause results to differ
materially from management's current expectations. Actual results
may differ materially due to a number of factors. Except as
required by law, Argonaut Gold Inc. assumes no obligation to update
the forward-looking information contained in this news release.
Contacts: Argonaut Gold Inc. Nichole Cowles Investor Relations
Manager (775) 284-4422 x 101 nichole.cowles@argonautgoldinc.com
www.argonautgoldinc.com
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