Argonaut Gold Inc. (TSX: AR) ("Argonaut" or the "Company")
announces financial and operating results for the second quarter
ended June 30, 2011. All dollar amounts are expressed in United
States dollars unless otherwise specified. All financial results
are presented in accordance with IFRS, unless otherwise noted.
SECOND QUARTER 2011 & RECENT HIGHLIGHTS
-- Q2 2011 revenue of $21.6 million
-- Q2 2011 net income of $5.2 million, $0.06 per share
-- Cash flows from operating activities before changes in non-cash
operating working capital and other items of $7.6 million
-- Cash on hand was $32.3 million at June 30, 2011
-- Gold production and cost
-- 29,555 ounces of gold loaded to the pad (up 47% from Q2 2010)
-- Gold ounces produced in Q2 of 2011 were 17,453 ounces (up 73% from
Q2 2010)
-- Cash cost per ounce sold - $578
-- Q2 2011 El Castillo operating statistics:
-- Record total tonnes mined - 4.97 million tonnes (up 44% from Q2
2010)
-- Record ore tonnes mined - 2.8 million tonnes (up 49% from Q2 2010)
-- Record tonnes crushed - 860,289 (up 218% from Q2 2010)
-- Updated NI 43-101 compliant technical report completed for San Antonio
-- 1.6 mm oz. in measured and indicated resources at San Antonio (up
33% over previous NI 43-101)
-- Exploration
-- El Castillo - Sulphide holes completed for metallurgical work
-- La Colorada - 56% complete of increased 52,000 metre drill program
-- San Antonio - 58% complete of 10,000 metre drill program
This press release should be read in conjunction with the
Company's unaudited interim condensed consolidated financial
statements for the three months ended June 30, 2011 and associated
Management's Discussion and Analysis ("MD&A") which are
available from the Company's website, www.argonautgoldinc.com, in
the "Investors" section under "Financial Filings", and under the
Company's profile on SEDAR at www.sedar.com.
Argonaut Financial Statistics
2nd Quarter 6 Months
6/30/2011 6/30/2010 6/30/2011 6/30/2010
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Revenue $21,631,900 $12,509,430 $47,308,354 $21,862,797
Net income (loss) $5,178,575 $855,673 $11,109,014 ($1,303,504)
Income (loss) per
share - basic &
diluted $0.06 $0.02 $0.13 ($0.02)
Gold ounces sold 14,331 10,387 32,792 18,785
Cash cost per ounce
for units sold $578 $712 $585 $889
Financial Results - Second Quarter 2011
During the second quarter of 2011, revenue was $21.6 million
from gold sales of 14,331 ounces compared to $12.5 million from
sales of 10,387 ounces in the second quarter of 2010. Cost of sales
and depreciation, depletion and amortization expenses were $11.0
million for the quarter. Cash cost per gold ounce for units sold
(see Non-IFRS measures section note below) was $578 compared to
$712 in the same period of 2010 principally because some ounces
sold in the second quarter of 2010 had been fair valued on the
acquisition of Castle Gold. During the second quarter of 2011,
operating income from mining operations was $10.6 million compared
to a $3.5 million operating income in the second quarter of 2010.
Net income for the quarter was $5.2 million, or $0.06 per
share.
Cash on hand decreased from $34.2 million at March 31, 2011 to
$32.3 million, as a result of $11.3 million in cash used for
payment of expenditures on mineral properties, plant and equipment
and the timing of delivery and sale of ounces produced during the
quarter that were not sold until early July. Cash flow from
operations before changes in non-cash operating working capital and
other items was $7.6 million. The cash flow provided by operating
activities in the quarter was $8.4 million; again this was impacted
by the timing of gold shipments and sales.
Summary of Production Results
Total tonnes mined increased by 44% for the second quarter 2011
over the second quarter of 2010. Once again utilizing a larger,
more efficient truck fleet at El Castillo for the full quarter, the
rate of mining production exceeded 1.65 million tonnes per month.
Total ounces loaded to the pads also increased. In the second
quarter of 2011, there were 29,555 ounces placed on the pad,
representing a 47% increase over the 20,112 ounces placed on the
pad in second quarter of 2010.
Gold production of 17,453 ounces in the second quarter of 2011
was a 73% increase compared to the second quarter of 2010.
The strip ratio of waste to ore declined in the second quarter
of 2011 to 0.78 compared to the second quarter of 2010 of 0.85.
(The new NI 43-101 compliant technical report for El Castillo
indicates the anticipated strip ratio is approximately 0.88 for the
life of mine).
Key operational metrics and production statistics for the second
quarter of 2011 compared to the respective period in 2010 are
presented below:
El Castillo Operating Statistics
2nd Quarter 6 Months
Percent Percent
6/30/2011 6/30/2010 Change 6/30/2011 6/30/2010 Change
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Tonnes ore 2,786,349 1,867,191 49% 5,324,613 3,183,738 67%
Tonnes waste 2,184,486 1,583,381 38% 4,405,680 3,160,168 39%
Tonnes mined 4,970,835 3,450,572 44% 9,730,293 6,343,906 53%
Waste/ore ratio 0.78 0.85 -8% 0.83 0.99 -16%
Tonnes direct to
leach pad 1,920,657 1,562,907 23% 3,733,668 2,562,028 46%
Tonnes crushed 860,289 270,879 218% 1,589,393 585,284 172%
Average grams
per tonne of
gold to leach
pad 0.33 0.34 -3% 0.34 0.36 -5%
Gold ounces to
leach pad 29,555 20,112 47% 57,780 36,542 58%
Gold ounces
produced 17,453 10,066 73% 35,467 20,308 75%
Cash cost per
gold ounce sold $578 $712 -19% $585 $889 34%
CEO Commentary
Pete Dougherty, Argonaut's President and CEO states: "Argonaut
continued to deliver production in Q2 which is in line with our
guidance for 2011. We are pleased with the progress made during the
first half of the year in terms of consistent production at El
Castillo, and a 33% increase in resources at San Antonio.
Meanwhile, our exploration team has been extensively drilling La
Colorada, we have doubled the 2011 budget to a total of $7.7
million (+52,000 meters). Exploration success and operational
improvements are trademark strengths of the Company which we strive
to continually deliver for our shareholders." He added "We are
pleased with the forward momentum of the Company and progress being
made at the three projects. This quarter marks the third quarter of
production gains that will meet our guidance of 70-75,000 ounces,
with cash costs at $575 to $600 per ounce sold."
Non-IFRS Measures
The Company included the non-IFRS measure "Cash cost per gold
ounce for units sold" 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 for units sold is equal to cost of sales less silver
sales divided by gold ounces sold. The Company believes that this
measure provides investors with an improved ability 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
MD&A for full disclosure on non-IFRS measures.
Technical Information and Mineral Properties Reports
The technical information contained in this document has been
prepared under supervision by Mr. Thomas H. Burkhart, Argonaut's
Vice President of Exploration, a qualified person as defined by NI
43-101.
The 1.6 million ounces consist of a measured resource found in
oxide, transition and sulphide zones of 620,000 ounces represented
by more than 18 million tonnes at 1.03 g/t and an indicated
resource of more than 995,000 ounces represented by more than 32
million tonnes at 0.96 g/t. Mineral resources are not mineral
reserves and do not have demonstrated economic viability.
For further information on the Company's properties please see
the reports as listed below on the Company's website or on
www.sedar.com:
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El Castillo Mine NI 43-101 Technical Report on Resources and Reserves,
Argonaut Gold Inc., El Castillo Mine, Durango State,
Mexico dated November 6, 2010
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La Fortuna Property La Fortuna, Durango, Mexico, Technical Report dated
October 21, 2008
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San Antonio Gold Technical Report and Mineral Resource Estimate on the
Project San Antonio Gold Project, Baja California Sur, Mexico
dated June 30, 2011
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La Colorada Property Geological Report on the La Colorada Property with a
Resource Estimate on La Colorada and El Creston
Mineralized Zones - Sonora, Mexico dated November 30,
2009
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About Argonaut
Argonaut is a Canadian gold company engaged in exploration, mine
development and production activities. Its primary assets are the
production-stage El Castillo Mine in the State of Durango, Mexico,
the advanced exploration stage San Antonio project, the past
producing and advanced exploration stage La Colorada project, and
several exploration stage projects, all of which are located in
Mexico.
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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