Argonaut Gold Inc. (TSX:AR) (the "Company", "Argonaut Gold" or
"Argonaut") is pleased to announce its financial and operating
results for the Second quarter ended June 30, 2012. All dollar
amounts are expressed in United States dollars unless otherwise
specified.
SECOND QUARTER 2012 & RECENT HIGHLIGHTS
Financials
-- Revenue of $37.5 million ($21.6 million in Q2 2011).
-- Net income of $11.3 million, $0.12 per basic share.
-- Cash flows from operating activities before changes in non-cash
operating working capital and other items of $16.4 million ($7.6 million
in Q2 2011).
-- Cash on hand was $21.4 million at June 30, 2012.
Production and Cost
-- Ounces loaded to pads:
-- El Castillo: 35,220 ounces (up 19% from Q2 2011).
-- La Colorada: 10,173 gold ounces and 1,120,716 silver ounces.
-- Production of 24,123 gold ounces in the second quarter of 2012.
-- El Castillo: 19,533 gold ounces (up 12% from Q2 2011).
-- La Colorada: 4,590 gold ounces and 25,796 silver ounces.
-- Overall cash cost per gold ounce sold: $620.
Operational Improvements:
-- Capital expenditures of $12.8 million on mineral properties, plant and
equipment.
El Castillo
-- Construction completed on west side leach pad 7A.
-- Conveying and stacking system on the east side pad in place.
La Colorada
-- New crusher purchased for production of overliner for pad construction.
-- Desorption and refinery circuit fully commissioned.
-- New warehouse for reagent storage completed.
-- Final permits for mining expansion expected in third quarter.
-- Approximately half of Phase 1 run of mine material has been reprocessed.
-- New pad construction started on pads 8, 10 and 11.
Exploration:
-- El Castillo - Sulphide samples obtained for continued metallurgical test
work with results expected in fourth quarter.
-- La Colorada: 24 holes totaling 12,670 metres drilled in Q2; 78 holes
totaling near 28,000 metres drilled in 2012.
-- San Antonio: 4 holes totaling 678 metres drilled in Q2; 4,000 metres
drilled thus far in 2012.
This press release should be read in conjunction with the
Company's unaudited interim condensed consolidated financial
statements for the second quarter ended June 30, 2012 and
associated management's discussion and analysis ("MD&A") which
are available from the Company's website, www.argonautgold.com, in
the "Investors" section under "Financial Filings", and under the
Company's profile on SEDAR at www.sedar.com.
Three months ended Six months ended
June 30, June 30,
Financials 2012 2011 Change 2012 2011 Change
----------------------------------------------------------------------------
Revenue ($ millions) $ 37.5 $ 21.6 +74% $ 61.9 $ 47.3 +30%
Net income ($ millions) $ 11.3 $ 5.2 +117% $ 18.6 $ 11.1 +67%
Income per share - basic $ 0.12 $ 0.06 +100% $ 0.20 $ 0.13 +54%
Income per share -
diluted $ 0.11 $ 0.06 +83% $ 0.18 $ 0.13 +38%
Cash flow from operating
activities before
changes in non-cash
operating working
capital and other items
($ millions) $ 16.4 $ 7.6 +116% $ 24.5 $ 16.9 +45%
Gold ounces sold 23,247 14,331 +62% 37,745 32,792 +15%
Gold ounces produced 24,123 17,453 +38% 45,007 35,467 +27%
Average realized gold
sales price $ 1,600 $ 1,507 +6% $ 1,630 $ 1,440 +13%
Overall Cash cost per
gold ounce sold $ 620 $ 578 +7% $ 627 $ 585 +7%
Financial Results - Second Quarter 2012
During the second quarter of 2012, revenue was $37.5 million
from gold sales of 23,247 ounces compared to $21.6 million from
sales of 14,331 ounces in the second quarter of 2011. Cost of sales
was $19.3 million for the quarter compared to $11.0 million for the
second quarter of 2011. Cash cost per gold ounce sold was $620
compared to $578 in the same period of 2011. (Cash cost per gold
ounce sold is a non-IFRS measure, see note below).
During the second quarter of 2012, gross profit was $18.2
million compared to $10.6 million gross profit in the second
quarter of 2011. During the quarter, profit from operations was
$15.9 million compared to $8.8 million for 2011. Net income for the
quarter was $11.3 million or $0.12 per basic share versus $5.2
million or $0.06 per basic share in 2011.
Cash on hand increased from $17.8 million at March 31, 2012 to
$21.4 million at June 30, 2012. Capital expenditures in the second
quarter were $12.8 million primarily as a result of expanding
operations at the El Castillo and La Colorada mines. The 2012
capital expenditures and exploration program for Argonaut Gold
includes $38-$48 million at El Castillo, La Colorada and San
Antonio which includes pre-production stripping at La Colorada of
approximately $6 million. Cash flow from operations before changes
in non-cash operating working capital and other items was $16.4
million during the quarter, compared to $7.6 million for the second
quarter of 2011. The cash flow provided by operating activities in
the quarter was $18.3 million.
CEO Commentary
Mr. Pete Dougherty, Argonaut's President and CEO states: "The
Company saw important improvements made at both El Castillo and La
Colorada during the quarter. At El Castillo, a new stacking and
conveying system has been implemented, with the potential to
increase tonnes moved in the pit. In addition, construction on pad
7A was completed. To date, there is capacity to stack approximately
6.7 million tonnes on the west side and approximately 25 million
tonnes capacity on the east pads."
In regards to La Colorada, Mr. Dougherty added: "Reprocessing
material at La Colorada has continued with positive results to
date. Preparations at the site continue in anticipation of
receiving final permits for full scale mining in the third quarter.
Upon receiving permits, necessary developments and construction
will lead to full scale mining around year end. During the quarter,
the Company commissioned the new gold recovery circuit at La
Colorada. This will allow more efficient processing of metal for
all our Mexican operations.
"Looking forward, we are awaiting permit notifications at La
Colorada and are working towards permits for San Antonio. Both
permits represent significant milestones for the Company.
Operations are running smoothly and we anticipate meeting our full
year guidance."
El Castillo Operating Statistics
3 Months Ended June 30, 6 Months Ended June 30,
% %
2012 2011 Change 2012 2011 Change
------------------------------------------------------------
Mining
Total tonnes
mined 5,037,401 4,970,835 +1% 11,002,325 9,730,293 +13%
Tonnes ore mined 2,506,756 2,786,349 -10% 5,557,283 5,324,613 +4%
Heap Leach Pad
Direct ore
tonnes to pad 1,533,188 1,920,657 -20% 3,717,080 3,733,668 0%
Crushed ore
tonnes to pad 1,164,340 860,289 +35% 2,002,718 1,589,393 +26%
Production
Gold grade (g/t) 0.41 0.33 +24% 0.38 0.34 +12%
Gold loaded to
pad (oz) 35,220 29,555 +19% 71,503 57,780 +24%
Gold loaded to
carbon (oz) 19,533 17,453 +12% 37,332 35,467 +5%
Gold sold (oz) 17,949 14,331 +25% 32,447 32,792 -1%
(1) "g/t" is grams per tonne
(2) "oz" means ounce
El Castillo Summary of Production Results
Total tonnes mined in the second quarter 2012 were consistent
with 2011 accomplishments. Of note, there was a 35% increase in
crushed tonnes during the second quarter of 2012 over the second
quarter of 2011. The total ounces loaded to the pad were 35,220 in
the second quarter; a 19% increase over the second quarter of
2011.
The strip ratio of waste to ore was 1.01 compared to a strip
ratio of 0.78 in the second quarter of 2011.
Year to date, El Castillo has produced 37,332 ounces of gold at
a cash cost per ounce sold of $635. Third quarter production is
expected to be 20,000-21,000 ounces, while 2012 guidance remains at
75,000 to 80,000 ounces for a cash cost between $625 and $650 per
gold ounce.
3 Months Ended
La Colorada Operating Statistics Q2 2012 Q1 2012 % Change YTD 2012
------------------------------------------
Mining
Total tonnes moved 840,241 678,310 +24% 1,518,551
Ore tonnes moved 805,611 678,310 +19% 1,483,921
Heap Leach Pad
Crushed ore tonnes to pad 743,533 680,396 +9% 1,423,929
Production
Gold grade (g/t) 0.43 0.41 +5% 0.42
Gold loaded to pad (oz) 10,173 8,886 +14% 19,059
Gold loaded to carbon (oz) 4,590 3,085 +49% 7,675
Silver loaded to carbon (oz) 25,796 17,182 +50% 42,978
Gold sold (oz) 5,298 0 NA 5,298
(1) "g/t" is grams per tonne
(2) "oz" means ounce
La Colorada Summary of Production Results
Approximately half of the Phase 1 material to be reprocessed has
been recrushed and restacked for leaching. Construction has begun
on pads 8, 10 & 11 and one half of the total stacking capacity
is expected to be completed in the third quarter. During the third
quarter the crusher will be down for approximately one month as it
is relocated to a more permanent location, near the new pads
currently under construction.
The next steps at La Colorada will involve reprocessing loose
material in the pit, followed by full scale processing of newly
mined material by the first quarter of next year.
Year to date, the Company has produced 7,675 gold ounces at a
cash cost per ounce sold of $578. Due to the crusher relocation,
the third quarter production expectations are approximately 3,000
ounces of gold. 2012 guidance at La Colorada remains at production
of 13,000-17,000 ounces with a cash cost between $625 and $650 per
gold ounce.
Permitting Status update at San Antonio
Argonaut has received notice that the environmental permit
application has been denied, without objection to the substance of
the application, by SEMARNAT. SEMARNAT requires amendment of the
underlying zoning, a process Argonaut had already begun. Argonaut
is engaged with the local communities and government agencies in
addressing the zoning. The Company continues to pursue all
necessary permits for the San Antonio project.
Looking Forward - 2012:
Third Quarter
-- San Antonio - Preliminary Economic Assessment will be released in the
near term and will include an updated resource with revisions to the
capital expenditures and operational costs for the project.
-- La Colorada - Permits necessary for construction to expand mining
operations are expected in the third quarter. Near term projects will
include new heap leach pad construction.
Fourth Quarter
-- San Antonio - The Company continues working towards permits for the
project.
-- La Colorada - Construction to expand to full scale mining will be
initiated, dependent on receiving final permits.
Non-IFRS Measures
The Company included the non-IFRS measure "Cash cost per gold
ounce 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
sold is equal to cost of sales excluding depreciation, depletion
and amortization 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 of, and reviewed and approved by Mr.
Thomas H. Burkhart, Argonaut's Vice President of Exploration, and a
qualified person as defined by National Instrument 43-101 ("NI
43-101"). 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:
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
La Colorada Mine NI 43-101 Preliminary Economic Assessment La
Colorada Project, Sonora, Mexico dated December
30, 2011
----------------------------------------------------------------------------
San Antonio Gold Project Technical Report and Mineral Resource Estimate on
the San Antonio Gold Project, Baja California Sur,
Mexico dated June 30, 2011
----------------------------------------------------------------------------
La Fortuna Property La Fortuna, Durango, Mexico, Technical Report
dated October 21, 2008
----------------------------------------------------------------------------
About Argonaut Gold
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 La Colorada Mine in the State of Sonora, Mexico, the advanced
exploration stage San Antonio project in the State of Baja
California Sur, Mexico, and several exploration stage projects, all
of which are located in Mexico.
Creating Value Beyond Gold
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
(775) 284-4422 x 101nichole.cowles@argonautgold.com
www.argonautgold.com
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