Argonaut Gold Inc. (TSX:AR) (the "Company", "Argonaut Gold" or "Argonaut") is
pleased to announce its financial and operating results for the fourth quarter
and year ended December 31, 2013. All dollar amounts are expressed in United
States dollars unless otherwise specified.
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4thQuarter Change Year End Change
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2013 2012 2013 2012
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Financial Data (000's except for earnings per share)
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Revenue $ 34,604 $ 52,347 -34% $ 165,061 $ 187,119 -12%
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Gross profit $ 8,553 $ 26,641 -68% $ 59,065 $ 95,196 -38%
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Net income -
excludes one-time
item(1) $ 2,157 $ 19,070 -89% $ 26,843 $ 64,856 -59%
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Net income (loss) $ (14,674) $ 19,070 -177% $ 10,012 $ 64,856 -85%
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Earnings per share -
excludes one-time
item(1) $ 0.01 $ 0.19 -95% $ 0.18 $ 0.68 -74%
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Earnings (loss) per
share - basic $ (0.10) $ 0.19 -153% $ 0.07 $ 0.68 -90%
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Cash flow from
operating
activities before
changes in non-cash
operating working
capital and other
items $ 9,315 $ 24,134 -61% $ 61,734 $ 83,405 -26%
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Cash and cash
equivalents $ 81,076 $ 190,826 -58%
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Gold Production and Cost Data
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Gold ounces loaded
to the pad 49,068 48,174 +2% 177,889 191,642 -7%
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Gold equivalent
ounces ("GEO")
produced(2) 28,734 32,871 -13% 120,433 110,496 +9%
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Gold equivalent
ounces sold(2) 27,823 30,791 -10% 118,877 112,492 +6%
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Average realized
sales price $ 1,248 $ 1,698 -27% $ 1,392 $ 1,662 -16%
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Cash cost per gold
ounce sold(3) $ 654 $ 587 +11% $ 644 $ 597 +8%
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(1) Excludes deferred tax charge of $16.8 million in Q4 2013 due to Mexican
tax law reform.
(2) Gold equivalent ounces ("GEO") assumes gold plus the gold equivalent of
silver using a ratio of 55:1.
(3) Cash cost per gold ounce sold is net of silver by-product (see Non-
IFRS Measures section).
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2013 Financial Highlights:
-- Net income of $26.8 million, prior to a one-time deferred tax charge of
$16.8 million in 2013.
-- Cash and cash equivalents was $81.1 million at December 31, 2013.
-- Successfully carried out capital expansion programs to enhance
production at El Castillo and La Colorada.
-- Production increased to over 120,000 gold equivalent ounces, a 9%
improvement over 2012.
-- Cash cost per gold ounce sold of $644, within guidance of $630-$660.
2013 Company Highlights:
-- Completed the purchase of the San Agustin project from Silver Standard
Resources Inc.
-- Announced positive prefeasibility study on Magino which indicated an
after-tax internal rate of return of 18% and an after-tax net present
value of $199 million, while incorporating only 40% of the current
mineral resource estimate.
-- Drilling and metallurgical test work provided for the inclusion of an
additional 360,000 new gold ounces of in-pit mineralization, consisting
of more than 315,000 ounces in the measured resources category and more
than 45,000 ounces in the indicated resources category. These are
summarized in the Mineral Resources section at the end of this document.
-- Drilling program at Veta Madre led to a new resource of 110,000 new gold
ounces in the indicated category. This is summarized in the Mineral
Resources section table at the end of this document.
-- Completed acquisition of the La Colorada royalty to establish 100%
ownership of La Colorada.
-- A surface and mining rights expansion agreement with Richmont Mines Inc.
("Richmont") was signed. This provides a key strategic initiative for
the Company as now the full Magino resource envelope (an additional 60%
of the resource estimate) may be exploited while allowing for additional
exploration upside on the Richmont ground.
-- San Antonio exploration and permitting process continued.
-- Expenditures of $185.7 million on mineral properties, plant and
equipment in 2013, including $88.1 million on acquisitions.
Operations:
El Castillo
-- Q4 production of 20,848 gold ounces.
-- Full year production of 94,804 gold ounces.
-- Per ounce cash cost sold of $699, slightly below guidance of $700-$725.
-- During Q4, 39,269 gold ounces loaded on the pad.
-- West side crusher and overland conveyor project was completed and
1.3 million tonnes was moved during the fourth quarter.
-- New south waste dump is operational.
-- Drilling and metallurgical test work provided for the inclusion of an
additional 360,000 new gold ounces of in-pit mineralization, consisting
of more than 315,000 ounces in the measured resources category and more
than 45,000 ounces in the indicated resources category. These are
summarized in the Mineral Resources section at the end of this document.
La Colorada
-- Q4 production of 7,017 gold ounces and 47,759 silver ounces, for 7,885
gold equivalent ounces (at 55:1 conversion).
-- Full year production of 22,544 gold ounces and 169,673 silver ounces,
for 25,629 gold equivalent ounces (at 55:1 conversion).
-- Per ounce cash cost sold of $417, below guidance of $450-$475.
-- During Q4, 9,799 gold ounces and 136,476 silver ounces loaded on the
pad.
-- La Colorada pit is now fully opened, and the average life of mine grade
was achieved by year-end.
-- Drilling program at Veta Madre led to a new resource of 110,000 new gold
ounces in the indicated category. This is summarized in the Mineral
Resources section table at the end of this document.
CEO Commentary
Peter Dougherty, Argonaut's Chief Executive Officer stated, "2013 was a year in
which Argonaut Gold accomplished key advancements across all of our projects. We
added ounces at our operating mines, expanded the ground surrounding our
projects and brought on a new exploration property within 10 kilometers of our
main producing El Castillo mine. We are also proud that the Company beat
guidance on cash cost per ounce sold at both properties, coming in below $700 at
El Castillo and under $450 at La Colorada.
"2014 will be a key year for the organization as production is expected to
increase to 135-150,000 gold equivalent ounces at El Castillo and La Colorada.
We aim to expand our resource base further through drilling at San Agustin and
La Colorada. In addition, Argonaut will be moving forward with permitting at San
Antonio and Magino."
Financial Results - Fourth Quarter 2013
During the fourth quarter of 2013, revenue was $34.6 million from gold sales of
26,918 ounces. Gross profit was $8.6 million for the quarter. Cash cost per gold
ounce sold in the quarter was $654 (compared to $587 for the same period in
2012). Cash cost per gold ounce sold is a non-IFRS measure, see note below.
During the quarter, profit from operations was $5.1 million. Net income for the
quarter, prior to a one-time item, was $2.2 million or $0.01 per basic share.
Net income was adversely affected by a one-time, non-cash deferred income tax
charge of $16.8 million ($11.4 million for operating properties, $5.4 million
for exploration/development properties) as a result of the Mexican tax law
reform approved by the President of Mexico in December 2013.
Cash and cash equivalents was $81.1 million at December, 31, 2013. Capital
expenditures in the fourth quarter were $19.6 million, primarily as a result of
infrastructure improvements at the El Castillo and La Colorada mines, as well as
stripping at La Colorada.
Financial Results - Year End 2013
For the year ended December 31, 2013, revenue was $165.1 million from gold sales
of 114,909 ounces. Gross profit was $59.1 million for the year. Cash cost per
gold ounce sold in the year was $644 (compared to $597 for the same period in
2012).
For the full year, profit from operations was $43.9 million. Net income for the
year, prior to a one-time item, was $26.8 million or $0.18 per basic share. Net
income was adversely affected by a one-time, non-cash deferred income tax charge
of $16.8 million ($11.4 million for operating properties, $5.4 million for
exploration/development properties) as a result of the Mexican tax law reform
approved by the President of Mexico in December 2013.
El Castillo Operating Statistics
4th Quarter Year End
2013 2012 Change 2013 2012 Change
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Mining
Tonnes ore (000's) 3,764 3,321 +13% 13,621 11,962 +14%
Tonnes waste (000's) 3,810 3,374 +13% 13,376 12,091 +11%
Tonnes mined (000's) 7,574 6,695 +13% 26,997 24,052 +12%
Waste/ore ratio 1.01 1.02 -1% 0.98 1.01 -3%
Heap Leach Pad
Tonnes ore direct to
leach pad (000's) 1,045 2,034 -49% 6,352 7,561 -16%
Tonnes crushed (000's) 2,769 1,282 +116% 7,304 4,555 +60%
Tonnes overland
conveyor (000's) 1,312 - N/A 1,533 - N/A
Production
Gold grade (g/t) 0.32 0.37 -14% 0.35 0.39 -10%
Gold loaded to leach
pad (ozs.) 39,269 39,329 -0.2% 154,581 151,462 +2%
Gold produced (ozs.) 20,848 25,805 -19% 94,804 87,712 +8%
Gold ounces sold 20,620 23,595 -13% 92,675 89,881 +3%
Cash cost per gold
ounce sold $ 710 $ 661 +7% $ 699 $ 635 +10%
Summary of Production Results
Total tonnes mined increased by 13% for the fourth quarter 2013 over fourth
quarter 2012 and 12% year over year. The ounces loaded to the pads in the fourth
quarter were consistent in 2013 and 2012; however, approximately 36% of these
ounces came from transitional ore where recoveries are lower. Year over year,
there was a 2% increase in ounces of gold loaded to the pad.
Gold production of 20,848 ounces in the fourth quarter of 2013 was 19% lower
compared to the fourth quarter of 2012, primarily due to lower recoveries
encountered in the transition material processed. Full year production of 94,804
ounces was an 8% increase over 2012 production due to increased tonnage
processed. We anticipate gold equivalent ounce production of 90-100,000 ounces
for 2014.
The strip ratio of waste to ore decreased in the fourth quarter to 1.01 compared
to 1.02 in the fourth quarter of 2012. The strip ratio for the year ended
December 31, 2013 was 0.98 compared to 1.01 for the year ended December 31,
2012, reflecting a push to the southwest side of the pit.
La Colorada Operating Statistics
4th Quarter Year End
2013 2012 Change 2013 2012 Change
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Mining
Tonnes ore (000's) 413 230 +80% 1,726 266 +549%
Tonnes waste (000's) 4,103 2,023 +103% 14,588 3,841 +280%
Total tonnes (000's) 4,515 2,253 +101% 16,314 4,108 +297%
Waste/ore ratio 9.9 8.8 +13% 8.5 14.4 -41%
Tonnes rehandled
(000's) 21 693 -97% 21 3,066 -99%
Heap Leach Pad
Tonnes to pad (000's) 740 623 +19% 2,175 2,895 -25%
Production
Gold grade (g/t) 0.41 0.44 -7% 0.33 0.43 -23%
Gold loaded to leach
pad (ozs.) 9,799 8,845 +11% 23,308 40,180 -42%
Gold produced (ozs.) 7,017 6,195 +13% 22,544 20,369 +11%
Silver produced (ozs.) 47,759 47,890 -0.3% 169,673 132,805 +28%
Gold equivalent ounces
produced 7,885 7,066 +12% 25,629 22,784 +12%
Gold ounces sold 6,298 5,907 +7% 22,234 19,900 +12%
Silver ounces sold 40,800 54,108 -25% 173,751 116,717 +49%
Cash cost per gold
ounce sold (net of
silver credits) $ 468 $ 292 +60% $ 417 $ 424 -2%
Summary of Production Results
Total tonnes mined increased by 101% for the fourth quarter 2013 over fourth
quarter 2012 and 297% year over year. There were 9,799 ounces placed on the pad
in the fourth quarter of 2013, compared to 8,845 ounces placed on the pad in the
fourth quarter of 2012. Year over year, there was a 42% decrease in ounces of
gold loaded to the pad due to lower grade.
Gold production of 7,017 ounces in the fourth quarter of 2013 was a 13% increase
compared to the fourth quarter of 2012. Production in 2013 of 25,629 gold
equivalent ounces was an increase of 12% over 2012 production of 22,784 gold
equivalent ounces. We anticipate gold equivalent ounce production rising to
45-50,000 ounces for 2014 as we ramp up crushing capacity and mine higher grade
ore.
The strip ratio of waste to ore increased year over year in the fourth quarter
to 9.9:1 compared to 8.8:1 in the fourth quarter of 2012. The strip ratio for
the year ended December 31, 2012 was 8.5:1 compared to 14.4:1 for the year ended
December 31, 2013. By year-end, we had completed the majority of stripping on
the La Colorada pit and are now in ore grades similar to the life of mine grade.
In 2014 we will begin opening up the Grand Central pit.
Chief Operating Officer Comments
In regards to operations, Richard Rhoades, Chief Operating Officer at Argonaut
Gold said, "Production for the fourth quarter at El Castillo was impacted by
transitional material placed on the pads (36% being transitional material),
which yields lower recovery. This is part of the mine sequencing, and we
anticipate being back in oxide ores by Q3, 2014 as the mine plan expands into
the next cut on the north side of the pit.
"At La Colorada we are happy to report at the year end the mine was fully opened
up and operations have reached life of mine grade in the La Colorada pit.
Crusher throughput continues to be a challenge and we are adding additional
crushing capacity by the end of the first quarter. This additional equipment is
expected to help us increase our throughput capacity."
Expansion Projects for 2014
The Company plans on investing a total of between $41 million and $61 million on
capital expenditures and exploration initiatives in 2014. Major capital
expenditures in 2014 are expected to include approximately $11 million at El
Castillo, $14 million at La Colorada (predominately capitalized stripping of $11
million), $4 million at Magino, and $7-$27 million at San Antonio, depending on
permitting. Exploration expenditures in 2014 are expected to amount to
approximately $5 million.
Company Progress
Peter Dougherty added, "During 2014, Argonaut's goal is to expand production to
achieve 135-150,000 ounces of gold equivalent production. Capital projects will
be completed in regards to pad construction and equipment investments to ensure
production meets the expectations at the mines.
"The Company continues with permitting at our San Antonio and Magino development
projects. These projects are expected to provide future production growth to
achieve our goal of becoming a 300-500,000 ounce a year producer. Meanwhile, the
San Agustin project provides the Argonaut shareholders with an exciting
exploration property just 10 kilometers from our main producing mine. With three
drill rigs currently running and a timeline for establishing a current
preliminary economic assessment on the project by the end of 2014, the potential
for the project is very promising."
Argonaut Gold Q4 Financial Results Conference Call and Webcast - March 25, 2014:
The Q4 financial results call is scheduled to take place on March 25, 2014 at
8:30 am EDT. Details for the call-in participation are:
Q4 and Year End Conference Call Information for March 25, 2014:
Toll Free (North America): 1-866-696-5910
International: 1-416-340-2217
Webcast: http://www.argonautgold.com/
Q4 and Year End Conference Call Replay:
Toll Free Replay Call (North America): 1-905-694-9451
International Replay Call: 1-800-408-3053
Passcode: 4950688
The conference call replay will be available from 11:30 am EDT on March 25, 2014
to April 8, 2014.
Annual General Meeting:
Argonaut Gold Inc. will hold its annual meeting of shareholders on Tuesday, May
6, 2014 at 11:00 am EDT at the offices of Bennett Jones LLP, located at 3400 One
First Canadian Place, Toronto, Ontario, Canada.
Non-IFRS Measures
The Company has included a non-IFRS measure for "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 production costs 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.
This press release should be read in conjunction with the Company's audited
annual consolidated financial statements for the year-ended December 31, 2013
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.
Mineral Resources
The table below provides detail on the ounces provided by the drilling and
metallurgical assessment of sulphides at El Castillo and drilling at La Colorada
(Veta Madre).
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Au Ag
Resource Tonnes Grade Au Grade Ag
Property Category (000's) (g/t) Ounces (g/t) Ounces
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El Castillo - Sulphide non-
silicified Measured 17,222 0.46 256,978
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El Castillo - Sulphide non-
silicified Indicated 2,978 0.50 47,723
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El Castillo - Sulphide
silicified Measured 2,416 0.80 62,064
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La Colorada, Veta Madre Indicated 6,718 0.51 110,000 3.25 702,000
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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, a qualified person as defined by National
Instrument 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:
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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 February 24, 2011
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La Colorada Mine NI 43-101 Preliminary Economic Assessment La Colorada
Project, Sonora, Mexico dated December 30, 2011
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Magino Gold Project NI 43-101 Technical Report and Mineral Resource Estimate
on the Magino Gold Project, Ontario, Toronto, Canada
dated January 30, 2014
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San Antonio Gold NI 43-101 Technical Report and Mineral Resource Estimate
Project on the San Antonio Gold Project, Baja California Sur,
Mexico dated October 10, 2012
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About Argonaut Gold
Argonaut Gold is a Canadian gold company engaged in exploration, mine
development and production activities. Its primary assets are the production
stage El Castillo mine in Durango, Mexico, and the La Colorada mine in Sonora,
Mexico. Advanced exploration stage projects include the San Antonio project in
Baja California Sur, Mexico, and the Magino project in Ontario, Canada. The
recently acquired San Agustin project is the primary exploration target for
Argonaut in 2014. The Company also has several exploration stage projects, all
of which are located in North America.
Creating Value Beyond Gold
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
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.
These factors are discussed in greater detail in Argonaut's most recent Annual
Information Form and in the most recent Management 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Argonaut Gold Inc.
Nichole Cowles
Investor Relations Manager
(775) 284-4422 x 101
nichole.cowles@argonautgold.com
www.argonautgold.com
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