Argonaut Gold Inc. ("Argonaut", "Argonaut Gold" or the "Company") (TSX:AR),
announced today that the Company had production of 30,310 gold equivalent ounces
("GEOs") during the second quarter ended June 30, 2014 ("Q2"). This included
21,359 GEOs at its 100% owned El Castillo Mine ("El Castillo") located in
Durango, Mexico and 8,951 GEOs at its 100% owned La Colorada Mine ("La
Colorada") located near Hermosillo, Mexico.
----------------------------------------------------------------------------
2nd Quarter
----------------------
2014 2013 Change
----------------------------------------------------------------------------
Total Gold Equivalent Ounce Production:
----------------------------------------------------------------------------
GEOs loaded to the pads(1) 53,003 42,965 +23%
----------------------------------------------------------------------------
GEOs projected recoverable ounces(1,2) 31,849 25,344 +26%
----------------------------------------------------------------------------
GEOs produced ounces(1) 30,310 34,572 -12%
----------------------------------------------------------------------------
GEOs ounces sold(1) 31,723 32,424 -2%
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(1) GEOs are based on conversion ratio of 55:1 for silver to gold and is the
referenced ratio throughout the release.
(2) Recoverable ounces - see tables titled Second Quarter 2014 El Castillo
Operating Statistics and Second Quarter 2014 La Colorada Operating
Statistics
SECOND QUARTER 2014 HIGHLIGHTS:
El Castillo
-- GEO production of 21,359 ounces consisting of 21,041 gold ounces and
17,474 silver ounces (GEOs at 55:1 conversion rate).
-- 37,352 gold ounces loaded on the leach pads equating to 21,424 projected
recoverable gold ounces.
-- Mining:
-- The daily mining rate for the quarter increased from 87 thousand
tonnes per day ("ktpd") in the first quarter to 91 ktpd in the
second quarter, an increase of 5% quarter over quarter (24% year
over year). The mine plan incorporated mostly oxidized ore,
increasing from 75% to 87% of total ore to the pads for the second
quarter over the first quarter. This should result in improved
recoveries in the coming quarter.
-- Strip ratio increased to 1.2:1 which is consistent with mine plan
expectations.
-- Crushing and conveying:
-- West crusher conveyor moved a record 1,468,000 tonnes to the pads.
-- East crusher conveyor moved a record 1,615,000 tonnes to the pads.
-- West side pad expansion continues ahead of schedule.
-- Cell 2a was completed in May and over liner placement is nearly
complete, well ahead of schedule.
-- Cell 3b the rock fill was completed in June and the cell
construction will be finalized in the third quarter, which is also
ahead of schedule.
La Colorada
-- GEO production of 8,951 ounces, consisting of 8,420 gold ounces and
29,224 silver ounces (GEOs at 55:1 conversion rate).
-- 15,651 gold ounces and 189,621 silver ounces loaded on the pad; equating
to 10,425 projected recoverable GEOs to leach pad.
-- We are ahead on stripping for the year. The strip ratio for the quarter
of 4.49 fell in comparison to 7.22 realized during the first quarter, as
ore shipments to the crusher increased.
-- Record 880,000 tonnes of crushed ore was loaded to the leach pad which
is an increase of 182% year over year. A new level of 10 ktpd of crushed
ore to the pads has now been established. Since Q1 of this year we have
achieved nearly a 40% improvement in crushing.
-- An additional tertiary crusher was added to the crushing circuit and
commissioned at the beginning of July in an effort to further increase
crushing capacity.
Magino
-- The Richmont surface and mining rights expansion agreement was
finalized. A budget and exploration plan for this property will be
developed.
-- We have identified additional material for further heap leach column
test work to be performed, and will begin this metallurgical test work
in Q3.
-- We continue to advance the permitting studies on the project.
San Antonio
-- The Company continues to work on a dual permitting path; plans include
pursuing a mutually beneficial project for all stakeholders by
simultaneously pursuing the legal path to obtaining permits as well as
working with local and federal agencies and officials.
San Agustin
-- The Phase I drill program of 22,114 metres has been completed to date
including 21,115 metres of reverse circulation ("RC") in 217 drill holes
and 999 metres of PQ core in 13 drill holes.
-- Initiated Phase II drill program, completing 1,750 of 13,000 metres to
date.
-- Metallurgical test work continues with column tests being run by
independent laboratory Kappes, Cassiday & Associates in Reno, Nevada and
bulk run of mine column tests at El Castillo.
-- Argonaut Gold purchased Geologix Resources claims for the Nuestra Senora
del Carmen II property, and has an agreement to acquire the Consejo 1
title.
-- These concessions total 489 hectares immediately to the west and
east of the current drill program for the Company.
-- A cash payment of $10M was made to Silver Standard Resources Inc.
("Silver Standard"), as well as a $1.6M VAT payment to the government of
Mexico on this transaction.
CEO Commentary
Pete Dougherty, President and CEO for Argonaut Gold said, "Operationally we have
achieved marked improvement quarter over quarter in our mining and processing.
These operational improvements will lead to production increases in the 2nd half
of the year as we see mining capacity and gold recovery increasing.
At El Castillo, we are ahead with our heap leach pad construction. At La
Colorada, we have commissioned the new secondary cone crusher and installed a
fourth tertiary cone crusher which should further improve crushing production.
We anticipate further production gains to be achieved in the second half of the
year through these capital investments.
On the exploration front, we are pleased with the initial drilling results from
the newly acquired San Agustin project. We have expanded our mineral concessions
further with the purchase of the Nuestra Senora del Carmen II and the Consejo 1
title.
We continue to work toward permitting at both San Antonio and Magino. At Magino,
we announced positive heap leach column results which have prompted further test
work which will begin in Q3. At the San Antonio project, we are seeking an
approach to move this project forward as it represents significant value to all
stakeholders.
With steady improvement at the operations through the first half of the year, we
anticipate a strong second half of the year as outlined in January.
The Company continues to advance all of our projects as we work to build up our
production profile to join the ranks of the intermediate gold producers. We are
excited by the process improvements, our operating team's ability to set new
mining and processing records and our exploration group's positive drill results
to date. We are looking forward to a strong second half of the year."
SECOND QUARTER 2014 EL CASTILLO OPERATING STATISTICS
3 Months Ended March 31 6 Months Ended June 30
2014 2013 % Change 2014 2013 % Change
Mining
Tonnes ore (000s) 3,767 3,278 +15% 7,433 6,450 +15%
Tonnes waste (000s) 4,524 3,418 +32% 8,688 6,431 +35%
Tonnes mined (000s) 8,291 6,695 +24% 16,120 12,882 +25%
Tonnes per day (000s) 91 74 +24% 89 71 +25%
Waste/ore ratio 1.20 1.04 +15% 1.17 1.00 +17%
Heap Leach Pad
Tonnes ore direct to
leach pad (000s) 683 1,710 -60% 1,506 3,440 -56%
Tonnes crushed (000s) 1,616 1,565 +3% 3,113 2,996 +4%
Tonnes overland
conveyor (000s) 1,468 NA +100% 2,814 N/A +100%
Production
Gold grade (g/t)(1) 0.31 0.38 -19% 0.32 0.37 -12%
Gold loaded to leach
pad (oz)(2) 37,352 40,169 -7% 77,276 76,192 +1%
Projected recoverable
gold ounces (oz)(3) 21,424 23,403 -8% 43,702 44,937 -3%
Gold produced (oz) 21,041 28,075 -25% 43,017 51,200 -16%
Gold sold (oz) 22,292 26,705 -17% 43,198 46,214 -7%
(1) "g/t" is grams per tonne
(2) "oz" means troy ounce
(3) Recovery rates: ROM oxide 50%, crushed oxide 70%, ROM transition 40%,
crushed transition 60%, crushed sulfides argilic 30%, crushed sulfides
silicic 17%.
Richard Rhoades, Chief Operating Officer for the Company, said, "At El Castillo,
operations continued to increase productivity in the mining and
crushing/conveying areas. The mining fleet moved more than 91 thousand tonnes of
material per day, a new production record. Both the west and east
crushing/conveying systems set records for throughput. As anticipated, we have
experienced seen a higher strip ratio for the 1st half of 2013, which peaked in
the second quarter at 1.2. The strip ratio is expected to decline to 1.0 by the
4th quarter. The percentage of transition ore (which has lower leach recoveries)
continued to decrease, accounting for only 13% of the total ore placed on the
pad during the quarter.
The progress to date on the heap leach pad construction is well ahead of
schedule, which will allow the mining operations to increase placements during
the second half of the year."
SECOND QUARTER 2014 LA COLORADA OPERATING STATISTICS
3 Months Ended March 31 6 Months Ended June 30
2014 2013 % Change 2014 2013 % Change
Mining
Tonnes ore (000s) 700 342 +105% 1,260 898 +40%
Tonnes waste (000s) 3,145 3,802 -17% 7,188 7,600 -5%
Total tonnes (000s) 3,845 4,143 -7% 8,488 8,499 -1%
Waste/ore ratio 4.49 11.12 -60% 5.70 8.46 -33%
Tonnes rehandled
(000s) 245 0 +100% 315 0 +100%
Heap Leach Pad
Tonnes ore direct to
leach pad (000s) 880 312 +182% 1,515 715 +112%
Production
Gold grade mined
(g/t)(1) 0.68 0.28 +141% 0.63 0.29 +119%
Gold loaded to leach
pad (oz)(2) 15,651 2,796 +460% 26,463 6,559 +303%
Projected recoverable
GEOs loaded (oz)(3) 10,425 1,941 +437% 17,473 4,584 +281%
Gold produced (oz) 8,420 5,511 +53% 15,983 11,293 +42%
Silver produced (oz) 29,224 45,318 -36% 96,803 90,197 +7%
GE0s produced (oz) 8,951 6,335 +41% 17,743 12,933 +37%
Gold sold (oz) 8,530 5,051 +69% 16,263 10,983 +48%
Silver sold (oz) 32,083 27,801 +15% 105,294 82,070 +28%
GEOs sold 9,113 5,556 +64% 18,177 12,475 +46%
(1) "g/t" is grams per tonne
(2) "oz" means troy ounce
(3) Recovery rates: Gold 60% and Silver 30%
(4) GEOs based on conversion ratio of 55:1 for silver to gold
Richard Rhoades said, "At La Colorada, the mine grades continue to improve
averaging 0.68 g/t during the second quarter. We have added to the tertiary
crushing capacity, with throughput improving by nearly 40% over Q1. We have
begun reprocessing an old heap leach pad, which should result in lower operating
cost. We are now in a position to achieve greater production increases in the
second half of the year."
Exploration at San Agustin
The majority of the Company's 2014 exploration budget is focused on the recently
acquired San Agustin project, located 10 kilometres southwest of El Castillo.
The two deposits lie on the same regional mineral trend and are geologically
very similar.
Argonaut Gold has now completed Phase I of the two phase drilling program. Phase
I drilling consisted of more than 22,000 metres at San Agustin. RC drilling
includes 21,115 metres in 217 holes; PQ core drilling includes nearly 1,000
metres in 13 holes. The results from this Phase I drilling will be incorporated
into a current resource and then followed up with a preliminary economic
assessment anticipated by the end of the year.
Drill Summary
----------------------------------------------------------------------------
Phase I Phase II
----------------------------------------------------------------------------
RC CORE RC + CORE RC CORE RC + CORE
----------------------------------------------------------------------------
Completed Drill Holes 217 13 230 10 - 10
----------------------------------------------------------------------------
Completed Metres 21,115 999 22,114 1,750 - 1,750
----------------------------------------------------------------------------
Tom Burkhart, Vice President of Exploration for the Company, said, "When
Argonaut acquired the San Agustin project there was an historic resource and
potential to fill-in and expand the known zone of mineralization. The Company
completed a tight spaced Phase I drill program in what was termed the Main Zone
of the deposit in order to report a new resource from this area in Q3 of this
year. The required drilling for this was accomplished ahead of schedule and
under budget. Our work combined with earlier drilling has established mineral
continuity in the Main Zone. We also conducted additional wide space drilling
which we believe supports our assumption that the San Agustin mineral system has
the potential to grow.
The wide spaced drill holes outside the Main Zone drilling primarily focused on
testing the potential to the northwest. Drilling to date has yielded positive
results and indicates the San Agustin mineral system remains open. Our next
Phase of drilling will consist of approximately 13,000 metres, and is designed
to establish the broader limits of the mineral system. This is an exciting
project and our Mexican exploration team is doing a fantastic job moving this
project forward."
The Phase II RC drill program has begun on exploration ground for which the
Company has received exploration permits. As additional exploration permits are
received, the budget and scope of this drilling will be evaluated.
----------------------------------------------------------------------------
Significant drill hole results from the Main Zone
----------------------------------------------------------------------------
Gold Silver
From To Thickness Grade Grade Mineral
Drill Hole Number (metres) (metres) (metres) (g/t) (g/t) Type
----------------------------------------------------------------------------
14-SAGRC-122 7.62 64.01 56.39 0.35 25.7 Oxide
----------------------------------------------------------------------------
14-SAGRC-134 0.00 51.82 51.82 0.29 11.2 Oxide
----------------------------------------------------------------------------
14-SAGRC-163 0.00 38.10 38.10 0.49 13.9 Oxide
----------------------------------------------------------------------------
14-SAGRC-199 0.00 70.10 70.10 0.33 1.7 Oxide
----------------------------------------------------------------------------
14-SAGRC-201 0.00 39.62 39.62 0.64 2.0 Oxide
----------------------------------------------------------------------------
14-SAGRC-212 0.00 42.67 42.67 0.49 4.4 Oxide
----------------------------------------------------------------------------
14-SAGRC-213 0.00 82.30 82.30 0.32 3.7 Oxide
----------------------------------------------------------------------------
14-SAGRC-217 0.00 39.62 39.62 0.45 6.4 Oxide
----------------------------------------------------------------------------
14-SAGRC-219 12.19 74.68 62.48 0.33 12.7 Oxide
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Select extension drill hole results to the Northwest
----------------------------------------------------------------------------
Gold Silver
From To Thickness Grade Grade Mineral
Drill Hole Number (metres) (metres) (metres) (g/t) (g/t) Type
----------------------------------------------------------------------------
14-SAGRC-135 19.81 21.34 1.52 29.20 1.0 Oxide
----------------------------------------------------------------------------
14-SAGRC-157 59.44 67.06 7.62 3.17 84.4 Oxide
----------------------------------------------------------------------------
14-SAGRC-196 36.58 41.15 4.57 10.68 44.6 Oxide
----------------------------------------------------------------------------
14-SAGRC-198 76.20 91.44 15.24 1.05 16.9 Oxide
----------------------------------------------------------------------------
14-SAGRC-229 36.58 38.10 1.52 15.80 3.2 Oxide
----------------------------------------------------------------------------
The majority of drilling is oriented to cross the mineral system as close as
possible to determine true widths. However, the Company cannot assure that all
the reported intervals represent the true widths of the mineral system.
Complete results from the drilling campaign are posted on the Company's website
at www.argonautgold.com.
To view the 2014, Phase I grade thickness drill hole map, please visit the
following link: http://media3.marketwire.com/docs/ARmap1.pdf.
To view the 2014, Phase I & II drill hole map, please visit the following link:
http://media3.marketwire.com/docs/957427_MAP2.pdf.
Argonaut Gold Q2 Financial Results Conference Call and Webcast:
The Q2 financial results call is scheduled to take place on August 14, 2014
at 8:30 am EDT.
Q2 Conference Call Information
Toll Free (North America): 1-877-223-4471
International: 1-647-788-4922
Conference ID: 67705385
Webcast: http://www.argonautgold.com/
Q2 Conference Call Replay:
Toll Free Replay Call (North America): 1-416-621-4642
International Replay Call: 1-800-585-8367
The conference call replay will be available from 11:30 am EDT on August 15,
2014 until August
29, 2014.
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. 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 February 24, 2011
----------------------------------------------------------------------------
La Colorada Mine NI 43-101 Preliminary Economic Assessment La
Colorada Project, Sonora, Mexico dated December
30, 2011
----------------------------------------------------------------------------
Magino Gold Project NI 43-101 Technical Report and Mineral Resource
Estimate on the Magino Gold Project, Ontario,
Toronto, Canada dated January 30, 2014
----------------------------------------------------------------------------
San Antonio Gold Project NI 43-101 Technical Report and Mineral Resource
Estimate on the San Antonio Gold Project, Baja
California Sur, Mexico dated October 10, 2012
----------------------------------------------------------------------------
The San Agustin project is not a material property of Argonaut. For further
information on the San Agustin project, please see the historic estimates
disclosed in the technical report titled "San Agustin Resource Estimate" dated
March 2009 and available under the profile of Silver Standard at www.sedar.com.
Per Silver Standard, the historic mineral reserves estimate was completed by
Gilles Arseneau, Ph.D., P.Geo, a Qualified Person, pursuant to NI 43-101, in a
technical report completed by Wardrop, a TetraTech company, entitled "San
Agustin Resources Estimate" dated March, 2009. The report was reviewed by Thomas
Burkhart on behalf of Argonaut Gold, who has concluded that it continues to be
relevant and reliable as a basis for understanding the potential resources at
the property. To the best of Argonaut Gold's knowledge, information and belief,
there is no new material, scientific or technical information that would make
the disclosure of the mineral resources inaccurate or misleading. Argonaut Gold
has not done sufficient work to classify the historic estimate as current
mineral resources or mineral reserves and is not treating the historical
estimate as current mineral resources or mineral reserves. The Company has begun
an approximately 25,000 metre drill program to update the resource model and
verify or upgrade the historic work to support the development of a current
estimate.
Qualified Person Comments/Quality Control Procedures
For sample analysis the Company utilizes a system of Quality Assurance/Quality
Control that includes insertion and verification of standards, blanks and
duplicates consistent with industry standards. The preparation of this Press
Release was supervised and approved by Thomas Burkhart, Argonaut Gold's Vice
President of Exploration and a Qualified Person under National Instrument
43-101. Mr. Burkhart also reviewed the reverse circulation and core drilling
programs and on-site sample preparation procedures at La Colorada.
Samples from the San Agustin Project are collected at site by Argonaut's
personnel and transported to ALS-Chemex preparation laboratory in Zacatecas,
where samples are prepared and pulps sent for assay in ALS-Chemex's Vancouver,
BC laboratory. Samples are analyzed for gold by Fire Assay and Atomic absorption
finish (Au-AA23 assay code; 0.005 to 10 ppm detection limit) plus Silver by Aqua
Regia and Atomic Absorption finish (0.1 to 200 ppm detection limit). Samples
over 10 g/t Au are assayed with gravimetric finish (Assay code Au-GRA21). All
samples are also assayed by ICP-AES (code ME-ICP41) for a suite of 35 elements.
(Au AA-23 assay method code;). Samples over 10 g/t Au are assayed with
gravimetric finish (Assay code AU-GRA21). All samples are also assayed by ICP-MS
(code ME-ICP41) for a suite of 35 elements.
The potential quantities and grades disclosed herein are conceptual in nature,
there has been insufficient exploration to define an updated mineral resources
and it is uncertain if further exploration will result in these targets being
delineated as an updated mineral resource.
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 preliminary announcement of production results will be followed with a
report of financial results in connection with the publication of quarterly
financial information. 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;
economics 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 parametres, 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
(775) 284-4422 x 101
nichole.cowles@argonautgold.com
www.argonautgold.com
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