TORONTO, Aug. 11, 2020 /CNW/ - Argonaut Gold Inc.
(TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut") announces
its operating and financial results for the second quarter ended
June 30, 2020. The Company
reports quarterly production of 31,531 gold equivalent ounces[1]
("GEO" or "GEOs"), $23.4 million of
free cash flow[2] ("FCF"), cash flow from operating activities
before changes in operating working capital of $11.8 million, net loss of $7.7 million or loss per share of $0.04 and adjusted net income2 of
$8.5 million or adjusted earnings per
basic share2 of $0.05. All dollar amounts are expressed in
United States dollars, unless
otherwise specified (C$ refers to Canadian dollars).
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Pete Dougherty, President and CEO
stated: "We've completed major milestones for the Company over the
past few months with the Alio merger, the completion of the
Schedule 2 process at Magino and the recent equity financing.
The Company experienced a large cash increase of $23 million during the quarter amidst the two
month shutdown of mining, crushing and stacking activities in
Mexico due to COVID-19
restrictions. While production dipped during this shutdown
period, we saw significant cash flow, as the heap leach pad
inventory was reduced at minimal cost. We are in a position
to deliver significant free cash flow through the remainder of the
year, which bodes well for the execution of our transition strategy
of developing our lower-cost, longer-life pipeline of growth
assets. At $1,900 gold, we
expect to generate between $49
million and $79 million of
free cash flow during the second half of 2020."
Second Half 2020 FCF2 Guidance
Argonaut is
well positioned to generate significant FCF2 in
2020. The Company's anticipated FCF2 is highly
leveraged to the gold price. Between January 1, 2020 and June
30, 2020, Argonaut has generated approximately $29 million of FCF2. The table
below outlines Argonaut's FCF2 leverage to the gold
price during the second half of 2020, including the Florida Canyon
mine following the merger with Alio Gold Inc. on July 1, 2020 (outside of a construction decision
on a development stage project).
Second Half 2020 FCF2 Guidance Sensitivity to Gold
Price ($M)
$1,700
|
$1,800
|
$1,900
|
$2,000
|
$2,100
|
33 –
58
|
41 –
68
|
49 –
79
|
57 –
89
|
65 -
99
|
Key operating and financial statistics for the second quarter of
2020 are outlined in the following table:
|
3 Months Ended
June 30
|
6 Months Ended
June 30
|
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
Financial Data (in
millions except for
earning per share)
|
|
|
|
|
|
|
Revenue
|
$58.0
|
$56.0
|
4%
|
$124.5
|
$129.9
|
(4%)
|
Gross
profit
|
$17.7
|
$9.2
|
92%
|
$31.6
|
$20.7
|
53%
|
Net income
(loss)
|
$(7.7)
|
$5.4
|
(243%)
|
$(17.2)
|
$9.5
|
(281%)
|
Earnings (loss) per
share – basic
|
$(0.04)
|
$0.03
|
(233%)
|
$(0.10)
|
$0.05
|
(300%)
|
Adjusted net
income1
|
$8.5
|
$1.4
|
507%
|
$16.9
|
$3.8
|
345%
|
Adjusted earnings per
share – basic1
|
$0.05
|
$0.01
|
400%
|
$0.09
|
$0.02
|
350%
|
Cash flow from
operating activities
before changes in non-cash operating
working capital
|
$11.8
|
$11.3
|
4%
|
$26.5
|
$29.4
|
(10%)
|
Cash and cash
equivalents
|
$65.2
|
$23.9
|
173%
|
$65.2
|
$23.9
|
173%
|
Net
cash1
|
$58.2
|
$9.9
|
488%
|
$58.2
|
$9.9
|
488%
|
Gold Production
and Cost Data
|
|
|
|
|
|
|
GEOs loaded to the
pads2
|
40,309
|
82,680
|
(51%)
|
137,489
|
159,520
|
(14%)
|
GEOs projected
recoverable1,3
|
20,105
|
49,763
|
(60%)
|
64,389
|
97,944
|
(34%)
|
GEOs
produced2,2,4
|
31,531
|
40,213
|
(22%)
|
73,067
|
94,382
|
(23%)
|
GEOs
sold2
|
34,196
|
43,185
|
(21%)
|
76,400
|
99,859
|
(23%)
|
Average realized
sales price
|
$1,713
|
$1,303
|
31%
|
$1,642
|
$1,306
|
26%
|
Cash cost per gold
ounce sold1
|
$885
|
$931
|
(5%)
|
$929
|
$909
|
2%
|
All-in sustaining
cost per gold ounce sold1,5
|
$1,080
|
$1,264
|
(15%)
|
$1,213
|
$1,184
|
2%
|
|
|
1
|
Please refer to the
section below entitled "Non-IFRS Measures" for a discussion of
these Non-IFRS Measures.
|
2
|
GEOs are based on a
conversion ratio of 80:1 for silver to gold for 2020 and 75:1 for
2019. The silver to gold conversion ratio is based on the
three-year trailing average silver to gold ratio.
|
3
|
Expected recoverable
GEOs are based on the assumptions and parameters as set forth in
the El Castillo Complex Technical Report dated March 27, 2018 and
the La Colorada Gold/Silver Mine Technical Report dated March 27,
2018. In periods where the Company mines and processes
material not specifically defined in a technical report (for
example: low grade stockpile material or run-of-mine ore),
management uses its best estimate of recovery based on the
information available. The El Castillo mine is currently
processing run-of-mine ore and has several years of data to support
run-of-mine recoveries.
|
4
|
Produced ounces are
calculated as ounces loaded to carbon.
|
Second Quarter 2020 and Recent Company Highlights:
- Corporate
-
- Closed Alio Gold Inc. transaction on July 1, 2020 to create a North American,
diversified, intermediate gold producer.
- In July, the Company completed an equity financing for gross
proceeds of C$126.5 million.
- El Castillo Complex
-
- Second quarter production of 23,662 GEOs.
-
- El Castillo production of
9,394 GEOs.
- San Agustin production of
14,268 GEOs.
- Completed construction of LV North and East Crusher leach pads
at El Castillo.
- La Colorada
-
- Second quarter production of 7,869 GEOs.
- Completed construction of 4B
leach pad and overflow ponds.
- Florida Canyon
-
- In early July, the Company completed and filed a technical
report that included an updated life-of-mine plan demonstrating
mine site after-tax free cash flow of approximately $133 million at $1,350 gold, $216
million at $1,500 gold,
$326 million at $1,700 gold and $491
million at $2,000 gold.
- Magino
-
- Received approval of Schedule 2 process from Canadian Federal
government.
- In late July, the Company provided a drill results updated from
the Elbow Zone. These results showed high-grade continuity below
the proposed pit (see press release dated July 28, 2020).
- Cerro del Gallo
-
- At the end of June, the Company submitted a Unified Technical
Document that includes an Environmental Impact Assessment, an
Environmental Risk Assessment and the Justified Technical Study for
a Change of Soil Use.
- Social Responsibility
-
- Zero lost time accidents during the second quarter 2020.
- Received nationally awarded Environmental Socially Responsible
Company recognition at the El Castillo Complex for the eighth
consecutive year.
- Provided COVID-19 support to communities in Mexico by providing food baskets, sanitization
of public spaces and streets, donation of masks, sanitizer and
thermometers and hosted public health information sessions.
- Participated in municipal meetings with health officials at
La Colorada and the El Castillo
Complex in sessions relating to "Safe Return to Work"
procedures.
- Provided equipment for the cleaning of dams for water
harvesting in the communities of the Ejidos of Otilio Montaño and
Atotonilco, near the El Castillo
Complex.
Financial Results – Second Quarter 2020
Revenue for
the three months ended June 30, 2020
was $58.0 million, an
increase from $56.0 million for
the three months ended June 30, 2019.
During the second quarter of 2020, gold ounces sold totaled
32,707 at an average realized price per ounce of $1,713, compared to 41,647 gold ounces sold at an
average realized price per ounce of $1,303 during the same period of 2019. Gold
ounces sold for the three months ended June
30, 2020 decreased compared to the same period in 2019
primarily due to a decrease in gold ounces produced at the
El Castillo and La Colorada mines mostly related to a large
decrease in ore tonnes to leach pads as a result of the COVID-19
related suspension of mining, crushing and stacking activities in
response to the Mexican Federal Government decree. As of
June 1, 2020, all mining, crushing
and stacking activities had resumed at all Mexican operations.
Production costs for the second quarter of 2020 were
$30.9 million, a decrease from
$40.5 million in the second quarter
of 2019, primarily due to a decrease in gold ounces sold.
Cash cost per gold ounce sold (see "Non-IFRS Measures"
section) was $885 in the second quarter of 2020, a
decrease from $931 in the same
period of 2019, primarily due to a decrease in cash cost per gold
ounce sold at the El Castillo and
San Agustin mines as discussed
further in the discussion of operations for the respective mine.
The depreciation, depletion and amortization ("DD&A")
expense included in cost of sales for the second quarter of 2020
totaled $8.8 million, a
decrease from $10.2 million in
the second quarter of 2019, primarily due to a decrease in gold
ounces sold, as many of the mining assets are amortized on a
unit-of-production basis, partially offset by an increase in the
average DD&A expense per ounce in work-in-process inventory,
primarily due to significant capital additions during the second,
third and fourth quarters of 2019.
General and administrative expenses for the second quarter of
2020 were $3.1 million, comparable to
$3.4 million for the same period of
2019.
Losses on commodity derivatives for the second quarter of
2020 were $12.4 million,
compared to gains of $0.2 million in
the second quarter of 2019, primarily due to the large increase in
unrealized losses on the Company's zero-cost collar
contracts.
Care and maintenance expenses for the three months ended
June 30, 2020 were $8.2 million compared to nil for the comparative
period of 2019. On April 1,
2020, the Company temporarily suspended all mining, crushing
and stacking activities in Mexico
due to COVID-19 in response to the Mexican Federal Government
decree. All activities resumed on June
1, 2020. Costs incurred during the temporary
suspension associated with the suspended activities that did not
generate additional inventory have been separately identified and
accounted for as care and maintenance expenses within operating
income in the interim condensed consolidated statements of (loss)
income.
Other income for the second quarter of 2020 was
$1.0 million, a decrease from
$1.3 million in the second quarter of
2019, primarily due to differences in foreign currency translation
effects.
Income tax expense for the second quarter of 2020 was
$2.2 million, compared to
$1.3 million in the same period of
2019, primarily due to higher forecasted taxable income related to
the increase in the price of gold, offset by a deferred income tax
asset related to the unrealized loss on derivatives.
Net loss for the second quarter of 2020 was $7.7 million or $0.04 per share, a decrease from net income of
$5.4 million or $0.03 per basic share for the second quarter of
2019.
Adjusted net income2 for the second quarter of 2020
was $8.5 million or $0.05 per basic share, an increase from adjusted
net income of $1.4 million or
$0.01 per basic share for the second
quarter of 2019.
Financial Results – First Half 2020
Revenue for the
six months ended June 30, 2020 was
$124.5 million, a decrease from
$129.9 million for the six months
ended June 30, 2019. During the
first half of 2020, gold ounces sold totaled 72,876 at an average
realized price per ounce of $1,642,
compared to 96,426 gold ounces sold at an average realized price
per ounce of $1,306 during the same
period of 2019. Gold ounces sold for the six months ended
June 30, 2020 decreased compared to
the same period in 2019 primarily due to a decrease in gold ounces
sold at the El Castillo and
La Colorada mines due to a large
decrease in ore tonnes to leach pads as a result of the temporary
suspension of mining, crushing and stacking activities in response
to the Mexican Federal government decree related to COVID-19.
Production costs for the six months ended June 30, 2020 were $72.5
million, a decrease from $91.5
million in the first half of 2019 primarily due to a large
decrease in gold ounces sold partially offset by a slight increase
in cash cost per gold ounce sold. Cash cost per gold ounce
sold (see "Non-IFRS Measures" section) was $929 in the first half of 2020, an increase from
$909 in the same period of 2019,
primarily due to an increase in cash cost per gold ounce sold at
the El Castillo and La Colorada mines, as disclosed further in the
discussion of operations for the respective mine. DD&A
expense included in cost of sales for the six months ended
June 30, 2020 totaled $19.9 million, a decrease from $22.1 million in the six months ended
June 30, 2019, due to the decrease in
gold ounces sold, as many of the mining assets are amortized on a
unit-of-production basis.
General and administrative expenses for the six months ended
June 30, 2020 were $7.2 million, comparable to $7.2 million in the same period of 2019.
Care and maintenance expenses for the six months ended
June 30, 2020 were $8.2 million compared to nil for the comparative
period of 2019. On April 1,
2020, the Company temporarily suspended all mining, crushing
and stacking activities in Mexico
due to COVID-19 in response to the Mexican Federal Government
decree. All activities resumed on June
1, 2020. Costs incurred during the temporary
suspension associated with the suspended activities that did not
generate additional inventory have been separately identified and
accounted for as care and maintenance expenses within operating
income in the interim condensed consolidated statements of (loss)
income.
Losses on commodity derivatives during the first half of 2020
were $14.2 million, compared to gains
of $0.5 million in the first half of
2019, primarily due to the large increase in unrealized losses on
the Company's zero-cost collar contracts.
Other expenses for the six months ended June 30, 2020 was $4.9
million, a decrease from other income of $1.9 million in the same period of 2019,
primarily related to differences in foreign currency translation
effects.
Income tax expense for the six months ended June 30, 2020 was $13.4
million, compared to $5.2
million in the same period of 2019. The change is
primarily due to the foreign exchange effects of the weakening
Mexican peso on the calculation of deferred taxes during the first
half of 2020 and to higher forecasted taxable income related to the
increase in the price of gold, offset by a deferred income tax
asset related to the unrealized loss on
derivatives.
Net loss for the six months ended June
30, 2020 was $17.2 million or
$0.10 per share, a decrease from net
income of $9.5 million or
$0.05 per basic share for the six
months ended June 30, 2020.
Adjusted net income2 for the six months ended
June 30, 2020 was $16.9 million or $0.09 per basic share, an increase from adjusted
net income2 of $3.8
million or $0.02 per basic
share for the six months ended June 30,
2020.
Operational Results – Second Quarter 2020
During the
second quarter 2020, the Company achieved production of 31,531 GEOs
at a cash cost of $885 per gold ounce
sold and all-in sustaining cost of $1,080 per gold ounce sold compared to 40,213
GEOs at a cash cost of $931 per gold
ounce sold and an all-in sustaining cost of $1,264 per gold ounce sold during the second
quarter 2019 (see "Non-IFRS Measures" section). Lower
production was primarily related to the temporary shutdown of
mining, crushing and stacking activities during April and May due
to COVID-19 restrictions in response to the Mexican Federal
Government decree. Lower costs are primarily due to the
reduction in costs related to the temporary shutdown of mining,
crushing and stacking activities during April and May while gold
production and sales continued.
Pete Dougherty commented: "I
commend the team for their commitment to safety protocols and the
new protocols that have been developed and implemented due to
COVID-19 precautions. It is not an easy undertaking to
shutdown certain activities and ramp them back up as efficiently
and with the additional health and safety protocols as we have
done, and our operating team deserves full credit for this
successful restart. Mining, crushing and stacking activites
have ramped up very well following the temporary shutdown of these
activities due to COVID-19 during April and May. We are
getting the planned tonnes to the leach pads despite the heavy
rains experienced recently in Mexico. These rains have the
potential to dilute the solution on the leach pads and slow third
quarter recoveries, but any delay in recoveries is expected to be
temporary and all operations are functioning to
plan."
SECOND QUARTER 2020 EL CASTILLO COMPLEX OPERATING
STATISTICS
|
3 Months Ended
June 30
|
6 Months Ended
June 30
|
|
2020
|
2019
|
%
Change
|
2020
|
2019
|
%
Change
|
Mining (in 000s
except
waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore El
Castillo
|
902
|
2,300
|
-61%
|
2,824
|
4,588
|
-38%
|
Tonnes ore San
Agustin
|
1,172
|
1,961
|
-40%
|
3,881
|
3,622
|
7%
|
Tonnes
ore
|
2,074
|
4,261
|
-51%
|
6,705
|
8,210
|
-18%
|
Tonnes waste El
Castillo
|
770
|
3,489
|
-78%
|
4,184
|
7,294
|
-43%
|
Tonnes waste San
Agustin
|
584
|
1,408
|
-59%
|
2,453
|
2,725
|
-10%
|
Tonnes
waste
|
1,354
|
4,897
|
-72%
|
6,637
|
10,019
|
-34%
|
Tonnes mined El
Castillo
|
1,672
|
5,789
|
-71%
|
7,008
|
11,882
|
-41%
|
Tonnes mined San
Agustin
|
1,756
|
3,369
|
-48%
|
6,334
|
6,347
|
0%
|
Tonnes
mined
|
3,428
|
9,158
|
-63%
|
13,342
|
18,229
|
-27%
|
Tonnes per day El
Castillo
|
18
|
64
|
-72%
|
39
|
66
|
-41%
|
Tonnes per day San
Agustin
|
19
|
37
|
-49%
|
35
|
35
|
0%
|
Tonnes per
day
|
37
|
101
|
-63%
|
74
|
101
|
-27%
|
Waste/ore ratio El
Castillo
|
0.85
|
1.52
|
-44%
|
1.48
|
1.59
|
-7%
|
Waste/ore ratio San
Agustin
|
0.50
|
0.72
|
-31%
|
0.63
|
0.75
|
-16%
|
Waste/ore
ratio
|
0.65
|
1.15
|
-43%
|
0.99
|
1.22
|
-19%
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
East leach pads
El Castillo
|
64
|
1,101
|
-94%
|
278
|
2,174
|
-87%
|
Tonnes crushed to
West leach pads
El Castillo
|
0
|
1,175
|
-100%
|
3
|
2,432
|
-100%
|
Tonnes direct to
leach pads
El Castillo
|
903
|
0
|
-
|
2,635
|
0
|
-
|
Tonnes crushed to
leach pads San
Agustin
|
1,191
|
1,931
|
-38%
|
3,924
|
3,622
|
8%
|
Tonnes to leach
pads
|
2,158
|
4,207
|
-49%
|
6,840
|
8,228
|
-17%
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach pads El
Castillo (g/t)
|
0.43
|
0.39
|
10%
|
0.51
|
0.39
|
31%
|
Gold grade loaded to
leach pads
San Agustin (g/t)
|
0.33
|
0.39
|
-15%
|
0.35
|
0.43
|
-19%
|
Gold loaded to
leach pads (g/t)
|
0.37
|
0.39
|
-5%
|
0.42
|
0.41
|
2%
|
Gold loaded to leach
pads El Castillo
(oz)
|
13,386
|
28,225
|
-53%
|
47,857
|
57,569
|
-17%
|
Gold loaded to leach
pads San
Agustin (oz)
|
12,609
|
24,458
|
-48%
|
43,864
|
50,163
|
-13%
|
Gold loaded to
leach pads (oz)
|
25,995
|
52,683
|
-51%
|
91,721
|
107,732
|
-15%
|
Projected recoverable
GEOs loaded
El Castillo
|
5,547
|
18,635
|
-70%
|
18,619
|
38,972
|
-52%
|
Projected recoverable
GEOs loaded
San Agustin
|
8,951
|
16,940
|
-47%
|
31,732
|
34,966
|
-9%
|
Projected
recoverable GEOs loaded
|
14,498
|
35,575
|
-59%
|
50,351
|
73,938
|
-32%
|
Gold produced El
Castillo (oz)
|
9,151
|
14,361
|
-36%
|
23,586
|
37,248
|
-37%
|
Gold produced San
Agustin (oz)
|
13,403
|
12,684
|
6%
|
26,238
|
26,768
|
-2%
|
Gold produced
(oz)
|
22,554
|
27,045
|
-17%
|
49,824
|
64,016
|
-22%
|
Silver produced El
Castillo (oz)
|
19,547
|
29,791
|
-34%
|
43,092
|
58,001
|
-26%
|
Silver produced San
Agustin (oz)
|
69,242
|
43,097
|
61%
|
144,746
|
97,127
|
49%
|
Silver produced
(oz)
|
88,789
|
72,888
|
22%
|
187,838
|
155,128
|
21%
|
GEOs produced El
Castillo
|
9,394
|
14,758
|
-36%
|
24,123
|
38,021
|
-37%
|
GEOs produced San
Agustin
|
14,268
|
13,259
|
8%
|
28,047
|
28,063
|
0%
|
GEOs
produced
|
23,662
|
28,017
|
-16%
|
52,170
|
66,084
|
-21%
|
Gold sold El Castillo
(oz)
|
11,008
|
16,094
|
-32%
|
24,634
|
38,884
|
-37%
|
Gold sold San Agustin
(oz)
|
14,293
|
14,181
|
1%
|
27,754
|
30,087
|
-8%
|
Gold sold
(oz)
|
25,301
|
30,275
|
-16%
|
52,388
|
68,971
|
-24%
|
Silver sold El
Castillo (oz)
|
19,547
|
29,791
|
-34%
|
43,092
|
58,001
|
-26%
|
Silver sold San
Agustin (oz)
|
71,042
|
50,786
|
40%
|
156,179
|
107,420
|
45%
|
Silver sold
(oz)
|
90,589
|
80,577
|
12%
|
199,271
|
165,421
|
20%
|
GEOs sold El
Castillo
|
11,253
|
16,491
|
-32%
|
25,173
|
39,657
|
-37%
|
GEOs sold San
Agustin
|
15,181
|
14,858
|
2%
|
29,706
|
31,519
|
-6%
|
GEOs
sold
|
26,434
|
31,349
|
-16%
|
54,879
|
71,176
|
-23%
|
Cash cost per gold
ounce sold El
Castillo
|
$862
|
$976
|
-12%
|
$988
|
$942
|
5%
|
Cash cost per gold
ounce sold San
Agustin
|
$756
|
$910
|
-17%
|
$769
|
$849
|
-9%
|
Cash cost per gold
ounce sold
|
$802
|
$945
|
-15%
|
$872
|
$901
|
-3%
|
|
|
1
|
"g/t" refers to grams
per tonne.
|
2
|
"oz" refers to troy
ounce.
|
3
|
Produced ounces are
calculated as ounces loaded to carbon.
|
4
|
Expected recoverable
GEOs are based on the assumptions and parameters as set forth in
the El Castillo Complex Technical Report dated March 27,
2018. In periods where the Company mines and processes
material not specifically defined in a technical report (for
example: run-of-mine ore), management uses its best estimate of
recovery based on the information available. The El Castillo
mine is currently processing run-of-mine ore and has several years
of data to support run-of-mine recoveries.
|
5
|
Please refer to the
section below entitled "Non-IFRS Measures" for a discussion of this
Non-IFRS Measure.
|
Summary of Production Results at the El Castillo
Complex
The El Castillo Complex produced 23,662 GEOs at a
cash cost of $802 per gold ounce sold
during the second quarter of 2020 versus 28,017 GEOs at a cash cost
of $945 per gold ounce sold during
the second quarter of 2019 (see "Non-IFRS Measures" section).
Lower costs are primarily due to the reduction in strip ratio at
both mines and a weakening of the Mexican peso. El Castillo costs were also lower due to the
switch to processing run-of-mine ore and eliminating crushing and
related costs.
SECOND QUARTER 2020 LA COLORADA OPERATING STATISTICS
|
3 Months Ended
June 30
|
6 Months Ended
June 30
|
|
2020
|
2019
|
%
Change
|
2020
|
2019
|
%
Change
|
Mining (in 000s
except for
waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore
|
506
|
1,187
|
-57%
|
1,453
|
2,059
|
-29%
|
Tonnes
waste
|
1,737
|
5,934
|
-71%
|
6,420
|
11,900
|
-46%
|
Tonnes
mined
|
2,243
|
7,121
|
-69%
|
7,873
|
13,959
|
-44%
|
Tonnes per
day
|
25
|
78
|
-68%
|
43
|
77
|
-44%
|
Waste/ore
ratio
|
3.43
|
5.00
|
-31%
|
4.42
|
5.78
|
-24%
|
Tonnes
rehandled
|
0
|
0
|
|
0
|
0
|
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
leach pads
|
518
|
1,213
|
-57%
|
1,484
|
2,006
|
-26%
|
Tonnes direct to
leach pads
|
0
|
0
|
|
0
|
89
|
-100%
|
Production
|
|
|
|
|
|
|
Gold loaded to leach
pads (g/t)
|
0.42
|
0.46
|
-9%
|
0.38
|
0.45
|
-16%
|
Gold loaded to leach
pads (oz)
|
7,048
|
18,078
|
-61%
|
18,070
|
30,511
|
-41%
|
Projected recoverable
GEOs
loaded
|
5,607
|
14,188
|
-60%
|
14,038
|
24,006
|
-42%
|
Gold produced
(oz)
|
7,537
|
11,723
|
-36%
|
19,886
|
27,095
|
-27%
|
Silver produced
(oz)
|
26,554
|
35,485
|
-25%
|
80,869
|
90,258
|
-10%
|
GEOs
produced
|
7,869
|
12,196
|
-35%
|
20,897
|
28,298
|
-26%
|
Gold sold
(oz)
|
7,406
|
11,372
|
-35%
|
20,488
|
27,455
|
-25%
|
Silver sold
(oz)
|
28,410
|
34,788
|
-18%
|
82,608
|
92,090
|
-10%
|
GEOs sold
|
7,762
|
11,836
|
-34%
|
21,521
|
28,683
|
-25%
|
Cash cost per gold
ounce sold
|
$1,169
|
$894
|
31%
|
$1,074
|
$928
|
16%
|
|
|
1
|
"g/t" refers to grams
per tonne.
|
2
|
"oz" refers to troy
ounce.
|
3
|
Produced ounces are
calculated as ounces loaded to carbon.
|
4
|
Expected recoverable
GEOs are based on the assumptions and parameters as set forth in
the La Colorada Gold/Silver Mine Technical Report dated March 27,
2018. In periods where the Company mines material not
specifically defined in a technical report (for example: low grade
stockpile material), management uses its best estimate of recovery
based on the information available.
|
5
|
Please refer to the
section below entitled "Non-IFRS Measures" for a discussion of this
Non-IFRS Measure.
|
Summary of Production Results at La Colorada
La Colorada produced 7,869 GEOs at a cash cost
of $1,169 per gold ounce sold during
the second quarter of 2020 compared to 12,196 GEOs at a cash cost
of $894 per gold ounce sold during
the second quarter of 2019 (see "Non-IFRS Measures" section).
Higher costs are primarily due to lower gold grades and lower gold
ounces sold, as cash cost is calculated on a per-ounce-sold
basis.
Florida Canyon
While not attributed to Argonaut for
the second quarter of 2020, as the Alio Gold Inc. transaction
closed on July 1, 2020, during the
second quarter of 2020, the Florida Canyon mine produced 13,215
GEOs at a cash cost per gold ounce sold of $1,240.
During the second half of 2020, Argonaut anticipates making a
capital investment of approximately $10
million into the crushing and stacking circuit with the
expectation that this investment will lower operating costs in 2021
onward.
For more information regarding plans at Florida Canyon, please
refer to the updated life-of-mine plan detailed in the press
release dated July 3, 2020 and the
corresponding technical report, which is available on the Company's
website at www.argonautgold.com or at www.sedar.com.
2020 Guidance
Since resuming mining, crushing and
stacking activities on June 1, 2020,
the Company has not experienced significant disruptions to
production or its supply chain due to COVID-19. However, the
Company cautions that the global effects of COVID-19 are continuing
to evolve and given the uncertainty of the duration and magnitude
of the impact of COVID-19, the Company's production and cash cost
estimates are subject to a higher than normal degree of
uncertainty. The guidance discussed below does not reflect
any potential for additional suspensions or other significant
disruption to operations due to COVID-19.
On July 6, 2020, the Company
provided updated production, cost and capital guidance following
the re-instatement of mining, crushing and stacking activities on
June 1, 2020 and the closing of the
Alio Gold Inc. merger on July 1,
2020. No changes have been made to that guidance (see
July 6, 2020 press
release).
Argonaut Gold Second Quarter 2020 Operational and Financial
Results Conference Call and Webcast:
The Company will host
the second quarter 2020 conference call and webcast on Wednesday, August 12, 2020 at 9:00 am EDT.
Q2 Conference Call Information
Toll Free (North
America):
|
1-888-231-8191
|
International:
|
1-647-427-7450
|
Conference
ID:
|
6463827
|
Webcast:
|
www.argonautgold.com
|
Q2 Conference Call Replay:
Toll Free Replay Call
(North America):
|
1-855-859-2056
|
International Replay
Call:
|
1-416-849-0833
|
The conference call replay will be available from 12:00 pm EDT on August 12,
2020 until 11:59 pm EDT on
August 19, 2020.
Non-IFRS Measures
The Company has included certain
non-IFRS measures including "Cash cost per gold ounce sold",
"All-in sustaining cost per gold ounce sold", "Adjusted net
income", "Adjusted earnings per share – basic", "Net cash"
and "Free Cash Flow" 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. All-in sustaining cost per
gold ounce sold is equal to production costs less silver sales plus
general and administrative, exploration, accretion and other
expenses and sustaining capital expenditures divided by gold ounces
sold. Adjusted net income is equal to net income less foreign
exchange impacts on deferred income taxes, foreign exchange (gains)
losses, non-cash impairment write down (reversal) of
work-in-process inventory, unrealized (gains) losses on commodity
derivatives and care and maintenance expenses. Adjusted
earnings per share – basic is equal to adjusted net income divided
by the basic weighted average number of common shares outstanding.
Net cash is calculated as the sum of the cash and cash
equivalents balance net of debt as at the statement of financial
position date. Free cash flow is equal to the change in the
Company's net cash (cash and cash equivalents less debt),
excluding cash increases related to equity financings. The
Company believes that these measures provide investors with an
alternative view 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 management's discussion and analysis ("MD&A")
for full disclosure on non-IFRS measures.
This press release should be read in conjunction with the
Company's unaudited interim condensed consolidated financial
statements for the three and six months ended June 30, 2020 and associated MD&A, for the
same period, 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.
Qualified Person, Technical Information and Mineral
Properties Reports
Technical information included in this
release was supervised and approved by Brian Arkell, Argonaut's Vice President,
Exploration and a Qualified Person under National Instrument 43-101
("NI 43-101"). For further information on the Company's
material properties, please see the reports as listed below on the
Company's website or on www.sedar.com:
El Castillo
Complex
|
NI 43-101 Technical
Report on Resources and Reserves, El Castillo Complex,
Durango, Mexico dated March 27, 2018 (effective date of March 7,
2018)
|
La Colorada
Mine
|
NI 43-101 Technical
Report on Resources and Reserves, La Colorada
Gold/Silver Mine, Hermosillo, Mexico dated March 27, 2018
(effective date
of December 8, 2017)
|
Florida Canyon
Gold Mine
|
NI 43-101 Technical
Report on Mineral Resource and Mineral Reserve
Florida Canyon Gold Mine Pershing County, Nevada, USA dated July 8,
2020
(effective date June 1, 2020)
|
Magino Gold
Project
|
Feasibility Study
Technical Report on the Magino Project, Ontario, Canada
dated December 21, 2017 (effective date November 8,
2017)
|
Cerro del Gallo
Project
|
Pre-Feasibility Study
Technical Report on the Cerro del Gallo Project,
Guanajuato, Mexico dated January 31, 2020 (effective date of
October 24,
2019)
|
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 the pandemic virus outbreak and government, regulatory
and market responses thereto; commodity price volatility;
uncertainty of exploration and development; uncertainty in the
estimation of Mineral Reserves and Mineral Resources; permitting
risk; mineral and surface rights; undisclosed risks and liabilities
relating to the Alio business combination; risks that the
anticipated benefits of the Alio business combination will not be
realized or fully realized; statements with respect to estimated
production and mine life of the various mineral projects of
Argonaut; the benefits of the development potential of the
properties of Argonaut; the future price of gold, copper, and
silver; 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; the scope, duration and impact of the
COVID-19 pandemic; the scope, duration and impact of regulatory
responses to the pandemic on the employees, business and operations
of Argonaut and the broader market; variations in ore grade or
recovery rates; risks relating to international operations;
fluctuating metal prices and currency exchange rates; the ability
to realize synergies of recent M&A activity; possible exposure
to undisclosed risks of liabilities arising in relation to recent
transactions; 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. 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.
About Argonaut Gold
Argonaut Gold is a Canadian gold
company engaged in exploration, mine development and
production. Its primary assets are the El Castillo mine and San Agustin mine, which together form the El
Castillo Complex in Durango,
Mexico, the La Colorada
mine in Sonora, Mexico and the
Florida Canyon mine in Nevada,
USA. Advanced exploration projects include the Magino project
in Ontario, Canada, the Cerro del
Gallo project in Guanajuato,
Mexico and the Ana Paula project in Guerrero, Mexico. The Company holds
several other exploration stage projects, all of which are located
in North America.
For more information,
contact:
Argonaut Gold Inc.
Dan
Symons
Vice President, Investor Relations
Phone: 416-915-3107
Email: dan.symons@argonautgold.com
____________________________
|
1
|
GEOs are based on a
conversation ratio of 80:1 for silver to gold for 2020 and 75:1 for
2019. The silver to gold conversation ratio is based on the
three-year trailing average silver to gold ratios. These are
the referenced ratios for each year throughout the press
release.
|
2
|
Please refer to the
section entitled "Non-IFRS Measures" for a discussion of these
Non-IFRS Measures.
|
SOURCE Argonaut Gold Inc.