Rupert Resources

Argonaut Gold Announces Record Quarterly and Annual Revenue and Cash Flow from Operating Activities; Provides Fourth Quarter and Full Year Financial and Operating Results

TORONTO, Feb. 25, 2021 /CNW/ - 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, 2020.  For the fourth quarter 2020, the Company reports record quarterly revenue of $100.8 million, adjusted net income1 of $20.8 million or adjusted earnings per basic share1 of $0.07 and net income of $18.0 million or earnings per basic share of $0.06, derived from the sale of 53,478 gold equivalent ounces2 ("GEO" or "GEOs"), which generated record quarterly cash flow before changes in working capital of $39.5 million.  For the full year 2020, the Company reports record annual revenue of $319.7 million, adjusted net income1 of $48.3 million or adjusted earnings per basic share1 of $0.21 and net income of $14.2 million or earnings per basic share of $0.06, derived from the sale of 179,169 GEOs, which generated record annual cash flow from operations before working capital changes of $95.0 million.  All dollar amounts are expressed in United States dollars unless otherwise specified.

______________

1 

See "Non-IFRS Measures" section.

2 

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 ratio.

CEO Commentary

Pete Dougherty, President and CEO stated: "During 2020, we put the Company in a fantastic position to execute on our transition strategy from a short mine life, high-cost junior producer to a long mine life, lower cost intermediate producer through the permitting and financing achievements for the Magino project in Ontario, Canada, leading to a construction decision, and the acquisition of the Florida Canyon mine in Nevada, USA.  As we look to 2021, we are focused on continuing to execute on this strategy now that the pieces are in place to do so, as well as the exploration upside at the Magino and the Florida Canyon districts."

The table below outlines the Company's performance compared to updated full-year guidance:

 


Full Year 2020


Guidance1

GEO production2

203,483

200,000 – 215,000

Cash cost per gold ounce sold2,3

$936


$925 – $1,025

AISC per gold ounce sold2,3

$1,244


$1,225 – $1,350

Capital (including exploration
and excluding Magino
construction capital)2


$60 million


$58 million – $64 million

Magino construction capital


$19 million


$35 million – $40 million

1 As presented in the third quarter 2020 financial and operating results press release dated November 5, 2020.
2 Florida Canyon production during Q1 2020 and Q2 2020 was under Alio Gold Inc. prior to the closing of the merger between Alio Gold Inc. and Argonaut on July 1, 2020.  2020 GEO production and capital guidance estimated the combined full year 2020 production from the El Castillo, San Agustin, La Colorada and Florida Canyon.  Cash cost and AISC guidance do not include costs associated with Florida Canyon prior to Argonaut's ownership.
3 See "Non-IFRS Measures" section.

The Company achieved its updated GEO production, cash cost, AISC and capital guidance. The Magino project was approved for construction in October 2020 and a fixed-bid contract covering approximately 40% of the initial project capital was announced early January 2021.  Fourth quarter 2020 spending on Magino construction capital was approximately $19.3 million, with the balance of the estimated 2020 spend, primarily related to the timing of procurement of long-lead time equipment, shifting from December 2020 to January 2021 given the timing of execution of the fixed-bid contract.

Key operating and financial statistics for the three months and year ended December 31, 2020 are outlined in the following table:

 

3 months ended  
December 31

%
Change

Year ended
December 31

%
Change

2020

2019

   20201

2019

Financial Data (in millions except for earnings (loss) per share)

Revenue

$100.8

$72.1

40%

$319.7

$268.9

19%

Net income (loss)

$18.0

($107.5)

117%

$14.2

($93.1)

115%

Earnings (loss) per share

$0.06

($0.60)

110%

$0.06

($0.52)

112%

Adjusted net income2

$20.8

$2.7

670%

$48.3

$13.0

236%

Adjusted earnings per share – basic2

$0.07

$0.01

600%

$0.21

$0.07

171%

Cash flow from operating activities
before changes in non-cash operating
working capital

$39.5

$27.2

45%

$95.0

$73.8

29%

Cash and cash equivalents

     

$214.2

$38.8

452%

Net cash2

     

$214.2

$28.8

644%

Gold Production and Cost Data

GEOs loaded to the pads3

113,463

101,348

12%

371,344

361,599

3%

GEOs projected recoverable3,4

65,426

46,608

40%

191,039

199,436

(4%)

GEOs produced3,5

56,985

47,521

20%

179,003

186,615

(4%)

GEOs sold3

53,478

48,843

9%

179,169

194,269

(8%)

Average realized sales price

$1,882

$1,484

27%

$1,789

$1,390

29%

Cash cost per gold ounce sold2

$910

$1,441

(37%)

$936

$1,041

(10%)

All-in sustaining cost per gold ounce sold2

$1,189

$1,690

(30%)

$1,244

$1,299

(4%)

1 Year ended December 31, 2020 reflects Florida Canyon operations for the period of Argonaut ownership from July 1, 2020 to December 31, 2020.
2 Please refer to the section below entitled "Non-IFRS Measures" for a discussion of these Non-IFRS Measures.
3GEOs 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.
4Expected recoverable GEOs are based on the assumptions and parameters as set forth in the El Castillo Complex Technical Report dated March 27, 2018, the La Colorada Gold/Silver Mine Technical Report dated March 27, 2018 and the Florida Canyon Technical Report dated July 8, 2020.  In periods where the Company mines material not specifically defined in a technical report (for example: run-of-mine ore or low grade stockpile material), management uses its best estimate of recovery based on the information available.
5Produced ounces are calculated as ounces loaded to carbon.

2020 and Recent Company Highlights:

  • Corporate Highlights:
    • Full year 2020:
      • Record annual revenue of $319.7 million.
      • Record annual cash flow from operating activities before changes in non-cash operating working capital of $95.0 million.
      • Completed at-market merger with Alio Gold Inc. ("Alio") creating a North American, diversified intermediate gold producer.
      • Closed C$126.5 million bought deal equity financing to fund Magino construction.
    • Fourth quarter 2020
      • Closed $57.5 million bought deal convertible debenture financing to fund Magino construction.
      • Extended and expanded corporate revolving credit facility for up to $125 million, which is fully undrawn.
      • Set new record for quarterly GEO production during the fourth quarter 2020.
      • Entered into a contingent agreement to sell the Ana Paula project.
      • Closed a C$11.5 million bought deal private placement of flow-through shares to fund further exploration at Magino.
    • Subsequent to year end 2020:
      • Closed a C$26.5 million bought deal of flow-through shares to fund qualifying development expenditures at Magino.
  • Social and Environmental Responsibility:
    • Received nationally awarded Environmental Socially Responsible Company recognition for the ninth consecutive year at both the El Castillo Complex and La Colorada mine.
    • La Colorada mine recognized as a leader in Social Responsibility by Clúster Minero de Sonora A.C.
    • Commenced and continued COVID-19 support for communities in Mexico, including sanitization of homes and businesses and donations of hygiene supplies.
    • Year-round voluntary support for Safe Haven Wildlife Sanctuary in Imlay, Nevada.
    • High school student scholarship donations for the Mining Industry Foundation in Winnemucca, Nevada.
  • El Castillo Complex:
    • Produced 110,049 GEOs despite a two-month suspension of mining, crushing and stacking operations due to the Mexican Federal government decree at the onset of the COVID-19 pandemic.
    • Reduced cash cost per gold ounce sold by 24% and cost per tonne of ore processed by 34% at El Castillo compared to 2019 (see "Non-IFRS Measures" section).
    • Reduced cash cost per gold ounce sold by 10% and cost per tonne of ore processed by 10% at San Agustin compared to 2019 (see "Non-IFRS Measures" section).
  • La Colorada:
    • Produced 46,371 GEOs despite a two-month suspension of mining, crushing and stacking operations due to the Mexican Federal government decree at the onset of the COVID-19 pandemic.
    • Reduced cash cost per gold ounce sold by 11% and cost per tonne of ore processed by 4% compared to 2019 (see "Non-IFRS Measures" section).
  • Florida Canyon:
    • Filed updated life-of-mine plan National Instrument ("NI") 43-101 Technical Report demonstrating over $325 million of mine site, after-tax free cash flow at $1,700 per ounce gold.
  • Magino:
    • Made decision to advance Magino into construction.
    • Executed a fixed-bid contract for a significant portion of the Magino project initial capital.
    • Continued to intersect high-grade gold mineralization below and adjacent to the planned pit and identified multiple new high-grade structures hosting multiple veins:
      • Elbow and Central zones showing promising high-grade gold continuity.
      • Intersected high-grade gold mineralization in new zones Scotland, #42, Sandy and South.
      • South zone strike length extended to 1.5 kilometers and remains open to the west and at depth.
    • Completed pivotal permitting milestone with the Federal Cabinet Decision to Authorize Schedule 2 amendment.
    • Obtained key Species at Risk permit for bat conservation.
    • Completed a major permitting milestone with the Magino Closure Plan filing.
    • Accommodation agreement framework agreed to with Garden River First Nation.
    • Completed and received authorization for Fisheries & Oceans Canada Fish Habitat Compensation Plan.
  • Cerro del Gallo:
    • Submitted and advanced an updated permit application for the project.

Financial Results – Fourth Quarter 2020

Record quarterly revenue was $100.8 million for the fourth quarter of 2020, an increase from $72.1 million for the fourth quarter of 2019.  During the fourth quarter of 2020, gold ounces sold totaled 51,497 at an average realized price per ounce of $1,882, compared to 47,073 gold ounces sold at an average price per ounce of $1,484 during the same period of 2019.  Gold ounces sold for the fourth quarter of 2020 increased compared to the same period in 2019 primarily due to the addition of the gold ounces sold from the Florida Canyon mine offset by decreases in gold ounces produced and sold at the El Castillo mine mostly related to the change from processing crushed ore to run-of-mine ore and the San Agustin mine related to lower gold grades.

Income from continuing operations for the fourth quarter of 2020 was $20.3 million or $0.07 per basic or diluted share compared to a loss from continuing operations of $107.5 million or $0.60 per share in the fourth quarter of 2019.  Loss from discontinued operations for the fourth quarter of 2020 was $2.3 million as a result of the Ana Paula project being classified as a held-for-sale asset as at December 31, 2020 and as a discontinued operation for 2020.  Net income for the fourth quarter of 2020 was $18.0 million or $0.06 per basic or diluted share compared to a net loss of $107.5 million or $0.60 loss per share for the fourth quarter of 2019.  The increase is net income is primarily related to record quarterly revenue of $100.8 million during the fourth quarter 2020 and the impact of the non-cash impairment of $111.0 million associated with the San Antonio project during the fourth quarter 2019.

Record quarterly cash flow from operating activities before changes in non-cash operating working capital was $39.5 million.  During the fourth quarter of 2020, cash increased by $36.3 million due primarily to $31.5 million of cash flows from operations (including changes in non-cash operating capital and other items), $54.0 million net proceeds from the convertible debentures, and $8.2 million from issuance of flow-through shares, partially offset by $34.8 million of capital expenditures incurred and the repayment of $22.1 million of debt, as compared to the fourth quarter of 2019 in which cash increased by $3.2 million due primarily to $17.7 million of cash flows from operations, partially offset by $11.2 million of capital expenditures incurred and the repayment of $4.0 million of debt. 

Financial Results – 2020

Record annual revenue for 2020 was $319.7 million, an increase from $268.9 million for 2019.  Gold ounces sold totaled 172,024 at an average realized price per ounce of $1,789 (compared to 187,802 gold ounces sold at an average price per ounce of $1,390 for 2019).  Gold ounces sold for 2020 decreased compared to the same period in 2019, primarily as a result of the temporary suspension of mining, crushing and stacking activities in response to the Mexican Federal Government decree related to the COVID-19.  Other factors include a decrease in gold ounces sold at the La Colorada and San Agustin mines due to a reduction in ore grades and a decrease in gold ounces sold at the El Castillo mine due to the change from processing crushed ore to run-of-mine ore, offset by an addition of the gold ounces sold from the Florida Canyon mine.  

Income from continuing operations for 2020 was $17.9 million or $0.08 per basic or diluted share compared to a loss from continuing operations of $93.1 million or $0.52 per share in 2019.  Loss from discontinued operations for 2020 was $3.7 million as a result of the Ana Paula project, which has been classified as a held-for-sale asset as at December 31, 2020 and as a discontinued operation for 2020.  Net income for 2020 was $14.2 million or $0.06 per basic or diluted share compared to a net loss of $93.1 million or $0.52 loss per share for the fourth quarter of 2019.  The increase is net income is primarily related to record annual revenue of $319.7 million in 2020 and the impact of the non-cash impairment of $111.0 million associated with the San Antonio project in 2019.

Record annual cash flow from operating activities before changes in non-cash operating working capital was $95.0 million.  During 2020, cash increased by $175.5 million due primarily to $111.7 million of cash flows from operations (including changes in non-cash operating working capital and other items), $89.4 million from the public offering of shares, $54.0 million from the convertible debentures, and $8.2 million from issuance of flow-through shares, partially offset by $28.7 of debt repayments and $63.9 million of capital expenditures incurred, as compared to 2019 in which cash increased by $23.4 million due primarily to $74.8 million of cash flows from operations, partially offset by $51.8 million of capital expenditures incurred. 

Operating Results – Fourth Quarter 2020

During the fourth quarter of 2020, the Company achieved record quarterly production of 56,985 GEOs at a cash cost per gold ounce sold of $910 and an all-in sustaining cost ("AISC") per gold ounce sold of $1,189, compared to 47,521 GEOs at a cash cost of $1,441 per gold ounce sold and an AISC per gold ounce sold of $1,690 during the fourth quarter of 2019 (see "Non-IFRS Measures" section).  Higher GEO production is primarily related to the addition of the Florida Canyon mine following the acquisition of Alio on July 1, 2020.  Lower cash cost per gold ounce sold and AISC per gold ounce sold was primarily due to an impairment of work-in-progress inventory of $20.1 million at the El Castillo Complex and $12.1 million at the La Colorada mine in the fourth quarter of 2019, which increased the cash cost and AISC during the fourth quarter of 2019.

Operating Results – 2020

During 2020, the Company achieved production of 179,003 GEOs at a cash cost per gold ounce sold of $936 and an AISC per gold ounce sold of $1,244, compared to 186,615 GEOs at a cash cost per gold ounce sold of $1,041 and AISC per gold ounce sold of $1,299 in 2019 (see "Non-IFRS Measures" section).  Lower GEO production in 2020 is primarily related to the change from processing crushed ore to run-of-mine ore at the El Castillo mine and the two month suspension of mining, crushing and stacking activities at all Mexican operations due to COVID-19.  Lower production was partially offset by the addition of the Florida Canyon mine following the Alio acquisition on July 1, 2020.  Lower cash cost per gold ounce sold was primarily related to the inventory adjustment recorded during the fourth quarter of 2019.

Pete Dougherty commented: "I'm very pleased with how our organization worked with the various levels of the Mexican government to assist in the development of COVID-19 protocols for the Mexican mining industry that prioritize the safety and well-being of our workforces and the communities in which we operate.  While the two month temporary suspension of mining, crushing and stacking operations we experienced in 2020 clearly had an impact on all Mexican operations, we successfully and safely re-started operations and have experienced very minimal COVID-19 infections throughout our Mexican workforce due to our strict protocols."

FOURTH QUARTER AND FULL YEAR 2020 EL CASTILLO COMPLEX OPERATING STATISTICS

 

3 Months Ended Dec 31

Year Ended Dec 31

 

2020

2019

%
Change

2020

2019

%
Change

Mining (in 000s except
waste/ore ratio)

           

Tonnes ore El Castillo

2,910

1,890

54%

8,608

8,914

(3%)

Tonnes ore San Agustin

2,807

2,460

14%

9,261

8,453

10%

Tonnes ore

5,717

4,350

31%

17,869

17,367

3%

Tonnes waste El Castillo

3,107

3,052

2%

9,531

13,293

(28%)

Tonnes waste San Agustin

1,904

1,808

5%

6,171

6,166

0%

Tonnes waste

5,011

4,860

3%

15,702

19,459

(19%)

Tonnes mined El Castillo

6,017

4,942

22%

18,139

22,207

(18%)

Tonnes mined San Agustin

4,711

4,268

10%

15,432

14,619

6%

Tonnes mined

10,728

9,210

16%

33,571

36,826

(9%)

Tonnes per day El Castillo

65

54

20%

50

61

(18%)

Tonnes per day San Agustin

51

46

11%

42

40

5%

Tonnes per day

116

100

16%

92

101

(9%)

Waste/ore ratio El Castillo

1.07

1.61

(34%)

1.11

1.49

(26%)

Waste/ore ratio San Agustin

0.68

0.73

(7%)

0.67

0.73

(8%)

Waste/ore ratio

0.88

1.12

(21%)

0.88

1.12

(21%)

Leach Pads (in 000s)

           

Tonnes crushed to East leach pads El Castillo

0

714

(100%)

337

3,876

(91%)

Tonnes crushed to West leach pads El Castillo

0

755

(100%)

3

4,311

(100%)

Tonnes direct to leach pads El Castillo

2,911

306

851%

8,420

680

1138%

Tonnes crushed to leach pads San Agustin

2,888

2,382

21%

9,428

8,291

14%

Tonnes to leach pads

5,799

4,157

39%

18,188

17,158

6%

Production

           

Gold grade loaded to leach pads El Castillo (g/t)1

0.25

0.52

(52%)

0.37

0.41

(10%)

Gold grade loaded to leach pads San Agustin (g/t)1

0.31

0.35

(11%)

0.32

0.38

(16%)

Gold grade loaded to leach pads (g/t)1

0.28

0.42

(33%)

0.35

0.40

(13%)

Gold loaded to leach pads El Castillo (oz)2

23,148

29,584

(22%)

105,286

118,092

(11%)

Gold loaded to leach pads San Agustin (oz)2

28,778

26,815

7%

98,431

100,363

(2%)

Gold loaded to leach pads (oz)2

51,926

56,399

(8%)

203,717

218,455

(7%)

Projected recoverable GEOs loaded El Castillo4

11,852

11,642

2%

43,731

66,140

(34%)

Projected recoverable GEOs loaded San Agustin4

21,349

20,933

2%

72,430

72,981

(1%)

Projected recoverable GEOs loaded4

33,201

32,575

2%

116,161

139,121

(17%)

Gold produced El Castillo (oz)2,3

12,390

13,616

(9%)

45,305

65,145

(30%)

Gold produced San Agustin (oz)2,3

17,265

19,864

13%

59,695

61,842

(3%)

Gold produced (oz)2,3

29,655

33,480

(11%)

105,000

126,987

(17%)

Silver produced El Castillo (oz)2,3

14,213

20,988

(32%)

70,180

102,282

(31%)

Silver produced San Agustin (oz)2,3

108,553

85,449

27%

333,713

219,463

52%

Silver produced (oz)2,3

122,766

106,437

15%

403,893

321,745

26%

GEOs produced El Castillo3

12,568

13,896

(10%)

46,183

66,509

(31%)

GEOs produced San Agustin3

18,621

21,003

(11%)

63,866

64,768

(1%)

GEOs produced3

31,189

34,899

(11%)

110,049

131,277

(16%)

Gold sold El Castillo (oz)2

9,863

14,132

(30%)

43,815

68,971

(36%)

Gold sold San Agustin (oz)2

16,124

20,708

(22%)

58,189

65,273

(11%)

Gold sold (oz)2

25,987

34,840

(25%)

102,004

134,244

(24%)

Silver sold El Castillo (oz)2

14,213

20,988

(32%)

70,180

102,282

(31%)

Silver sold San Agustin (oz)2

98,029

76,599

28%

324,576

221,429

47%

Silver sold (oz)2

112,242

97,587

15%

394,755

323,711

22%

GEOs sold El Castillo

10,041

14,412

(30%)

44,692

70,335

(36%)

GEOs sold San Agustin

17,349

21,729

(20%)

62,246

68,225

(9%)

GEOs sold

27,390

36,141

(24%)

106,939

138,560

(23%)

Cash cost per gold ounce sold El Castillo5

$875

$2,095

(58%)

$908

$1,201

(24%)

Cash cost per gold ounce sold San Agustin5

$765

$894

(14%)

$780

$863

(10%)

Cash cost per gold ounce sold5

$806

$1,381

(42%)

$835

$1,036

(19%)

1"g/t" is grams per tonne.
2"oz" means troy ounce.
3Produced ounces are calculated as ounces loaded to carbon.
4Expected 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 material not specifically defined in a technical report (for example: run-of-mine ore or low grade stockpile material), management uses its best estimate of recovery based on the information available.
5Please 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 – Fourth Quarter 2020

During the fourth quarter of 2020, the El Castillo Complex produced 11% fewer GEOs at a cash cost per gold ounce sold 42% less than during the fourth quarter of 2019.  Lower GEO production was primarily due to a 33% reduction in gold grades loaded to the leach pads associated with the change from crushed ore to run-of-mine ore, which lowered unit costs and allowed for lower grade ore to become economic.  This was partially offset by a 21% reduction in overall waste to ore strip ratio.  Lower cash cost per gold ounce sold was primarily related to an inventory write-down in the fourth quarter of 2019. 

El Castillo produced 10% fewer GEOs at a cash cost per gold ounce sold 58% less than during the fourth quarter of 2019.  At El Castillo, 54% more ore tonnes were mined compared to the fourth quarter of 2019, partially to offset the 52% reduction in gold grade during this period, as lower grades became economic with the change from crushed ore to run-of-mine ore due to the associated reduction in unit costs, and also because during the fourth quarter of 2019, productivity was slowed due to water in the pit. 

San Agustin produced 11% fewer GEOs at a cash cost per gold ounce sold 14% less than during the fourth quarter of 2019.  At San Agustin, ore tonnes mined increased by 14% compared to the fourth quarter of 2019, primarily due to crusher throughput averaging better than 31,000 tonnes per day following the ramp up of the crusher expansion from 20,000 tonnes per day to 30,000 tonnes per day, which was completed in 2019, partially offset by 11% lower gold grade.

Summary of Production Results at the El Castillo Complex – 2020

During 2020, the El Castillo Complex produced 16% fewer GEOs at a cash cost per gold ounce sold 19% less compared to 2019.  Lower GEO production was primarily due to the two-month suspension of mining, crushing and stacking activities and lower production at El Castillo associated with the change from processing crushed ore to run-of-mine ore. 

El Castillo produced 31% fewer GEOs at a cash cost per gold ounce sold 24% less compared to 2019.  El Castillo experienced a 34% reduction in cost per tonne processed compared to 2019 by eliminated crushing early in 2020 and switching to run-of-mine ore processing. 

San Agustin produced 1% fewer GEOs at a cash cost per gold ounce sold 10% less compared to 2019.  San Agustin experienced a 10% reduction in cost per tonne processed compared to 2019, primarily due to optimizing crushing and stacking rates to available solution capacity following the crusher expansion from 20,000 tonnes per day to 30,000 tonnes per day, which was completed by the end of 2019.

FOURTH QUARTER AND FULL YEAR 2020 LA COLORADA OPERATING STATISTICS

 

3 Months Ended Dec 31

Year Ended Dec 31

 

2020

2019

%
Change

2020

2019

%
Change

Mining (in 000s except for waste/ore ratio)

           

Tonnes ore

1,363

1,115

22%

4,019

4,626

(13%)

Tonnes waste

3,974

5,778

(31%)

14,303

23,445

(39%)

Total tonnes

5,337

6,893

(23%)

18,322

28,071

(35%)

Tonnes per day

58

75

(23%)

50

77

(35%)

Waste/mineralized material ratio

2.92

5.18

(44%)

3.56

5.07

(30%)

Leach Pads (in 000s)

           

Tonnes crushed to leach pads

1,332

1,141

17%

4,058

4,478

(9%)

Tonnes direct to leach pads

44

5

780%

44

239

(82%)

Production

           

Gold grade loaded to leach pads (g/t)1

0.45

0.49

(8%)

0.43

0.51

(16%)

Gold loaded to leach pads (oz)2

19,872

17,872

11%

56,274

76,969

(27%)

Projected recoverable GEOs loaded4

16,929

14,033

21%

45,514

60,315

(25%)

Gold produced (oz)2,3

14,045

12,144

16%

44,340

53,208

(17%)

Silver produced (oz)2,3

36,570

35,863

2%

162,499

159,737

2%

GEOs produced3

14,502

12,622

15%

46,371

55,338

(16%)

Gold sold (oz)2

14,049

12,233

15%

44,820

53,558

(16%)

Silver sold (oz)2

39,105

35,213

11%

161,644

161,344

0%

GEOs sold

14,538

12,702

14%

46,841

55,709

(16%)

Cash cost per gold ounce sold5

$756

$1,613

(53%)

$937

$1,051

(11%)

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: run-of-mine ore or 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 – Fourth Quarter 2020

During the fourth quarter of 2020, the La Colorada mine produced 15% more GEOs at a cash cost per gold ounce sold 53% less than during the fourth quarter of 2019.  Higher GEO production was primarily due to a 17% increase in crushed tonnes to the leach pads, as La Colorada experienced productivity challenges during the fourth quarter of 2019 due to water in the pit.  Lower cash cost per gold ounce sold was primarily due to an inventory write-down during the fourth quarter of 2019.  Total tonnes mined decreased 23% compared to 2019, as the waste to ore strip ratio was 44% lower, and ore tonnes mined were set at the optimal rate to meet crusher throughput and solution capacity. 

Summary of Production Results at La Colorada – 2020

During 2020, the La Colorada mine produced 16% less GEOs at a cash cost per gold ounce sold 11% less compared to 2019.  Lower GEO production was primarily due to the two-month suspension of mining, crushing and stacking activities.  La Colorada experienced a 4% reduction in cost per tonne processed compared to 2019, primarily due to higher daily crusher throughput rates and better productivity after experiencing challenges with water in the pit during the second half of 2019. 

FOURTH QUARTER AND FULL YEAR 2020 FLORIDA CANYON OPERATING STATISTICS

 

3 Months
Ended Dec 31

Year Ended
Dec 31

 

2020

20201

Mining (in 000s except for waste/ore ratio)

   

Tonnes ore

2,251

4,346

Tonnes waste

3,060

5,907

Total tonnes

5,311

10,253

Tonnes per day

57

55

Waste/ore ratio

1.36

1.36

Leach Pads (in 000s)

   

Tonnes crushed to leach pads

1,965

3,890

Tonnes direct to leach pads

302

530

Production

   

Gold grade loaded to leach pads (g/t)2

0.29

0.29

Gold loaded to leach pads (oz)3

21,484

41,241

Projected recoverable GEOs loaded4

15,296

29,363

Gold produced (oz)3,4

11,202

22,406

Silver produced (oz)3,4

7,356

14,154

GEOs produced4

11,294

22,583

Gold sold (oz)3

11,461

25,199

Silver sold (oz)3

7,109

15,176

GEOs sold

11,550

25,389

Cash cost per gold ounce sold6

$1,335

$1,345

1 Includes operating statistics for the period of Argonaut ownership from July 1, 2020 to December 31, 2020. 
2 "g/t" refers to grams per tonne.
3 "oz" refers to troy ounce.
4 Produced ounces are calculated as ounces loaded to carbon.
5 Expected recoverable GEOs are based on the assumptions and parameters as set forth in the Florida Canyon Mine Technical Report dated July 8, 2020.  In periods where the Company mines material not specifically defined in a technical report (for example: run-of-mine ore or low grade stockpile material), management uses its best estimate of recovery based on the information available.
6 Please refer to the section below entitled "Non-IFRS Measures" for a discussion of this Non-IFRS Measure.

Summary of Production Results at Florida Canyon

As the Company's has only two quarters of operating history at Florida Canyon following the acquisition of Alio, the Company is not making comparisons to previous periods.  Florida Canyon produced 11,294 GEOs at a cash cost of $1,335 per gold ounce sold during the fourth quarter of 2020 (see "Non-IFRS Measures" section). 

During the fourth quarter 2020, the Company eliminated a re-handle of ore prior to the primary crusher by adding a drop box to the design.  Haul trucks can now dump ore directly into a box that feeds into the primary crusher.  Prior to the addition of the drop box, the primary crusher had to be loader fed, which required haul trucks to dump ore on the ground, a dozer to push the ore into a pile and a loader to feed to the primary crusher.  Currently, once ore goes through the primary and secondary crushers, it is loaded into haul trucks with a front-end loader and delivered to the leach pads via haul trucks. 

Argonaut has identified potentially significant operating cost savings once it can eliminate the re-handle on the back end of the secondary crushing by switching to a conveying and stacking system to transport crushed ore to the leach pads.  To achieve this, a minor modification to the Air Quality permit (Plan of Operations) is required.  While Argonaut views this to be a minor modification, the current US Federal administration has recently signed an executive order that requires all modifications, however minor, to be approved by one of four positions located in Washington, D.C.  Argonaut is currently working to determine how the current signing authority process will impact all minor permit modifications, including the modification required to optimize the Florida Canyon mine.  Argonaut believes the modification it is seeking will reduce greenhouse gas emissions at Florida Canyon, as the conveying and stacking system would be operated on grid power thus eliminating the need to run diesel haul trucks from the crusher to the leach pads.

Pete Dougherty commented: "Since closing the acquisition of the Florida Canyon mine on July 1, 2020, the first three months was spent by the Argonaut team getting to know the Florida Canyon team to gain a better understanding of the challenges and opportunities at the mine.  The second three months were spent initiating changes to allow for a more efficient and lower cost operation, such as completing the permitting to allow solution to the newly constructed leach pad, upgrading equipment, adding the drop box at the primary crusher and preparing and submitting the minor modification to the existing permit to allow us to automate transporation of crushed ore to the leach pads through a conveying and stacking sytem.  2021 will be about finalizing the changes necessary to take Florida Canyon to a larger production profile at lower operating costs."

Argonaut Gold Fourth Quarter and Year End 2020 Financial Results Conference Call and Webcast
The Company will host a conference call and webcast on February 26, 2021 at 9:00 am EST to discuss the fourth quarter and year ended 2020 financial and operating results.

Fourth Quarter and Year End 2020 Conference Call Information for February 26, 2021:

Toll Free (North America):                    

1-888-231-8191

International:                                          

 1-647-427-7450

Webcast:                                            

www.argonautgold.com   

 

Fourth Quarter and Year End 2020 Conference Call Replay:

 Toll Free Replay Call (North America):            

1-855-859-2056

 International Replay Call:                                 

1-416-849-0833

 Passcode:                                                            

8346749

 

The conference call replay will be available from 12:00 pm EST on February 26, 2021 to 11:59 pm EST March 4, 2021.

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" and "Net cash" 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 plus the total impact of impairment write downs related to work-in-process inventory less silver sales divided by gold ounces sold.  Adjusted cash cost per gold ounce sold is equal to production costs plus only the impact of non-cash impairment write downs related to the net realizable value of work-in-process inventory less silver sales divided by gold ounces sold.  AISC per gold ounce sold is equal to production costs plus the total impact of impairment write downs related to work-in-process inventory less silver sales plus general and administrative, exploration, accretion and other expenses and sustaining capital expenditures divided by gold ounces sold.  Adjusted AISC per gold ounce sold is equal to production costs plus only the impact of non-cash impairment write downs related to the net realizable value of work-in-process inventory 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 loss less foreign exchange impacts on deferred income taxes, foreign exchange (gains) losses, impairment write down (reversal) of work-in-process inventory, proceeds from legal proceedings, non-cash impairment loss (reversal) on certain non-current assets, unrealized (gains) losses on commodity derivatives and other operating expense (income).  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.  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 audited consolidated financial statements for the year ended December 31, 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 Reports", and under the Company's profile on SEDAR at www.sedar.com.

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 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 realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; estimated production and mine life of the various mineral projects of Argonaut; timing of approval for modifications to existing permits; permitting and legal processes in relation to mining permitting and approval; 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; 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", "should" 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 variations in ore grade or recovery rates, changes in market conditions, risks relating to the availability and timeliness of permitting and governmental approvals; 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's 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.

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 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)

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.  The Company also holds the construction stage Magino project, the advanced exploration stage Cerro del Gallo project and several other exploration stage projects, all of which are located in North America. 

For more information, contact:

Argonaut Gold Inc.
Dan Symons
Vice President, Corporate Development & Investor Relations
Phone:  416-915-3107
Email: This email address is being protected from spambots. You need JavaScript enabled to view it. 

Source: Argonaut Gold Inc.

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Argonaut Gold

Last Trade: C$2.95
Daily Change: 0.10 3.51
Daily Volume: 1,253,368
Market Cap: C$912.260M
Argonaut Gold Announces Results of Annual General Meeting of Shareholders
Argonaut Gold Announces Record Quarterly Production of 59,704 Gold Equivalent Ounces, Record Quarterly Revenue of $105.3 Million and Earnings per Share of $0.09
Argonaut Gold Receives Air Quality Permit Modification for Florida Canyon to Allow Installation and Operation of New Conveying and Stacking System
Argonaut Gold Drills High Grade Gold Veins Below the El Crestón Pit at its La Colorada Mine including 12.2 Metres at 98.9 g/t Gold and 30.3 g/t Silver and 21.3 Metres at 44.6 g/t Gold and 274.9 g/t Silver
Argonaut Gold Announces Release Date for First Quarter 2021 Operational and Financial Results
Argonaut Gold Strengthens Management Team and Provides Ana Paula Sale Update
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Argonaut Gold Announces 43% Increase in Mineral Reserves to 6.8 Million Contained Gold Ounces and 26% Increase in Measured and Indicated Mineral Resources to 13.1 Million Contained Gold Ounces Year-over-Year
Argonaut Gold Announces Closing of $26.5 Million Offering of Flow-Through Shares
Argonaut Gold Announces $23 Million Bought Deal Public Offering of Flow-Through Common Shares
Argonaut Gold Announces Major Milestone of Magino Closure Plan Filing
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