TORONTO, Jan. 16, 2017 /CNW/ - Argonaut Gold Inc.
(TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut")
announces gold equivalent ounce1 ("GEO" or "GEOs")
production of 34,384 during the fourth quarter ended December 31, 2016 ("Q4") and 122,097 during the
year ended December 31, 2016 ("YE").
During Q4, production was 16,747 GEOs at its 100% owned El
Castillo Mine ("El Castillo") located in the State of Durango, Mexico and 17,637 GEOs at
its 100% owned La Colorada Mine ("La Colorada") located near
Hermosillo, Mexico. During
2016, El Castillo and La Colorada
GEO production totaled 62,766 and 59,331, respectively.
Management expects YE consolidated cash costs2 to be
below the lower end of the range of revised 2016 guidance of
$825 to $875 per gold ounce sold.
At YE, the Company had a cash balance of
$42 million and $30 million available on an undrawn corporate
revolver. All dollar amounts are expressed in United States dollars unless otherwise
specified.
Pete Dougherty, President &
CEO stated: "Production at El
Castillo normalized during the fourth quarter after a
challenging third quarter, while La
Colorada provided consistent production throughout
2016. The 34,384 GEOs of production during the fourth quarter
represents our strongest quarter of the year and also is the
largest quarterly production total since the second quarter of
2015. I'm also pleased to report that construction at
San Agustin is advancing on
schedule and on budget. With first gold production from
San Agustin targeted for the third
quarter of this year and the following ramp up, we expect our
highest quarterly production and lowest costs during the fourth
quarter of 2017. Looking forward in terms of operations, we
remain focused on operating in a safe and environmentally conscious
manner while providing production growth over the next several
years as we construct and ramp up operations at San
Agustin."
2017 Guidance
The Company anticipates it will produce between 115,000 to
130,000 GEOs during 2017 at a cash cost2 of between
$725 to $775 per gold ounce sold and
an all-in sustaining costs ("AISC")2 of between
$910 to $960 per gold ounce
sold. Due to the anticipated start up at San Agustin during the third quarter 2017 and
the following ramp up, the Company expects the fourth quarter 2017
to provide the strongest production and lowest costs during
2017. Table 1 below illustrates the 2017 production and cost
guidance:
Table 1 – 2017 Production and Cost
Guidance
|
|
El Castillo/San
Agustin(1)
Complex
|
La Colorada
|
Consolidated
|
GEO
Production
|
In
000s
|
70 – 80
|
45 – 50
|
115 –
130
|
Cash costs(2)
(3)
|
$ per
ounce
|
760 - 810
|
675 - 725
|
725 –
775
|
AISC(2)
(3)
|
$ per
ounce
|
|
|
910 –
960
|
(1) San
Agustin guidance reflects full year expected production and
cost guidance. Production and costs prior to declaration of
commercial production will be capitalized on the balance
sheet.
(2) Assumes a MXN:USD exchange rate of
19:1.
(3)Please refer to section
"Non-IFRS Measures" below for a discussion of these non-IFRS
measures.
The Company plans to invest $75.8
million in capital expenditures during 2017, primarily in
the areas of construction at San
Agustin ($34.0 million) and
capitalized stripping at the El Creston pit at La Colorada ($18.7
million). Table 2 below illustrates the projected
capital expenditures for 2017:
Table 2 – 2017 Capital Estimate
($M)(1)
|
El Castillo
|
San Agustin
|
La Colorada
|
Magino, San
Antonio & Other
|
Consolidated
|
Sustaining
|
3.7
|
1.0
|
1.9
|
0.0
|
6.6
|
Expansion
|
3.4
|
34.0
|
3.4
|
5.5
|
46.3
|
Stripping
|
2.6
|
0.3
|
18.7
|
0.0
|
21.6
|
Exploration
|
0.0
|
0.2
|
0.4
|
0.7
|
1.3
|
Total
|
9.7
|
35.5
|
24.4
|
6.2
|
75.8
|
(1) Assumes exchanges rates of MXN:USD of 19.1 and
CAD:USD of 1.3:1.
Over the next three years, the Company expects production at the
El Castillo pit to decrease
annually and production at San
Agustin to ramp up resulting in overall production growth at
a lower cost at the El
Castillo/San Agustin Complex. At La Colorada, the
Company is investing in a significant capital stripping program to
open the El Creston pit during 2017 with the goal of increasing
annual production at La Colorada
over the next several years. The Company is currently
updating its life of mine plans and intends to publish these during
the first quarter 2017 in conjunction with the filing of its Annual
Information Form.
The Company advises that it will no longer pre-release its
first, second and third quarter production results, unless there is
a material change which would require such an announcement, and
will publish its operating results with its quarterly financial
disclosure.
Argonaut Gold Fourth Quarter and Year End Financial Results
Conference Call and Webcast
The Company anticipates
releasing its fourth quarter and year end financial results before
market open on March 13, 2017 and
will host a conference call and webcast on March 13, 2017 at 8:30 am
EDT to discuss the results.
Fourth Quarter and Year End Conference Call Information for
March 13, 2017:
Toll Free (North
America): 1-888-231-8191
International: 1-647-427-7450
Webcast: www.argonautgold.com
Fourth Quarter and Year End Conference Call
Replay:
Toll Free Replay Call (North America): 1-855-859-2056
International Replay Call: 1-416-849-0833
Passcode: 54191629
The conference call replay will be available from 11:30 am EDT on March 13,
2017 to March 27, 2017.
Non-IFRS Measures
The Company has included certain
non-IFRS measures including "Cash cost per gold ounce sold" and
"All-in sustaining cost per gold ounce sold" in this press release.
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 expenses,
exploration expenses, accretion of reclamation provision and
sustaining capital expenditures divided by gold ounces sold.
The Company believes that these measures provide investors
with an improved ability to evaluate the performance of the
Company. Non-IFRS measures do not have any standardized
meaning prescribed under IFRS. Therefore they may not be comparable
to similar measures employed by other companies. The data is
intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Please see the
management's discussion and analysis ("MD&A") for full
disclosure on non-IFRS measures.
Cautionary Note Regarding Forward-looking
Statements
This press release contains certain
"forward-looking statements" and "forward-looking information"
under applicable Canadian securities laws concerning the proposed
transaction and the business, operations and financial performance
and condition of Argonaut Gold Inc. ("Argonaut" or "Argonaut
Gold"). Forward-looking statements and forward-looking
information include, but are not limited to, statements with
respect to estimated production and mine life of the various
mineral projects of Argonaut; synergies and financial impact of
completed acquisitions; the benefits of the development potential
of the properties of Argonaut; the future price of gold, copper,
and silver; the estimation of mineral reserves and resources; the
realization of mineral reserve estimates; the timing and amount of
estimated future production; costs of production; success of
exploration activities; and currency exchange rate fluctuations.
Except for statements of historical fact relating to
Argonaut, certain information contained herein constitutes
forward-looking statements. Forward-looking statements are
frequently characterized by words such as "plan," "expect,"
"project," "intend," "believe," "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. Forward-looking statements are based
on the opinions and estimates of management at the date the
statements are made, and are based on a number of assumptions and
subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from
those projected in the forward-looking statements. Many of
these assumptions are based on factors and events that are not
within the control of Argonaut and there is no assurance they will
prove to be correct.
Factors that could cause actual results to vary materially from
results anticipated by such forward-looking statements include
changes in market conditions, variations in ore grade or recovery
rates, risks relating to international operations, fluctuating
metal prices and currency exchange rates, changes in project
parameters, the possibility of project cost overruns or
unanticipated costs and expenses, labour disputes and other risks
of the mining industry, failure of plant, equipment or processes to
operate as anticipated. 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 Thomas Burkhart, Argonaut Gold's Vice President
of 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
Mine
|
NI 43-101 Technical
Report on Resources and Reserves, Argonaut Gold Inc., El Castillo
Mine, Durango State, Mexico dated February 24, 2011 (effective date
of November 6, 2010)
|
La Colorada
Mine
|
NI 43-101 Preliminary
Economic Assessment La Colorada Project, Sonora, Mexico dated
December 30, 2011 (effective date of October 15, 2011)
|
San Agustin
Project
|
NI 43-101 Technical
Report and Preliminary Economic Assessment San Agustin Heap Leach
Project, Durango, Mexico dated June 10, 2016 (effective date of
Resources April 29, 2016)
|
Magino Gold
Project
|
Preliminary
Feasibility Study Technical Report on the Magino Project, Wawa,
Ontario, Canada dated February 22, 2016 (effective date January 18,
2016)
|
San Antonio Gold
Project
|
NI 43-101 Technical
Report on Resources, San Antonio Project, Baja California Sur,
Mexico dated October 10, 2012 (effective date of September 1,
2012)
|
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 and the construction stage San Agustin project in Durango, Mexico and the production stage
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 Company also has
several exploration stage projects, all of which are located in
North America.
----------------------
1
|
GEOs are based on
conversion ratio of 65:1 for silver to gold ounces ratio for 2016
and 70:1 for 2017 and are the referenced ratios throughout this
press release.
|
2
|
Please refer to
section "Non-IFRS Measures" below for a discussion of these
non-IFRS measures.
|
SOURCE Argonaut Gold Ltd.