TORONTO, Feb. 16, 2017 /CNW/ - Argonaut Gold Inc.
(TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut") is
pleased to provide its three-year production outlook, updated
mineral reserves and resources at its operating mines and a general
corporate update. All dollar amounts are expressed in
United States dollars unless
otherwise specified.
Three-Year Production Outlook
Based on life-of-mine
planning at December 31, 2016, the
Company anticipates it will achieve production growth on a
gold equivalent ounce1 ("GEO") basis as its San Agustin and La
Colorada projects ramp up and lower the overall cost
profile. The Company's goal is to achieve annual all-in
sustaining costs per gold ounce sold2 at or below
$950. Table 1 below illustrates
the Company's three-year GEO production outlook:
Table 1 –
Three-Year GEO Production Outlook
|
Year
|
El
Castillo/San
Agustin(1) Complex
GEO Production
(000s)
|
La Colorada
GEO
Production
(000s)
|
Consolidated
GEO
Production
(000s)
|
2017
|
70 – 80
|
45 – 50
|
115 –
130
|
2018
|
90 – 100
|
65 – 70
|
155 –
170
|
2019
|
115 – 125
|
55 – 60
|
170 –
185
|
(1) San Agustin 2017 guidance
includes all expected production during the year. 2017
revenues and costs prior to declaration of commercial production
will be capitalized.
|
Mineral Reserve and Resource Estimates
Table 2 below
outlines the Company's Mineral Reserve and Resource estimates at
December 31, 2016. Mineral
Resources are presented inclusive of Mineral Reserves and do not
have demonstrated economic viability. There is no certainty
that all or any part of the Mineral Resources will be converted
into Mineral Reserves.
Table 2 –
Consolidated Mineral Reserve and Resource
Estimates(1)
|
Project
|
Category
|
Tonnes (millions)
|
Au Grade
(g/t)
|
Contained
Au Ounces
(millions)
|
Ag Grade
(g/t)
|
Contained
Ag Ounces (millions)
|
El
Castillo(2)
|
Proven &
Probable
|
22.4
|
0.42
|
0.30
|
|
|
Magino(3)
|
Proven &
Probable
|
105.4
|
0.89
|
3.02
|
|
|
Consolidated
Mineral Reserves
|
Proven &
Probable
|
127.8
|
0.81
|
3.32
|
|
|
El
Castillo(4)
|
Measured &
Indicated
|
39.3
|
0.38
|
0.49
|
|
|
San
Agustin(5)
|
Indicated
|
82.2
|
0.32
|
0.85
|
10.7
|
28.26
|
La
Colorada(6)
|
Indicated
|
29.7
|
0.59
|
0.56
|
10.4
|
9.93
|
Magino(7)
|
Indicated
|
143.8
|
0.88
|
4.07
|
|
|
San
Antonio(8)
|
Measured &
Indicated
|
65.1
|
0.83
|
1.74
|
|
|
Consolidated
Mineral Resources
|
Measured &
Indicated
|
360.1
|
0.66
|
7.71
|
10.6
|
38.19
|
El
Castillo(4)
|
Inferred
|
1.0
|
0.37
|
0.01
|
|
|
San
Agustin(5)
|
Inferred
|
7.0
|
0.29
|
0.06
|
11.0
|
2.46
|
La
Colorada(6)
|
Inferred
|
2.4
|
0.82
|
0.06
|
12.0
|
0.93
|
Magino(7)
|
Inferred
|
43.3
|
0.76
|
1.06
|
|
|
San
Antonio(8)
|
Inferred
|
6.2
|
0.34
|
0.07
|
|
|
Consolidated
Mineral Resources
|
Inferred
|
59.9
|
0.66
|
1.26
|
11.3
|
3.39
|
|
|
(1)
|
Mineral Resources are
presented inclusive of Mineral Reserves.
|
(2)
|
The Mineral Reserves
for El Castillo set out in the above table were updated internally,
are valid as of December 31, 2016 and reviewed by Mike Lechner and
Richard Rhoades, each of whom is a "qualified person" for purposes
of National Instrument 43-101 ("NI 43-101"). The reserve update
used a gold price of $1,200. Cut-off grades, depending on rock and
ore type, varied from 0.15 g/t for oxide to 0.44 g/t for silicified
sulphide.
|
(3)
|
The Mineral Reserves
for Magino set out in the table above were taken from the Magino
Technical Report dated February 22, 2016 (effective January 18,
2016). The Mineral Reserve was estimated at a gold price of
$1,200. The Probable Reserve study used a gold cutoff of 0.35
g/t. These amounts have been reviewed and confirmed by Thomas
Burkhart, who is a "qualified person" for purposes of NI
43-101.
|
(4)
|
The M&I Resource
and Inferred Resource for El Castillo in the above table were
updated internally, are valid as of December 31, 2016 and reviewed
Mike Lechner and Richard Rhoades, each of whom is a "qualified
person" for purposes of NI 43-101. The Mineral Resource update used
a gold price of $1,400. Cut-off grades, depending on rock and ore
type, varied from 0.091 g/t for oxide to 0.374 g/t for silicified
sulphide.
|
(5)
|
The Mineral Resources
for the San Agustin Gold-Silver Project set out in the table above
were taken from the San Agustin Technical Report dated June 10,
2016 (effective date of April 29, 2016). The Mineral Resource was
estimated at a gold price of $1,300 and silver price of $20. A gold
equivalent cutoff of 0.18 g/t was utilized for the resource. These
amounts have been reviewed and confirmed by Thomas Burkhart, who is
a "qualified person" for purposes of NI 43-101.
|
(6)
|
The M&I Resource
and Inferred Resource used for La Colorada in the above table were
updated internally, are valid as of December 31, 2016 and reviewed
by Mike Lechner and Richard Rhoades, each of whom is a "qualified
person" for purposes of NI 43-101. The Mineral Resource update used
a gold price of $1,400 and a silver price of $20. The gold
equivalent cutoff grade varied depending on deposit and ranged from
0.086 to 0.13 g/t.
|
(7)
|
The Mineral Resources
for the Magino Project set out in the table above were taken from
the Magino Technical Report dated February 22, 2016 (effective date
of January 18, 2016). The Mineral Resource was estimated at a gold
price of $1,300. The Indicate Resource study used a cutoff of 0.25
g/t gold. These amounts have been reviewed and confirmed by Thomas
Burkhart, who is a "qualified person" for purposes of NI
43-101.
|
(8)
|
The Mineral Resources
for the San Antonio Project set out in the table above were taken
from the San Antonio Technical Report dated October 10, 2012
(effective date of September 1, 2012). The gold resource was
estimated at a gold price of $1,500 using a cutoff grade of 0.11
g/t Au for oxide and transition and 0.15 g/t Au for sulphide. These
amounts have been reviewed and confirmed by Thomas Burkhart, who is
a "qualified person" for purposes of NI 43-101.
|
San Agustin Construction Progress
The Company is
pleased to report its San Agustin
project is currently tracking on schedule and budget with
construction approximately 26% complete and first gold production
anticipated during the third quarter of 2017. The crusher
pad, leach pad and pond construction are well underway and the
Company anticipates it will commence laying leach pad liner and
begin relocating the west crusher from El
Castillo prior to the end of the first quarter. The
San Agustin project has an initial capital budget of $43 million and is expected to produce an average
of approximately 80,000 GEOs per year at a cash cost per gold ounce
sold of approximately $650 (see
Non-IFRS Measures section). To view photos of the
San Agustin construction progress,
please visit:
http://www.argonautgold.com/gold_operations/san_agustin/construction_progress/
Currency Hedging
The Company has entered into a
$30 million Mexican peso/United States zero-cost collar program with
the purchase of call options at an average strike price of 20.00
Mexican pesos per US dollar and sale of put options at an average
strike price of 24.58 Mexican pesos per US dollar. The
contracts settle on a monthly basis between February and November
2017. There was no cost exposure to put this program in
place. This hedging strategy safeguards the Company to
currency volatility during the construction of its San Agustin project. The Company's 2017
budget assumed a 19:1 MXN:USD exchange rate and its San Agustin capital guidance assumed a 16:1
MXN:USD exchange rate.
Management Departure
Curtis
Turner, the Company's former Corporate Development Officer,
left the Company at the end of January
2017. The Company thanks Mr. Turner for his
contributions during his tenure with Argonaut Gold and extends its
best wishes to Mr. Turner in his future endeavours.
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 GEO is based on a conversion ratio of 70:1 for silver
to gold ounces and is the referenced ratio throughout the press
release.
2 Please refer to the section "Non-IFRS Measures" below
for a discussion of this non-IFRS measure.
SOURCE Argonaut Gold Ltd.