TORONTO, Jan. 16, 2018 /CNW/ - Argonaut Gold Inc.
(TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut")
announces gold equivalent ounce1 ("GEO" or "GEOs")
production of 34,987 during the fourth quarter ended December 31, 2017 ("Q4") and 126,704 during the
year ended December 31, 2017 ("YE"),
including 2,932 pre-commercial production GEOs at San Agustin. During Q4, production was 19,653
GEOs at the El Castillo Complex (8,707 from El Castillo and 10,946 from San Agustin) located in the State of Durango, Mexico and 15,334 GEOs at
the La Colorada Mine located near Hermosillo, Mexico. During 2017, the El
Castillo Complex and La Colorada Mine GEO production totaled 73,418
(including 2,932 GEOs of pre-commercial production from
San Agustin) and 53,286,
respectively. Management expects YE consolidated cash
costs2 to be slightly above the high end of the range of
2017 guidance of $725 to $775 per gold ounce sold. At YE, the Company had
a cash balance of $14 million and
$8 million drawn from its
$30 million corporate
revolver. All dollar amounts are expressed in United States dollars unless otherwise
specified.
Pete Dougherty, President &
CEO stated: "Production of 126,704 GEOs falls within our stated
2017 guidance of between 122,000 and 130,000 GEOs. At La Colorada we exceeded our expectation of
between 47,000 and 50,000 GEOs with production of 53,286 GEOs. At
San Agustin, we experienced a
slower than expected ramp up in the mine and slower than
anticipated flow rate to the leach pad. These issues have
since been resolved and mining and flow rates are now meeting
plan. We had several major accomplishments during 2017:
San Agustin construction was
completed on time and 25% under budget, we produced a positive
Feasibility Study for our Magino project detailing a project with
significantly lower initial capital requirements, a higher grade
profile, an attractive rate of return and we remain on track to
achieve our 60% growth target from 2016's approximate 122,000 GEO
production to 2019's projected production of over 200,000 GEOs.
2017 was a capital intensive year for the Company due to
San Agustin's construction, the
purchase of the San Juan mineral
concession from Fresnillo Plc and the acquisition of the Cerro del
Gallo project. Our main focus as a Company during 2018 will be
adding cash to the balance sheet through the free cash flow
generated by our
operations."
2018 Guidance
The Company anticipates it will produce between 165,000 to
180,000 GEOs during 2018 at a cash cost2 of between
$700 to $800 per gold ounce sold and all-in sustaining
costs ("AISC")2 of between $850 to $950 per
gold ounce sold. The Company anticipates approximately 40% to 45%
of its full year production during the first half of 2018 and 55%
to 60% of production during the second half of 2018. Table 1 below
illustrates the 2018 production and cost guidance:
Table 1 – 2018 GEO
Production and Cost Guidance
|
|
|
El Castillo/San
Agustin(1)
Complex
|
La Colorada
|
Consolidated
|
GEO
Production
|
In
000s
|
105 – 115
|
60 – 65
|
165 –
180
|
Cash costs(2)
(3)
|
$ per
oz/Au
|
700 –
800
|
700 – 800
|
700 –
800
|
AISC(2)
(3)
|
$ per
oz/Au
|
|
|
850 –
950
|
(1)
|
Anticipated
production from El Castillo and San Agustin is between 60,000 to
65,000 GEOs at a cash cost of $850
to $950 per gold ounce sold and 45,000 to 50,000 GEOs at a cash
cost of $500 to $600 per gold ounce sold,
respectively.
|
(2)
|
Assumes a MXN:USD
exchange rate of 18:1.
|
(3)
|
Please refer to
section "Non-IFRS Measures" below for a discussion of these
non-IFRS measures.
|
The Company plans to invest $50 to
$55 million in capital expenditures
during 2018. Table 2 below illustrates the projected capital
expenditures for 2018:
Table 2 – 2018
Capital Estimate ($M)(1)
|
|
|
Sustaining
|
7 – 8
|
Expansion
|
23 – 25
|
Stripping
|
17 – 18
|
Exploration
|
3 – 4
|
Total
|
50 –
55
|
(1)
|
Assumes exchanges
rates of MXN:USD of 18.1 and CAD:USD of 1.3:1.
|
Table 3 below illustrates the projected capital expenditures for
2018 by project:
Table 3 – 2018
Capital Estimate by Project ($M)(1)
|
|
El Castillo/San
Agustin Complex
|
La Colorada
|
Magino, San
Antonio & Cerro
del Gallo
|
Consolidated
|
Total
|
26 – 28
|
17 – 18
|
7 – 9
|
50 –
55
|
(1)
|
Assumes exchanges
rates of MXN:USD of 18.1 and CAD:USD of 1.3:1
|
Three-Year Production Outlook
By 2019, the Company expects to produce over 200,000 GEOs
annually from its existing operations, which would reflect over 60%
production growth from 2016. This production growth is
primarily driven by the ramp up of the El Castillo Complex with the
addition of San Agustin and the
extension of mine life at El
Castillo subsequent to the San
Juan concession purchase from Fresnillo Plc (see press
release dated February 23, 2017) as
well as higher anticipated grades at La
Colorada as mining transitions to the El Creston pit. Table
3 illustrates the Company's projected three-year production
outlook:
Table 3 –
Three-Year GEO Production Outlook
|
Year
|
El Castillo/San
Agustin Complex
GEO Production
(000s)
|
La Colorada
GEO
Production
(000s)
|
Consolidated
GEO
Production
(000s)
|
2018
|
105 – 115
|
60 – 65
|
165 –
180
|
2019
|
140 – 150
|
70 – 75
|
210 –
225
|
2020
|
150 – 160
|
60 – 65
|
210 –
225
|
Management Team
The Company is pleased to announce the hiring of Brian Arkell as Vice President,
Exploration. Mr. Arkell has over 30 years of worldwide
experience in exploration, resource development and mine
operations. Mr. Arkell previously served as Chief Executive
Officer, President and Director of Caza Gold Corp. from 2014 to
2017. Prior to his role leading Caza
Gold, he served as Senior Vice President of Exploration and
Corporate Development for Rio Novo Gold Inc. from 2011 through
2013. Prior to this, he held a variety of senior positions at
Newmont Mining Co., including Director of Geology Canada &
Hope Bay, Director of Geology and
Exploration, South America,
Geology Manager at the Waihi Gold Project in New Zealand and Manager of Mine Geology for
the Yanacocha Mine in Peru. He has also served as Chief
Geologist at the Batu Hijau and Mesel Mines in Indonesisa, as well
as holding various positions in Nevada and the Pacific Northwest. Mr. Arkell
studied geology and engineering at New Mexico
Institute of Mining and Technology (M.S.) and at the
University of Maryland (B.S.). He is a
Registered Member of SME, Fellow of AusIMM, and Fellow of SEG. He
is a Qualified Person (QP) under Canadian NI 43-101 Standards, as
well as a Competent Person under Australian JORC Code.
Pete Dougherty, President and CEO
commented: "I'm very pleased to welcome Brian to the Argonaut
team. His wealth of experience in exploration and resource
development are tremendous assets for the Company. I also want
to extend the Company's gratitude to Tom
Burkhart, our former Vice President, Exploration, for
remaining on as a consultant following his retirement in
March 2017 until a suitable
replacement could be found."
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 after
market close on February 22, 2018 and
will host a conference call and webcast on February 23, 2018 at 8:30
am EST to discuss the results.
Fourth Quarter and
Year End Conference Call Information for February 23,
2018:
|
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:
|
5687488
|
The conference call replay will be available from 11:30 am EST on February
22, 2018 to March 2, 2018.
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.
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 San
Agustin mine, which together form the El Castillo Complex 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, the Cerro del
Gallo project in Guanajuato,
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 70:1 for silver
to gold ounces ratio which is the referenced ratio 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.