Fourth Quarter Net Income of $5.2 Million and Cash Flow from Operations of
$11.7 Million
TORONTO, Feb. 22, 2018 /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,
2017. The Company reports quarterly and full year net income
of $5.2 million and $23.9 million, respectively, or earnings per
share of $0.03 and $0.14, respectively, derived from the sale of
31,025 and 123,554 gold equivalent ounces1 ("GEO" or
"GEOs"), respectively, which generated cash flow from operations
before working capital changes of $11.7
million and $45.9 million,
respectively. During 2017, the Company produced 126,704 GEOs,
including pre-commercial production from the San Agustin mine of 2,932 GEOs. All dollar
amounts are expressed in United
States dollars unless otherwise specified (C$ represents
Canadian dollars).
CEO Commentary
Pete
Dougherty, President and CEO stated: "We made several
significant investments during 2017 that we feel will reward our
shareholders in both the near and long term. We made two
acquisitions, the San Juan mineral
concession adjacent to the El
Castillo mine and the Cerro del Gallo project in
Guanajuato, Mexico. At El
Castillo, we have already begun mining oxide ore in the
San Juan concession area, while at
Cerro del Gallo we intend to complete metallurgical test work and
prepare an internal economic analysis on the project during
2018. We completed construction of the San Agustin mine 28% under budget and with
zero lost time incidents. With the San Agustin mine online and functioning at
design capacity, and the throughput enhancements scheduled at
El Castillo and San Agustin this year, we are now in a
position to capitalize on our 2017 investments and lift our
production by more than 65% over the next two years with the
anticipation of generating solid free cash flow during 2018 and
2019. Furthermore, I'm proud of our team for the safety
performance improvements we made at our operations, the respect we
have shown for the environment and communities in which we operate
and our ability to deliver production towards the upper end of our
guidance range."
The San Agustin project was in
pre-production development until September
30, 2017. Therefore, GEOs produced prior to the
declaration of commercial production effective October 1, 2017 are excluded from the revenue,
sales, net income, adjusted net income, cash flows from operations,
cash cost and all-in sustaining cost figures for the year ended
December 31, 2017 presented in this
release.
|
|
|
|
|
|
3 months ended
December 31
|
Change
|
Year
ended December
31
|
Change
|
2017
|
2016
|
2017
|
2016
|
Financial Data (in
$USD millions except for earnings per share)
|
Revenue
|
$39.5
|
$35.3
|
12%
|
$155.1
|
$144.8
|
7%
|
Gross
profit
|
$8.2
|
$7.0
|
17%
|
$31.3
|
$30.6
|
2%
|
Net income
|
$5.2
|
$0.5
|
940%
|
$23.9
|
$4.3
|
456%
|
Earnings per share –
basic
|
$0.03
|
$0.00
|
-
|
$0.14
|
$0.03
|
367%
|
Adjusted net
income1
|
$6.4
|
$5.7
|
12%
|
$14.9
|
$14.5
|
3%
|
Adjusted earnings per
share – basic1
|
$0.04
|
$0.04
|
0%
|
$0.09
|
$0.09
|
0%
|
Cash flow from
operating activities before changes in non-cash operating working
capital
|
$11.7
|
$8.5
|
38%
|
$45.9
|
$35.0
|
31%
|
Cash and cash
equivalents
|
|
|
|
$14.1
|
$42.1
|
(67%)
|
Debt
|
|
|
|
$8.0
|
$0.9
|
(789%)
|
Gold Production
and Cost Data
|
GEOs loaded to the
pads2
|
68,108
|
68,201
|
0%
|
217,224
|
240,692
|
(10%)
|
GEOs projected
recoverable2,3
|
38,774
|
36,143
|
7%
|
126,755
|
125,462
|
1%
|
GEOs
produced2,4,5
|
34,987
|
34,384
|
2%
|
126,704
|
122,097
|
4%
|
GEOs
sold2
|
31,025
|
29,865
|
4%
|
123,554
|
117,176
|
5%
|
Average realized
sales price
|
$1,276
|
$1,186
|
8%
|
$1,257
|
$1,239
|
1%
|
Cash cost per gold
ounce sold1
|
$755
|
$746
|
1%
|
$787
|
$795
|
(1%)
|
All-in sustaining
cost per gold ounce sold1
|
$897
|
$894
|
0%
|
$922
|
$938
|
(2%)
|
|
|
|
|
|
|
|
1Please refer to the section below
entitled "Non-IFRS Measures" for a discussion of these Non-IFRS
Measures.
|
2Gold equivalent ounces ("GEO" or
"GEOs") are based on a conversion ratio of 70:1 for silver to gold
for 2017 and 65:1 for 2016. This is the referenced ratio for
each year throughout the release.
|
3Recoverable ounces – El Castillo
expected recovery rates: ROM oxide 50%, crushed oxide 70%, ROM
transition 40%, crushed transition 60%, crushed sulphides argillic
30% and crushed sulphides silicic 17%; San Agustin expected
recovery rates: gold 66% and silver 16%; La Colorada expected
recovery rates: gold 60% and silver 30%.
|
4Produced ounces are calculated as
ounces loaded to carbon.
|
5Year ended December 31, 2017
includes GEOs produced by San Agustin prior to declaration of
commercial production effective October 1, 2017.
|
2017 and Recent Company Highlights:
- Corporate Highlights:
-
- Acquisition of the San Juan
mineral concession adjacent to the El
Castillo mine, increasing the mineral concession footprint
from 200 hectares to 620 hectares
- Acquisition of the Cerro del Gallo project in Guanajuato, Mexico
- Successful C$45 million equity
financing, including the over-allotment option, primarily allocated
toward the San Juan mineral
concession acquisition and subsequent infill drill program
- Received nationally awarded Environmental Socially Responsible
Company recognition at both El
Castillo and La Colorada
for the fifth consecutive year
- Entered into zero cost collar Mexican peso ("MXN") to US dollar
("USD") contracts for $30 million
with weighted average downside protection of 17.9 MXN:1 USD and participation up to 22.5
MXN:1 USD from January 2018 to December
2018
- Increased corporate revolver from $30
million to $50 million with an
accordion feature providing for total availability of up to
$75 million.
- El Castillo:
-
- Operated with safety results significantly better than industry
standards.
- Achieved full year production of 59,000 gold ounces, only a 5%
decrease from 2016 despite a 37% year-over-year reduction in
crushing capacity due to the relocation of the West crusher to
San Agustin in the month of
March.
- Completed an approximate 25,000 metre infill drill campaign on
the acquired San Juan mineral
concession
- Increased Measured and Indicated Mineral Resources during the
first six months of 2017 by approximately 55% net of depletion (see
press release dated September 21,
2017)
- Initiated design improvements in the CR2 crusher to increase
crushing capacity from approximately 5,000 tonnes per day to 14,000
tonnes per day.
- Began construction of the Victoria leach pad.
- San Agustin:
-
- Project constructed with an initial capital investment of
approximately $31 million, which is
28% under budget from the initial capital estimate of $43 million.
- Achieved first gold pour on September
18, 2017.
- Achieved commercial production effective October 1, 2017.
- Completed construction with zero lost time incidents.
- La Colorada:
-
- Operated the entire year without a lost time injury.
- Compania Minera Pitalla S.A. de C.V., Argonaut's wholly owned
subsidiary that owns its La
Colorada mine, was awarded distinction at the highest level
for their accomplishments as an Environmentally and Socially
Responsible (ESR) company in the small to medium size
category.
- Invested in stripping the El Creston pit, the next pit to be
mined in the life-of-mine plan.
- Completed construction of Northeast leach pad phase three and
initiated construction on phase two.
- Magino:
-
- Completed Feasibility Study.
- Advanced Environmental Assessment process.
- Signed Collaborative Agreement with the Red Sky Métis
Independent Nation and Community Benefits Agreement with Missanabie
Cree First Nation.
- Continued to consult with and work towards agreements with
other Indigenous communities.
Financial Results – Fourth Quarter 2017
Revenue for
the three months ended December 31,
2017 was $39.5 million, an
increase from $35.3 million for the
three months ended December 31, 2016.
During the fourth quarter of 2017, gold ounces sold totaled
29,912 at an average realized price per ounce of $1,276 (compared to 28,891 gold ounces sold at an
average price per ounce of $1,186
during the same period of 2016).
Production costs for the fourth quarter of 2017 were
$23.9 million, an increase from
$22.6 million in the fourth quarter
of 2016 primarily due to the increase in gold ounces sold.
Cash cost per gold ounce sold (see Non-IFRS Measures section)
was $755 in the fourth quarter of
2017, comparable to $746 in the same
period of 2016. Depreciation, depletion and amortization
("DD&A") expense included in cost of sales for the fourth
quarter of 2017 totaled $7.4 million,
an increase from $5.7 million in the
fourth quarter of 2016, due to the increase in the average DD&A
expense per ounce in work-in-process inventory. As a result
of the non-cash impairment loss on non-current assets recorded
during the year ended December 31,
2015, the average DD&A in work-in-process inventory
decreased throughout 2016. During 2017, the average DD&A
in work-in-process inventory began increasing as the effect of the
non-cash impairment loss on average DD&A lessened.
General and administrative expenses for the fourth quarters of
2017 and 2016 were $2.9 million.
Losses on foreign exchange derivatives for the fourth quarter of
2017 were $0.6 million, compared to
nil in the fourth quarter of 2016, primarily due to unrealized
losses on the Company's outstanding zero-cost collar contracts on
the Mexican peso.
Other expense for the fourth quarter of 2017 was $1.2 million, comparable to $1.1 million in the fourth quarter of 2016.
Income tax recovery for the fourth quarter of 2017 was
$2.8 million compared to income tax
expense of $2.2 million in the same
period of 2016. The change is primarily due to the
recognition of a deferred tax asset related to the net operating
losses ("NOLs") from prior years of its subsidiary, Minera Real del
Oro S.A. de C.V. ("MRO"), which were
not previously recognized as the utilization of the NOLs became
probable with the declaration of commercial production at the
San Agustin mine effective
October 1, 2017.
Net income for the fourth quarter of 2017 was $5.2 million or $0.03 per basic share, an increase from
$0.5 million or $0.00 per share for the fourth quarter of
2016.
Financial Results – Year End 2017
Revenue for the year
ended December 31, 2017 was
$155.1 million, an increase from
$144.8 million for the year ended
December 31, 2016. Gold ounces
sold totaled 120,041 at an average realized price per ounce of
$1,257 (compared to 113,853 gold
ounces sold at an average price per ounce of $1,239 for 2016). Gold ounces sold
increased in 2017 primarily due to the commencement of commercial
production at the San Agustin mine
effective October 1, 2017.
Production costs for the year ended December 31, 2017 were $98.8 million, an increase from $94.2 million in 2016, primarily due to the
increase in gold ounces sold. Cash cost per gold ounce sold
(see Non-IFRS Measures section) was $787 for the year ended December 31, 2017, comparable to $795 in the same period of 2016. DD&A
expense included in cost of sales for the year ended December 31, 2017, totaled $25.0 million, an increase from $23.5 million for the year ended December 31, 2016, due to an increase in ounces
sold, as many of the mining assets are amortized on a
unit-of-production basis. Additionally, included in cost of
sales for 2016 is a non-cash impairment reversal of $3.6 million related to the net realizable value
of work-in-process inventory at the El
Castillo mine, as a result of an increase in the price of
gold during 2016.
General and administrative expenses for year ended December 31, 2017 were $11.7 million, an increase from $10.6 million for the year ended December 31, 2016, primarily due to employee
transition costs.
Finance expenses for the year ended December 31, 2017 were $1.3 million, an increase from $0.6 million for the year ended December 31, 2016, primarily due to accretion on
deferred cash consideration related to the acquisition of the
San Juan mineral concession
adjacent to the El Castillo
mine.
Gains on foreign exchange derivatives during the year ended
December 31, 2017 were $2.0 million, compared to nil for the year ended
December 31, 2016, primarily due to
the realized gains on the Company's zero-cost collar contracts on
the Mexican peso.
Other income for the year ended December
31, 2017 was $1.8 million, an
increase from other expense of $4.8
million in 2016, primarily due to differences in foreign
currency translation effects.
Income tax recovery for the year ended December 31, 2017 was $2.8
million compared to income tax expense of $10.0 million in the same period of 2016.
The change is primarily due to the foreign exchange effects
of the strengthening Mexican peso on the calculation of deferred
taxes during 2017, compared to the weakening Mexican peso during
2016 and the recognition of a deferred tax asset related to the
NOLs from prior years of its subsidiary, MRO, which were not
previously recognized as the utilization of the NOLs became
probable with the declaration of commercial production at the
San Agustin mine effective
October 1, 2017.
Net income for the year ended December
31, 2017 was $23.9 million or
$0.14 per basic share, an increase
from $4.3 million or $0.03 per share for the year ended December 31, 2016.
Operational Results – Fourth Quarter and Full Year
2017
The Company achieved its production guidance of between
122,000 and 130,000 GEOs (raised in August
2017 from the original guidance range of between 115,000 and
130,000 GEOs), producing 126,704 GEOs, including pre-commercial
production from the San Agustin
mine of 2,932 GEOs. La
Colorada was expected to produce between 47,000 and 50,000
GEOs and exceeded expectations with production of 53,286
GEOs. El Castillo was
expected to produce between 55,000 and 60,000 GEOs and met the
upper end of expectations with production of 59,540 GEOs. The
Company had anticipated combined pre-commercial and commercial
production of approximately 20,000 GEOs at its recently
commissioned San Agustin
mine. However, San Agustin
experienced a slower than anticipated ramp up, primarily relating
to slower than anticipated solution flow rates to the leach pad due
to a scaling issue that clogged pumps and drip hoses. The
Company has since modified its anti-scaling chemicals to respond to
water chemistry, has switched from drip hoses to sprinklers and has
continued to ramp up to planned flow rates since December
2017. During 2017, San
Agustin produced 13,878 GEOs, including 2,932 pre-commercial
production GEOs. Consolidated cash cost per gold ounce sold
of $787 slightly exceeded
expectations of between $725 and
$775 due to lower production from the
San Agustin mine (see non-IFRS
Measures disclosure).
Bill Zisch, Chief Operating
Officer, commented: "Overall, I'm pleased with the progress we made
during 2017 at our operations and look forward to continued
improvement during 2018. We improved our safety record,
increased productivity at our crushers and achieved our production
guidance despite initial ramp up challenges at San Agustin. San
Agustin is now delivering at plan and we have two crushing
circuit enhancements planned for 2018. At El Castillo, we
will increase throughput from approximately 20,000 tonnes per day
to 29,000 tonnes per day by the end of the first quarter. At
San Agustin, continued debottlenecking of the crushing and
conveying circuit alone may allow for a significant increase in
throughput. We should continue to see production growth at
our operations and quarter-over-quarter improvements throughout the
year."
|
FOURTH QUARTER
& FULL YEAR EL CASTILLO OPERATING STATISTICS
|
|
3 Months Ended
December 31
|
12 Months Ended
December 31
|
|
2017
|
2016
|
Change
|
2017
|
2016
|
Change
|
Mining
|
|
|
|
|
|
|
Tonnes ore
(000s)
|
1,940
|
2,993
|
(35%)
|
8,140
|
11,139
|
(27%)
|
Tonnes waste
(000s)
|
1,961
|
4,276
|
(54%)
|
10,407
|
16,450
|
(37%)
|
Tonnes mined
(000s)
|
3,901
|
7,269
|
(46%)
|
18,547
|
27,589
|
(33%)
|
Tonnes per day
(000s)
|
42
|
79
|
(47%)
|
51
|
75
|
(32%)
|
Waste/ore
ratio
|
1.01
|
1.43
|
(29%)
|
1.28
|
1.48
|
(14%)
|
Heap Leach
Pads
|
|
|
|
|
|
|
Tonnes crushed EAST
(000s)
|
1,323
|
1,214
|
9%
|
5,214
|
5,100
|
2%
|
Tonnes crushed CR2
(000s)
|
571
|
354
|
61%
|
2,181
|
605
|
260%
|
Tonnes overland
conveyor (000s)
|
0
|
1,262
|
(100%)
|
769
|
5,157
|
(85%)
|
Production
|
|
|
|
|
|
|
Gold grade
(g/t)1
|
0.38
|
0.37
|
3%
|
0.36
|
0.34
|
6%
|
Gold loaded to leach
pads (oz)2
|
23,109
|
35,236
|
(34%)
|
95,705
|
121,333
|
(21%)
|
Projected recoverable
gold (oz)3
|
14,683
|
18,372
|
(20%)
|
60,022
|
62,758
|
(4%)
|
Gold produced
(oz)4
|
8,551
|
16,632
|
(49%)
|
59,000
|
62,235
|
(5%)
|
Gold sold
(oz)
|
8,707
|
13,156
|
(34%)
|
62,194
|
57,741
|
8%
|
Cash cost per gold
ounce sold5
|
1,015
|
877
|
16%
|
918
|
884
|
4%
|
|
1"g/t" is
grams per tonne.
|
2"oz"
means troy ounce.
|
3Recovery
rates: ROM oxide 50%, crushed oxide 70%, ROM transition 40%,
crushed transition 60%, crushed sulfides argilic 30%, crushed
sulfides silicic 17%.
|
4Produced
ounces are calculated as ounces loaded to carbon.
|
5See
Non-IFRS Measures section.
|
Summary of Production Results at El Castillo
Increased crusher
throughput, primarily from the CR2 crusher, with similar grades
allowed for the placement of ounces on the pad that were only 30%
less than the prior year's quarter in spite of crushing capacity
having been reduced by about 45% for the quarter. Recoveries
during the quarter were lower than realized in the prior year
quarter; therefore, gold production was below the reduced
expectation associated with reduced crusher throughput, which led
to increased cash cost per ounce gold ounce sold (see Non-IFRS
measures section) during the fourth quarter of 2017.
For the year, gold production was down only 5% from the prior
year in spite of annual crushing capacity having been reduced by
37%, partially offset by a 6% increase in grade processed and
better than planned throughput at the CR2 crusher.
|
POST COMMERCIAL
PRODUCTION SAN AGUSTIN OPERATING STATISTICS
|
Period from
declaration of commercial production on October 1, 2017 to December
31, 2017
|
Mining
|
|
Mineralized material
tonnes (000s)
|
939
|
Tonnes waste
(000s)
|
404
|
Tonnes mined
(000s)
|
1,343
|
Tonnes per day
(000s)
|
15
|
Waste/mineralized
material ratio
|
0.43
|
Heap Leach
Pads
|
|
Crushed mineralized
material tonnes to pads (000s)
|
1,004
|
Production
|
|
Gold grade
(g/t)1
|
0.50
|
Gold loaded to leach
pads (oz)2
|
15,967
|
Projected recoverable
GEOs3
|
11,321
|
Gold produced
(oz)4
|
10,302
|
Silver produced
(oz)4
|
45,100
|
Gold sold
(oz)
|
8,309
|
Silver sold
(oz)
|
32,626
|
GEOs sold
|
8,775
|
Cash cost per gold
ounce sold5
|
$385
|
|
1"g/t" is
grams per tonne.
|
2"oz"
means troy ounce.
|
3Recovery
rates: gold 66% and silver 16%.
|
4Produced
ounces are calculated as ounces loaded to carbon.
|
5See
Non-IFRS Measures section.
|
Summary of Production Results at San Agustin
The San Agustin mine achieved commercial
production effective October 1, 2017.
The ramp up of mining and processing rates went as planned during
the pre-commercial production commissioning of the operation during
the month of September. During the period from declaration of
commercial production on October 1,
2017 to December 31, 2017, a
longer than anticipated ramp up of solution flow rates to the leach
pad impacted the production rates due to a scaling issue that
clogged the pumps and drip hoses, limiting solution flow to the
leach pad. The Company has since modified its anti-scaling
chemicals to respond to water chemistry, has switched from drip
hoses to wobblers and has continued to ramp up to planned flow
rates since December 2017. While solution flow rates were
temporarily reduced, mining and crushing rates were also slowed and
were restored to planned levels by the end of 2017.
|
FOURTH QUARTER
& FULL YEAR LA COLORADA OPERATING STATISTICS
|
|
3 Months Ended
December 31
|
12 Months Ended
December 31
|
|
2017
|
2016
|
Change
|
2017
|
2016
|
Change
|
Mining
|
|
|
|
|
|
|
Mineralized material
tonnes (000s)
|
1,109
|
1,062
|
4%
|
4,492
|
4,477
|
0%
|
Tonnes waste
(000s)
|
4,409
|
4,440
|
(1%)
|
18,864
|
15,935
|
18%
|
Tonnes mined
(000s)
|
5,518
|
5,502
|
0%
|
23,356
|
20,412
|
14%
|
Tonnes per day
(000s)
|
60
|
60
|
0%
|
64
|
56
|
14%
|
Waste/mineralized
material ratio
|
3.97
|
4.18
|
(5%)
|
4.20
|
3.56
|
18%
|
Tonnes rehandled
(000s)
|
10
|
0
|
-
|
39
|
50
|
(22%)
|
Heap Leach
Pads
|
|
|
|
|
|
|
Mineralized material
tonnes direct to pads (000s)
|
93
|
289
|
(68%)
|
383
|
469
|
(18%)
|
Crushed mineralized
material tonnes to pads (000s)
|
1,134
|
1,071
|
6%
|
4,490
|
4,598
|
(2%)
|
Production
|
|
|
|
|
|
|
Gold grade
(g/t)1
|
0.47
|
0.60
|
(22%)
|
0.54
|
0.55
|
(2%)
|
Gold loaded to leach
pads (oz)2
|
18,430
|
26,273
|
(30%)
|
84,050
|
89,654
|
(6%)
|
Projected recoverable
GEOs3
|
12,770
|
17,771
|
(28%)
|
55,412
|
62,704
|
(12%)
|
Gold produced
(oz)4
|
14,779
|
16,706
|
(12%)
|
50,796
|
56,492
|
(10%)
|
Silver produced
(oz)4
|
38,861
|
60,451
|
(36%)
|
174,330
|
184,503
|
(6%)
|
GEOs
produced4
|
15,334
|
17,637
|
(13%)
|
53,286
|
59,331
|
(10%)
|
Gold sold
(oz)
|
12,896
|
15,735
|
(18%)
|
49,538
|
56,112
|
(12%)
|
Silver sold
(oz)
|
34,404
|
55,802
|
(38%)
|
175,502
|
181,473
|
(3%)
|
GEOs sold
|
13,387
|
16,594
|
(19%)
|
52,045
|
58,904
|
(12%)
|
Cash cost per gold
ounce sold5
|
817
|
636
|
28%
|
691
|
704
|
(2%)
|
|
1"g/t" is
grams per tonne.
|
2"oz"
means troy ounce.
|
3Recovery
rates: gold 60% and silver 30%.
|
4Produced
ounces are calculated as ounces loaded to carbon.
|
5See
Non-IFRS Measures section.
|
Summary of Production Results at La Colorada
Lower grades, along with
less run-of-mine material hauled directly to the leach pad during
the fourth quarter of 2017, resulted in reduced production in the
fourth quarter compared to 2016.
For 2017, and excluding run-of-mine material hauled directly to
the leach pad, tonnes of mineralized material crushed were down
slightly (2%) and grades, related to the types of mineralized
material mined, were down 2% year-over-year. Both are
reasonably small variances, but when combined, they led to a 10%
reduction in GEO production year-over-year. Despite this
year-over-year reduction in GEO production, La Colorada still exceeded planned production
and beat our guidance by delivering 53,286 GEOs during 2017 – above
our estimate of between 47,000 and 50,000 GEOs.
2017 Capital
The Company forecasted 2017 capital
spending of approximately $118
million, including several one-time items such as
San Agustin construction
($35 million), the San Juan mineral concession purchase and
subsequent infill drill program ($28
million) and the Cerro del Gallo asset purchase
($14 million). Actual 2017
capital spend totaled approximately $110
million with the $8 million
positive variance primarily attributable to San Agustin construction being completed 28%
under budget.
2018 Guidance and Plans
In 2018, the Company plans to
produce between 165,000 and 180,000 GEOs (based on the three-year
historical average silver to gold ratio of 70:1). Cash cost
per ounce of gold sold (see Non-IFRS measures section) in 2018 is
expected to be between $700 and
$800. All-in sustaining cost in
2018 is expected to be between $850
and $950 per gold ounce sold (see
Non-IFRS measures section).
The Company plans to invest a total of between $50 million and $55
million on capital expenditures and exploration initiatives
in 2018, including between $26
million and $28 million at
El Castillo and San Agustin, between $17 million and $18
million at La Colorada and
between $7 million and $9 million at its development assets.
The Company's plans include:
El Castillo
- CR2 crusher enhancement to take El
Castillo throughput capacity from 20,000 tonnes per day to
29,000 tonnes per day by the end of the first quarter of 2018.
- Construction of the Victoria
leach pad and extension of the West leach pad.
San Agustin
- Continued optimizing of the crushing and conveying circuit,
which may allow for a significant increase in throughput.
- 15,000 metre exploration drill program along strike to the
northwest. The Company will evaluate the results of this program to
determine the scale for a potential second crushing, conveying and
stacking line during 2019.
La Colorada
- Expansion of the Northwest leach pad.
- Transition all mining to El Creston pit by the end of the first
quarter of 2018.
Magino
- Complete Environmental Assessment process.
- Submit Closure Plan and Schedule 2 permit applications.
Cerro del Gallo
- Metallurgical test work.
- Evaluate future exploration targets.
- Internal project assessment and costing.
Argonaut Gold Fourth Quarter and Year End Financial Results
Conference Call and Webcast
The Company 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
23, 2018 to March 2, 2018.
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"
and "Adjusted earnings per share – basic" 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 expenses,
exploration expenses, accretion of reclamation provision 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,
reversal of non-cash impairment write down related to the net
realizable value of work-in-process inventory, other operating
expenses and recognition of previously unrecognized Mexican
deferred tax assets. Adjusted earnings per share – basic is equal
to adjusted net income divided by the basic weighted average number
of common shares outstanding. 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.
This press release should be read in conjunction with the
Company's audited consolidated financial statements for the year
ended December 31, 2017 and
associated MD&A, 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.
Creating Value Beyond Gold
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 estimated production and mine life of
the various mineral projects of Argonaut; the ability to obtain
permits for operations; synergies; the realization of mineral
reserve estimates; the timing and amount of estimated future
production; costs of production; 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;
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 parametres, 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
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 Thomas Burkhart, 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
|
Feasibility Study
Technical Report on the Magino Project, Wawa, Ontario, Canada dated
December 21, 2017 (effective date November 8, 2017)
|
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 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 a conversion ratio of 70:1 for
silver to gold for 2017 and 65:1 for 2016. This is the referenced
ratio for each year throughout the press release.
SOURCE Argonaut Gold Ltd.