Production of 38,441 Gold Equivalent
Ounces
TORONTO, Aug. 9, 2018 /CNW/ - Argonaut Gold Inc. (TSX:
AR) (the "Company", "Argonaut Gold" or "Argonaut") is pleased
to announce its financial and operating results for the second
quarter ended June 30, 2018.
The Company reports a quarterly cash flow from operating activities
before changes in operating working capital of $17.0 million, net income of $0.4 million or earnings per share of
$0.00, adjusted net
income1 of $7.0 million or
adjusted earnings per share1 of $0.04, net cash1 increase of
$1.5 million and production of 38,441
gold equivalent ounces2 ("GEO" or "GEOs"). All
dollar amounts are expressed in United
States dollars, unless otherwise specified (C$ refers to
Canadian dollars).
CEO Commentary
Pete
Dougherty, President and CEO stated: "As previously
reported, we went several weeks without blasting material at our
La Colorada mine. I commend
the team for its ability to adjust the mine plan temporarily and
maintain our 12,000 tonnes per day operation without sacrificing
the long term mine plan. Although the use of low-grade
stockpiles will ultimately lead to lower 2018 production at
La Colorada, with the continued
outperformance at our new San
Agustin mine, we remain comfortable with our consolidated
annual production and cost guidance of between 165,000 and 180,000
GEOs at cash costs between $700
and $800 per gold ounce
sold1."
Key operating and financial statistics for the second quarter of
2018 are outlined in the following table:
1Please
refer to the section below entitled "Non-IFRS Measures" for a
discussion of these Non-IFRS Measures.
2GEOs are based on a conversion ratio of 70:1 for silver
to gold. This is the referenced ratio for each year throughout the
release.
|
|
3 Months Ended
June 30
|
6 Months Ended
June 30
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
Financial Data (in
millions except for
earning per
share)
|
|
|
|
|
|
|
Revenue
|
$50.2
|
$42.5
|
18%
|
$103.1
|
$87.0
|
19%
|
Gross
profit
|
$14.0
|
$9.5
|
47%
|
$31.4
|
$19.5
|
61%
|
Net income
|
$0.4
|
$6.2
|
(94%)
|
$12.6
|
$18.2
|
(31%)
|
Earnings per share –
basic
|
$0.00
|
$0.04
|
(100%)
|
$0.07
|
$0.11
|
(36%)
|
Adjusted net
income1
|
$7.0
|
$4.1
|
71%
|
$14.9
|
$9.0
|
66%
|
Adjusted earnings per
share – basic1
|
$0.04
|
$0.02
|
100%
|
$0.08
|
$0.05
|
60%
|
Cash flow from
operating activities
before changes
in non-cash operating
working
capital
|
$17.0
|
$13.5
|
26%
|
$38.1
|
$28.4
|
34%
|
Cash and cash
equivalents
|
$22.7
|
$53.8
|
(58%)
|
$22.7
|
$53.8
|
(58%)
|
Net
cash1
|
$14.7
|
$53.8
|
(73%)
|
$14.7
|
$53.8
|
(73%)
|
Gold Production
and Cost Data
|
|
|
|
|
|
|
GEOs loaded to the
pads2
|
74,728
|
53,402
|
40%
|
155,647
|
108,849
|
43%
|
GEOs projected
recoverable2, 3
|
39,777
|
31,430
|
27%
|
84,169
|
64,142
|
31%
|
GEOs produced2,
4
|
38,441
|
29,730
|
29%
|
79,294
|
67,437
|
18%
|
GEOs
sold2
|
38,858
|
33,747
|
15%
|
78,904
|
69,920
|
13%
|
Average realized
sales price
|
$1,295
|
$1,260
|
3%
|
$1,313
|
$1,244
|
6%
|
Cash cost per gold
ounce sold1
|
$704
|
$785
|
(10%)
|
$677
|
$767
|
(12%)
|
All-in sustaining
cost per gold ounce
sold1
|
$832
|
$906
|
(8%)
|
$806
|
$887
|
(9%)
|
1Please refer to the
section below entitled "Non-IFRS Measures" for a discussion of
these Non-IFRS Measures.
2GEOs are based on a conversion ratio of 70:1 for silver
to gold. This is the referenced ratio for each period throughout
the release.
32018: Expected recoverable GEOs are based on the
assumptions and parameters as set forth in the El Castillo Complex
Technical Report dated March 27, 2018 and 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: low grade stockpile material),
management uses its best estimate of recovery based on the
information available. 2017: Expected recoverable GEOs – 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.
|
Second Quarter 2018 and Recent Company Highlights:
- Corporate Highlights
-
- Received nationally awarded Environmental Socially Responsible
Company recognition at both the El Castillo Complex and
La Colorada mine. This is the
seventh consecutive year that the La
Colorada mine has received this recognition and with the
introduction of the San Agustin
mine within the El Castillo Complex, the first year the El Castillo
Complex has received this recognition.
- Increased net cash (see Non-IFRS Measures section) by
$1.5 million during the second
quarter 2018.
- El Castillo Complex
-
- Second quarter production of 26,518 GEOs
-
- El Castillo production of
10,194 GEOs
- San Agustin production of
16,324 GEOs
- San Agustin crushing
throughput achieved 24% over nameplate capacity of 16,700 tonnes
per day
- Completed construction of cell 1 of the Phase 8A leach pad at
El Castillo
- Completed construction of the San
Agustin leach pad expansion and currently placing
overliner
- Completed 15,000 metre drill program at San Agustin.
- La Colorada
-
- Second quarter production of 11,923 GEOs
- By accessing low-grade stockpiles, maintained crusher
throughput of approximately 12,500 tonnes per day in spite of the
inability to blast
- Experienced a 28% decrease in costs on a per tonne processed
basis to $7.85 in the second quarter
from $10.94 in the first quarter due
to the elimination of costs associated with drilling and blasting
and significantly reduced haul distances associated with low-grade
stockpiles
- Completed construction of the NE Phase Two leach pad.
- Cerro del Gallo
-
- Initiated a drill program for metallurgical test work
samples.
- Magino
-
- Advanced Environmental Assessment process (federal and
provincial).
- Signed the Community Engagement Agreement with the Métis Nation
of Ontario.
Financial Results – Second Quarter 2018
Revenue for
the three months ended June 30, 2018
was $50.2 million, an increase from
$42.5 million for the three months
ended June 30, 2017. During the
second quarter of 2018, gold ounces sold totaled 37,414 at an
average realized price per ounce of $1,295, compared to 32,961 gold ounces sold at an
average realized price per ounce of $1,260 during the same period of 2017. Gold
ounces sold for the three months ended June
30, 2018 increased compared to the same period in 2017
primarily due to the commencement of commercial production at the
San Agustin mine effective
October 1, 2017, partially offset by
a reduction in gold ounces produced and sold at the El Castillo mine.
Production costs for the second quarter of 2018 were
$28.1 million, an increase from
$26.8 million in the second quarter
of 2017, primarily due to an increase in gold ounces sold, offset
by a decrease in cash cost per gold ounce sold. Cash cost per
gold ounce sold (see Non-IFRS Measures section) was $704 in the second quarter of 2018, a decrease
from $785 in the same period of 2017,
primarily due to the commencement of commercial production at the
San Agustin mine effective
October 1, 2017, which has a lower
cash cost per gold ounce sold. Depreciation, depletion and
amortization ("DD&A") expense included in cost of sales for the
second quarter of 2018 totaled $8.1
million, an increase from $6.2
million in the second quarter of 2017, due to the increase
in gold ounces sold, as many of the mining assets are amortized on
a unit-of-production basis, and the commencement of commercial
production at the San Agustin
mine, which has a higher DD&A expense per ounce.
General and administrative expenses for the second quarter of
2018 were $3.5 million, an increase
from $2.9 million in the same period
of 2017 primarily due to an increase in employee related costs.
Losses on foreign exchange derivatives for the second quarter of
2018 were $0.4 million, a decrease
from gains of $0.7 million in the
second quarter of 2017, due principally to a decrease in realized
gains on the Company's zero-cost collar contracts on the Mexican
peso.
Other expense for the second quarter of 2018 was $1.6 million, a decrease from other income of
$1.3 million in the second quarter of
2017, primarily due to differences in foreign currency translation
effects.
Income tax expense for the second quarter of 2018 was
$7.7 million, compared to
$1.9 million in the same period of
2017. The increase is primarily due to the foreign exchange
effects of the weakening Mexican peso on the calculation of
deferred taxes.
Net income for the second quarter of 2018 was $0.4 million or $0.00 per basic share, a decrease from
$6.2 million or $0.04 per basic share for the second quarter of
2017.
Adjusted net income for the second quarter of 2018, which
removes foreign exchange translation effects on deferred income
taxes, foreign exchange gains and losses and the effects of
recognizing/de-recognizing deferred tax assets from net income, was
$7.0 million or $0.04 per basic share, an increase from
$4.1 million or $0.02 per basic share for the second quarter of
2017 (see Non-IFRS Measures section), primarily due to a higher
average realized gold price, an increase in by-product silver sales
and a decrease in cash cost per gold ounce sold (see Non-IFRS
Measures section) with the commencement of commercial production at
the San Agustin mine effective
October 1, 2017.
Financial Results – First Half 2018
Revenue for the
six months ended June 30, 2018 was
$103.1 million, an increase from
$87.0 million for the six months
ended June 30, 2017. During the
first half of 2018, gold ounces sold totaled 75,486 at an average
realized price per ounce of $1,313,
compared to 67,923 gold ounces sold at an average realized price
per ounce of $1,244 during the same
period of 2017. Gold ounces sold for the six months ended
June 30, 2018 increased compared to
the same period in 2017 primarily due to the commencement of
commercial production at the San
Agustin mine effective October 1,
2017, partially offset by a reduction in gold ounces
produced and sold at the El
Castillo mine.
Production costs for the six months ended June 30, 2018 were $55.1
million, an increase from $54.6
million in the first half of 2017 primarily due to an
increase in gold ounces sold, offset by a decrease in cash cost per
gold ounce sold. Cash cost per gold ounce sold (see Non-IFRS
Measures section) was $677 in the
first half of 2018, a decrease from $767 in the same period of 2017, primarily due to
the commencement of commercial production at the San Agustin mine effective October 1, 2017, which has a lower cash cost per
gold ounce sold. DD&A expense included in cost of sales
for the six months ended June 30,
2018 totaled $16.6 million, an
increase from $12.9 million in the
six months ended June 30, 2017, due
to the increase in gold ounces sold, as many of the mining assets
are amortized on a unit-of-production basis, and the commencement
of commercial production at the San
Agustin mine, which has a higher DD&A expense per
ounce.
General and administrative expenses for the six months ended
June 30, 2018 were $6.9 million, an increase from $6.1 million in the same period of 2017,
primarily due to employee related costs.
Gains on foreign exchange derivatives during the first half of
2018 were $0.4 million, a decrease
from $2.4 million in the first half
of 2017, due to a decrease in realized and unrealized gains on the
Company's zero-cost collar contracts on the Mexican peso.
Other expense for the six months ended June 30, 2018 was $1.1
million, a decrease from other income of $2.9 million in the same period of 2017,
primarily due to differences in foreign currency translation
effects.
Income tax expense for the six months ended June 30, 2018 was $10.3
million, compared to income tax recovery of $0.2 million in the same period of 2017.
The change is primarily due to the foreign exchange effects
of the strengthening Mexican peso on the calculation of deferred
taxes in 2017 and the recognition of previously unrecognized
Mexican deferred tax assets in the first quarter of 2017.
Net income for the six months ended June
30, 2018 was $12.6 million or
$0.07 per basic share, a decrease
from $18.2 million or $0.11 per basic share for the six months ended
June 30, 2017.
Adjusted net income for the six months ended June 30, 2018 was $14.9
million or $0.08 per basic
share, an increase from $9.0 million
or $0.05 per basic share for the six
months ended June 30, 2017 (see
Non-IFRS Measures section), primarily due to a higher average
realized gold price, an increase in by-product silver sales and a
decrease in cash cost per gold ounce sold (see Non-IFRS Measures
section) with the commencement of commercial production at the
San Agustin mine effective
October 1, 2017.
Operational Results – Second Quarter 2018
During the
second quarter 2018, the Company achieved production of 38,441 GEOs
at a cash cost of $704 per gold ounce
sold and all-in sustaining cost of $832 per gold ounce sold compared to 29,730 GEOs
at a cash cost of $785 per gold ounce
sold and an all-in sustaining cost of $906 per gold ounce sold during the second
quarter 2017 (see Non-IFRS Measures section). Higher
production and lower costs were driven by the commencement of
commercial production at the low-cost San
Agustin mine effective October 1,
2017.
The El Castillo Complex produced 26,518 GEOs at a cash cost of
$638 per gold ounce sold during the
second quarter of 2018 versus 17,086 GEOs at a cash cost of
$893 per gold ounce sold during the
second quarter of 2017. Higher production and lower costs
were driven by the commencement of commercial production at the
low-cost San Agustin mine
effective October 1, 2017 (see
Non-IFRS Measures section).
La Colorada produced 11,923
GEOs at a cash cost of $833 per gold
ounce sold during the second quarter of 2018 compared to 12,644
GEOs at a cash cost of $590 per gold
ounce sold during the second quarter of 2017 (see Non-IFRS Measures
section). The increase in costs are primarily due to lower
deferred stripping. On a cost per tonne processed basis,
La Colorada experienced a 28%
reduction in costs versus the first quarter 2018 as movement of
stockpiled material did not require drilling and blasting.
Bill Zisch, Chief Operating
Officer, commented: "For the second straight quarter, San Agustin continued its strong performance
and exceeded throughput expectations at the crusher by 24% over
nameplate capacity of 16,700 tonnes per day. At El Castillo,
we continued to be affected by the height of the leach pads, which
continues to delay the timing of recovering ounces. With the
completion of two new leach pads and our ability to place ore close
to the plastic, we expect to see a reduced timing to
recovery. Also at El
Castillo, we experienced sub-optimal productivity due to
equipment availability and maintenance related issues. We
have taken steps to increase equipment availability and continue to
take steps to improve our productivity. At La Colorada,
despite the inability to blast during the quarter, we maintained
mining, crushing, stacking and leaching operations due to the
availability of previously blasted ore and low-grade stockpiled
ore. While we maintained crusher throughput of slightly above
our 12,000 tonnes per day budget, we began to see the impact of the
lower grade ore late in the quarter in the form of lower production
and expect to see the bulk of the lower grade impact during the
third quarter. Without blasting expenses during the second
quarter and with reduced haul distances associated with low-grade
stockpiles, our cost per tonne processed at La Colorada decreased 28% to $7.85 from $10.94
in the first quarter 2018."
The table below details the El Castillo Complex operating
statistics during the three and six months ended June 30, 2018 and 2017. The three and six
months ended June 30, 2017 for the
San Agustin mine represent
pre-commercial production operating statistics. Commercial
production at the San Agustin mine
was declared on October 1, 2017.
SECOND QUARTER 2018 EL CASTILLO COMPLEX OPERATING
STATISTICS
|
3 Months Ended
June 30
|
6 Months Ended
June 30
|
|
2018
|
2017
|
%
Change
|
2018
|
2017
|
%
Change
|
Mining (in 000s
except
waste/ore
ratio)
|
|
|
|
|
|
|
Tonnes ore El
Castillo
|
2,149
|
2,011
|
7%
|
3,768
|
4,478
|
(16%)
|
Tonnes ore San
Agustin
|
1,851
|
227
|
715%
|
3,577
|
227
|
1476%
|
Tonnes
ore
|
4,000
|
2,238
|
79%
|
7,345
|
4,705
|
56%
|
Tonnes waste El
Castillo
|
2,223
|
2,646
|
(16%)
|
5,329
|
6,035
|
(12%)
|
Tonnes waste San
Agustin
|
618
|
145
|
326%
|
974
|
145
|
572%
|
Tonnes
waste
|
2,841
|
2,791
|
2%
|
6,303
|
6,180
|
2%
|
Tonnes mined El
Castillo
|
4,372
|
4,657
|
(6%)
|
9,097
|
10,513
|
(13%)
|
Tonnes mined San
Agustin
|
2,469
|
372
|
564%
|
4,551
|
372
|
1123%
|
Tonnes
mined
|
6,841
|
5,029
|
36%
|
13,648
|
10,885
|
25%
|
Tonnes per day El
Castillo
|
48
|
51
|
(6%)
|
50
|
58
|
(14%)
|
Tonnes per day San
Agustin
|
27
|
6
|
350%
|
25
|
6
|
317%
|
Tonnes per
day
|
75
|
57
|
32%
|
75
|
64
|
17%
|
Waste/ore ratio El
Castillo
|
1.03
|
1.32
|
(22%)
|
1.41
|
1.35
|
4%
|
Waste/ore ratio San
Agustin
|
0.33
|
0.64
|
(48%)
|
0.27
|
0.64
|
(58%)
|
Waste/ore
ratio
|
0.71
|
1.25
|
(43%)
|
0.86
|
1.31
|
(34%)
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
East leach pads El
Castillo
|
1,171
|
1,355
|
(14%)
|
2,166
|
2,656
|
(18%)
|
Tonnes crushed to
West leach pads El
Castillo
|
952
|
660
|
44%
|
1,580
|
1,111
|
42%
|
Tonnes overland
conveyor to leach pads El
Castillo
|
0
|
0
|
-
|
0
|
769
|
(100%)
|
Tonnes crushed to
leach pads San Agustin
|
1,885
|
85
|
2118%
|
3,603
|
85
|
4139%
|
Tonnes crushed to
leach pads
|
4,008
|
2,100
|
91%
|
7,349
|
4,621
|
59%
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach pads El
Castillo (g/t)1
|
0.37
|
0.39
|
(5%)
|
0.40
|
0.39
|
3%
|
Gold grade loaded to
leach pads San Agustin
(g/t)1
|
0.36
|
0.41
|
(12%)
|
0.43
|
0.41
|
5%
|
Gold grade loaded
to leach pads (g/t)1
|
0.37
|
0.39
|
(5%)
|
0.41
|
0.39
|
5%
|
Gold loaded to leach
pads El Castillo
(oz)2
|
25,456
|
25,004
|
2%
|
48,196
|
56,960
|
(15%)
|
Gold loaded to leach
pads San Agustin
(oz)2
|
21,813
|
1,122
|
1844%
|
49,691
|
1,122
|
4329%
|
Gold loaded to
leach pads (oz)2
|
47,269
|
26,126
|
81%
|
97,887
|
58,082
|
69%
|
Projected recoverable
GEOs loaded El
Castillo4
|
14,790
|
15,459
|
(4%)
|
27,670
|
34,818
|
(21%)
|
Projected recoverable
GEOs loaded San
Agustin4
|
14,397
|
741
|
1843%
|
32,796
|
741
|
4326%
|
Projected
recoverable GEOs loaded4
|
29,187
|
16,200
|
80%
|
60,466
|
35,559
|
70%
|
Gold produced El
Castillo (oz)2,3
|
10,079
|
16,927
|
(40%)
|
18,736
|
39,012
|
(52%)
|
Gold produced San
Agustin (oz)2,3
|
15,528
|
0
|
-
|
31,352
|
0
|
-
|
Gold produced
(oz)2,3
|
25,607
|
16,927
|
51%
|
50,088
|
39,012
|
28%
|
Silver produced El
Castillo (oz)2,3
|
8,111
|
11,152
|
(27%)
|
15,639
|
20,992
|
(26%)
|
Silver produced San
Agustin (oz)2,3
|
55,781
|
0
|
-
|
136,112
|
0
|
-
|
Silver produced
(oz)2,3
|
63,892
|
11,152
|
473%
|
151,751
|
20,992
|
623%
|
GEOs produced El
Castillo3
|
10,194
|
17,086
|
(40%)
|
18,959
|
39,312
|
(52%)
|
GEOs produced San
Agustin3
|
16,324
|
0
|
-
|
33,296
|
0
|
-
|
GEOs
produced3
|
26,518
|
17,086
|
55%
|
52,255
|
39,312
|
33%
|
Gold sold El Castillo
(oz)2
|
9,096
|
21,156
|
(57%)
|
17,355
|
41,219
|
(58%)
|
Gold sold San Agustin
(oz)2
|
15,577
|
0
|
-
|
30,310
|
0
|
-
|
Gold sold
(oz)2
|
24,673
|
21,156
|
17%
|
47,665
|
41,219
|
16%
|
Silver sold El
Castillo (oz)2
|
8,111
|
11,152
|
(27%)
|
15,639
|
20,992
|
(26%)
|
Silver sold San
Agustin (oz)2
|
59,186
|
0
|
-
|
130,669
|
0
|
-
|
Silver sold
(oz)2
|
67,297
|
11,152
|
503%
|
146,308
|
20,992
|
597%
|
GEOs sold El
Castillo
|
9,211
|
21,315
|
(57%)
|
17,578
|
41,519
|
(58%)
|
GEOs sold San
Agustin
|
16,423
|
0
|
-
|
32,177
|
0
|
-
|
GEOs
sold
|
25,634
|
21,315
|
20%
|
49,755
|
41,519
|
20%
|
Cash cost per gold
ounce sold El
Castillo5
|
$992
|
$893
|
11%
|
$1,005
|
$889
|
13%
|
Cash cost per gold
ounce sold San
Agustin5
|
$431
|
$0
|
-
|
$399
|
$0
|
-
|
Cash cost per gold
ounce sold5
|
$638
|
$893
|
(29%)
|
$620
|
$889
|
(30%)
|
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 2018: Expected recoverable GEOs are based on the
assumptions and parameters as set forth in the El Castillo Complex
Technical Report dated March 27, 2018. 2017: Expected recoverable
GEOs – 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%.
5 Please 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
During the second quarter 2018, the El Castillo
Complex produced 55% more GEOs at a cash cost (see Non-IFRS
Measures section) of 29% less compared to the second quarter 2017
due to the introduction of the low cost San Agustin mine to the Complex.
At El Castillo, production was
delayed by the additional leach cycle time required from higher
leach pads and equipment availability associated with maintenance
issues along with lower than expected utilization. Two new
leach pad areas were completed during the second quarter, which
will increase operating flexibility. The CR2 crusher, which
was enhanced during the first quarter of 2018, continues to ramp up
towards its nameplate capacity of 14,000 tonnes per day but has not
yet consistently maintained this higher throughput level primarily
due to maintenance related issues with the conveying line.
Also, mobile fleet availability impacted productivity during the
quarter. After examining the economic trade off between
capital and operating cost, the Company moved the mobile fleet from
the San Agustin mine to the
El Castillo mine and initiated
contract mining at San Agustin
effective July 1,
2018.
At San Agustin, the crusher
continued to outperform and exceeded nameplate throughput capacity
of 16,700 tonnes per day by approximately 24% during the second
quarter of 2018. Also during the second quarter, a second
water well was drilled and brought on line with the goal of
increasing solution flow to match increased ore placement on the
leach pad.
SECOND QUARTER 2018 LA COLORADA OPERATING STATISTICS
|
3 Months Ended
June 30
|
6 Months Ended
June 30
|
|
2018
|
2017
|
%
Change
|
2018
|
2017
|
%
Change
|
Mining (in 000s
except for
waste/ore
ratio)
|
|
|
|
|
|
|
Tonnes mineralized
material
|
1,062
|
1,225
|
(13%)
|
2,158
|
2,290
|
(6%)
|
Tonnes
waste
|
1,815
|
4,767
|
(62%)
|
7,946
|
9,964
|
(20%)
|
Total
tonnes
|
2,877
|
5,992
|
(52%)
|
10,104
|
12,254
|
(18%)
|
Tonnes per
day
|
32
|
66
|
(52%)
|
56
|
68
|
(18%)
|
Waste/mineralized
material ratio
|
1.71
|
3.89
|
(56%)
|
3.68
|
4.35
|
(15%)
|
Tonnes
rehandled
|
38
|
29
|
31%
|
38
|
29
|
31%
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
leach pads
|
1,140
|
1,110
|
3%
|
2,265
|
2,218
|
2%
|
Tonnes direct to
leach pads
|
0
|
46
|
(100%)
|
0
|
126
|
(100%)
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach pads
(g/t)1
|
0.36
|
0.64
|
(44%)
|
0.40
|
0.59
|
(32%)
|
Gold loaded to leach
pads (oz)2
|
13,347
|
23,648
|
(44%)
|
28,809
|
44,666
|
(36%)
|
Projected recoverable
GEOs loaded4
|
9,168
|
15,176
|
(40%)
|
20,641
|
28,529
|
(28%)
|
Gold produced
(oz)2,3
|
11,503
|
12,098
|
(5%)
|
25,794
|
26,499
|
(3%)
|
Silver produced
(oz)2,3
|
29,368
|
38,201
|
(23%)
|
87,135
|
113,800
|
(23%)
|
GEOs
produced3
|
11,923
|
12,644
|
(6%)
|
27,039
|
28,125
|
(4%)
|
Gold sold
(oz)2
|
12,741
|
11,805
|
8%
|
27,821
|
26,704
|
4%
|
Silver sold
(oz)2
|
33,842
|
43,865
|
(23%)
|
92,958
|
118,762
|
(22%)
|
GEOs sold
|
13,224
|
12,432
|
6%
|
29,149
|
28,401
|
3%
|
Cash cost per gold
ounce sold5
|
$833
|
$590
|
41%
|
$775
|
$579
|
34%
|
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 2018: 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: low grade stockpile material),
management uses its best estimate of recovery based on the
information available. 2017: Expected recoverable GEOs – recovery
rates: gold 60% and silver 30%.
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
As previously disclosed,
the Company lacked the ability to blast material during the second
quarter due to the temporary suspension of the La Colorada mine's explosives permit.
The Company mined previously blasted material and free-dig material
in the pit and utilized low-grade stockpiles to maintain its
crushing throughput at its budget of 12,000 tonnes per day.
As a result, the grade of ore placed on the leach pad during the
second quarter 2018 was 44% lower than the second quarter
2017. While the Company began to see the impact of the lower
grade ore during the second quarter in the form of lower
production, given the nature of the heap leach recovery cycle the
Company expects to see the bulk of the impact associated with the
lower grade in the third quarter 2018. Since the Company was
not incurring costs associated with drilling and blasting during
the second quarter, combined with the significantly reduced haul
distances associated with utilizing the lower grade stockpiles,
costs per tonne of ore processed decreased by 28% to $7.85 from $10.94
during the first quarter.
Operations at La Colorada are
ramping up to normal state following the reinstatement of the
explosive permit. The Company expects the third quarter 2018
will see lower production due to the lower grades stacked on the
leach pad during the second quarter 2018 and also expects higher
costs during the third quarter 2018 associated with drilling,
blasting and hauling costs for normal state operations.
While the Company's explosives permit has been reinstated at
La Colorada, the legal action
brought against the Secretary of National Defense and the
Municipality of La Colorada
continues through the Judiciary court process.
2018 Capital Estimate
The Company plans to invest $40
million to $45 million on
capital expenditures and exploration initiatives in 2018, of which
$20.1 million has been invested
through June 30, 2018. This is
a reduction from the previous full year guidance of $50 million to $55
million on capital expenditures and exploration initiatives
in 2018. This change is primarily an elimination of
capitalized stripping at the La
Colorada mine, which is now recognized in mine operating
costs.
Argonaut Gold Second Quarter Operational and Financial
Results Conference Call and Webcast:
The Company will host the second quarter 2018 conference call
and webcast on August 10, 2018 at
9:00 am EDT.
Q2 Conference Call Information
Toll Free (North
America):
|
1-888-231-8191
|
International:
|
1-647-427-7450
|
Conference
ID:
|
1284417
|
Webcast:
|
www.argonautgold.com
|
Q2 Conference Call Replay:
Toll Free Replay Call
(North America):
|
1-855-859-2056
|
International Replay
Call:
|
1-416-849-0833
|
The conference call replay will be available from 12:00 pm EDT on August 10,
2018 until 11:59 pm EDT on
August 17, 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", "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 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
and unrecognized (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. 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 unaudited interim condensed consolidated financial
statements for the three months and six months ended June 30, 2018 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
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 permitting and legal processes in
relation to mining permitting and approvals; 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'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
National Instrument 43-101 ("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 State, Mexico
dated March 27, 2018 (effective date of March 7, 2018)
|
La Colorada
Mine
|
NI 43-101 Technical
Report on Resources and Reserve, La Colorada
Gold/Silver Mine,
Hermosillo, Mexico dated March 27, 2018 (effective date of December
8, 2017)
|
Magino
Gold
Project
|
Feasibility Study
Technical Report on the Magino Project, 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.
SOURCE Argonaut Gold Inc.