Announces Release Date for Fourth Quarter and
Year End 2019 Operational and Financial Results, Timing of 2020
Guidance and Provides Development Project Updates
TORONTO, Jan. 17, 2020 /CNW/ - Argonaut Gold Inc.
(TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut")
announces record annual gold equivalent ounce1 ("GEO" or
"GEOs") production of 186,615 during 2019 and fourth quarter 2019
GEO production of 47,521. During the fourth quarter,
production was 34,899 GEOs at the El Castillo Complex (13,896 from
the El Castillo mine and 21,003
from the San Agustin mine) located
in the State of Durango, Mexico
and 12,622 GEOs at the La Colorada
mine located near Hermosillo, Sonora,
Mexico. During 2019, the El Castillo Complex and
La Colorada mine production
totaled 131,277 GEOs and 55,338 GEOs, respectively. All
dollar amounts are expressed in United
States dollars unless otherwise specified.
During the fourth quarter 2019, the Company increased its cash
balance by $3.2 million while also
paying down $4.0 million on its
revolving credit facility. At December
31, 2019, the Company's cash balance was $38.8 million and it had $10.0 million drawn on its revolving credit
facility, representing a net cash increase of $7.2 million during the fourth quarter (see
Non-IFRS Measures section).
Pete Dougherty, President &
CEO stated: "We achieved record annual production in 2019 of nearly
187,000 GEOs, which represents a 13% increase year-over-year.
While we fell short of our 2019 guidance of 200,000 GEOs of
production, which was a target that we set for ourselves back in
2017, over the last three years we have grown our production by
53%. The production shortfall of our 2019 guidance was driven
by a number of factors, which contributed to the build up of leach
pad inventory, which is under review. We are currently in the
process of optimizing our operations to maximize profitability and
cash flow through cost reduction initiatives. This review
process has delayed the release of our 2020 guidance to
February. Our focus during 2020 will be on adding cash to the
balance sheet while continuing to de-risk and advance our
development assets. Achieving these two key activities will
put Argonaut in a solid position to execute on our strategy of
transforming from a high-cost, junior producer to a lower-cost,
intermediate producer."
2020 Guidance
The Company is currently revising its operations with an
emphasis on profitability and cash flow. Before considering the
increased cash flow from an improved gold price, initial
indications reveal it may be more profitable for the Company to
produce slightly less GEOs in 2020 than 2019 while increasing cash
flow from operations. The potential changes to the operations may
involve run-of-mine ore, more favourable overburden stockpile
locations and changes in processing parameters. This
evaluation is ongoing and not yet conclusive. The Company
expects to provide production, cash cost, all-in sustaining cost
and capital guidance (see Non-IFRS Measures section) for 2020 on or
before the release date of its fourth quarter and year-end
operational and financial results on February 24, 2020.
San Antonio Project
The Company is currently evaluating a potential non-cash
impairment on the book value of its San
Antonio project given the uncertainty surrounding the timing
of if and when the project will receive necessary permits to
develop and construct the project. The conclusion on the
potential non-cash impairment of the San
Antonio project will be announced on the release date of the
Company's fourth quarter and year end operational and financial
results on February 24, 2020.
The Company is reviewing all of its options to advance the
San Antonio project. These
options include seeking an amendment to the La Paz 2018 zoning plan, submitting a revised
environmental permit application and legal options.
Cerro del Gallo Project
During the second quarter of 2019, the Company submitted a
Unified Technical Document that includes an Environmental Impact
Assessment, an Environmental Risk Assessment and the Justified
Technical Study for a Change of Soil Use for its Cerro del Gallo
project in Guanajuato,
Mexico. The Mexican Environmental Authority ("SEMARNAT") has
informed the Company that it will not approve the Unified Technical
Document application in its current form and has requested the
Company make minor revisions and re-submit the application.
The Company expects to re-submit a revised Unified Technical
Document application that satisfies SEMARNAT's requests during the
first quarter of 2020 and, as per SEMARNAT's stated policy, to
receive a decision from SEMARNAT on the revised application within
60 working days of submission.
Magino Project
The Company is pleased to announce it has executed a Community
Agreement with the Michipicoten First Nation. As part of the
Community Agreement, the Company has issued 505,237 common shares
to the Michipicoten First Nation. Along with the Michipicoten
First Nation, the Company now has agreements in place with the
Missanabie Cree First Nation, the Batchewana First Nation, the
Métis Nation of Ontario and the
Red Sky Métis Independent Nation, all of which have expressed their
overwhelming support for the Magino project. The Company has
also consulted with the Garden River First Nation for multiple
years with the aim of coming to a reasonable agreement.
During 2019, the Company received a positive decision
statement and approval of both the federal and provincial
environmental assessment processes. The Company continues to
advance the federal Schedule 2 permitting process, as well as
consult with and inform Indigenous communities and local
stakeholders about the project.
Argonaut Gold Fourth Quarter and Year End Financial Results
Conference Call and Webcast
The Company anticipates
releasing its fourth quarter and year end financial and operational
results prior to market open on February 24,
2020 and will host a conference call and webcast on
February 24, 2020 at 8:30 am EST to discuss the results.
Fourth Quarter and Year End Conference Call Information for
February 24, 2020:
Toll Free (North
America):
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1-888-231-8191
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International:
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1-647-427-7450
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Webcast:
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www.argonautgold.com
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Fourth Quarter and Year End Conference Call Replay:
Toll Free
Replay Call (North America):
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1-855-859-2056
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International
Replay Call:
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1-416-849-0833
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Passcode:
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1967125
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The conference call replay will be available from 11:30 am EST on February
24, 2020 to 11:59 pm EST
March 2, 2020.
Non-IFRS Measures
The Company has included certain
non-IFRS measures including "Net cash", "Cash cost per gold ounce
sold" and "All-in sustaining cost per gold ounce sold" in this
press release. 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. 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,
exploration, accretion and other expenses 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. Its primary assets are the
El Castillo mine and San Agustin mine, which together form the El
Castillo Complex in Durango,
Mexico and the La Colorada
mine in Sonora, Mexico.
Advanced exploration 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.
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1 GEOs are
based on conversion ratio of 75:1 for silver to gold ounces for
2019. The silver to gold conversion ratio is based on the
three-year trailing average silver to gold exchange ratio.
This is the referenced ratio for each year throughout the press
release.
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SOURCE Argonaut Gold Inc.