TORONTO, Nov. 5, 2020 /CNW/ - Argonaut Gold
Inc. (TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut")
announces its operating and financial results for the third quarter
ended September 30, 2020. The
Company reports quarterly production of 48,951 gold equivalent
ounces1 ("GEO" or "GEOs"), cash flow from operating
activities before changes in operating working capital of
$29.0 million, net income of
$13.4 million or earnings per share
of $0.05, adjusted net income of
$12.2 million or adjusted earnings
per share of $0.04 (see "Non-IFRS
Measures" section) and cash and cash equivalents of $177.9 million. All dollar amounts are
expressed in United States
dollars, unless otherwise specified (C$ refers to Canadian
dollars).
CEO Commentary
Pete
Dougherty, President and CEO stated: "It was an extremely
busy third quarter for the Company. We closed the Alio
transaction, completed a C$126.5
million equity financing and entered into an agreement for
the sale of the Ana Paula project. Subsequent to the end of
the quarter, we completed a C$11.5
million flow-through financing to fund exploration at Magino
for the next year, announced that we closed a convertible debenture
financing for $57.5 million while
expanding and extending our revolving credit facility to up to
$125.0 million and are moving Magino
towards construction early in 2021. After acquiring the
Florida Canyon mine at the beginning of the third quarter, we have
begun to implement modifications to the crushing and stacking
circuit, which we expect will lower operating costs. We
expect these modifications to be completed in the first half of
2021."
Key operating and financial statistics for the three and nine
months ended September 30, 2020 are
outlined in the following table:
1 GEOs are
based on a conversion ratio of 80:1 for silver to gold for 2020 and
75:1 for 2019. The silver to gold conversion ratio is based
on the three-year trailing average silver to gold ratio.
|
|
3 Months Ended
Sept 30
|
9 Months Ended
Sept 30
|
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
Financial Data (in
millions except for
earnings per share)
|
|
|
|
|
|
|
Revenue
|
$94.4
|
$66.8
|
41%
|
$218.9
|
$196.8
|
11%
|
Gross
profit
|
$31.6
|
$14.5
|
118%
|
$63.2
|
$35.2
|
80%
|
Net income
(loss)
|
$13.4
|
$4.9
|
173%
|
($3.8)
|
$14.4
|
(126%)
|
Earnings (loss) per
share – basic
|
$0.05
|
$0.03
|
67%
|
($0.02)
|
$0.08
|
(125%)
|
Adjusted net
income1
|
$12.2
|
$6.5
|
88%
|
$30.0
|
$10.3
|
191%
|
Adjusted earnings per
share – basic1
|
$0.04
|
$0.04
|
25%
|
$0.14
|
$0.06
|
133%
|
Cash flow from
operating activities
before changes in non-cash operating
working capital
|
$29.0
|
$17.2
|
69%
|
$55.5
|
$46.6
|
19%
|
Cash and cash
equivalents
|
$177.9
|
$35.6
|
400%
|
$177.9
|
$35.6
|
400%
|
Net
cash1
|
$155.8
|
$21.6
|
621%
|
$155.8
|
$21.6
|
621%
|
Gold Production
and Cost Data
|
|
|
|
|
|
|
GEOs loaded to the
pads2
|
120,392
|
100,731
|
20%
|
257,881
|
260,251
|
(1%)
|
GEOs projected
recoverable2,3
|
61,224
|
54,884
|
12%
|
125,613
|
152,828
|
(18%)
|
GEOs
produced2,3,4
|
48,951
|
44,712
|
9%
|
122,018
|
139,094
|
(12%)
|
GEOs
sold2
|
49,291
|
45,567
|
8%
|
125,691
|
145,426
|
(14%)
|
Average realized
sales price
|
$1,915
|
$1,474
|
30%
|
$1,750
|
$1,359
|
29%
|
Cash cost per gold
ounce sold1
|
$1,008
|
$901
|
12%
|
$960
|
$906
|
6%
|
All-in sustaining
cost per gold ounce
sold1
|
$1,401
|
$1,134
|
24%
|
$1,280
|
$1,168
|
10%
|
1 Please
refer to the section below entitled "Non-IFRS Measures" for a
discussion of these Non-IFRS Measures.
|
2 GEOs are
based on a conversion ratio of 80:1 for silver to gold for 2020 and
75:1 for 2019. The silver to gold conversion ratio is based on the
three-year trailing average silver to gold ratio.
|
3 Expected
recoverable GEOs are based on the assumptions and parameters as set
forth in the El Castillo Complex Technical Report dated March 27,
2018, the La Colorada Gold/Silver Mine Technical Report dated March
27, 2018 and the Florida Canyon Technical Report dated July 8,
2020. In periods where the Company mines material not
specifically defined in a technical report (for example:
run-of-mine ore or low grade stockpile material), management uses
its best estimate of recovery based on the information
available.
|
4 Produced
ounces are calculated as ounces loaded to carbon.
|
Third Quarter 2020 and Recent Company Highlights:
- Corporate
-
- Completed at-market merger with Alio Gold Inc. ("Alio") to
create a North American diversified intermediate gold
producer.
- Completed a bought-deal equity financing for gross proceeds of
C$126.5 million ($89.6 million).
- Entered into an agreement to sell the Ana Paula project for
$30 million, a C$10 million contingent payment, a 1% net smelter
returns royalty and 9.9% equity in the acquiring company.
- Completed a bought-deal private placement flow-through equity
financing for gross proceeds of C$11.5
million ($8.9 million) to fund
the continuing exploration program at Magino.
- Approved Magino project construction.
- Received fixed bid pricing proposal for approximately 50% of
Magino's initial capital.
- Completed a bought-deal convertible debenture financing for
gross proceeds of $57.5 million.
- Extended and expanded the existing corporate revolving credit
facility to up to $125.0
million.
- El Castillo Complex
-
- Third quarter production of 26,690 GEOs.
-
- El Castillo production of
9,492 GEOs.
- San Agustin production of
17,198 GEOs.
- Reduced cash cost per gold ounce sold by 10% compared to the
third quarter of 2019 (see "Non-IFRS Measures" section).
-
- El Castillo cash cost per gold
ounce sold reduced by 14% compared to the third quarter of 2019
(see "Non-IFRS Measures" section).
- San Agustin cash cost per gold
ounce sold reduced by 3% compared to the third quarter of 2019 (see
"Non-IFRS Measures" section).
- La Colorada
-
- Third quarter production of 10,972 GEOs.
- Florida Canyon
-
- Published updated life-of-mine plan, which generates
$381 million of after-tax mine site
free cash flow over the next 9.5 years at $1,800 gold.
- Third quarter production of 11,289 GEOs.
- Magino
-
- Continued exploration program targeting high-grade
mineralization at depth below the proposed open pit and provided
drill result updates at the Elbow and Central zones, which show
promising high-grade gold continuity.
- Preparing to commence construction early in 2021.
- Social Responsibility
-
- Received nationally awarded Environmental Socially Responsible
Company recognition at the La
Colorada mine for the ninth consecutive year.
- Continued COVID-19 support for communities surrounding the
Company's operations in Mexico,
including safety training, donation of hygiene supplies and the
sanitization of homes and local businesses.
- Provided a donation to the Red Cross station in Dolores Hidalgo, Guanajuato Mexico.
- Donation of food baskets to families and students in
communities surrounding Argonaut's operations.
Financial Results – Third Quarter 2020
Revenue for the
three months ended September 30, 2020
was $94.4 million, an
increase from $66.8 million for
the three months ended September 30,
2019. During the third quarter of 2020, gold ounces
sold totaled 47,651 at an average realized price per ounce of
$1,915, compared to 44,303 gold
ounces sold at an average realized price per ounce of $1,474 during the same period of 2019. Gold
ounces sold for the three months ended September 30, 2020 increased compared to the same
period in 2019 primarily due to addition of the gold ounces sold
from the Florida Canyon mine offset by decreases in gold ounces
produced and sold at the El
Castillo and La Colorada
mines mostly related to a large decrease in ore tonnes to leach
pads during the second quarter, as a result of the COVID-19 related
suspension of mining, crushing and stacking activities in response
to the Mexican Federal Government decree. While the
San Agustin mine also suspended
mining, crushing and stacking activities during April 2020 and May
2020, gold ounces produced and sold at the San Agustin mine during the three months ended
September 30, 2020 were relatively
consistent with the three months ended September 30, 2019, as a 10,000 tonne per day
expansion to the crushing and stacking system put in place at the
end of 2019 led to more ore tonnes to the leach pad prior to and
following COVID-19 related suspensions. As of June 1, 2020, all mining, crushing and stacking
activities had resumed at all Mexican operations.
Production costs for the third quarter of 2020 were $51.2 million, an increase from $41.5 million in the third quarter of 2019,
primarily due to an increase in gold ounces sold. Cash
cost per gold ounce sold (see "Non-IFRS Measures" section) was
$1,008 in the third quarter of 2020,
an increase from $901 in the
same period of 2019, primarily due to an increase in cash cost per
gold ounce sold at the San Agustin
mine and the addition of the Florida Canyon mine that has higher
cash cost than the other three mines, offset by a decrease in cash
cost per gold ounce sold at the El
Castillo and La Colorada
mines as discussed further in the discussion of operations for the
respective mine. The depreciation, depletion, and
amortization (DD&A) expense included in cost of sales for the
third quarter of 2020 totaled $13.5 million, an increase from $11.2 million in the third quarter of 2019,
primarily due to an increase in gold ounces sold related to the
addition of the Florida Canyon mine and by an increase in the
average DD&A expense per ounce in work-in-process inventory,
primarily due to the significant capital additions during the last
half of 2019.
General and administrative expenses for the third quarter of
2020 were $4.5 million, an increase
from $3.4 million for the same period
of 2019 primarily related to employee related costs.
Transaction costs on acquisition for the third quarter of 2020
were $3.8 million as a result of the
Alio merger.
Losses on commodity derivatives for the third quarter of
2020 were $9.0 million,
compared to gains of $0.5 million in
the third quarter of 2019, primarily due to the large increase in
realized and unrealized losses on the Company's zero-cost collar
commodity contracts.
Impairment reversal of mineral properties, plant and equipment
for the third quarter of 2020 was $5.9
million, compared to nil in the third quarter of 2019,
primarily due to the increase in mineral reserves and resources at
the La Colorada mine from the
updated life-of-mine plan and due to updates to the gold price per
ounce assumption, both used in determining the recoverable amount
of the relative cash generating units for the mine.
Other income for the third quarter of 2020 was $6.2 million, an increase from other expense
of $1.1 million in the third quarter
of 2019, primarily due to differences in foreign currency
translation effects.
Income tax expense for the third quarter of 2020 was
$10.4 million, compared to
$5.1 million in the same period of
2019, primarily due to higher income before income taxes in the
third quarter of 2020 compared to the income before income taxes in
the same period of 2019.
Income from continuing operations and net income for the third
quarter of 2020 were $14.9 million and $13.4 million, respectively or $0.05 per basic and diluted share, an
increase from income from continuing operations and net income of
$4.9 million or $0.03 per basic or diluted share for the third
quarter of 2019.
Financial Results – First Nine Months 2020
Revenue for
the nine months ended September 30,
2020 was $218.9 million, an
increase from $196.8 million for the
nine months ended September 30, 2019.
During the first nine months of 2020, gold ounces sold
totaled 120,527 at an average realized price per ounce of
$1,750, compared to 140,729 gold
ounces sold at an average realized price per ounce of $1,359 during the same period of 2019. Gold
ounces sold for the nine months ended September 30, 2020 decreased compared to the same
period in 2019 primarily due to a decrease in gold ounces sold at
the El Castillo and La Colorada mines due to a large decrease in
ore tonnes to leach pads as a result of the temporary suspension of
mining, crushing and stacking activities in response to the Mexican
Federal Government decree related to COVID-19 and due to lower gold
ounces sold at the El Castillo
mine as a result of changing from crushing ore to run-of-mine ore
direct to the leach pads, offset by increased ounces from the
Florida Canyon mine effective July 1,
2020. While the San Agustin
mine also suspended mining, crushing and stacking activities during
April 2020 and May 2020, gold ounces produced and sold at the
San Agustin mine during the nine
months ended September 30, 2020 were
relatively consistent with the nine months ended September 30, 2019, as a 10,000 tonne per day
expansion to the crushing and stacking system put in place at the
end of 2019 led to more ore tonnes to the leach pad in prior to and
following COVID-19 related suspensions.
Production costs for the nine months ended September 30, 2020 were $123.7 million, a decrease from $133.0 million in the first nine months of 2019
primarily due to a large decrease in gold ounces sold partially
offset by a slight increase in cash cost per gold ounce sold.
Cash cost per gold ounce sold (see "Non-IFRS Measures"
section) was $960 in the first nine
months of 2020, an increase from $906
in the same period of 2019, primarily due to an increase in cash
cost per gold ounce sold at the La
Colorada mine and the addition of the Florida Canyon mine
that has higher cash cost than the other three mines, offset by a
decrease in cash cost per gold ounce sold at the San Agustin and El
Castillo mines as discussed further in the discussion of
operations for the respective mine. DD&A expense included
in cost of sales for the nine months ended September 30, 2020 totaled $33.4 million, a slight increase from
$33.3 million in the nine months
ended September 30, 2019, mostly due
to a large decrease in gold ounces sold offset by an increase in
the average DD&A expense per ounce in work-in-process
inventory, primarily due to the significant capital additions
during the last half of 2019.
General and administrative expenses for the nine months ended
September 30, 2020 were $10.9 million, a slight increase from
$10.5 million in the same period of
2019.
Transaction costs on acquisition for the nine months ended of
September 30, 2020 were $4.6 million as a result of the Alio merger.
Care and maintenance expenses for the nine months ended
September 30, 2020 were $8.2 million compared to nil for the comparative
period of 2019. On April 1,
2020, the Company temporary suspended all mining, crushing,
and stacking activities in Mexico
due to COVID-19 in response to the Mexican Federal Government
decree. All activities resumed on June 1,
2020. Costs incurred during the temporary suspension
associated with the suspended activities did not that generate
additional inventory were separately identified and accounted for
as care and maintenance expenses within operating income in the
interim condensed consolidated statements of (loss) income.
Losses on commodity derivatives during the first nine months of
2020 were $23.2 million, compared to
gains of $1.0 million in the first
nine months of 2019, primarily due to the large increase in
unrealized and realized losses on the Company's zero-cost collar
commodity contracts.
Impairment reversal of mineral properties, plant and equipment
for first nine months of 2020 was $5.9
million, compared to nil in the first nine months of 2019,
primarily due to the increase in mineral reserves and resources of
the La Colorada mine from the
updated life-of-mine plan and due to updates to the gold price per
ounce assumption, both used in determining the recoverable amount
of the relative cash generating unit for the mine.
Other income for the nine months ended September 30, 2020 was $1.3 million, an increase from other income of
$0.8 million in the same period of
2019, primarily related to differences in foreign currency
translation effects.
Income tax expense for the nine months ended September 30, 2020 was $23.8 million, compared to $10.4 million in the same period of 2019.
The change is primarily due to higher taxable income on the
Mexican operations in 2020 and due to the foreign exchange effects
of the weakening Mexican peso on the calculation of deferred taxes
during the first nine months of 2020.
Loss from continuing operations and net loss for the nine months
ended September 30, 2020 was
$2.3 million and $3.8 million, or $0.01 and $0.02
loss per basic share, respectively, a decrease from and income from
continuing operations and net income of $14.4 million or $0.08 per basic and diluted share for the nine
months ended September 30, 2019.
Operational Results – Third Quarter 2020
During the
third quarter 2020, the Company achieved production of 48,951 GEOs
at a cash cost of $1,008 per gold
ounce sold and all-in sustaining cost of $1,401 per gold ounce sold compared to 44,712
GEOs at a cash cost of $901 per gold
ounce sold and an all-in sustaining cost of $1,134 per gold ounce sold during the third
quarter 2019 (see "Non-IFRS Measures" section). Higher
production was primarily due to the addition of the Florida Canyon
mine following the acquisition of Alio on July 1, 2020, partially offset by fewer GEOs
produced at the El Castillo and
La Colorada mines due to a large
decrease in ore tonnes to leach pads as a result of the temporary
suspension of mining, crushing and stacking activities in response
to the Mexican Federal Government decree related to COVID-19.
While the San Agustin mine also
suspended mining, crushing and stacking activities during
April 2020 and May 2020, GEOs produced and sold at the
San Agustin mine during the three
months ended September 30, 2020 were
relatively consistent with the three month ended September 30, 2019, as a 10,000 tonne per day
expansion to the crushing and stacking system put in place at the
end of 2019 led to more ore tonnes to the leach pad prior to and
following COVID-19 related suspensions. Higher cash cost and
all-in sustaining cost are primarily related the addition of the
Florida Canyon mine that has a higher cost and higher sustaining
capital spend in 2020, partially offset by a decrease in cash cost
and sustaining capital spend at the El Castillo Complex.
Pete Dougherty commented: "We saw
lower production in the third quarter than typical steady-state
operations due to lower ore tonnes to leach pads in the second
quarter, as a result of the shutdown of mining, crushing and
stacking activities during April and May. We also experienced
the normal seasonal challenges at our Mexican operations of
solution on the leach pads being diluted by heavy rains. In
spite of the rainy season, from a productivity standpoint, we
managed to get the required ore tonnes to the leach pads during the
third quarter, which leads us to believe the fourth quarter will be
our strongest quarter of 2020."
THIRD QUARTER 2020 EL CASTILLO COMPLEX OPERATING
STATISTICS
|
3 Months Ended
Sept 30
|
9 Months Ended
Sept 30
|
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
Mining (in 000s
except
waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore El
Castillo
|
2,874
|
2,436
|
18%
|
5,698
|
7,024
|
(19%)
|
Tonnes ore San
Agustin
|
2,573
|
2,371
|
9%
|
6,454
|
5,993
|
8%
|
Tonnes
ore
|
5,447
|
4,807
|
13%
|
12,152
|
13,017
|
(7%)
|
Tonnes waste El
Castillo
|
2,240
|
2,947
|
(24%)
|
6,424
|
10,241
|
(37%)
|
Tonnes waste San
Agustin
|
1,814
|
1,633
|
11%
|
4,267
|
4,358
|
(2%)
|
Tonnes
waste
|
4,054
|
4,580
|
(11%)
|
10,691
|
14,599
|
(27%)
|
Tonnes mined El
Castillo
|
5,114
|
5,383
|
(5%)
|
12,122
|
17,265
|
(30%)
|
Tonnes mined San
Agustin
|
4,387
|
4,004
|
10%
|
10,721
|
10,351
|
4%
|
Tonnes
mined
|
9,501
|
9,387
|
1%
|
22,843
|
27,616
|
(17%)
|
Tonnes per day El
Castillo
|
56
|
59
|
(5%)
|
44
|
63
|
(30%)
|
Tonnes per day San
Agustin
|
48
|
44
|
9%
|
39
|
38
|
3%
|
Tonnes per
day
|
104
|
103
|
1%
|
83
|
101
|
(18%)
|
Waste/ore ratio El
Castillo
|
0.78
|
1.21
|
(36%)
|
1.13
|
1.46
|
(23%)
|
Waste/ore ratio San
Agustin
|
0.71
|
0.69
|
3%
|
0.66
|
0.73
|
(10%)
|
Waste/ore
ratio
|
0.74
|
0.95
|
(22%)
|
0.88
|
1.12
|
(21%)
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
East leach pads
El Castillo
|
59
|
988
|
(94%)
|
337
|
3,162
|
(89%)
|
Tonnes crushed to
West leach pads
El Castillo
|
0
|
1,124
|
(100%)
|
3
|
3,556
|
(100%)
|
Tonnes direct to
leach pads El
Castillo
|
2,874
|
374
|
668%
|
5,509
|
374
|
1373%
|
Tonnes crushed to
leach pads San
Agustin
|
2,616
|
2,287
|
14%
|
6,540
|
5,909
|
11%
|
Tonnes crushed to
leach pads
|
5,549
|
4,773
|
16%
|
12,389
|
13,001
|
(5%)
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach pads El
Castillo (g/t)1
|
0.36
|
0.39
|
(8%)
|
0.44
|
0.39
|
13%
|
Gold grade loaded to
leach pads
San Agustin (g/t)1
|
0.31
|
0.32
|
(3%)
|
0.33
|
0.39
|
(15%)
|
Gold grade loaded
to leach pads
(g/t)1
|
0.34
|
0.35
|
(3%)
|
0.38
|
0.39
|
(3%)
|
Gold loaded to leach
pads El Castillo
(oz)2
|
34,281
|
30,939
|
11%
|
82,138
|
88,508
|
(7%)
|
Gold loaded to leach
pads San
Agustin (oz)2
|
25,789
|
23,385
|
10%
|
69,653
|
73,548
|
(5%)
|
Gold loaded to
leach pads (oz)2
|
60,070
|
54,324
|
11%
|
151,791
|
162,056
|
(6%)
|
Projected recoverable
GEOs loaded
El Castillo4
|
13,259
|
15,526
|
(15%)
|
31,878
|
54,498
|
(42%)
|
Projected recoverable
GEOs loaded
San Agustin4
|
19,350
|
17,082
|
13%
|
51,081
|
52,048
|
(2%)
|
Projected
recoverable GEOs
loaded4
|
32,609
|
32,608
|
0%
|
82,959
|
106,546
|
(22%)
|
Gold produced El
Castillo (oz)2,3
|
9,329
|
14,281
|
(35%)
|
32,915
|
51,529
|
(36%)
|
Gold produced San
Agustin (oz)2,3
|
16,192
|
15,210
|
6%
|
42,430
|
41,978
|
1%
|
Gold produced
(oz)2,3
|
25,521
|
29,491
|
(13%)
|
75,345
|
93,507
|
(19%)
|
Silver produced El
Castillo (oz)2,3
|
12,875
|
23,293
|
(45%)
|
55,967
|
81,294
|
(31%)
|
Silver produced San
Agustin (oz)2,3
|
80,414
|
36,887
|
118%
|
225,160
|
134,014
|
68%
|
Silver produced
(oz)2,3
|
93,289
|
60,180
|
55%
|
281,127
|
215,308
|
31%
|
GEOs produced El
Castillo3
|
9,492
|
14,592
|
(35%)
|
33,615
|
52,613
|
(36%)
|
GEOs produced San
Agustin3
|
17,198
|
15,702
|
10%
|
45,245
|
43,765
|
3%
|
GEOs
produced3
|
26,690
|
30,294
|
(12%)
|
78,860
|
96,378
|
(18%)
|
Gold sold El Castillo
(oz)2
|
9,318
|
15,955
|
(42%)
|
33,952
|
54,839
|
(38%)
|
Gold sold San Agustin
(oz)2
|
14,312
|
14,478
|
(1%)
|
42,066
|
44,565
|
(6%)
|
Gold sold
(oz)2
|
23,630
|
30,433
|
(22%)
|
76,018
|
99,404
|
(24%)
|
Silver sold El
Castillo (oz)2
|
12,875
|
23,293
|
(45%)
|
55,967
|
81,294
|
(31%)
|
Silver sold San
Agustin (oz)2
|
70,368
|
37,410
|
88%
|
226,547
|
144,830
|
56%
|
Silver sold
(oz)2
|
83,243
|
60,703
|
37%
|
282,514
|
226,124
|
25%
|
GEOs sold El
Castillo
|
9,479
|
16,266
|
(42%)
|
34,652
|
55,923
|
(38%)
|
GEOs sold San
Agustin
|
15,191
|
14,977
|
1%
|
44,897
|
46,496
|
(3%)
|
GEOs
sold
|
24,670
|
31,243
|
(21%)
|
79,549
|
102,419
|
(22%)
|
Cash cost per gold
ounce sold El
Castillo5
|
$894
|
$1,038
|
(14%)
|
$963
|
$970
|
(1%)
|
Cash cost per gold
ounce sold San
Agustin5
|
$821
|
$848
|
(3%)
|
$787
|
$848
|
(7%)
|
Cash cost per gold
ounce sold5
|
$850
|
$947
|
(10%)
|
$865
|
$915
|
(5%)
|
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 Expected
recoverable GEOs are based on the assumptions and parameters as set
forth in the El Castillo Complex Technical Report dated March 27,
2018. In periods where the Company mines material not
specifically defined in a technical report (for example:
run-of-mine ore), management uses its best estimates of recovery
based on the information available.
|
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
The El Castillo Complex produced 26,690 GEOs at a
cash cost of $850 per gold ounce sold
during the third quarter of 2020 compared to production of 30,294
GEOs at a cash cost of $947 per gold
ounce sold during the third quarter of 2019 (see "Non-IFRS
Measures" section). Lower production was primarily due to a
large decrease in ore tonnes to leach pads in the second quarter as
a result of the temporary suspension of mining, crushing and
stacking activities in response to the Mexican Federal Government
decree related to COVID-19. Lower costs are primarily related
to the reduction of crushing and conveying cost at the El Castillo mine following the switch to
primarily run-of-mine ore processing earlier in 2020 and a lower
waste to ore ratio at El
Castillo.
THIRD QUARTER 2020 LA COLORADA OPERATING STATISTICS
|
3 Months Ended
Sept 30
|
9 Months Ended
Sept 30
|
|
2020
|
2019
|
Change
|
2020
|
2019
|
Change
|
Mining (in 000s
except for
waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore
|
1,203
|
1,452
|
(17%)
|
2,656
|
3,511
|
(24%)
|
Tonnes
waste
|
3,909
|
5,767
|
(32%)
|
10,329
|
17,667
|
(42%)
|
Total
tonnes
|
5,112
|
7,219
|
(29%)
|
12,985
|
21,178
|
(39%)
|
Tonnes per
day
|
56
|
78
|
(28%)
|
47
|
78
|
(40%)
|
Waste/ore
ratio
|
3.25
|
3.97
|
(18%)
|
3.89
|
5.03
|
(23%)
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
leach pads
|
1,242
|
1,331
|
(7%)
|
2,726
|
3,337
|
(18%)
|
Tonnes direct to
leach pads
|
0
|
145
|
(100%)
|
0
|
234
|
(100%)
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach
pads (g/t)1
|
0.46
|
0.60
|
(23%)
|
0.42
|
0.51
|
(18%)
|
Gold loaded to leach
pads
(oz)2
|
18,332
|
28,586
|
(36%)
|
36,402
|
59,097
|
(38%)
|
Projected recoverable
GEOs
loaded4
|
14,548
|
22,276
|
(35%)
|
28,586
|
46,282
|
(38%)
|
Gold produced
(oz)2,3
|
10,409
|
13,969
|
(25%)
|
30,295
|
41,064
|
(26%)
|
Silver produced
(oz)2,3
|
45,060
|
33,616
|
34%
|
125,929
|
123,874
|
2%
|
GEOs
produced3
|
10,972
|
14,418
|
(24%)
|
31,869
|
42,716
|
(25%)
|
Gold sold
(oz)2
|
10,283
|
13,870
|
(26%)
|
30,771
|
41,325
|
(26%)
|
Silver sold
(oz)2
|
39,932
|
34,041
|
17%
|
122,540
|
126,131
|
(3%)
|
GEOs sold
|
10,782
|
14,324
|
(25%)
|
32,303
|
43,007
|
(25%)
|
Cash cost per gold
ounce sold5
|
$910
|
$800
|
14%
|
$1,020
|
$885
|
15%
|
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 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.
|
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
La Colorada produced 10,972 GEOs at a cash
cost of $910 per gold ounce sold
during the third quarter of 2020 compared to 14,418 GEOs at a cash
cost of $800 per gold ounce sold
during the third quarter of 2019 (see "Non-IFRS Measures"
section). Lower production was primarily due to a large
decrease in ore tonnes to leach pads in the second quarter as a
result of the temporary suspension of mining, crushing and stacking
activities in response to the Mexican Federal Government decree
related to COVID-19 and lower gold grade mined. Higher costs
were primilarly related to lower gold ounces sold, as cash cost is
calculated on a per-ounce-sold basis.
THIRD QUARTER 2020 FLORIDA CANYON OPERATING
STATISTICS
|
3 Months Ended
Sept 30
|
|
2020
|
Mining (in 000s
except for waste/ore ratio)
|
|
Tonnes ore
|
2,095
|
Tonnes
waste
|
2,847
|
Total
tonnes
|
4,942
|
Tonnes per
day
|
53
|
Waste/ore
ratio
|
1.36
|
Leach Pads (in
000s)
|
|
Tonnes crushed to
leach pads
|
1,925
|
Tonnes direct to
leach pads
|
228
|
Production
|
|
Gold grade loaded to
leach
pads (g/t)1
|
0.29
|
Gold loaded to leach
pads
(oz)2
|
19,757
|
Projected recoverable
GEOs
loaded4
|
14,067
|
Gold produced
(oz)2,3
|
11,204
|
Silver produced
(oz)2,3
|
6,798
|
GEOs
produced3
|
11,289
|
Gold sold
(oz)2
|
13,738
|
Silver sold
(oz)2
|
8,067
|
GEOs sold
|
13,839
|
Cash cost per gold
ounce sold5
|
$1,353
|
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 Expected
recoverable GEOs are based on the assumptions and parameters as set
forth in the Florida Canyon Technical Report dated July 8,
2020. 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.
|
5 Please
refer to the section below entitled "Non-IFRS Measures" for a
discussion of this Non-IFRS Measure.
|
Summary of Production Results at Florida
Canyon
As this was the Company's first quarter of operating history at
Florida Canyon following the acquisition of Alio, the Company is
not making comparisons to previous periods. Florida Canyon
produced 11,289 GEOs at a cash cost of $1,353 per gold ounce sold during the third
quarter of 2020 (see "Non-IFRS Measures" section). Quarterly
production was impacted primarily by a delay in getting the
required permit to allow for solution to the newly constructed
leach pad and the mining of low-grade material that was previously
backfilled into the pit during the historical operations. The
Company has since received the permit to allow for solution to the
newly constructed leach pad, which is expected to allow for the
designed leach cycle and therefore higher gold recoveries.
The Company anticipates it will have completed mining of the
low-grade material that was previously backfilled in the pit early
in 2021, which, once completed, should lead to a higher overall
gold grade given 100% of mining will then be focused on in-situ
ounces.
Outlook - Production
The Company is tracking toward
the low end of its 2020 production guidance of between 210,000 and
230,000 GEOs (assuming a full year of production at Florida
Canyon). Updated 2020 production guidance is provided
below:
Updated 2020 GEO Production Guidance (in 000s)
Mine
|
Q1
Actual
|
Q2
Actual
|
Q3
Actual
|
Q4
Estimate
|
Updated
2020
Estimate
|
Previous
2020
Estimate
|
El
Castillo
|
15
|
9
|
10
|
10 – 14
|
43 – 47
|
45 – 50
|
San
Agustin
|
14
|
14
|
17
|
18 – 22
|
63 – 67
|
62 – 68
|
La
Colorada
|
13
|
8
|
11
|
14 – 18
|
46 – 50
|
53 – 55
|
Florida
Canyon*
|
11
|
13
|
11
|
12 – 15
|
47 – 50
|
50 – 57
|
Consolidated*
|
53
|
44
|
49
|
54 –
69
|
200 –
215
|
210 –
230
|
* Florida Canyon
production during Q1 2020 and Q2 2020 was under Alio Gold Inc.
prior to the closing of the merger between Alio Gold Inc. and
Argonaut on July 1, 2020. 2020 GEO production guidance
estimates the combined full year 2020 production from the El
Castillo Complex, La Colorada and Florida Canyon.
|
Outlook – Cost and Capital
The Company's consolidated
cash cost and all-in sustaining cost continue to track well within
the 2020 cost guidance ranges:
- Cash cost per gold ounce sold between $925 and $1,025
(see "Non-IFRS Measures" section).
- All-in sustaining cost per gold ounce sold between $1,225 and $1,350
(see "Non-IFRS Measures" section).
With the recent decision to advance the Magino project into
construction early in 2021, the Company anticipates investing
between $35 million and $40 million of the Magino project initial capital
during the fourth quarter of 2020, primarily related to the
financial assurance bond to be posted with the province of
Ontario and payments related to
long lead time equipment. The Company also anticipates a
reduction in 2020 capital investment at its operating mines
primarily due to capital associated with La Colorada (stripping) and Florida Canyon
(finalizing modifications to the crushing and stacking circuit) now
expected to take place in 2021. Given these changes to
anticipated capital spend, the Company now plans to invest between
$93 million and $104 million in capital programs in 2020 (was
previously between $64 million and
$72 million), including a full year
of capital investment at Florida Canyon ($15
million by Alio during the six months ended June 30, 2020), of which $49 million has been spent through September 30, 2020.
Argonaut Gold Third Quarter Operational and Financial Results
Conference Call and Webcast:
The Company will host a conference call and webcast to discuss
its third quarter operating and financial results at 9:00 am EST on November 6,
2020.
Q3 Conference Call
Information
|
Toll Free (North
America):
|
1-888-231-8191
|
International:
|
1-647-427-7450
|
Conference
ID:
|
3642548
|
Webcast:
|
www.argonautgold.com
|
|
|
Q3 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 EST on November
6, 2020 until 11:59 pm EST on
November 13, 2020.
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, exploration, accretion and other expenses 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, non-cash impairment write down (reversal) of
work-in-process inventory, proceeds from legal proceedings and
unrealized (gains) losses on commodity derivatives. 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 and nine months ended September 30, 2020 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.
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,
Mexico dated March 27, 2018 (effective date of March 7,
2018)
|
La Colorada
Mine
|
NI 43-101 Technical
Report on Resources and Reserves, La Colorada Gold/Silver Mine,
Hermosillo, Mexico dated March 27, 2018 (effective date of December
8, 2017)
|
Florida Canyon Gold
Mine
|
NI 43-101 Technical
Report on Mineral Resource and Mineral Reserve Florida Canyon Gold
Mine Pershing County, Nevada, USA dated July 8, 2020 (effective
date June 1, 2020)
|
Magino Gold
Project
|
Feasibility Study
Technical Report on the Magino Project, Ontario, Canada dated
December 21, 2017 (effective date November 8, 2017)
|
Cerro del Gallo
Project
|
Pre-Feasibility Study
Technical Report on the Cerro del Gallo Project, Guanajuato, Mexico
dated January 31, 2020 (effective date of October 24,
2019)
|
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 the
pandemic virus outbreak and government, regulatory and market
responses thereto; commodity price volatility; uncertainty of
exploration and development; uncertainty in the estimation of
Mineral Reserves and Mineral Resources; permitting risk; mineral
and surface rights; undisclosed risks and liabilities relating to
the Alio business combination; risks that the anticipated benefits
of the Alio business combination will not be realized or fully
realized; the ability to close on the sale of the Ana Paula
project; statements with respect to estimated production and mine
life of the various mineral projects of Argonaut; the benefits of
the development potential of the properties of Argonaut; the future
price of gold, copper, and silver; 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; the scope, duration and impact of the
COVID-19 pandemic; the scope, duration and impact of regulatory
responses to the pandemic on the employees, business and operations
of Argonaut and the broader market; variations in ore grade or
recovery rates; risks relating to international operations;
fluctuating metal prices and currency exchange rates; the ability
to realize synergies of recent M&A activity; possible exposure
to undisclosed risks of liabilities arising in relation to recent
transactions; 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, the La Colorada
mine in Sonora, Mexico and the
Florida Canyon mine in Nevada,
USA. Advanced exploration projects include the Magino project
in Ontario, Canada and the Cerro
del Gallo project in Guanajuato,
Mexico. The Company holds several other exploration stage
projects, all of which are located in North America.
For more information,
contact:
Argonaut Gold Inc.
Dan
Symons
Vice President, Corporate Development & Investor Relations
Phone: 416-915-3107
Email: dan.symons@argonautgold.com
Source: Argonaut Gold Inc.
SOURCE Argonaut Gold Inc.