TORONTO, Feb. 14, 2022 /CNW/ - Argonaut Gold
Inc. (TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut")
is pleased to announce updated information to be included in a new
Magino technical report, 2021 production, 2022 production and cost
guidance, an exploration update and the filing of updated technical
reports for its Mexican operating assets. All dollar amounts
are expressed in United States
dollars, unless specified. "C$" refers to Canadian dollars.
Magino Technical Report Highlights
- After-tax net present value of current 10,000 tonne per day
project at a 5% discount rate ("NPV5%") of $421 million, 19% internal rate of return ("IRR")
at a gold price of $1,600/oz and
USD:CAD exchange rate of 0.80 (from January
1, 2022);
- After-tax NPV5% of current 10,000 tonne per day project of
$622 million, 26% IRR at the current
gold price of $1,800/oz and USD:CAD
exchange rate of 0.80 (from January 1,
2022);
- Average annual production of 142,000 gold ounces during the
first five years following ramp up to full run rate;
- Mine life of 19 years;
- Life-of-mine average cash cost of $888/oz and all-in sustaining costs ("AISC") of
$963/oz; and
- Other opportunities:
-
- Processing expansion: The current 10,000 tonnes per day project
was chosen to manage initial capital costs. Studies have been
conducted that contemplate an expansion of the processing facility
to 20,000 tonnes per day; and
- Underground Potential: An exploration target has been
identified, primarily consisting of the upper portions of the Elbow
and Central Zones between the bottom of the current Mineral Reserve
pit and approximately 500m vertical
below surface, where there is the highest drill density on deeper,
high-grade gold targets and excluding the Scotland, #42, Sandy and South Zones. This
exploration target ranges from 1.8 million to 2.5 million tonnes at
gold grades ranging from 6.0 g/t to 7.0 g/t for 400,000 to 500,000
contained gold ounces (see "Other Opportunities" section below for
more detail).
Fourth Quarter and Full Year 2021 Gold Equivalent Ounce
("GEO" or "GEOs")1 Production
- Record annual production of 244,156 GEOs; and
- Fourth quarter 2021 of 61,926 GEOs.
Exploration Update Highlights
- Recent Magino drill results include:
-
- MA21-088 intersected 4.0m at 26.7
g/t Au, including 2.0m at 53.2 g/t Au
within the #42 Zone; and
- MA21-102 intersected 3.0m at 11.1
g/t Au, including 1.0m at 30.0 g/t Au
within the Elbow Zone.
- Recent La Colorada drill
results include:
-
- 21-LCRC-675 intersected 27.4m at
5.2 g/t Au and 12.5 g/t Ag, including 7.6m at 16.8 g/t Au and 29.3 g/t Ag within the
South vein;
- 21-LCRC-678 intersected 47.2m at
2.5 g/t Au and 6.6 g/t Ag, including 1.5m at 66.2 g/t Au and 47.4 g/t Ag within the
North vein; and
- 21-LCRC-680 intersected 56.4m at
2.3 g/t Au and 16.6 g/t Ag, including 4.6m at 16.5 g/t Au and 17.1 g/t Ag within the
South vein.
- Recent Florida Canyon drill results targeting gold
mineralization in sulphides below the oxide cap include:
-
- FCM-0124 intersected 73.2m at 8.8
g/t Au below the Main pit; and
- FCM-0115 intersected 68.6m at 2.8
g/t Au, including 47.2m at 3.9 g/t Au
below the Radio Tower pit.
Mexican Mines Technical Report Highlights
- Significant increase in San Agustin Inferred Mineral Resource
to 86.9 million tonnes at 0.48 g/t Au and 14.7 g/t Ag for 1.3
million contained gold ounces and 41.0 million contained silver
ounces, which includes 84.8 million tonnes in initial sulphide
Inferred Mineral Resource;
-
- Potential to add between six and ten years to San Agustin mine life with further drilling
and metallurgical work; and
- La Colorada mine life extended
to 2027.
Magino Updated Technical Report
Argonaut Gold reports results to be incorporated in a new
technical report prepared by Independent Mining Consultants, Inc.
("IMC") in accordance with National Instrument 43-101 –
Standards of Disclosure for Mineral Properties ("NI
43-101"), which confirms Magino as a robust, long-life project in a
tier one jurisdiction.
Dan Symons, Vice President,
Corporate Development & Investor Relations stated: "These
reported results, which will be incorporated into a Technical
Report, demonstrate the robust economics of a long-life asset in
the attractive mining jurisdiction of Ontario, Canada. When you consider
Argonaut's entire portfolio of assets and that the results for
Magino alone demonstrate a NPV5% of $622
million at $1,800/oz gold –
excluding any of the exciting upside opportunities such as
potential future processing expansion or underground mining of
high-grade gold – you can clearly see today's value
proposition. Under our Environmental Assessment, Magino is
authorized to permit for up to 35,000 tonnes per day. We are
approximately half way through the construction of a 10,000 tonne
per day project, and we continue to believe that an expansion,
including the existing high-grade underground exploration targets,
has the potential to meaningfully increase production. We
view Magino as the flagship asset of the Company and look forward
to unlocking its value potential, as we continue with our strategy
of transitioning from a higher cost, junior producer to a lower
cost, intermediate producer with long life assets."
The reported results assumed a gold price of $1,600/oz, a 0.80 United States dollar to Canadian dollar
exchange rate and considered capital invested in the project up to
December 31, 2021 as sunk
costs.
Magino Reported Economic Results
Parameter
|
Unit
|
|
Gold Price
|
US $/oz
|
1,600
|
Exchange
Rate
|
USD:CAD
|
0.80
|
Production
|
|
|
Mine Life (from
commercial production)
|
Years
|
19
|
Payable
Gold
|
LOM k oz
|
2,225
|
Net Sales Revenue
(after royalties)
|
LOM US$M
|
3,519
|
Operating
Costs
|
|
|
Mining, Processing
and G&A
|
US$M
|
1,977
|
Mining, Processing
and G&A
|
US$/t
processed
|
30.16
|
Cash Cost
|
US$/oz
|
888
|
AISC
|
US$/oz
|
963
|
Capital
Costs
|
|
|
Pre-Production
|
US$M
|
331
|
Sustaining Capital
& Closure
|
US$M
|
125
|
Contingency
|
US$M
|
35
|
Total Capital
Costs
|
US$M
|
492
|
Economic
Results
|
|
|
Net Operating Cash
Flow
|
US$M
|
1,542
|
Cumulative After-Tax
Free Cash Flow
|
US$M
|
824
|
After-Tax
NPV5%
|
US$M
|
421
|
After-Tax
IRR
|
%
|
19.3
|
After-Tax
Payback
|
Years
|
4.6
|
Note: Numbers may not
sum due to rounding.
|
Argonaut has evaluated the after-tax NPV5% and IRR of the Magino
project at various sensitivities, including gold price. As
illustrated in the table below, every $100/oz change in the gold price impacts the
after-tax NPV5% by approximately $100
million and IRR by approximately 3.2%. At the base
case assumption of $1,600 gold/oz and
a USD:CAD exchange rate of 0.80, the after-tax NPV5% is
$421M and IRR is 19.3%. At the
current gold price of $1,800/oz, the
after-tax NPV5% of the Magino project is $622 million and IRR is 26.1%.
Magino After-Tax NPV5% and IRR Sensitivities to Gold Price at
a USD:CAD Exchange Rate of 0.80
Gold
Price/oz
|
$1,500
|
$1,600
|
$1,700
|
$1,800
|
$1,900
|
$2,000
|
NPV5%
(US$M)
|
$321
|
$421
|
$522
|
$622
|
$722
|
$821
|
IRR
|
15.9%
|
19.3%
|
22.7%
|
26.1%
|
29.4%
|
32.6%
|
Mineral Resource Estimate
A conceptual pit was generated in order to constrain the
tabulation of Mineral Resources. A gold price of $1,800/oz was used, along with other cost,
recovery and slope parameters. The table below tabulates
undiluted Measured and Indicated Mineral Resources and Inferred
Mineral Resources at a 0.28 g/t Au cut-off grade.
Magino Mineral Resource Estimate
Mineral Resource Category
|
Tonnes (000s)
|
Grade (g/t Au)
|
Contained Au
oz (000s)
|
Measured
|
43,558
|
0.98
|
1,367
|
Indicated
|
88,849
|
0.93
|
2,652
|
Measured &
Indicated
|
132,407
|
0.94
|
4,019
|
Inferred
|
20,919
|
0.78
|
526
|
Notes to accompany Magino Mineral Resource table:
- The Mineral Resources have an effective date of 31 January 2022 and the estimate was prepared
using the definitions in CIM Definition Standards (10 May 2014).
- All figures are rounded to reflect the relative accuracy of the
estimate and therefore numbers may not appear to add
precisely.
- Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability.
- Mineral Resources are based on a gold price of US$ 1800/oz and an estimated gold recovery of
92%.
- The Mineral Resources are reported at a gold cutoff grade of
0.28 g/t. This cutoff grade is based on unit mining costs of
US$ 2.60 per tonne and unit
processing + G&A costs of US$
14.80/t.
- The Mineral Resources are inclusive of Mineral Reserves.
- It is reasonably expected that the majority of the Inferred
Mineral Resources could be upgraded to Indicated Mineral Resources
with continued exploration.
- Mineral Resources are reported in relation to a conceptual
constraining pit shell in order to demonstrate reasonable prospects
of eventual economic extraction, as required by the definition of
Mineral Resource in NI 43-101; mineralization lying outside the pit
shell is excluded from the Mineral Resource.
Mineral Reserve Estimate
The Mineral Reserve estimate for the Magino open pit was
constrained with estimates of gold price, mining dilution, process
recovery, operating costs, pit slope angles and refining/transport
costs.
The Mineral Resource block model for the Magino deposit was then
used to determine optimal mining shells and pit phasing.
Measured and Indicated Resources were included in the pit
optimization process. Inferred Mineral Resources within the
designed open pit are treated as waste.
Detailed pit and phase designs were created based on the pit
optimization results. These designs incorporated geotechnical
parameters as well as ramp accesses and formed the basis of the
Mineral Reserve estimate.
A gold price of $1,600/oz was used
and gold cut-off grades varied from between 0.38 g/t Au to 0.70 g/t
Au.
Magino Mineral Reserve Estimate
Mineral Reserve Category
|
Tonnes (000s)
|
Grade (g/t Au)
|
Contained Au
oz (000s)
|
Proven
|
26,286
|
1.24
|
1,044
|
Probable
|
39,238
|
1.10
|
1,383
|
Proven &
Probable
|
65,526
|
1.15
|
2,427
|
Notes to accompany Magino Mineral Reserve table:
- The Mineral Reserve estimate has an effective date of
January 31, 2022 and was prepared
using CIM Definition Standards (May 10,
2014).
- Numbers may not sum due to rounding.
- The Mineral Reserve is based on estimated dilution of 16% and
ore loss of 4.8% for direct feed material and an estimated dilution
of 15% and ore loss of 30% for lower grade stockpile material.
- The Mineral Reserve is based on an estimated plant recovery of
92%.
Capital Costs
From January 1, 2022, the
pre-commercial production capital is estimated at $367 million, including contingency.
Sustaining and closure capital is estimated at $125 million. From December 2020 to December
2021, Argonaut invested $273
million in capital that is considered sunk costs.
Magino Capital Costs (US$M)
CAPEX
|
US$M
|
Ausenco
EPC
|
$88
|
Mining
|
$51
|
Site
Development
|
$66
|
On-Site
Infrastructure
|
$18
|
Off-Site
Infrastructure
|
$30
|
Project
Indirects
|
$36
|
Engineering &
Project Management
|
$14
|
Owner
Costs
|
$29
|
Subtotal
|
$331
|
Contingency
|
$35
|
Sustaining
Capital
|
$88
|
Closure
|
$37
|
Total
|
$492
|
Note: Numbers may not
sum due to rounding.
|
Operating Costs
On-site operating costs are estimated at $30.16 per tonne processed or $888 per payable gold ounce, and AISC is
estimated at $32.71 per tonne
processed or $963 per payable gold
ounce.
Magino Operating and Unit Costs
OPEX
|
LOM
US$M
|
US$/tonne
material
|
US$/tonne
processed
|
US$/oz
|
Mining
|
$959
|
$2.55
|
$14.64
|
$431
|
Equipment
Lease
|
$81
|
$0.22
|
$1.24
|
$36
|
Processing
|
$683
|
|
$10.42
|
$307
|
G&A
|
$254
|
|
$3.87
|
$114
|
Subtotal – On-site
OPEX
|
$1,977
|
|
$30.16
|
$888
|
Refinement
|
$11
|
|
$0.17
|
$5
|
Royalties
|
$30
|
|
$0.46
|
$14
|
All-in
OPEX
|
$2,018
|
|
$30.80
|
$907
|
Sustaining
Capital
|
$125
|
|
$1.91
|
$56
|
AISC
|
$2,143
|
|
$32.71
|
$963
|
Note: Numbers may not
sum due to rounding.
|
Other Opportunities
Processing Expansion: The Environmental Assessment at
Magino authorizes permitting a processing facility up to 35,000
tonnes per day. Argonaut is currently constructing a 10,000
tonne per day processing facility and envisions a potential
expansion to 20,000 tonnes per day or greater early in Magino's
mine life. The 10,000 tonne per day project was chosen to
begin development of the property to manage initial capital
costs. Studies have been conducted that contemplate an
expansion of the processing facility to 20,000 tonnes per
day. The plant expansion requires further study and
ultimately will become a capital allocation decision in the
future. There is no guarantee that a plant expansion will be
undertaken.
Underground Mining: As an alternative to open pit mining
below the current reserve pit, an underground mining scenario is
being evaluated. Deep exploration target areas include the
Elbow, Central, Scotland, #42,
Sandy and South Zones, which all remain open at depth. The
upper portion of the Elbow and Central Zones, between the Mineral
Reserve pit and approximately 500m
vertical below surface, are drilled to approximately 40m spacing. The deeper portions of the
Elbow and Central Zones below 500m,
as well as the Scotland, #42,
Sandy and South Zones below the Mineral Reserve pit, are being
tested with focused drilling campaigns to build drill density,
high-grade gold mineralization continuity and confidence.
This preliminary work has identified an exploration target,
primarily in the upper portions of the Elbow and Central Zones
where drill density is the greatest, that ranges from 1.8 million
to 2.5 million tonnes at gold grades ranging from 6.0 g/t to 7.0
g/t for 400,000 to 500,000 contained gold ounces. More drill
density will be needed to properly outline the extent of the
exploration targets for the lower portions of the Elbow and Central
Zones, as well as the Scotland,
#42, Sandy and South Zones. Approximately 50% of the
identified material pulls into the $1,800 gold resource cone and is included in the
open pit Mineral Resource estimate. However, Argonaut will be
conducting future trade-off studies to determine if an underground
mining operation of this material would ultimately provide stronger
economics, as the higher-grade material would be available earlier
than an exclusive open pit mining scenario.
The potential tonnages and grades outlined are currently
conceptual in nature. The available drilling defines the
approximate length, thickness, depth and grade of the target
material, but additional drilling, geology, and engineering studies
need to be conducted to determine if any of the material can be
classified as Mineral Resource that is amenable to underground
mining. While Argonaut is encouraged by the underground
exploration target potential, no economics or mine design have been
completed at this point and further exploration and studies may or
may not result in the delineation of a current Mineral Resource
that is amenable to underground mining.
Plan View Map Showing Locations for Cross Sections and
Long Sections
Cross Section 'A' Showing Elbow Zone and Targets for
Future Infill and Step Out Drilling at Depth
Cross Section 'B' Showing South Zone and Targets for
Future Step Out Drilling at Depth
Long Section 'C' Showing
Elbow Zone and Targets for Future Infill and Step Out Drilling at
Depth
2021 Gold Equivalent Ounce Production and 2022
Production and Cost Guidance
Argonaut Gold is pleased to announce record annual production of
244,156 GEOs, representing a 20% increase over 2020 GEO production.
During the fourth quarter of 2021, Argonaut produced of 61,926
GEOs, representing a 9% increase over the same period last
year. The table below details fourth quarter and full year
2021 GEO production results. Argonaut exceeded its 2021 GEO
production guidance at La
Colorada, achieved near the upper end of its guidance at
El Castillo and San Agustin and achieved near the midpoint of
its guidance at Florida Canyon.
Fourth Quarter and Full Year 2021 GEO Production
Mine
|
Fourth Quarter
2021
|
Full Year
2021
|
2021
Production
Guidance
|
El
Castillo
|
12,458
|
48,861
|
40,000 –
50,000
|
San
Agustin
|
17,809
|
74,116
|
65,000 –
75,000
|
La
Colorada
|
17,358
|
66,964
|
55,000 –
65,000
|
Florida
Canyon
|
14,301
|
54,215
|
50,000 –
60,000
|
Consolidated
|
61,926
|
244,156
|
210,000 –
250,000
|
Dan Symons, Vice President,
Corporate Development & Investor Relations stated: "2021 was a
strong year across our operating portfolio, as we achieved near the
upper end of our GEO production guidance range and record annual
GEO production for the Company. We set a goal at the
beginning of 2021 to deliver $100
million of cash flow from our operating portfolio, which is
critical as we re-invest into the growth of our business. We
surpassed this goal with $107 million
of cash flow2 generated through the first nine months of
2021, and we expect to show record annual cash flow for 2021 when
we complete and announce our year end financial statements."
Argonaut is undertaking an impairment evaluation for the year
ended December 31, 2021 and believes
there is potential for an impairment to certain mineral properties,
plant and equipment. Early analysis suggests a potential
impairment totaling between $50
million and $100
million. This impairment analysis will be finalized
and reported in the Company's fourth quarter and year-ended 2021
financial statements.
Argonaut's net cash position at December
31, 2021 was $119.2 million
(see "Non-IFRS Measures" section).
2022 Production and Cost Guidance
Argonaut anticipates it will produce between 200,000 and 230,000
GEOs during 2022 at a cash cost of between $1,100 and $1,190
per gold ounce sold and an AISC of between $1,415 and $1,525
per gold ounce sold (see "Non-IFRS Measures" section). The
Company also anticipates higher cash taxes will impact cash flow in
2022 as a result of Argonaut's highly profitable operations in 2021
combined with the exhaustion of net operating losses at its Mexican
subsidiaries.
2022 GEO Production and Cost Guidance
|
|
El
Castillo
|
San
Agustin
|
La
Colorada
|
Florida
Canyon
|
Consolidated
|
GEO production
|
In
000s
|
38 – 45
|
62 – 70
|
48 – 55
|
52 – 60
|
200 –
230
|
Cash
costs1
|
$ per oz
Au
|
1,400 –
1,475
|
1,000 –
1,075
|
950 –
1,050
|
1,150 –
1,250
|
1,100 –
1,190
|
AISC1
|
$ per oz
Au
|
1,500 –
1,600
|
1,050 –
1,150
|
1,200 –
1,300
|
1,700 –
1,800
|
1,415 –
1,525
|
1 See
"Non-IFRS Measures" section.
|
Lower GEO production and higher AISC in 2022 are primarily
driven by lower expected GEO production at La Colorada due to a higher strip ratio and
lower grade and recovery, as mining transitions from the El Crestón
pit to the Veta Madre pit. Lower GEO production and higher
cost at El Castillo is primarily
related to processing less oxide ore and more transition and
sulphide ore as El Castillo enters
its final full year of mining operations. Both GEO production
and costs are also impacted by higher costs for consumables and
reagents across all operations due to the current inflationary
environment.
As Argonaut is currently evaluating several viable financing
options to fund the remainder of the Magino construction project,
it intends to provide full year 2022 capital guidance after
achieving financing. The largest component of the projected
2022 capital spend will be the Magino construction project where
Argonaut forecasts it will invest approximately $340 million (C$424
million) during 2022.
Exploration Update at Magino, La Colorada and Florida Canyon
Argonaut Gold is pleased to provide an exploration update at its
Magino project and its La Colorada
and Florida Canyon mines.
Recent Magino drill result highlights include:
- MA21-088 intersected 4.0m at 26.7
g/t Au, including 2.0m at 53.2 g/t Au
within the #42 Zone; and
- MA21-102 intersected 3.0m at 11.1
g/t Au, including 1.0m at 30.0 g/t Au
within the Elbow Zone.
Recent La Colorada drill result
highlights below the El Crestón open pit include:
- 21-LCRC-675 intersected 27.4m at
5.2 g/t Au and 12.5 g/t Ag, including 7.6m at 16.8 g/t Au and 29.3 g/t Ag within the
South vein;
- 21-LCRC-678 intersected 47.2m at
2.5 g/t Au and 6.6 g/t Ag, including 1.5m at 66.2 g/t Au and 47.4 g/t Ag within the
North vein;
- 21-LCRC-680 intersected 56.4m at
2.3 g/t Au and 16.6 g/t Ag, including 4.6m at 16.5 g/t Au and 17.1 g/t Ag within the
South vein.
Recent Florida Canyon drill results targeting gold
mineralization in sulphides below the oxide cap include:
- FCM-0124 intersected 73.2m at 8.8
g/t Au below the Main pit;
- FCM-0115 intersected 68.6m at 2.8
g/t Au, including 47.2m at 3.9 g/t Au
below the Radio Tower pit.
Brian Arkell, Vice President,
Exploration and Mine Technical Services, stated: "We continue to
have meaningful exploration success across multiple assets within
our portfolio. At Magino, we continue to intersect high-grade
gold mineralization at depth below and adjacent to the planned open
pit in multiple zones. At La Colorada, each of the three
distinct veins below the El Crestón pit show between 20 and 30
metres of true width at grades that we believe support bulk tonnage
underground targets and within these same veins, between three and
12 metre true widths of a much higher-grade core that could point
to more selective underground mining methods. At Florida
Canyon, we have always known there was good potential for
meaningful widths and grades in the sulphides below the oxide cap,
and these initial results have exceeded our expectations.
Combined, these exploration results point to potential second
phases across three of our key mineral properties beyond what is in
our current life-of-mine plans."
Select Results from Magino Drill Program Targeting High-Grade
Gold Mineralization at Depth
Hole
|
|
|
|
From
(metres)
|
To
(metres)
|
Length
(metres)
|
Grade*
|
Estimated
True
|
Zone
|
Azimuth
|
Dip
|
(Au
g/t)
|
Width
(metres)
|
MA21-080W3
|
Central
|
167
|
-80
|
1,126.0
|
1,127.0
|
1.0
|
16.0
|
0.7
|
|
|
|
|
|
|
|
|
|
MA21-089
|
Central
|
180
|
-60
|
589.3
|
591.0
|
1.7
|
10.5
|
1.2
|
including
|
|
|
|
589.8
|
590.3
|
0.5
|
34.1
|
0.4
|
and
|
|
|
|
616.0
|
617.0
|
1.0
|
15.1
|
0.7
|
|
|
|
|
|
|
|
|
|
MA21-088
|
#42
|
157
|
-55
|
817.0
|
821.0
|
4.0
|
23.7
|
2.8
|
including
|
|
|
|
817.0
|
819.0
|
2.0
|
53.2
|
1.4
|
|
|
|
|
|
|
|
|
|
MA21-102
|
Elbow
|
154
|
-57
|
351.0
|
354.0
|
3.0
|
11.1
|
2.1
|
including
|
|
|
|
351.0
|
352.0
|
1.0
|
30.0
|
0.7
|
and
|
South
|
|
|
818.3
|
819.9
|
1.6
|
4.6
|
1.1
|
including
|
|
|
|
818.3
|
819.0
|
0.7
|
9.8
|
0.5
|
|
|
|
|
|
|
|
|
|
MA21-104
|
Central
|
154
|
-58
|
413.0
|
418.0
|
5.0
|
2.6
|
3.5
|
including
|
|
|
|
413.0
|
414.0
|
1.0
|
7.8
|
0.7
|
and
|
Scotland
|
|
|
569.0
|
572.0
|
3.0
|
4.6
|
2.1
|
including
|
|
|
|
570.0
|
571.0
|
1.1
|
12.2
|
0.8
|
and
|
#42
|
|
|
594.0
|
598.0
|
4.0
|
3.8
|
2.8
|
including
|
|
|
|
596.0
|
598.0
|
2.0
|
6.7
|
1.4
|
and
|
Sandy
|
|
|
632.0
|
634.0
|
2.0
|
9.4
|
1.4
|
including
|
|
|
|
632.0
|
633.0
|
1.0
|
18.6
|
0.7
|
|
|
|
|
|
|
|
|
|
MA21-085W2
|
Central
|
144
|
-83
|
1,003.0
|
1,023.0
|
20.0
|
1.8
|
14.0
|
including
|
|
|
|
1,012.0
|
1,023.0
|
11.0
|
2.5
|
7.7
|
Argonaut has completed its initial infill drilling program on
the Elbow and Central Zones to 40m
spacing between the bottom of the planned open pit and 500m vertical below surface, with wider spaced
drilling in these zones to approximately 1,000m vertical below surface. Resource
modeling and preliminary mine design is now in progress.
Drilling has now shifted to testing the Scotland, #42, Sandy and South Zones, where in
many cases multiple zones can be intersected with a single drill
hole due to the parallel nature of these structures.
Figure 1 – Plan Map of Magino Showing the Locations of
Drill Holes in this Press Release
The drill plan will continue to test higher-grade gold zones
below the planned pit for both expansion and with infill holes to
test continuity. These higher-grade gold zones are associated
with mafic and felsic dykes, which have been emplaced along the
main structural controls for gold mineralization.
Figure 2 – Drill holes MA21-088 and
MA21-102
Brian Arkell, Vice President of
Exploration & Mine Technical Services commented: "We have now
drilled approximately 67,000 metres into the Elbow and Central
Zones, and our model shows good continuity and impressive gold
grades extending well below the planned ultimate pit. We
currently have four drill rigs following up on some of the other
high-grade gold zones discovered in 2021: Scotland, #42, Sandy and South. Based on
results encountered in these zones to date, we believe we have good
potential to repeat the success we have experienced within the
Elbow and Central Zones."
Select Results From La Colorada Drill Program Targeting
High-Grade Gold Mineralization Below the El Crestón Pit
Hole
|
|
|
|
From
(metres)
|
To
(metres)
|
Length
(metres)
|
Grade*
|
Grade*
(Ag
g/t)
|
Estimated
True
|
Vein
|
Azimuth
|
Dip
|
(Au
g/t)
|
Width
(metres)
|
21-LCRC-675
|
Central
|
180
|
-45
|
15.2
|
21.3
|
6.1
|
1.5
|
28.9
|
5.8
|
including
|
|
|
|
15.2
|
16.8
|
1.5
|
4.7
|
53.4
|
1.5
|
and
|
|
|
|
59.4
|
65.5
|
6.1
|
4.1
|
12.4
|
5.7
|
including
|
|
|
|
59.4
|
61.0
|
1.5
|
14.5
|
37.1
|
1.4
|
and
|
South
|
|
|
97.5
|
125.0
|
27.4
|
5.2
|
12.5
|
26.1
|
including
|
|
|
|
109.7
|
117.3
|
7.6
|
16.8
|
29.3
|
7.3
|
|
|
|
|
|
|
|
|
|
|
21-LCRC-676
|
North
|
180
|
-68
|
192.0
|
225.6
|
33.5
|
2.0
|
14.1
|
28.9
|
including
|
|
|
|
192.0
|
193.5
|
1.5
|
5.5
|
33.0
|
1.3
|
|
|
|
|
|
|
|
|
|
|
21-LCRC-678
|
North
|
180
|
-80
|
150.9
|
198.1
|
47.2
|
2.5
|
6.6
|
33.2
|
including
|
|
|
|
179.8
|
181.4
|
1.5
|
66.2
|
47.4
|
1.1
|
|
|
|
|
|
|
|
|
|
|
21-LCRC-680
|
Central
|
180
|
-61
|
6.1
|
10.7
|
4.6
|
0.6
|
13.4
|
3.9
|
and
|
|
|
|
13.7
|
21.3
|
7.6
|
0.7
|
5.9
|
6.5
|
and
|
|
|
|
39.6
|
53.3
|
13.7
|
1.0
|
3.5
|
11.0
|
including
|
|
|
|
51.8
|
53.3
|
1.5
|
6.8
|
5.7
|
1.2
|
and
|
|
|
|
68.6
|
70.1
|
1.5
|
4.7
|
8.2
|
1.2
|
and
|
|
|
|
106.7
|
163.1
|
56.4
|
2.3
|
16.6
|
52.5
|
including
|
|
|
|
144.8
|
149.4
|
4.6
|
16.5
|
17.1
|
4.3
|
|
|
|
|
|
|
|
|
|
|
21-LCRC-683
|
North
|
180
|
-73
|
192.0
|
214.0
|
22.9
|
1.3
|
17.6
|
16.9
|
including
|
|
|
|
198.1
|
202.7
|
4.6
|
4.9
|
20.0
|
3.4
|
Figure 3 – Plan Map of La
Colorada's El Crestón Pit Showing the Locations of Drill
Holes from the El Crestón Deep Drill Program
At the El Crestón deep target, final assay results have been
received from the 2021 drilling program. These latest results
continue to show higher grade gold and silver mineralization
extending beyond the current pit plan. Continuous
mineralization can be seen in all three veins, with strike lengths
of at least 700m, continuing to
depths of between 100m to
300m below the planned ultimate
pit. Argonaut is initiating an underground mining study and
planning further metallurgical testing of the El Crestón deep
target, as well as preparing to conduct further structural study
and drilling.
Figure 4 – Drill hole 21-LCRC-675
Brian Arkell, Vice President of
Exploration & Mine Technical Services commented: "When you look
at the entire La Colorada
district, in all cases these veins continue below our planned
pits. There is some offset by faults, but we are at the top
of the system and there is potential to go deeper in all these
pits. At El Crestón specifically, we are seeing that grade
increases at depth and gold-silver mineralization continues well
below our planned ultimate pit. This district contains a very
large, low-sulphidation system that stretches over four kilometres
along strike, and we are confident there is still very good
potential for future discovery."
Select Results From Florida Canyon Drill Program Targeting
Gold Mineralization in Sulphides Below the Oxide Cap
Hole
|
|
|
|
From
(metres)
|
To
(metres)
|
Length
(metres)
|
Grade*
|
Estimated
True
|
Zone
|
Azimuth
|
Dip
|
(Au
g/t)
|
Width
(metres)
|
FCM-0123
|
Main
|
270
|
-53
|
140.2
|
198.1
|
57.9
|
2.0
|
43.4
|
|
|
|
|
|
|
|
|
|
FCM-0124
|
Main
|
270
|
-49
|
128.0
|
201.2
|
73.2
|
8.8
|
54.9
|
|
|
|
|
|
|
|
|
|
FCM-0115
|
Radio
Tower
|
270
|
-65
|
91.4
|
160.0
|
68.6
|
2.8
|
51.4
|
including
|
|
|
|
103.6
|
150.9
|
47.2
|
3.9
|
35.4
|
|
|
|
|
|
|
|
|
|
FCM-0118
|
Radio
Tower
|
270
|
-75
|
71.6
|
164.6
|
93.0
|
0.9
|
69.7
|
including
|
|
|
|
76.2
|
93.0
|
16.8
|
2.8
|
12.6
|
and
|
|
|
|
172.2
|
263.7
|
91.4
|
0.8
|
68.6
|
including
|
|
|
|
231.6
|
242.3
|
10.7
|
2.3
|
8.0
|
Figure 3 – Plan Map of Florida Canyon Showing the
Locations of Drill Holes in this Press Release
The Florida Canyon mine has been in production on and off since
1986 and has produced over two million gold ounces from oxide gold
mineralization hosted in sedimentary rocks. Beneath the
oxide, mineralization continues in a large sulphide body.
Argonaut drilled four reverse-circulation drill holes to confirm
and expand gold mineralization in the sulphide zone. Results
confirmed that sulphide mineralization underpins the entire oxide
zone, contains similar or higher gold grades than the overlying
oxide zone and in places reaches over 100m in thickness. Argonaut intends to
follow up on these results with metallurgical testing and further
drilling specifically targeting the mineralized sulphide body.
Figure 4 – Drill Holes FCM-0124 and FCM-0115 Targeting the
Sulphide Body in Relation to the Oxide Cap
Boundary
Brian Arkell, Vice President of
Exploration & Mine Technical Services commented: "We've always
known there is potential for a large sulphide mineral resource
below the Florida Canyon oxide zone. The recent drilling
confirmed this, and the high gold grades encountered exceeded our
expectations. When we consider the results we are seeing in
the Main and the Radio Tower Zones, along with what we know from
previous drill results, it appears the sulphide body is continuous
for over a kilometre."
Argonaut Gold Files Updated Technical Reports for its
El Castillo, San Agustin and La Colorada Mines
Argonaut Gold announces that it has filed updated National
Instrument ("NI") 43-101 Technical Reports for its three operating
mines in Mexico: El Castillo, San
Agustin and La Colorada. These reports were updated
based on drilling data, geotechnical and metallurgical information
acquired since the former reports were published. The reports
are available on www.sedar.com and Argonaut's website
www.argonautgold.com. All dollar amounts are expressed
in United States dollars, unless
otherwise specified.
El Castillo
El Castillo Measured and Indicated ("M&I") Mineral Resources
totalled 30.8 million tonnes at 0.34 g/t Au for 340,000 contained
M&I gold ounces. Inferred Mineral Resources totalled 1.7
million tonnes at 0.33 g/t Au for 18,000 contained gold
ounces. The El Castillo Mineral Resource estimate assumed an
$1,800 gold price and has an
effective date of October 1,
2021.
El Castillo Proven and Probable ("P&P") Mineral Reserves
totalled 11.3 million tonnes at 0.39 g/t Au for 142,000 contained
gold ounces. The El Castillo Mineral Reserves assumed a
$1,650 gold price and has an
effective date of October 1,
2021.
The El Castillo life-of-mine
("LOM") plan contemplates 6.8 million ore tonnes mined in 2022 and
2.6 million ore tonnes mined in 2023, using open pit methods,
before the operation transitions to residual leaching of any
remaining gold in the leach pads. It is estimated that the
residual leaching will conclude in March
2024 followed by closure and reclamation. The total
costs for closure and reclamation, including a 9% contingency, were
estimated at $9.3 million.
El Castillo Mineral Resources at October 1, 2021
Mineral Resource Category
|
Tonnes (000s)
|
Grade (g/t Au)
|
Contained Au oz (000s)
|
Measured
|
1,192
|
0.45
|
17
|
Indicated
|
29,631
|
0.34
|
322
|
M&I
|
30,823
|
0.34
|
340
|
Inferred
|
1,705
|
0.33
|
18
|
Notes to accompany El Castillo Mineral Resource table:
- Mineral Resources are reported using the 2014 CIM Definition
Standards. The Qualified Person for the estimate is Brian Arkell, RM SME.
- Mineral Resource estimates have an effective date of
October 1, 2021 as defined by end of
month September 2021 topography.
- Mineral Resources are constrained by a conceptual pit shell
using the following assumptions: a gold price of $1,800/oz Au; mining cost of $1.58/t mined; hauling cost to East Leach Pad of
$0.12/ore t ROM; hauling cost to West
Heap Leach Pad of $0.22/ore t ROM;
process and leaching cost for oxides and transitional material of
$1.95/t processed; process and
leaching cost for sulphides of $2.20/t processed; G&A cost of $0.51/t processed; selling cost of $0.15/t processed; oxide metallurgical recoveries
from 38-66%; transitional metallurgical recovery of 41%; sulphide
metallurgical recoveries from 11-24%; and pit slope angles from
35-50º.
- Mineral Resources are reported inclusive of Mineral Reserves.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability.
- Mineral Resource estimates do not account for mineability,
selectivity, mining loss or dilution.
- Totals may not add up due to rounding.
El Castillo Mineral Reserves at October 1, 2021
Mineral Reserve
Category
|
Tonnes
(000s)
|
Grade (g/t
Au)
|
Contained Au oz
(000s)
|
Proven
|
205
|
0.51
|
3
|
Probable
|
11,085
|
0.39
|
139
|
P&P
|
11,290
|
0.39
|
142
|
Notes to accompany El Castillo Mineral Reserves table
- Mineral Reserves are reported using the 2014 CIM Definition
Standards. The Qualified Person for the estimate is Brian Arkell, RM SME.
- Mineral Reserves have an effective date of October 1, 2021 as defined by end of month
September 2021 topography.
- Mineral Reserves are reported inside an optimized pit shell
using the following assumptions: a gold price of US$1,650/oz Au; mining cost of US$1.58/t mined; hauling cost to East Leach Pad
of US$0.12/ore t ROM; hauling cost to
West Heap Leach Pad of US$0.22/ore t
ROM; process and leaching cost for oxides and transitional material
of US$1.95/t processed; process and
leaching cost for sulphides of US$2.20/t processed; G&A cost of US$0.51/t processed; selling cost of US$0.15/t processed; oxide metallurgical
recoveries from 38-66%; transitional metallurgical recovery of 41%;
sulphide metallurgical recoveries from 11-24%; and pit slope angles
from 35-50º.
- Mineral Reserves do not have additional dilution. Full mine
recovery is assumed.
- The selective mining unit was sized at 10 m x 10 m x
6 m.
- Totals may not add up due to rounding.
San Agustin
San Agustin Indicated Mineral Resources totalled 60.9 million
tonnes at 0.28 g/t Au and 8.3 g/t Ag for 541,000 contained gold
ounces and 16.2 million contained silver ounces. Inferred
Mineral Resources totalled 86.9 million tonnes at 0.48 g/t Au and
14.7 g/t Ag for 1.3 million contained gold ounces and 41.0 million
contained silver ounces. Of the Inferred Mineral Resource,
84.8 million tonnes are within an initial sulphide Inferred Mineral
Resource. The Company has conducted metallurgical testing on
San Agustin sulphide mineralized
material below the oxide cap and test work has shown similar
recoveries to the sulphide ores currently processed at El
Castillo. The San Agustin Mineral Resource estimate assumed
an $1,800 gold price, a $24.00 silver price and has an effective date of
August 1, 2021.
San Agustin P&P Mineral Reserves totalled 35.2 million
tonnes at 0.31 g/t Au and 9.9 g/t Ag for 355,000 contained gold
ounces and 11.2 million contained silver ounces. The San
Agustin Mineral Reserves assumed a $1,500 gold price, a $20.00 silver price and has an effective date of
August 1, 2021.
The San Agustin LOM plan contemplates 32.1 million ore tonnes
mined, using open pit methods, between 2022 and 2024, after which
active mining would cease and the operation would transition to
residual leaching of any gold and silver remaining in the leach
pads. However, Argonaut believes there is good potential to
extend San Agustin's mine life
beyond 2024 by drilling on the mineral concessions acquired in
October 2021 (see press release dated
October 12, 2021) and with more
drilling and metallurgical work to potentially convert the newly
declared sulphide Inferred Mineral Resource to Mineral
Reserves. These programs are currently underway and if
successful, Argonaut sees the potential to add between six and ten
years to San Agustin's mine life
solely based on the information currently available and not
including additional exploration discovery success within the
San Agustin district.
San Agustin Mineral Resources at August 1, 2021
Mineral
Resource
Category
|
Tonnes
(000s)
|
Grade
(g/t Au)
|
Grade
(g/t Ag)
|
Contained Au
oz
(000s)
|
Contained Ag
oz
(000s)
|
Indicated
|
60,938
|
0.28
|
8.3
|
541
|
16,191
|
Inferred
|
86,909
|
0.48
|
14.7
|
1,345
|
40,975
|
Notes to accompany Mineral Resources table:
- Mineral Resources are reported using the 2014 CIM Definition
Standards. The Qualified Person for the estimate is Brian Arkell, SM RME.
- Mineral Resource estimates have an effective date of
August 1, 2021 as defined by end of
month July 2021 topography.
- Mineral Resources are constrained by a conceptual pit shell
using the following assumptions: a gold price of US$1,800/oz Au; a silver price of US$24.00/oz Ag; mining cost of US$1.66/t mined; crushing and conveying cost of
US$1.04/t processed; process and
leaching cost of US$2.33/t processed;
G&A cost of US$0.49/t processed;
selling cost of US$0.30/t processed;
variable gold metallurgical recoveries from 17-66%; silver
metallurgical recoveries from 14-16%; and pit slope angles of
45º.
- Mineral Resources are reported inclusive of Mineral Reserves.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability.
- Mineral Resource estimates do not account for mineability,
selectivity, mining loss or dilution.
- Totals may not add up due to rounding.
San Agustin Mineral Reserves at August
1, 2021
Mineral
Reserve
Category
|
Tonnes
(000s)
|
Grade
(g/t Au)
|
Grade
(g/t Ag)
|
Contained Au
oz
(000s)
|
Contained Ag
oz
(000s)
|
Probable
|
35,230
|
0.31
|
9.9
|
355
|
11,211
|
Notes to accompany Mineral Reserves table:
- Mineral Reserves are reported using the 2014 CIM Definition
Standards. The Qualified Person for the estimate is Brian Arkell, RM SME.
- Mineral Reserves have an effective date of August 1, 2021 as defined by end of month
July 2021 topography.
- Mineral Reserves are reported inside an optimized pit shell
using the following assumptions: a gold price of US$1,500/oz Au; a silver price of US$20/oz Ag; mining cost of US$1.66/t mined; crushing and conveying cost of
US$1.04/t processed; process and
leaching cost of US$2.33/t processed;
G&A cost of US$0.49/t processed;
selling cost of US$0.30/t processed;
gold metallurgical recoveries from 17-66%; silver metallurgical
recoveries from 14-16%; and pit slope angles of 45º.
- Mineral Reserves are reported using a cut-off grade of 0.16 g/t
AuEq, except for material scheduled for mining in 2021 that is
reported using a cut-off grade of 0.13 g/t AuEq.
- Mineral Reserves do not have additional dilution. Full mine
recovery is assumed.
- The selective mining unit was sized at 6
m x 6 m x 6 m.
- Totals may not add up due to rounding.
La Colorada
La Colorada Indicated Mineral Resources totalled 38.9 million
tonnes at 0.57 g/t Au and 7.9 g/t Ag for 658,000 contained gold
ounces and 9.1 million contained silver ounces. Inferred
Mineral Resources totalled 3.4 million tonnes at 0.57 g/t Au and
12.6 g/t Ag for 62,000 contained gold ounces and 1.4 million
contained silver ounces. The La Colorada Mineral Resource
estimated assumed an $1,800 gold
price, a $24.00 silver price and has
an effective date of October 1,
2021.
La Colorada Probable Mineral Reserves totalled 19.5 million
tonnes at 0.61 g/t Au and 8.2 g/t Ag for 383,000 contained gold
ounces and 5.1 million contained silver ounces. The La
Colorada Mineral Reserves assumed a $1,500 gold price, a $20.00 silver price and has an effective date of
October 1, 2021.
The La Colorada LOM plan contemplates 18.9 million ore tonnes,
using open pit methods, mined between 2022 and 2027, after which
active mining would cease and the operation would transition to
residual leaching of any gold and silver remaining in the leach
pads. However, the current LOM assumes El Crestón ore will be
completely mined via open pit methods and does not contemplate
potential future underground operations below the El Crestón
pit. In the current LOM, there are 36.4 million tonnes of
waste to be mined in the El Crestón pit in years 2024 and 2025 and
20.0 million tonnes of waste to be mined in the Veta Madre pit in
year 2023. Argonaut is evaluating options to optimize the
LOM, which include:
- bringing in larger equipment to accelerate waste
stripping;
- a trade off study to determine the optimal timeframe in which
to transition mining of the El Crestón deposit from open pit
methods to underground methods;
- metallurgical testing on the high-grade gold and silver
mineralization below the El Crestón pit to determine the
appropriate process flow sheet to maximize metal recoveries and
cash flow; and
- the potential to add additional gold and silver ounces through
La Colorada satellite targets and
district exploration potential.
La Colorada Mineral Resources at October 1, 2021
Mineral Resource
Category
|
Tonnes
(000s)
|
Grade
(g/t Au)
|
Grade
(g/t Ag)
|
Contained Au
oz
(000s)
|
Contained Ag
oz
(000s)
|
Indicated
|
38,858
|
0.57
|
7.9
|
658
|
9,088
|
Inferred
|
3,414
|
0.57
|
12.6
|
62
|
1,384
|
Notes to accompany Mineral Resource table:
- Mineral Resources are reported using the 2014 CIM Definition
Standards. The Qualified Person for the estimate is Brian Arkell, SM RME.
- Mineral Resource estimates have an effective date of
October 1, 2021 as defined by end of
month September 2021 topography.
- Mineral Resources are constrained by conceptual pit shells
using the following assumptions: a gold price of US$1,800/oz; a silver price of US$24/oz; rock mining cost of US$1.82/t mined; backfill mining cost of
US$1.49/t mined; crushing and
conveying cost of US$1.68/t
processed; process and leaching cost of US$1.30/t processed; G&A cost of US$0.54/t processed; capital cost allocation of
$0.25/t processed; selling cost of
US$0.19/t processed; gold
metallurgical recoveries from 53-89% for La Colorada/Gran Central, 79% for El Crestón,
and 81-84% for Veta Madre; silver metallurgical recoveries from
11-53% for La Colorada/Gran
Central, 13% for El Crestón, and 10-31% for Veta Madre; and pit
slope angles from 30-47º for La
Colorada/Gran Central, 35-51º for El Crestón, and 46-51º for
Veta Madre.
- Mineral Resources are reported inclusive of Mineral Reserves.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability.
- Mineral Resource estimates do not account for mineability,
selectivity, mining loss or dilution.
- Totals may not add up due to rounding.
La Colorada Mineral Reserves at October 1, 2021
Mineral
Reserve
Category
|
Tonnes
(000s)
|
Grade
(g/t Au)
|
Grade
(g/t Ag)
|
Contained Au
oz
(000s)
|
Contained Ag
oz
(000s)
|
Probable
|
19,459
|
0.61
|
8.2
|
383
|
5,123
|
Notes to accompany Mineral Reserves table
- Mineral Reserves are reported using the 2014 CIM Definition
Standards. The Qualified Person for the estimate is Brian Arkell, RM SME.
- Mineral Reserves have an effective date of October 1, 2021 as defined by end of month
September 2021 topography.
- Mineral Reserves are reported inside an optimized pit shell
using the following assumptions: a gold price of US$1,500/oz; a silver price of US$20/oz; rock mining cost of US$1.79/t mined; backfill mining cost of
US$1.49/t mined; crushing cost of
US$1.48/t processed; process cost of
US$2.33/t processed; G&A cost of
US$0.82/t processed; capital cost
allocation for El Crestón of US$0.23/t processed; selling cost of US$0.23/t processed; gold metallurgical
recoveries from 79-84%; silver metallurgical recoveries from
10-31%; and pit slope angles from 22-50º.
- Mineral Reserves do not have additional dilution. Full mine
recovery is assumed.
- The selective mining unit was sized at 5
m x 5 m x 5 m.
- Totals may not add up due to rounding.
Lowe Billingsley, Chief Operating
Officer, stated: "Argonaut Gold was originally launched on the back
of the El Castillo acquisition at
the beginning of 2010. Since that time, we have successfully
extended its mine life nearly a decade longer than was originally
contemplated when the mine began production in 2007, and we are now
running out of opportunities to continue to economically extend its
life. We are, however, very encouraged with the
possibility of significantly extending San Agustin's mine life through potential
exploration success in the recently acquired mineral concessions
and the potential to process sulphide mineralized material.
At La Colorada, the mine life currently runs through 2027.
While we see good potential to extend this further, particularly at
depth, we are currently focused on optimizing the existing LOM plan
by accelerating waste stripping and/or eliminating certain waste
stripping by transitioning to underground mining sooner on the El
Crestón deposit. This LOM optimization work will be a major
focus of the La Colorada team this
year."
Promotion of Lowe Billingsley
to Chief Operating Officer
Argonaut announces that Mr. Lowe
Billingsley has been promoted to the role of Chief Operating
Officer. Mr. Billingsley previously held the role of Senior
Vice President, Operations since joining the Company in April
2021. Mr. Billingsley has 33 years of industry experience
spanning executive leadership, multi-cultural engagement,
operations, project management and technical expertise. He
was previously the Mine Manager of the Stillwater East Mining
Complex for Sibanye-Stillwater. Prior to, Mr. Billingsley
spent 27 years with AngloGold Ashanti in various roles increasing
in responsibility, seniority and leadership with the most recent
being Senior Vice President, Americas. In this role with
AngloGold Ashanti, Mr. Billingsley was responsible for managing the
Americas Region, comprising four operations in Brazil and Argentina with annual production of 850,000
gold ounces and a workforce of approximately 5,000 employees and
4,000 contractors. Mr. Billingsley holds a B.A. in Geology
from The Colorado College, in
Colorado Springs.
Lowe Billingsley, Chief Operating
Officer, commented: "Despite the recent turbulence due to the
revised Magino capital estimate, I continue to view Argonaut as an
exceptional opportunity within the precious metals mining
sector. Argonaut is generating positive cash flow through its
existing operating portfolio, holds an enviable portfolio of growth
assets and, once Magino comes on line next year, has the
opportunity to transition from a higher cost, junior producer to a
lower cost, intermediate producer with a more diversified
jurisdictional profile. In terms of our 2022 GEO production
and cost guidance, we felt it prudent to take a hard look at the
operating portfolio, as is often done during a period of a
leadership change, and have put forth guidance in which we have a
high degree of confidence it can be achieved."
Leadership Update
The Company has engaged Korn
Ferry, a leading executive recruitment firm, to assist with
the Chief Executive Officer search and is encouraged with the
strong level of interest from highly respected mining
executives. While the process continues to put permanent
leadership in place, on an interim basis, Argonaut has divided its
leadership roles between two of its Directors.
James Kofman, Chairman of the
Board, is dedicating significant time to Argonaut until a permanent
Chief Executive Officer is appointed. Mr. Kofman is primarily
focused on the evaluation of Argonaut's financing and strategic
alternatives with Dave Ponczoch,
Chief Financial Officer and Dan
Symons, Vice President, Corporate Development & Investor
Relations. Mr. Kofman has over three decades of experience in
the mergers and acquisitions and corporate finance
sectors.
Peter Mordaunt, Director, is
focused on assisting Lowe
Billingsley, Chief Operating Officer, Bob Rose, Vice President of Technical Services
and Brian Arkell, Vice President of
Exploration and Mine Technical Services in the execution of
operations, projects and exploration. He has also assumed the
title of interim Chief Executive Officer for regulatory
purposes. Mr. Mordaunt is a Registered Professional
Geoscientist with over 35 years of experience in mining, mine
development and advanced exploration, including 18 years of
experience in Mexico.
James Kofman, Chairman, stated:
"The entire Board of Directors is extremely encouraged by the high
quality professionals that have expressed a serious interest in
Argonaut's leadership position. Several candidates view the
current environment as a terrific entry point to take Argonaut
firmly into the intermediate producer class with the completion of
the Magino construction project. In the interim, the
management team has stepped up and we are leaning on the entire
Board's wealth of experience and areas of expertise where we have
four Directors who are former or active mining CEOs. Our goal
is to have fully evaluated our options and make decisions on the
best path to maximize shareholder value by the end of the first
quarter 2022."
Peter Mordaunt, Director and
interim CEO, commented: "Argonaut has a strong and experienced
management team already in place and I'm mainly focused on
assisting with core business decisions in the areas of operations,
projects and exploration. We as a Board believe that Lowe has
demonstrated his capability over the last several months and are
pleased to announce his well-deserved promotion to Chief Operating
Officer."
Qualified Persons Responsible for Technical Reports
The Qualified Persons responsible for the Magino Technical
Report are John M. Marek, P. Eng.,
IMC, Christos Marais, P. Geo., Chief Mine
Geologist, Magino, Argonaut Gold, Philip Addis, P. Eng., SLR, Tommaso.Roberto Raponi, P. Eng., T.R. Raponi Consulting
Ltd., and Kyle L. Stanfield, P.
Eng., Director, Environment & Permitting, Argonaut Gold.
The Qualified Persons responsible for the El Castillo, San
Agustin and La Colorada Technical Reports are Brian Arkell, RM SME, Vice President,
Exploration and Mine Technical Services, Argonaut Gold,
Josh Carron, RM SME, Senior Modeler,
Argonaut Gold and Carl DeFilii, RM SME, Project Manager, Kappes,
Cassidy and Associates.
For further information regarding the Company's material
properties, please see the reports as listed below on the Company's
website or on www.sedar.com:
El Castillo Gold
Mine
|
El Castillo Gold
Mine, Durango, Mexico NI 43-101 Technical Report dated February 14,
2022 (effective date of October 1, 2021)
|
San Agustin
Gold/Silver Mine
|
San Agustin
Gold/Silver Mine, Durango, Mexico, NI 43-101 Technical Report dated
February 14, 2022 (effective date of August 1, 2022)
|
La Colorada
Gold/Silver Mine
|
La Colorada
Gold/Silver Mine, Sonara, Mexico, NI 43-101 Technical Report dated
February 14, 2022 (effective date of October 1, 2021)
|
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)
|
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)
|
The key assumptions, parameters and methods used in the Magino
technical report described in this press release will be further
described in the full technical report being prepared for the
Magino Project pursuant to NI 43-101 and will be available on
www.sedar.com under Argonaut's issuer profile within 45 days from
today. The Company is not aware of any known legal,
political, environmental or other risks that could materially
affect the potential development of the Mineral Resources or
Mineral Reserves beyond those contemplated in the prior technical
report for Magino, as will be updated in the report to be
filed.
Qualified Person Comments / Quality Control
Procedures
The preparation of this press release was supervised and
approved by Brian Arkell, Argonaut
Gold's Vice President Exploration and Mine Technical Services and a
Qualified Person under NI 43-101. Mr. Arkell also reviewed
the diamond drilling, RC drilling, sampling, and on-site sample
preparation procedures at Magino, La
Colorada, and Florida Canyon. Full results of the
drilling programs are presented on the Company's website at
www.argonautgold.com.
For sample analysis, the Company utilizes a system of Quality
Assurance/Quality Control (QA/QC) that includes insertion and
verification of standards, blanks, and duplicates consistent with
industry standards.
The Company has implemented a QA/QC program to ensure sampling
and analysis of all exploration work is conducted in accordance
with the CIM Exploration Best Practices Guidelines. The
entire drill hole is sampled and tagged by geologic
personnel. Cores are then photographed and sawn in half by
experienced geo-technicians, placed in numbered plastic bags, and
gathered in rice bags which are sealed with tamper-proof security
tags under the supervision of the project geologists. The
other half of the core is retained for future assay verification
and/or metallurgical testing. Other QA/QC procedures include
the insertion of coarse blanks and Canadian Reference Standards for
every tenth sample in the sample stream. Samples are bagged, sealed
with numbered security tags and shipped to the Activation
Laboratories facility, Thunder Bay,
Ontario, for sample preparation and assaying. The
laboratory has its own QA/QC protocols, running standards, blanks,
and duplicate samples in each batch stream. Gold analysis is
conducted by lead collection, fire assay with an atomic absorption
finish (FAAA) on a 50-gram sample. When gold FAAA is greater than 3
ppm, an additional fire assay with a gravimetric finish (FAGRAV) on
a 50-gram sample is analyzed. When gold FAGRAV is greater than 10
ppm or when a sample contains visible gold, a metallic screen fire
assay is performed using a 1.0 kg sample. All material from the
+100-mesh fraction is pulverized and fire assayed with a
gravimetric finish. Two 50-gram samples from the -100-mesh fraction
are pulverized and fire assayed with a gravimetric finish. Check
assays are conducted at a secondary ISO certified laboratory
applying the same analytical methods and triggers as the primary
laboratory.
Please see below under the heading "Cautionary note regarding
forward-looking statements" for further details regarding
risks.
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" and "Net cash" in this press release, 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. 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 most recent 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 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 Magino project, the realization of mineral reserve
estimates; the timing and amount of estimated future production;
costs of production; estimated production and mine life of the
various mineral projects of Argonaut; timing of approval for
modifications to existing permits; permitting and legal processes
in relation to mining permitting and approval; 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 the
possibility of project cost overruns or unanticipated costs and
expenses; 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 parameters; 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.
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. The Company also holds the construction stage Magino
project, the advanced exploration stage Cerro del Gallo project and several other
exploration stage projects, all of which are located in North
America.
______________________________
|
1 GEOs are based on a conversion
ratio of 80:1 silver to gold in 2022 and 85:1 in 2021. The
silver to gold ratio is based on the three-year trailing average
silver to gold ratio. This is the silver to gold ratio
throughout this press release.
|
2 "Cash
Flow" refers to "Cash flow from operating activities before changes
in non-cash operating working capital and other items".
|
SOURCE Argonaut Gold Inc.