Argonaut Gold Announces 1st Quarter 2013 Revenue of $43.1M and Net Income of $11.6M

Toronto, Ontario – (May 14, 2013) Argonaut Gold Inc. (TSX: AR) (the “Company”, “Argonaut Gold” or “Argonaut”) is pleased to announce its financial and operating results for the first quarter ended March 31, 2013. All dollar amounts are expressed in United States dollars unless otherwise specified.

 
FIRST QUARTER 2013 & RECENT HIGHLIGHTS

• Capital expenditures of $18.8 million on mineral properties, plant and equipment
• El Castillo operations:

• • Pad 8 construction well under way with stacking of ore and leaching
  • Argonaut is now operating all mining internally, having assumed prior contractor mining activities in March 2013
  • Over 360,000 gold ounces were added to the in-pit resources relating to sulphide mineralization

• La Colorada operations:
• Pad construction initiated in 2012 continues to progress well and we have now begun loading and leaching

• • Crushing circuit expansion continues and is scheduled to be completed and operational in the third quarter of 2013
  • Updated resource for the Veta Madre deposit added 110,000 inferred gold ounces, with potential for further expansion

• San Antonio and Magino permitting process underway

CEO Commentary
Pete Dougherty, President and CEO of Argonaut Gold stated “2013 will see a substantial investment in both the El Castillo and La Colorada operations as we bring forward our capital expansion programs. At El Castillo, the addition of the new heap leach pads and west side crusher/overland conveyor is aimed at reducing operating costs and providing production growth; both should be fully functional in the third quarter of this year. At La Colorada, the Company continues to open the ore body and construct the new crusher; both are anticipated to provide improved production in the second half of the year. Overall operations are showing steady improvement toward our 2013 goals and objectives and we are poised to make our guidance provided earlier.”

Financial Results – First Quarter 2013
During the first quarter of 2013, revenue was $43.1 million from gold sales of 25,441 ounces, compared to $24.4 million from gold sales of 14,498 ounces in the first quarter of 2012. Cash cost per gold ounce sold in the quarter was $594, compared to $639 in the same period of the prior year (cash cost per gold ounce sold is a non-IFRS measure, see note below).

During the first quarter of 2013, gross profit was $21.0 million, compared to $12.3 million in the first quarter of 2012. During the quarter, profit from operations was $17.2 million, compared to $9.7 million in the same period of the prior year. Net income for the period was $11.6 million, or $0.08 per basic share, versus $7.3 million, or $0.08 per basic share, in the first quarter of 2012.

Cash and cash equivalents was $168.5 million at March 31, 2013. Capital expenditures in the first quarter were $18.8 million primarily as a result of infrastructure improvements at the El Castillo and La Colorada mines.

This press release should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements for the quarter ended March 31, 2013 and associated management’s discussion and analysis (“MD&A”) which are available from the Company’s website,www.argonautgold.com, in the “Investors” section under “Financial Filings”, and under the Company’s profile on SEDAR at www.sedar.com.

Summary of Production Results at El Castillo
As of mid-March, we assumed the day to day mining operations at El Castillo from the former mining contractor. We hope to bring further efficiencies to the mining process through this investment. Total tonnes mined in the first quarter 2013 were up 4 percent, compared to the first quarter of 2012. Of note, the 1.4 million tonnes crushed in the first quarter was a new record for El Castillo and represented a 71 percent increase in crushed tonnes, over the first quarter of 2012. The total ounces loaded to the leach pad were 36,023 in the first quarter of 2013, a 2 percent increase over the first quarter of 2012. The stripping ratio of waste to ore remained relatively consistent between periods.

The 2013 production guidance at El Castillo is expected to be between 90,000-100,000 ounces with a cash cost between $700 and $725 per gold ounce sold.

Summary of Production Results at La Colorada
Overburden removal began in the fourth quarter of 2012; we have now increased the daily mining rate to roughly 50,000 tonnes per day. During removal of the overburden we have encountered some marginally mineralized material at 0.27 g/t for the first quarter. We are on schedule to have the pit opened to ore in the third quarter. As a result, we anticipate mineralization to increase during the second half of the year.

The 2013 production guidance at La Colorada is between 30,000-40,000 ounces, back loaded to the second half of the year, with a cash cost between $450 and $475 per gold ounce sold.

Expansion Projects for 2013 
The Company plans on investing a total of between $64 million to $74 million on capital expenditures and exploration initiatives in 2013. Major capital expenditures in 2013 are expected to include approximately $25 million at El Castillo, $19 million at La Colorada, $6 million at Magino, between $5 million and $11 million at San Antonio and between $2 million and $3 million for other capital expenditures. Exploration expenditures in 2013 are expected to amount to between $7 million and $10 million.

Non-IFRS Measures
The Company included the non-IFRS measure “Cash cost per gold ounce sold” 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. The Company believes that this measure provides investors with an improved ability to evaluate the performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. Therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please see the MD&A for full disclosure on non-IFRS measures.

Qualified Person, Technical Information and Mineral Properties Reports
The technical information contained in this document has been prepared under supervision of, and reviewed and approved by Mr. Thomas H. Burkhart, Argonaut’s Vice President of Exploration, a qualified person as defined by National Instrument 43-101. Mr. Alberto Orozco, Argonaut’s Mexico Exploration Manager also supervised the drill programs and on-site sample preparation procedures at La Colorada. Bret Swanson of SRK of Denver, CO, who is an “Independent Qualified Person” as defined by NI 43-101 and the lead person responsible for completing the updated Veta Madre resource has reviewed this press release as it relates to Veta Madre.

For further information on the Company’s properties please see the reports as listed below on the Company’s website or on www.sedar.com:

About Argonaut Gold
Argonaut Gold is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production stage El Castillo Mine in Durango, Mexico and the La Colorada Mine in Sonora, Mexico, the advanced exploration stage San Antonio project in Baja California Sur, Mexico, the recently acquired advanced exploration stage Magino project in Ontario, Canada and several exploration stage projects, all of which are located in North America.

Creating Value Beyond Gold

Cautionary Note Regarding Forward-looking Statements
This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management’s current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release.

For more information, contact:
Argonaut Gold Inc.
Nichole Cowles
Investor Relations Manager
Tel: (775) 284-4422 x 101
Email: nichole.cowles@argonautgold.com 
www.argonautgold.com