Argonaut Gold Announces Full Year 2013 Gold Production of 120,224 Gold equivalent ounces
Toronto, Ontario – (January 20, 2014) Argonaut Gold Inc. (“Argonaut”, “Argonaut Gold” or the “Company”; TSX: AR) announced today that it had production of 28,648 gold equivalent ounces during the 4th quarter ended December 31, 2013. This included 20,848 ounces at its 100% owned El Castillo Mine (“El Castillo”) located in the State of Durango, Mexico and 7,800 gold equivalent ounces at its 100% owned La Colorada Mine (“La Colorada”) located near Hermosillo, Mexico.
FOURTH QUARTER 2013 HIGHLIGHTS:
El Castillo
- Q4 production of 20,848 gold ounces; full year production of 94,804 gold ounces,
- During Q4, 39,269 gold ounces loaded on the pad,
- West side crusher and overland conveyor project was completed and 1.3 million tonnes was moved during the fourth quarter,
- New south waste dump is operational.
La Colorada
- Q4 production of 7,017 gold ounces and 47,759 silver ounces, for 7,800 gold equivalent ounces (at 61:1 conversion),
- Full year production of 22,544 gold ounces and 169,673 silver ounces, for 25,420 gold equivalent ounces (at 59:1 conversion),
- During Q4, 9,799 gold ounces and 136,476 silver ounces loaded on the pad,
- La Colorada pit is now fully opened, and the average life of mine grade was achieved in December.
Magino
- Announced prefeasibility study on Magino indicating an after-tax internal rate of return (“IRR”) of 18% and an after-tax net present value (“NPV”) of $199 million incorporating 40% of the current mineral resource estimate.
San Agustín
- Completed purchase of the San Agustín gold-silver project from Silver Standard Resources Inc.,
- Provided first cash payment of $15 million for the asset, together with agreed share consideration. Purchase completion also requires IVA (VAT) payment of $6.5 million.
2014 GUIDANCE
- Gold production of 135-150,000 gold equivalent ounces (at a 60:1 conversion),
- El Castillo – 90-100,000 gold ounces at cash costs of$775-$800/ounce sold,
- La Colorada – 45-50,000 gold equivalent ounces at cash costs of $640-$665/ounce sold,
- Cash cost per ounce sold of $750-$775,
- Sustaining capital program of $6 million, and $11 million on capitalized stripping at La Colorada,
- Expansion capital program of $70 million,
- Exploration program of $5 million for in-fill and step-out drilling primarily focused at San Agustín and La Colorada,
- Total anticipated spending by project:
- El Castillo – $11 million, split 60% sustaining and 40% expansion,
- La Colorada – $3 million expansion capital and $11 million on capitalized stripping,
- San Antonio – $56 million capital expansion subject to permits being granted,
- San Agustin – $3 million expansion capital,
- Magino – $4 million expansion capital.
Pete Dougherty, Argonaut Gold’s President & CEO said “Overall, 2013 was a tremendous year at Argonaut. The Company announced the results of a prefeasibility study on Magino with a positive after-tax IRR of 18%, incorporating 40% of the resource. Potential upside in terms of exploration and economics for the project, may exist at Magino based on the pending surface land acquisition.
In terms of resources, ounces were added at both La Colorada and El Castillo. Exploration drilling added 110,000 ounces at La Colorada’s Veta Madre discovery. At El Castillo, additional metallurgical work conducted added 360,000 in-pit gold ounces.
In terms of improving efficiencies, capital projects aimed at decreasing the production costs at both El Castillo and La Colorada were implemented. Total gold equivalent production of almost 95,000 ounces at El Castillo and 26,000 ounces at La Colorada resulted in a gold equivalent ounce production increase of 7% year over year. Additionally, at La Colorada, the Company acquired the outstanding royalty providing full ownership of the project.
Lastly, Argonaut expanded our near term development projects by acquiring the San Agustin project located 10 km from El Castillo, and by increasing our land position at the Magino project. The San Agustin projects proximity and likeness to the El Castillo mine allows us to leverage our understanding and regional strength to undertake timely exploration and development. A surface and mining rights expansion agreement with Richmont Mines Ltd. (“Richmont”) was signed. This provides a key strategic initiative for the Company as now the full Magino resource envelope (an additional 60% of the resource) at Magino may be exploited while allowing for additional exploration upside on the Richmont ground.
As an organization, we have made great accomplishments, and we look forward to the challenges and opportunities 2014 bring as we embark upon continuing the development of the Company in the future.”
FOURTH QUARTER 2013 El CASTILLO OPERATING STATISTICS
| 3 Months Ended December 31 | 12 Months Ended December 31 | ||||||
| 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||
|
|
|||||||
| Mining (Tonnes 000’s) | |||||||
| Total tonnes mined | 7,574 | 6,695 | ↑13% | 26,997 | 24,052 | ↑12% | |
| Total ore tonnes mined | 3,764 | 3,321 | ↑13% | 13,621 | 11,962 | ↑14% | |
| Heap Leach Pad (Tonnes 000’s) | |||||||
| Tonnes ore direct to leach pad | 1,045 | 2,034 | ↓49% | 6,352 | 7,561 | ↓16% | |
| Tonnes crushed | 1,407 | 1,282 | ↑10% | 5,736 | 4,555 | ↑26% | |
| Tonnes overland conveyor | 1,312 | 1,486 | |||||
| Production | |||||||
| Gold grade (g/t) | 0.32 | 0.37 | ↓13% | 0.35 | 0.39 | ↓9% | |
| Gold loaded to leach pad (oz) | 39,269 | 39,329 | 0 | 154,581 | 151,462 | ↑2% | |
| Gold produced (oz) | 20,848 | 25,805 | ↓19% | 94,804 | 87,712 | ↑8% | |
| Gold sold (oz) | 20,620 | 23,595 | ↓13% | 92,675 | 89,881 | ↑3% | |
| 1 “g/t” is grams per tonne | |||||||
| 2 “oz” means troy ounce | |||||||
Richard Rhoades, Chief Operating Officer of Argonaut Gold, said “At El Castillo, during the fourth quarter, production results were lower than anticipated, due to the processing of some transitional material which resulted in lower recovery. It is anticipated that the Company will progress through this material and by second quarter of this year we should see more traditional oxide ores and recovery improve. During 2014, the Company aims to deliver record ore tonnes to the pad, while lower ore grades are expected. The increase in tonnage should offset the lower grades and recoveries early in the year and we anticipate producing between 90-100 thousand ounces of gold.
At the La Colorada mine, the La Colorada pit has reached life of mine grades as the pit has been opened. During December, we were able to achieve average life of mine grade from the pit. While this is very encouraging, we are still experiencing lower than projected crusher throughput. We have brought additional crushing equipment to the site and believe that further increases can be made.”
FOURTH QUARTER 2013 LA COLORADA OPERATING STATISTICS
| 3 Months Ended December 31 | 12 Months Ended December 31 | ||||||
| 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||
|
|
|||||||
| Mining (Tonnes 000’s) | |||||||
| Total tonnes mined | 4,536 | 2,945 | ↑54% | 16,335 | 7,174 | ↑128% | |
| Total ore tonnes mined | 434 | 923 | ↓53% | 1,747 | 3,332 | ↓48% | |
| Heap Leach Pad (Tonnes 000’s) | |||||||
| Crushed ore tonnes to pad | 669 | 623 | ↑7% | 1,919 | 2,895 | ↓34% | |
| Production | |||||||
| Gold grade (g/t) | 0.41 | 0.43 | ↓4% | 0.34 | 0.43 | ↓21% | |
| Gold loaded to leach pad (oz) | 9,799 | 8,845 | ↑11% | 21,928 | 40,180 | ↓45% | |
| Gold produced (oz) | 7,017 | 6,195 | ↑13% | 22,544 | 20,369 | ↑11% | |
| Silver produced (oz) | 47,759 | 47,890 | 0 | 169,673 | 132,805 | ↑28% | |
| Gold equivalent ounces produced | 7,800 | 7,097 | ↑10% | 25,420 | 22,828 | ↑11% | |
| Gold sold (oz) | 6,298 | 5,907 | ↑7% | 22,234 | 19,900 | ↑12% | |
| Silver sold (oz) | 40,800 | 54,108 | ↓25% | 173,751 | 116,717 | ↑49% | |
| 1 “g/t” is grams per tonne | |||||||
| 2 “oz” means troy ounce | |||||||
3 Conversion ratios used: Q4 2012 at 53:1, Q4 2013 at 61:1, full year 2012 at 54:1, and full year 2013 at 59:1
2014 Development and Growth
Peter Dougherty said “In 2014, we anticipate a production increase at La Colorada as the pit is opened up, higher tonnes are being processed and the grade continues to increase on the main ore zone. At El Castillo, we anticipate lower grade in 2014 and higher tonnes, as we move from the southeast side of the pit back to the main zone.
In terms of advancing projects, at San Antonio, we anticipate that we will be able to provide a third quarter update in regards to the zoning issue at the project. Currently, our hope is that this issue can be resolved to benefit all parties, paving the way for construction. Capital expenditures at San Antonio are subject to the permitting process.
At the newly acquired San Agustín property, a reverse circulation drill program totaling 14,000 meters (~150 holes) and a core drill program totaling 1,000 meters (12-15 holes) is scheduled for completion during the first half of 2014. Further metallurgical test work is also planned for the San Agustin project. At Magino, permitting-related activities will continue.”
Argonaut Gold Q4 Financial Results Conference Call and Webcast – March 25, 2013:
The Q4 financial results call is scheduled to take place on March 25, 2014 at 8:30 am ET. Details for the call-in participation are:
| Q4 and Year End Conference Call Information for March 25, 2014: | |
| Toll Free (North America): | 1-866-696-5910 |
| International: | 1-416-340-2217 |
| Webcast: | www.argonautgold.com |
| Q4 and Year End Conference Call Replay: | |
| Toll Free Replay Call (North America): | 1-905-694-9451 |
| International Replay Call: | 1-800-408-3053 |
| Passcode: | 4950688 |
The conference call replay will be available from 11:30 a.m. ET on March 25, 2014 to April 8, 2014.
