Argonaut Gold Inc.
TSX : AR

Argonaut Gold Inc.

January 07, 2015 07:30 ET

Argonaut Gold Announces Full Year 2014 Gold Production of 136,706 Gold Equivalent Ounces; Record Quarterly Production of 44,312 Gold Equivalent Ounces

2015 Guidance of 135,000-145,000 Gold Equivalent Ounces of Production at a Cash Cost of $700-$750

TORONTO, ONTARIO--(Marketwired - Jan. 7, 2015) - Argonaut Gold Inc. ("Argonaut", "Argonaut Gold" or the "Company") (TSX:AR) announced today that it had record production of 44,312 gold equivalent ounces ("GEO" or "GEOs") during the fourth quarter ended December 31, 2014. This included 27,870 gold equivalent ounces at its 100% owned El Castillo Mine ("El Castillo") located in the State of Durango, Mexico and 16,442 gold equivalent ounces at its 100% owned La Colorada Mine ("La Colorada") located near Hermosillo, Mexico. Gold equivalent ounces are calculated on the basis set out below.

FOURTH QUARTER 2014 HIGHLIGHTS:

El Castillo

  • Quarterly production of 27,870 gold equivalent ounces; full year production of 93,379 gold equivalent ounces (at 55:1 conversion of silver to gold ounces).
  • During the quarter, 37,986 gold ounces loaded on the leach pads.
  • 7.4 million total tonnes mined and 3.0 million tonnes processed through the crushing circuits during the quarter.
  • Heap Leach pad 3B west completed.

La Colorada

  • Quarterly production of 15,682 gold ounces and 41,787 silver ounces, for 16,442 gold equivalent ounces (at 55:1 conversion of silver to gold ounces).
  • Full year production of 40,535 gold ounces and 153,548 silver ounces, for 43,327 gold equivalent ounces (at 55:1 conversion of silver to gold ounces).
  • During the quarter, 19,917 gold ounces and 270,601 silver ounces loaded on the leach pads.
  • Average crusher throughput for the quarter of 12,140 tonnes per day.

Project updates

  • Updates are expected to be provided in mid-January 2015 regarding the San Agustín Preliminary Economic Assessment ("PEA") and the ongoing Magino metallurgical test work.

2015 GUIDANCE

  • Gold production of 135,000-145,000 gold equivalent ounces (at a 55:1 conversion of silver to gold ounces).
    • El Castillo - 85,000-90,000 gold ounces at cash costs of $750-$800 per gold ounce sold (cash cost per ounce sold is a non-IFRS measure as described in the notes to this release).
    • La Colorada - 50,000-55,000 gold equivalent ounces at cash costs of $600-$650 per gold ounce sold (cash cost per ounce sold is a non-IFRS measure as described in the notes to this release).
    • Total cash cost of $700-$750 per gold ounce sold (cash cost per ounce sold is a non-IFRS measure as described in the notes to this release).
  • Total capital spending of $37 million, with anticipated spending by project of:
    • El Castillo - $16 million in total capital, consisting of $4 million in leach pad expansion, $6 million in sustaining capital and $6 million in capitalized stripping.
    • La Colorada - $11 million in total capital, consisting of $3 million in leach pad expansion, $2 million in sustaining capital and $6 million on capitalized stripping.
    • San Antonio - $2 million on-going cost excluding any capital for construction of the project that is subject to permits being granted.
    • San Agustín - $2 million in design costs excluding drilling and any capital for construction of the project subject to permits being granted and a construction decision by the board of directors.
    • Magino - $2 million in technical and permitting studies.
    • Exploration program - $4 million primarily focused at San Agustín, Magino and fixed holding costs for land and concessions.

Pete Dougherty, Argonaut Gold's President and CEO, said, "Overall, 2014 was a challenging year for Argonaut. However, our teams have overcome these obstacles as can be seen in the record production results of the fourth quarter. We are pleased with the efforts made and look forward to 2015. In addition to the strong 2014 operational results, we continued to move forward other projects in our portfolio. At the San Agustín project, an updated resource nearly tripled the previous resource, and we believe there continues to be upside exploration potential still to be realized. At Magino, we finalized a transaction with Richmont Mines Inc. that will allow us to look at adding further value to the project with possible resource expansion onto this adjacent property.

"During 2015, the Company aims to deliver additional value on the key development projects in our portfolio. A PEA for San Agustín is expected to be presented to the market in January. At Magino, the upcoming drill campaign and the release of the Magino metallurgical test work on the lower grade ore are key catalysts to unlocking the true potential of the project. We continue to be patient at San Antonio, as the election process works itself out in 2015. We will use this time to position ourselves to be able to move this project forward.

"In spite of the challenging market conditions, as an organization we have made great strides during 2014. In 2015, the focus will continue to be on the core principles of our Company; safe and efficient operations, meeting production goals and targets, producing at a cost that allows us to generate returns to our shareholders and finding value in development projects."

FOURTH QUARTER 2014 El CASTILLO OPERATING STATISTICS
3 Months Ended December 31 12 Months Ended December 31
2014 2013 % Change 2014 2013 % Change
Mining (Tonnes 000s)
Total tonnes mined 7,376 7,574 - 3 % 31,211 26,997 +16 %
Total ore tonnes mined 3,484 3,764 - 7 % 14,976 13,621 +10 %
Heap Leach Pad (Tonnes 000s)
Tonnes ore direct to leach pad 527 1,045 -50 % 3,096 6,352 -51 %
Tonnes crushed 1,556 1,456 + 7 % 6,200 5,771 + 7 %
Tonnes overland conveyor 1,471 1,312 +12 % 5,750 1,533 +275 %
Production
Gold grade (g/t)1 0.33 0.32 + 3 % 0.33 0.35 - 6 %
Gold loaded to leach pad (oz)2 37,986 39,269 - 3 % 159,294 154,581 + 3 %
Gold produced (oz)3 27,676 20,848 +33 % 92,500 94,804 - 2 %
Gold equivalent ounces produced 4 27,870 21,011 +33 % 93,379 95,614 - 2 %
Gold sold (oz) 25,292 20,620 + 23 % 89,017 92,675 - 4 %
Silver sold (oz) 10,649 8,954 +19 % 48,401 44,504 + 9 %
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 GEOs are based on a conversion ratio of 55:1 for silver to gold
El Castillo Mine Plan 2015
Q1 Q2 Q3 Q4 FY 2015
Ore Tonnes 3.3M 3.4M 3.1M 3.3M 13.1 M
Oxide 80 % 78 % 71 % 87 % 79 %
Transition 20 % 22 % 29 % 13 % 21 %
Strip ratio 1.24 1.24 1.24 1.24 1.24

Richard Rhoades, Chief Operating Officer of Argonaut Gold, said, "At El Castillo, we are pleased that we were able to deliver a record quarter from the operations. After recovering from the extensive third quarter rains, we were able to resume efficient mine operations by delivering tonnes to the pad and recovering ounces placed on the pad. In 2015, El Castillo will implement an optimization program designed to improve the operating margins of the ounces and to fully take advantage of our expansion programs including the west overland conveyor system.

"At the La Colorada mine, expansion projects were completed in the third quarter and the mine delivered record quarterly production to finish out the year. The crushing circuit continues to process greater than 12,000 tonnes per day, and we are set up to continue to deliver strong results. The added flexibility of reprocessing leach pad material from the pad 6 area, and mining the main La Colorada/Gran Central pit, will provide the operational flexibility to more effectively manage operations and costs."

FOURTH QUARTER 2014 LA COLORADA OPERATING STATISTICS
3 Months Ended December 31 12 Months Ended December 31
2014 2013 % Change 2014 2013 % Change
Mining (Tonnes 000s)
Total tonnes mined 4,306 4,515 -5 % 16,998 16,314 +4 %
Total ore tonnes mined 732 413 +77 % 2,748 1,726 +59 %
Total ore tonnes rehandled 392 265 +48 % 1,009 382 +164 %
Heap Leach Pad (Tonnes 000s)
Crushed ore tonnes to pad 1,117 740 +51 % 3,700 2,175 +70 %
Production
Gold grade to leach pad (g/t)1 0.55 0.41 +34 % 0.57 0.33 +73 %
Gold loaded to leach pad (oz)2 19,917 9,799 +103 % 67,576 23,308 +190 %
Gold produced (oz)3 15,682 7,017 +123 % 40,535 22,544 +80 %
Silver produced (oz) 41,787 47,759 -13 % 153,548 169,673 -10 %
Gold equivalent ounces produced4 16,442 7,885 +109 % 43,327 25,629 +69 %
Gold sold (oz) 14,958 6,298 +138 % 40,104 22,234 +80 %
Silver sold (oz) 38,436 40,800 -6 % 162,042 173,751 -7 %
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 GEOs are based on a conversion ratio of 55:1 for silver to gold

2015 Development and Growth

Peter Dougherty said, "In 2015, we look forward to continuing to deliver production results as we build upon the momentum of the fourth quarter. We are now realizing the benefits of the increased crushing capacity at La Colorada and have the flexibility to meet production and cost targets by combining newly mined ore in combination with the reprocessing of historic heap leach pad material. At El Castillo, we anticipate another year of consistent delivery on guidance.

"At San Agustín, we are encouraged by the upcoming release of the PEA and our ability to realize additional upside potential through future drilling programs. We continue to believe in the social and economic benefits of the San Antonio project, but recognize the need to be patient as 2015 is an election year. At Magino, we anticipate the commencement of a drill campaign focusing on property related to the recently finalized agreement with Richmont Mines Inc. This campaign will test further extension of mineralization, along with in-fill drilling in some of the higher grade portions of the deposit where gaps were created by the exclusion of some historic drilling that was not utilized in compiling the current resource. This campaign, coupled with additional metallurgical test work, will allow us to unlock potential additional value."

Argonaut Gold Q4 Financial Results Conference Call and Webcast - March 16, 2015:

The Q4 financial results call is scheduled to take place on March 16, 2014 at 8:30 AM (ET). Details for the call-in participation are:

Q4 and Year End 2014 Conference Call Information for March 16, 2015:

Toll Free (North America): 1-877-223-4471
International: 1-647-788-4922
Webcast: www.argonautgold.com

Q4 and Year End 2014 Conference Call Replay:

Toll Free Replay Call (North America): 1-416-621-4642
International Replay Call: 1-800-585-8367
Passcode: 60998177

The conference call replay will be available from 11:30 AM (ET) on March 16, 2015 to March 30, 2015.

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. Advanced exploration stage projects are the San Antonio project in Baja California Sur, Mexico, the Magino project in Ontario, Canada and the San Agustín project in Durango, Mexico. The San Agustín and Magino projects will be the primary exploration targets for Argonaut in 2015. The Company also has several exploration stage projects, all of which are located in North America.

Cautionary Note Regarding Forward-looking Statements

This press release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the proposed transaction and the business, operations and financial performance and condition of Argonaut Gold Inc. ("Argonaut" or "Argonaut Gold"). Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and mine life of the various mineral projects of Argonaut; synergies and financial impact of completed acquisitions; the benefits of the development potential of the properties of Argonaut; the future price of gold, copper, and silver; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to Argonaut, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of Argonaut and there is no assurance they will prove to be correct.

Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, variations in ore grade or recovery rates, risks relating to international operations, fluctuating metal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated. Although Argonaut has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Argonaut undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered if the property is developed. Comparative market information is as of a date prior to the date of this document.

Non-IFRS Measures

The Company included the non-IFRS measure "cash cost per gold ounce sold" in this press release to supplement its regular financial statement reporting which is 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

Technical information included in this release was supervised and approved by Thomas Burkhart, Argonaut Gold's Vice President of Exploration, and a Qualified Person under National Instrument ("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 Mine NI 43-101 Technical Report on Resources and Reserves, Argonaut Gold Inc., El Castillo Mine, Durango State, Mexico dated November 6, 2010
La Colorada Mine NI 43-101 Preliminary Economic Assessment
La Colorada Project, Sonora, Mexico dated December 30, 2011
San Agustín Project NI 43-101 Technical Report on Resources, Argonaut Gold Inc., San Agustín Project, Durango, Mexico dated October 3, 2014
Magino Gold Project NI 43-101 Preliminary Feasibility Study Technical Report on the Magino Gold Project, Ontario, Toronto, Canada dated January 30, 2014
San Antonio Gold Project NI 43-101 Technical Report and Mineral Resource Estimate on the San Antonio Gold Project, Baja California Sur, Mexico dated October 10, 2012

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