Argonaut Gold Inc.
TSX : AR

Argonaut Gold Inc.

July 15, 2011 08:52 ET

Argonaut Gold Announces Q2 Gold Production of 17,453 Ounces

El Castillo Production of 35,467 Ounces in the First Half of 2011

TORONTO, ONTARIO--(Marketwire - July 15, 2011) - Argonaut Gold Inc. ("Argonaut Gold" or the "Company") (TSX:AR), announced today that the Company produced 17,453 ounces of gold during the 2nd quarter ended June 30, 2011, at its 100% owned El Castillo Mine ("El Castillo"), located 100 km north of the city of Durango, Mexico. Gold produced in the first half of 2011 was 35,467 ounces, which is in line with the Company's guidance of 70-75,000 ounces for full year production.

SECOND QUARTER 2011 HIGHLIGHTS:

Operations
  • Approximately 5 million total tonnes mined in the 2nd quarter of 2011
  • Record ore tonnes crushed for the 2nd quarter of 860,289 tonnes, 218% increase over Q2 2010
  • New crushing circuit will be online by the end of July
  • 29,555 ounces loaded on the pad in the 2nd quarter, 47% increase over Q2 2010
  • Gold production of 17,453 ounces for the 2nd quarter, 73% increase over Q2 2010
2011 Exploration and Metallurgical Programs
  • El Castillo – 1,500 meter core drill program to obtain sulphide samples was completed and metallurgical testing is underway
    • Column test results are expected in Q3 2011
  • San Antonio – 10,000 meter program
    • 4,700 meters completed to date
    • 2 drills are completing condemnation and exploration drilling
    • Current phase of drilling is expected to be complete in Q3 of 2011
    • Significant progress was made on land and water purchases as well as necessary environmental studies for the permitting process
  • La Colorada - 52,000 meter program
    • 5 exploration drills were active, completing Phase I drilling of 25,780 meters
    • Based on encouraging results, the Company has doubled the 2011 drill budget from $3.8 million to $7.7 million and increased total meters to 52,000
    • Phase II drilling is in progress and an additional 26,000 meters are expected to be completed this year
    • Multiple 1.5 to 2 meter wide intercepts exceeding 1 oz/t gold were identified within the La Colorada pit target area.
    • New resource estimate from SRK is due in Q3 of 2011 based upon 2011 Phase I drilling
El Castillo East Side Expansion program
  • Cell 4 was completed
  • Cell 5 was cleared in advance of Q4 construction
  • Overflow pond is nearly complete

SECOND QUARTER 2011 OPERATING RESULTS:

The second quarter production showed improvement for the sixth consecutive quarter as well as year over year. Mine ore production has improved to an annualized rate over 11 million tonnes. Crushing capacity at the west plant has continued year over year improvements of 218% and is now running at an annualized rate of 3.4 million tonnes. Production was strong at 17,453 ounces, a 73% improvement year over year. Recoveries were 59% for the quarter, an improvement over prior year's rate of 50% but lower than last quarter. (Recovery rate is defined as ounces produced over ounces loaded to pads). This was due to lower cyanide concentration and flow rate to the pad coupled with higher stacking lifts. The lower cyanide concentration was due to a shortfall of cyanide resulting from the Company's supplier experiencing flooding at their production facility. The Company has addressed this issue by sourcing cyanide from alternative sources. Currently, the Company has a sufficient cyanide supply at site and the Company's primary supplier has reestablished production flow to the site. The Company expects this set back to not impact full year production guidance of 70 - 75,000 gold ounces.

El Castillo Operating Statistics 3 Months Ended June 30 6 Months Ended June 30
2011 2010 % Change 2011 2010 % Change
Mining
Total tonnes mined 4,970,835 3,450,572 +44% 9,730,293 6,343,906 +53%
Tonnes ore mined 2,786,349 1,867,191 +49% 5,324,613 3,183,738 +67%
Heap Leach Pad
ROM tonnes ore 1,920,657 1,562,907 +23% 3,733,668 2,562,028 +46%
Tonnes crushed 860,289 270,879 +218% 1,589,393 585,284 +172%
Production
Gold grade (g/t) 0.33 0.34 -2.8% 0.34 0.36 -5.6%
Gold loaded to pad (oz) 29,555 20,112 +47% 57,780 36,542 +58%
Gold loaded to carbon (oz) 17,453 10,066 +73% 35,467 20,308 +75%
Gold sold 14,331 10,387 +38% 32,792 18,785 +75%
1 "g/t" is grams per tonne
2 "oz" means ounce

Pete Dougherty, President and CEO of Argonaut Gold noted: "This quarter marks the third consecutive quarter of consistent gold production, as we continue to meet our guidance of 70-75,000 ounces of production in 2011. The team continues to deliver on our established targets at the property." In regards to further Company developments, Dougherty noted. "Our drilling programs continue with nine drill rigs currently operating across our properties. San Antonio drill results are expected in Q3, while updated NI 43-101 technical reports for El Castillo and La Colorada will be completed by year end."

About Argonaut

Argonaut is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production-stage El Castillo Mine in the State of Durango, Mexico, the development stage San Antonio project, the past producing La Colorada project, several exploration stage projects, all of which are located in Mexico.

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.

Qualified Person

Preparation of this release was supervised by Thomas Burkhart, Argonaut's Vice President of Exploration, and a Qualified Person under NI 43-101. For additional information on El Castillo please refer to the "NI 43-101 Technical Report on Resources and Reserves, Argonaut Gold Inc., El Castillo Mine, Durango State, Mexico" dated Nov. 6, 2010 and available at Argonaut's website and profile on www.sedar.com.

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