TORONTO, Nov. 7, 2019 /CNW/ - Argonaut Gold Inc. (TSX:
AR) (the "Company", "Argonaut Gold" or "Argonaut") announces
its operating and financial results for the third quarter ended
September 30, 2019. The Company
reports quarterly production of 44,712 gold equivalent
ounces1 ("GEO" or "GEOs"), cash flow from operating
activities before changes in operating working capital of
$17.2 million, net income of
$4.9 million or earnings per share of
$0.03, adjusted net income of
$6.5 million or adjusted earnings per
share of $0.04 and a net cash
increase of $11.7 million (see
"Non-IFRS Measures" section). All dollar amounts are
expressed in United States
dollars, unless otherwise specified (C$ refers to Canadian
dollars).
CEO Commentary
Pete
Dougherty, President and CEO stated: "Our net cash position
increased by $11.7 million during the
quarter and as the quarter progressed, we started to see a rebound
in operations after a challenging second quarter earlier this
year. We were able to stack considerable ounces to the leach
pads, which should lead to a strong fourth quarter in terms of
production. As previously guided, we expect crushing
throughput at San Agustin to ramp
up to 30,000 tonnes per day during the fourth quarter after
achieving nearly 25,000 tonnes per day in the third quarter.
We anticipate finishing 2019 near the low end or slightly under our
annual production guidance of between 200,000 and 215,000
GEOs."
Outlook
The Company is tracking toward the low end of
its 2019 production guidance of between 200,000 and 215,000 GEOs
and anticipates it will produce between 190,000 and 200,000 GEOs
during 2019. Given the expectation that GEO production for
the year will be near or slightly under the low end of previous
guidance, the Company now expects 2019 cash costs of between
$900 and $925 per gold ounce sold (previously $800 to $900 per
gold ounce sold) (see "Non-IFRS Measures" section). In
addition, the Company now anticipates all-in sustaining costs of
between $1,125 and $1,150 per gold ounce sold (previously
$1,025 to $1,125 per gold ounce sold) (see "Non-IFRS
Measures" section) primarily due to the potential for fewer gold
ounces sold.
The Company plans to invest between $50
million and $55 million in
capital programs during 2019 (unchanged from last quarter), of
which approximately $41 million was
spent during the first nine months of 2019.
1 GEOs are
based on a conversion ratio of 75:1 for silver to gold for 2019 and
70:1 for 2018. The silver to gold conversion ratio is based
on the three-year trailing average silver to gold ratio.
|
Key operating and financial statistics for the three and nine
months ended September 30, 2019 are
outlined in the following table:
|
3 Months Ended
Sept 30
|
9 Months Ended
Sept 30
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Financial Data (in
millions except for earnings (loss) per share)
|
|
|
|
|
|
|
Revenue
|
$66.8
|
$41.3
|
62%
|
$196.8
|
$144.4
|
36%
|
Gross profit
(loss)
|
$14.5
|
($3.3)
|
539%
|
$35.2
|
$28.0
|
26%
|
Net income
(loss)
|
$4.9
|
($2.7)
|
281%
|
$14.4
|
$9.9
|
45%
|
Earnings (loss) per
share – basic
|
$0.03
|
($0.02)
|
250%
|
$0.08
|
$0.06
|
33%
|
Adjusted net income
(loss)1
|
$6.5
|
($1.0)
|
750%
|
$10.3
|
$13.9
|
(26%)
|
Adjusted earnings
(loss) per share – basic1
|
$0.04
|
($0.01)
|
500%
|
$0.06
|
$0.08
|
(25%)
|
Cash flow from
operating activities before changes in non-cash operating working
capital
|
$17.2
|
$10.9
|
58%
|
$46.6
|
$48.9
|
(5%)
|
Cash and cash
equivalents
|
$35.6
|
$20.6
|
73%
|
$35.6
|
$20.6
|
73%
|
Net
cash1
|
$21.6
|
$12.6
|
71%
|
$21.6
|
$12.6
|
71%
|
Gold Production
and Cost Data
|
|
|
|
|
|
|
GEOs loaded to the
pads2
|
100,731
|
67,244
|
50%
|
260,251
|
222,891
|
17%
|
GEOs projected
recoverable2,3
|
54,884
|
37,763
|
45%
|
152,828
|
121,932
|
25%
|
GEOs
produced2,3,4
|
44,712
|
34,165
|
31%
|
139,094
|
113,459
|
23%
|
GEOs
sold2
|
45,567
|
34,248
|
33%
|
145,426
|
113,152
|
29%
|
Average realized
sales price
|
$1,474
|
$1,212
|
22%
|
$1,359
|
$1,282
|
6%
|
Cash cost per gold
ounce sold1
|
$901
|
$867
|
4%
|
$906
|
$735
|
23%
|
All-in sustaining
cost per gold ounce sold1,5
|
$1,134
|
$1,032
|
10%
|
$1,168
|
$930
|
26%
|
1Please
refer to the section below entitled "Non-IFRS Measures" for a
discussion of these Non-IFRS Measures.
|
2GEOs are
based on a conversion ratio of 75:1 for silver to gold for 2019 and
70:1 for 2018. The silver to gold conversion ratio is based on
the
three-year trailing average silver to gold ratio.
|
3Expected
recoverable GEOs are based on the assumptions and parameters as set
forth in the El Castillo Complex Technical Report dated March
27, 2018 and the La Colorada Gold/Silver Mine Technical Report
dated March 27, 2018. In periods where the Company mines
material not
specifically defined in a technical report (for example: low grade
stockpile material), management uses its best estimate of recovery
based on
the information available.
|
4Produced
ounces are calculated as ounces loaded to carbon.
|
5Three and
nine months ended September 30, 2018 all-in sustaining cost per
gold ounce sold was restated to follow the amended guidance
issued by the World Gold Council during the fourth quarter of
2018.
|
Third Quarter 2019 and Recent Company Highlights:
- Corporate
-
- Increased net cash by $11.7
million (see "Non-IFRS Measures" section).
- Completed a private placement financing of flow-through common
shares at a price of C$3.40 per
flow-through share for gross proceeds of C$4.0 million.
- Initiated zero-cost collar gold price protection program on
145,500 total ounces, which is a portion of El Castillo's estimated remaining life-of-mine
production, to ensure profitability at an attractive price
protection point. The monthly gold collars have a floor price of
$1,450 per gold ounce and a weighted
average ceiling price of $1,707 per
gold ounce from between the fourth quarter of 2019 to the second
quarter of 2022.
- El Castillo Complex
-
- Third quarter production of 30,294 GEOs.
-
- El Castillo production of
14,592 GEOs.
- San Agustin production of
15,702 GEOs.
- Completed new water well at San
Agustin, which allows for a crushing and stacking ramp up to
30,000 tonnes per day during the fourth quarter 2019.
- La Colorada
-
- Third quarter production of 14,418 GEOs.
- Achieved crushing and stacking rate above 14,000 tonnes per
day.
- Cerro del Gallo
-
- Advanced pre-feasibility study.
- Advanced the Unified Technical Document that includes an
Environmental Impact Assessment, an Environmental Risk Assessment
and the Justified Technical Study for a Change of Soil Use.
- San Antonio
-
- Advanced environmental permitting.
- Magino
-
- Commenced a 6,000-metre drill program and subsequently expanded
the program to 20,000 metres based on the early success of
identifying high-grade structures beneath and to the east of the
planned pit and to the west of the adjacent Island Gold Mine.
- Advanced remaining Federal and Provincial authorizations.
- Social Responsibility
-
- Signed a collaborative agreement for the 7th health
fair at La Colorada in
Sonora, Mexico with the Centro de
Rehabilitación Integral Teletón.
- Hosted a cultural event with the Cultural Institute of
Sonora at La Colorada.
- Participated in an exposition hosted by the Durango, Mexico state government where the
Company exhibited an interactive learning pavilion where local
attendees, including families, could learn about mining and the
Company's projects.
-
- The Company's exhibit was awarded first place and best
interactive exhibit among 160 participants.
- Sponsored an international forum on geological and mining
heritage, organized by the Universidad Autónoma de Baja California Sur, to discuss possible
historical tourism and ecotourism in mining communities.
- Hosted soprano Elena Rivera and
the Latin American Quartet at the Mining Cultural Centre of the
Mexican chamber of commerce in Mexico
City, Mexico.
- Hosted student interactive workshops in the municipality of
Dolores Hidalgo in the village of
San Antón in Guanajuato,
Mexico.
Financial Results – Third Quarter 2019
Revenue for the
three months ended September 30, 2019
was $66.8 million, an
increase from $41.3 million for
the three months ended September 30,
2018. During the third quarter of 2019, gold ounces
sold totaled 44,303 at an average realized price per ounce of
$1,474, compared to 33,179 gold
ounces sold at an average realized price per ounce of $1,212 during the same period of 2018. Gold
ounces sold for the three months ended September 30, 2019 increased compared to the same
period in 2018 primarily due to an increase in gold ounces sold at
the El Castillo and La Colorada mines as a result of increases in
grade, ore tonnes to pad and recovery.
Production costs for the third quarter of 2019 were $41.5 million, an increase from
$29.9 million in the third quarter of
2018, primarily due to an increase in gold ounces sold.
Cash cost per gold ounce sold (see "Non-IFRS Measures"
section) was $901 in the third quarter of 2019, a slight
increase from $867 in the same
period of 2018. Depreciation, depletion and amortization
("DD&A") expense included in cost of sales for the third
quarter of 2019 totaled $11.2 million, an increase from
$7.9 million in the third quarter of
2018, primarily due to an increase in gold ounces sold, as many of
the mining assets are amortized on a unit-of-production
basis. Additionally, included in cost of sales in the
third quarter of 2018 is a non-cash impairment write down of
$6.9 million at the El Castillo and La
Colorada mines related to the net realizable value of
work-in-process inventory, as a result of a decrease in the price
of gold as at September 30, 2018.
General and administrative expenses for the third quarter of
2019 were $3.4 million, an increase
from $2.7 million for the same period
of 2018, primarily due to employee related costs.
Gains on derivatives for the third quarter of 2019 were
$0.5 million, an increase from
$0.2 million in the third quarter of
2018, principally due to an increase in realized and net unrealized
gains on the Company's zero-cost collar foreign exchange and
commodity contracts.
Other expense for the third quarter of 2019 was
$1.1 million, a decrease from other
income of $1.2 million in the third
quarter of 2018, primarily due to differences in foreign currency
translation effects, partially offset by proceeds of $0.6 million related to a bankruptcy filing.
Income tax expense for the third quarter of 2019 was
$5.1 million, compared to an income
tax recovery of $2.4 million in the
same period of 2018. The increase is primarily due to
the foreign exchange effects of the strengthening Mexican peso on
the calculation of deferred taxes, higher taxable income in the
third quarter of 2019 and the deferred tax effect of the non-cash
impairment write down of work-in-process inventory in the third
quarter of 2018.
Net income for the third quarter of 2019 was $4.9 million or $0.03 per basic share, an increase from a
net loss of $2.7 million or
$0.02 per basic share for the third
quarter of 2018.
Financial Results – First Nine Months 2019
Revenue for
the nine months ended September 30,
2019 was $196.8 million, an
increase from $144.4 million for
the nine months ended September 30,
2018. During the first nine months of 2019, gold
ounces sold totaled 140,729 at an average realized price per ounce
of $1,359, compared to 108,665 gold
ounces sold at an average realized price per ounce of $1,282 during the same period of 2018. Gold
ounces sold for the nine months ended September 30, 2019 increased compared to the same
period in 2018 primarily due to an increase in gold ounces sold at
the El Castillo and La Colorada mines as a result of increases in
grade, ore tonnes to pad and recovery. The increase in ore
tonnes to pad at the El Castillo
mine is primarily due to the expansion of crusher throughput
capacity at the West crusher from 5,000 tonnes per day to 14,000
tonnes per day during the first quarter of 2018.
Production costs for the nine months ended September 30, 2019 were $133.0 million, an increase from $85.0 million in the first nine months of 2018
primarily due to an increase in gold ounces sold and an increase in
cash cost per gold ounce sold. Cash cost per gold ounce sold
(see "Non-IFRS Measures" section) was $906 in the first nine months of 2019, an
increase from $735 in the same period
of 2018, primarily due to an increase in cash cost per gold ounce
sold at the San Agustin mine, as
disclosed further in the discussion of operations. DD&A
expense included in cost of sales for the nine months ended
September 30, 2019 totaled
$33.3 million, an increase from
$24.6 million in the nine months
ended September 30, 2018, primarily
due to the increase in gold ounces sold, as many of the mining
assets are amortized on a unit-of-production basis.
Additionally, included in cost of sales in the first nine
months of 2019 is a non-cash impairment reversal of $4.7 million at the El
Castillo mine related to the net realizable value of the
work-in-process inventory, primarily due to a revision in
management's estimate of future production costs to convert the
non-current work-in-process inventory into saleable form and the
expected timing of recoveries of the inventory. Included in
cost of sales during the first nine months of 2018 is a non-cash
impairment write down of $6.9 million
at the El Castillo and
La Colorada mines related to
the net realizable value of work-in-process inventory, as a result
of a decrease in the price of gold as at September 30, 2018.
General and administrative expenses for the nine months ended
September 30, 2019 were $10.5 million, an increase from $9.6 million in the same period of 2018,
primarily due to employee related costs.
Gains on derivatives during the first nine months of 2019 were
$1.0 million, an increase from
$0.6 million in the first nine months
of 2018, due to an increase in realized gains on the Company's
zero-cost collar foreign exchange contracts, partially offset by a
net decrease in unrealized gains on the Company's zero-cost collar
foreign exchange and commodity contracts.
Other income for the nine months ended September 30, 2019 was $0.8 million, an increase from $0.1 million in the same period of 2018,
primarily due to proceeds of $0.6
million related to a bankruptcy filing.
Income tax expense for the nine months ended September 30, 2019 was $10.4 million, compared to $7.9 million in the same period of 2018.
The increase is primarily due to a greater foreign exchange
effect of the strengthening Mexican peso on the calculation of
deferred taxes in the first nine months of 2018 and higher taxable
income in the first nine months of 2019.
Net income for the nine months ended September 30, 2019 was $14.4 million or $0.08 per basic share, an increase from
$9.9 million or $0.06 per basic share for the nine months ended
September 30, 2018.
Operational Results – Third Quarter 2019
During the
third quarter 2019, the Company achieved production of 44,712 GEOs
at a cash cost of $901 per gold ounce
sold and all-in sustaining cost of $1,134 per gold ounce sold compared to 34,165
GEOs at a cash cost of $867 per gold
ounce sold and an all-in sustaining cost of $1,032 per gold ounce sold during the third
quarter 2018 (see "Non-IFRS Measures" section). Higher
production was primarily driven by increases at the El Castillo mine due to increased tonnes to
pad and higher recoveries and at the La
Colorada mine due to an increase in grade. Higher
all-in sustaining costs are primarily related to higher deferred
stripping costs and costs associated with land acquisitions.
The El Castillo Complex produced 30,294 GEOs at a cash cost of
$947 per gold ounce sold during the
third quarter of 2019 versus 26,894 GEOs at a cash cost of
$786 per gold ounce sold during the
third quarter of 2018 (see "Non-IFRS Measures" section).
Higher costs are primarily related to higher waste to ore ratio at
the San Agustin mine.
La Colorada produced 14,418
GEOs at a cash cost of $800 per gold
ounce sold during the third quarter of 2019 compared to 7,271 GEOs
at a cash cost of $1,152 per gold
ounce sold during the third quarter of 2018 (see "Non-IFRS
Measures" section). Higher production and lower costs are
primarily related to an 82% increase in grade mined, as during the
third quarter of 2018, the Company was mining and processing ore
from low-grade stockpiles due to the inability to blast due to the
temporary suspension of the explosives permit in 2018.
Pete Dougherty commented: "After
a challenging second quarter operationally where we lacked
sufficient water at San Agustin to
meet our solution flow requirements, we successfully installed a
new water well and saw production trend stronger as we successfully
got stacked ore under solution. We averaged a crushing and
stacking rate of nearly 25,000 tonnes per day at San Agustin during the third quarter and
continue to expect to complete our ramp up to 30,000 tonnes per day
during the fourth quarter. Productivity at El Castillo was impacted during the quarter by
water in the pit and unexpected downtime at the East crusher for
maintenance – two issues that are now largely resolved. At La
Colorada, we were able to exceed the crushing and stacking rate of
14,000 tonnes per day, which should bode well for fourth quarter
production."
THIRD QUARTER 2019 EL CASTILLO COMPLEX OPERATING
STATISTICS
|
3 Months Ended
Sept 30
|
9 Months Ended
Sept 30
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Mining (in 000s
except waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore El
Castillo
|
2,436
|
2,267
|
7%
|
7,024
|
6,035
|
16%
|
Tonnes ore San
Agustin
|
2,371
|
1,747
|
36%
|
5,993
|
5,324
|
13%
|
Tonnes
ore
|
4,807
|
4,014
|
20%
|
13,017
|
11,359
|
15%
|
Tonnes waste El
Castillo
|
2,947
|
3,869
|
(24%)
|
10,241
|
9,198
|
11%
|
Tonnes waste San
Agustin
|
1,633
|
808
|
102%
|
4,358
|
1,782
|
145%
|
Tonnes
waste
|
4,580
|
4,677
|
-2%
|
14,599
|
10,980
|
33%
|
Tonnes mined El
Castillo
|
5,383
|
6,136
|
(12%)
|
17,265
|
15,233
|
13%
|
Tonnes mined San
Agustin
|
4,004
|
2,555
|
57%
|
10,351
|
7,106
|
46%
|
Tonnes
mined
|
9,387
|
8,691
|
8%
|
27,616
|
22,339
|
24%
|
Tonnes per day El
Castillo
|
59
|
66
|
(11%)
|
63
|
56
|
13%
|
Tonnes per day San
Agustin
|
44
|
28
|
57%
|
38
|
26
|
46%
|
Tonnes per
day
|
103
|
94
|
10%
|
101
|
82
|
23%
|
Waste/ore ratio El
Castillo
|
1.21
|
1.71
|
(29%)
|
1.46
|
1.52
|
(4%)
|
Waste/ore ratio San
Agustin
|
0.69
|
0.46
|
50%
|
0.73
|
0.33
|
121%
|
Waste/ore
ratio
|
0.95
|
1.16
|
(18%)
|
1.12
|
0.97
|
15%
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
East leach pads El Castillo
|
988
|
1,182
|
(16%)
|
3,162
|
3,348
|
(6%)
|
Tonnes crushed to
West leach pads El Castillo
|
1,124
|
1,064
|
6%
|
3,556
|
2,644
|
34%
|
Tonnes crushed to
leach pads San Agustin
|
2,287
|
1,732
|
32%
|
5,909
|
5,335
|
11%
|
Tonnes crushed to
leach pads
|
4,399
|
3,978
|
11%
|
12,627
|
11,327
|
11%
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach pads El Castillo (g/t)1
|
0.39
|
0.33
|
18%
|
0.39
|
0.38
|
3%
|
Gold grade loaded to
leach pads San Agustin (g/t)1
|
0.32
|
0.34
|
(6%)
|
0.39
|
0.40
|
(3%)
|
Gold grade loaded
to leach pads (g/t)1
|
0.35
|
0.34
|
3%
|
0.39
|
0.39
|
0%
|
Gold loaded to leach
pads El Castillo (oz)2
|
30,939
|
24,125
|
28%
|
88,508
|
72,321
|
22%
|
Gold loaded to leach
pads San Agustin (oz)2
|
23,385
|
18,832
|
24%
|
73,548
|
68,523
|
7%
|
Gold loaded to
leach pads (oz)2
|
54,324
|
42,957
|
26%
|
162,056
|
140,844
|
15%
|
Projected recoverable
GEOs loaded El Castillo4
|
15,526
|
14,477
|
7%
|
54,498
|
42,147
|
29%
|
Projected recoverable
GEOs loaded San Agustin4
|
17,082
|
13,596
|
26%
|
52,048
|
49,454
|
5%
|
Projected
recoverable GEOs loaded4
|
32,608
|
28,073
|
16%
|
106,546
|
91,601
|
16%
|
Gold produced El
Castillo (oz)2,3
|
14,281
|
10,298
|
39%
|
51,529
|
29,034
|
77%
|
Gold produced San
Agustin (oz)2,3
|
15,210
|
15,770
|
(4%)
|
41,978
|
47,122
|
(11%)
|
Gold produced
(oz)2,3
|
29,491
|
26,068
|
13%
|
93,507
|
76,156
|
23%
|
Silver produced El
Castillo (oz)2,3
|
23,293
|
4,865
|
379%
|
81,294
|
20,504
|
296%
|
Silver produced San
Agustin (oz)2,3
|
36,887
|
52,895
|
(30%)
|
134,014
|
189,007
|
(29%)
|
Silver produced
(oz)2,3
|
60,180
|
57,760
|
4%
|
215,308
|
209,511
|
3%
|
GEOs produced El
Castillo3
|
14,592
|
10,368
|
41%
|
52,613
|
29,327
|
79%
|
GEOs produced San
Agustin3
|
15,702
|
16,526
|
(5%)
|
43,765
|
49,822
|
(12%)
|
GEOs
produced3
|
30,294
|
26,894
|
13%
|
96,378
|
79,149
|
22%
|
Gold sold El Castillo
(oz)2
|
15,955
|
9,937
|
61%
|
54,839
|
27,292
|
101%
|
Gold sold San Agustin
(oz)2
|
14,478
|
15,912
|
(9%)
|
44,565
|
46,222
|
(4%)
|
Gold sold
(oz)2
|
30,433
|
25,849
|
18%
|
99,404
|
73,514
|
35%
|
Silver sold El
Castillo (oz)2
|
23,293
|
4,865
|
379%
|
81,294
|
20,504
|
296%
|
Silver sold San
Agustin (oz)2
|
37,410
|
54,747
|
(32%)
|
144,830
|
185,416
|
(22%)
|
Silver sold
(oz)2
|
60,703
|
59,612
|
2%
|
226,124
|
205,920
|
10%
|
GEOs sold El
Castillo
|
16,266
|
10,007
|
63%
|
55,923
|
27,585
|
103%
|
GEOs sold San
Agustin
|
14,977
|
16,694
|
(10%)
|
46,496
|
48,871
|
(5%)
|
GEOs
sold
|
31,243
|
26,701
|
17%
|
102,419
|
76,456
|
34%
|
Cash cost per gold
ounce sold El Castillo5
|
$1,038
|
$1,050
|
(1%)
|
$970
|
$1,021
|
(5%)
|
Cash cost per gold
ounce sold San Agustin5
|
$848
|
$622
|
36%
|
$848
|
$476
|
78%
|
Cash cost per gold
ounce sold5
|
$947
|
$786
|
20%
|
$915
|
$678
|
35%
|
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 Expected recoverable GEOs are based
on the assumptions and parameters as set forth in the El Castillo
Complex Technical Report dated March 27, 2018. In periods
where the Company mines material not specifically defined in a
technical report, management uses its best estimates of recovery
based on the information available.
|
5 Please refer to the section
below entitled "Non-IFRS Measures" for a discussion of this
Non-IFRS Measure.
|
Summary of Production Results at the El Castillo
Complex
During the third quarter 2019, the El Castillo
Complex produced 13% more GEOs at a cash cost per gold ounce sold
(see "Non-IFRS Measures" section) 20% higher compared to the third
quarter 2018. Higher production was driven by increased
production from the El Castillo
mine due to higher recoveries. Higher costs are primarily a
result of a higher waste to ore ratio at the San Agustin mine.
At El Castillo, water in the
bottom of the pit, combined with unscheduled downtime of the East
crusher for maintenance, led to lower than anticipated
productivity. This lower productivity led to a decrease in
total tonnes mined, crushed and stacked on the leach pads when
compared to the third quarter of 2018. The mine saw its waste
to ore ratio return to planned levels during the quarter after
experiencing a higher than anticipated waste to ore ratio during
the previous quarter.
At San Agustin, after the
completion of a new water well which allowed for planned solution
flow rates, daily production trended stronger as the third quarter
progressed. Additionally, with sufficient water available the
Company was able to increase its crushing and stacking rate,
averaging nearly 25,000 tonnes per day during the third quarter
representing a 32% increase over the third quarter 2018 and an 18%
increase over the second quarter 2019. The Company remains on
track to achieve its planned ramp up to 30,000 tonnes per day
during the fourth quarter. GEO production at San Agustin was 5% lower during the third
quarter 2019 when compared to the third quarter 2018 despite higher
contained ounces stacked on leach pad, primarily due to a lack of
water for planned solution flow rates during the first half of the
third quarter 2019. A new water well was drilled in
August 2019 and, during the second
half of the third quarter, sufficient water became available to
meet planned solution flow rates and increases in daily
production. Given the daily production trend experienced
during the third quarter 2019 and to-date in the fourth quarter, it
is anticipated that GEO production will reach planned levels during
the fourth quarter due to the increased ounces stacked and solution
flows at planned levels now that there is sufficient water
available. Total tonnes mined, crushed and stacked increased
during the third quarter 2019 compared to the third quarter 2018
due to the planned higher mining rate in connection with the 10,000
tonne per day expansion completed during the first half of 2019,
along with a higher waste to ore ratio.
THIRD QUARTER 2019 LA COLORADA OPERATING STATISTICS
|
3 Months Ended
Sept 30
|
9 Months Ended
Sept 30
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
Mining (in 000s
except for waste/ore ratio)
|
|
|
|
|
|
|
Tonnes ore
|
1,452
|
1,200
|
21%
|
3,511
|
3,358
|
5%
|
Tonnes
waste
|
5,767
|
4,254
|
36%
|
17,667
|
12,200
|
45%
|
Total
tonnes
|
7,219
|
5,454
|
32%
|
21,178
|
15,558
|
36%
|
Tonnes per
day
|
78
|
59
|
32%
|
78
|
57
|
37%
|
Waste/ore
ratio
|
3.97
|
3.55
|
12%
|
5.03
|
3.63
|
39%
|
Tonnes
rehandled
|
0
|
0
|
-
|
0
|
38
|
(100%)
|
Leach Pads (in
000s)
|
|
|
|
|
|
|
Tonnes crushed to
leach pads
|
1,331
|
1,207
|
10%
|
3,337
|
3,472
|
(4%)
|
Tonnes direct to
leach pads
|
145
|
0
|
-
|
234
|
0
|
-
|
Production
|
|
|
|
|
|
|
Gold grade loaded to
leach pads (g/t)1
|
0.60
|
0.33
|
82%
|
0.51
|
0.37
|
38%
|
Gold loaded to leach
pads (oz)2
|
28,586
|
12,957
|
121%
|
59,097
|
41,766
|
41%
|
Projected recoverable
GEOs loaded4
|
22,276
|
9,690
|
130%
|
46,282
|
30,331
|
53%
|
Gold produced
(oz)2,3
|
13,969
|
7,040
|
98%
|
41,064
|
32,834
|
25%
|
Silver produced
(oz)2,3
|
33,616
|
16,213
|
107%
|
123,874
|
103,348
|
20%
|
GEOs
produced3
|
14,418
|
7,271
|
98%
|
42,716
|
34,310
|
25%
|
Gold sold
(oz)2
|
13,870
|
7,330
|
89%
|
41,325
|
35,151
|
18%
|
Silver sold
(oz)2
|
34,041
|
15,205
|
124%
|
126,131
|
108,163
|
17%
|
GEOs sold
|
14,324
|
7,547
|
90%
|
43,007
|
36,696
|
17%
|
Cash cost per gold
ounce sold5
|
$800
|
$1,152
|
(31%)
|
$885
|
$854
|
4%
|
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 Expected recoverable GEOs are based
on the assumptions and parameters as set forth in the La Colorada
Gold/Silver Mine Technical Report dated March 27, 2018. In
periods where the Company mines material not specifically defined
in a technical report (for example: low grade stockpile material),
management uses its best estimate of recovery based on the
information available.
|
5 Please refer to the section
below entitled "Non-IFRS Measures" for a discussion of this
Non-IFRS Measure.
|
Summary of Production Results at La Colorada
During the third quarter
2019, La Colorada produced 98%
more GEOs at a cash cost per gold ounce sold (see "Non-IFRS
Measures" section) 31% lower than the third quarter 2018.
Higher production and lower costs are primarily due to the 82%
increase in grade, as the Company was mining and processing of ore
from low-grade stockpiles during the third quarter of 2018 due the
inability to blast due to the temporary suspension of the
explosives permit.
The crushing and stacking rate exceeded 14,000 tonnes per day
during the third quarter and, when combined with a grade increase
of 30% over the previous quarter, should lead to improved fourth
quarter GEO production.
Organizational Restructuring
The Company has made the
decision to restructure the organization with the goal of
eliminating redundancies and maximizing efficiencies and
profitability. In light of this restructuring, Bill Zisch, Chief Operating Officer is departing
the Company effective immediately. The VP, Operations of
Mexico will report directly to
Pete Dougherty, President and
CEO.
Pete Dougherty stated: "I want to
thank Bill for guiding us through our production growth ramp up
over the past two years, and we wish him well in his future
endeavours."
Argonaut Gold Third Quarter Operational and Financial Results
Conference Call and Webcast:
The Company will host a conference call and webcast to discuss
its third quarter operating and financial results at 9:00 am EST on November 8,
2019.
Q3 Conference Call
Information
|
|
Toll Free (North
America):
|
1-888-231-8191
|
International:
|
1-647-427-7450
|
Conference
ID:
|
7118207
|
Webcast:
|
www.argonautgold.com
|
Q3 Conference Call
Replay:
|
|
Toll Free Replay Call
(North America):
|
1-855-859-2056
|
International Replay
Call:
|
1-416-849-0833
|
The conference call replay will be available from 12:00 pm EST on November
8, 2019 until 11:59 pm EST on
November 15, 2019.
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", "Adjusted net income
(loss)", "Adjusted earnings (loss) per share – basic", and
"Net cash" 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. 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.
Adjusted net income (loss) is equal to net income (loss) less
foreign exchange impacts on deferred income taxes, foreign exchange
(gains) losses, non-cash impairment write down (reversal) of
work-in-process inventory, proceeds from legal proceedings and
unrealized (gains) losses on commodity derivatives. Adjusted
earnings (loss) per share – basic is equal to adjusted net income
(loss) divided by the basic weighted average number of common
shares outstanding. 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.
The Company adopted IFRS 16, Leases ("IFRS 16") in the annual
period commencing January 1, 2019.
The Company elected to apply IFRS 16 using a modified
retrospective approach; therefore, comparative amounts were not
restated. The impact as a result of adopting IFRS 16 on cash
costs per gold ounce sold and all-in sustaining costs per gold
ounce sold for 2019 compared to 2018 was not material.
Please see the management's discussion and analysis ("MD&A")
for full disclosure on non-IFRS measures.
This press release should be read in conjunction with the
Company's unaudited interim condensed consolidated financial
statements for the three and nine months ended September 30, 2019 and associated MD&A, for
the same period, 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.
Creating Value Beyond Gold
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
mine life of the various mineral projects of Argonaut; the ability
to obtain permits for operations; synergies; the realization of
mineral reserve estimates; the timing and amount of estimated
future production; costs of production; 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;
success of exploration activities; the ability to take advantage of
forward sales agreements profitably 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
access to water to meet planned solution flow rates, estimates of
future capital and operating costs, 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, 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.
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.
Qualified Person, Technical Information and Mineral
Properties Reports
Technical information included in this
release was supervised and approved by Brian Arkell, Argonaut's Vice President,
Exploration and a Qualified Person under National Instrument 43-101
("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
Complex
|
NI 43-101 Technical
Report on Resources and Reserves, El Castillo Complex,
Durango State, Mexico dated March 27, 2018 (effective date of March
7, 2018)
|
La Colorada
Mine
|
NI 43-101 Technical
Report on Resources and Reserve, La Colorada
Gold/Silver Mine, Hermosillo, Mexico dated March 27, 2018
(effective date
of December 8, 2017)
|
Magino Gold
Project
|
Feasibility Study
Technical Report on the Magino Project, Ontario, Canada
dated December 21, 2017 (effective date November 8,
2017)
|
San Antonio Gold
Project
|
NI 43-101 Technical
Report on Resources, San Antonio Project, Baja
California Sur, Mexico dated October 10, 2012 (effective date of
September
1, 2012)
|
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 and the La Colorada
mine in Sonora, Mexico.
Advanced exploration projects include the San Antonio project in Baja California Sur, Mexico, the Cerro del
Gallo project in Guanajuato,
Mexico and the Magino project in Ontario, Canada. The Company also has
several exploration stage projects, all of which are located in
North America.
SOURCE Argonaut Gold Inc.