Argonaut Gold Meets Production Guidance With 139,059 Gold Equivalent Ounces and Increases Cash Balance to $46 Million

January 13, 2016

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2016 Guidance of 130,000-140,000 Gold Equivalent Ounces of Production at a Cash Cost of $750-$800

TORONTO, ONTARIO–(Marketwired – Jan. 13, 2016) – Argonaut Gold Inc. (“Argonaut”, “Argonaut Gold” or the “Company”) (TSX:AR) announced today that it had produced 30,399 gold equivalent ounces (“GEO” or “GEOs”; calculated at conversion ratios set out below) during the fourth quarter ended December 31, 2015. This included 16,731 GEOs at its 100% owned El Castillo Mine (“El Castillo”) located in the State of Durango, Mexico and 13,668 GEOs at its 100% owned La Colorada Mine (“La Colorada”) located near Hermosillo, Mexico.

4th Quarter Change Full Year Change
2015 2014 2015 2014
Total Gold Equivalent Ounce Production:
GEOs loaded to the pads1 55,769 62,823 -11% 214,662 241,656 -11%
GEOs projected recoverable ounces1,2 28,823 38,093 -24% 119,256 140,563 -15%
GEOs produced ounces1 30,399 44,312 -31% 139,059 136,706 +2%
GEOs ounces sold1 29,337 41,172 -29% 136,874 132,976 +3%
1 GEOs are based on conversion ratio of 55:1 for silver to gold ounces and is the referenced ratio for the 2015 results
2 Recoverable ounces – El Castillo expected recovery rates: ROM oxide 50%, crushed oxide 70%, ROM transition 40%, crushed transition 60%, crushed sulphides argillic 30% and crushed sulphides silicic 17%; La Colorada expected recovery rates: gold 60% and silver 30%.


Quarter and year-end cash balance of $45.8 million.

El Castillo

  • Q4 production of 16,586 gold ounces; full year production of 79,751 gold ounces.
  • During the quarter, 21,938 gold ounces loaded on the leach pad.
  • New phase 3b east pad was completed and stacking commenced during the quarter.

La Colorada

  • Q4 production of 12,866 gold ounces and 44,092 silver ounces, for 13,668 GEOs.
  • Full year production of 55,056 gold ounces and 192,837 silver ounces, for 58,562 GEOs.
  • During Q4, 23,599 gold ounces and 562,733 silver ounces loaded on the pad.
  • New phase 2 of leach pad 6 was completed and stacking commenced during the quarter.
  • Re-processing of the old heap leach pads has been completed.


  • Gold production of 130,000-140,000 gold equivalent ounces (at a 65:1 conversion of silver to gold ounces).
    • El Castillo – 75,000-80,000 gold equivalent ounces at cash costs of $750-$800 per gold ounce sold (Refer to Non-IFRS Measures section).
    • La Colorada – 55,000-60,000 gold equivalent ounces at cash costs of $725-$775 per gold ounce sold (Refer to Non-IFRS Measures section).
  • Cash cost per gold ounce sold of $750-$800 (Refer to Non-IFRS Measures section).
  • Expected capital spending for 2016 is $23 million including:
    • El Castillo – $4 million
    • La Colorada – $14 million including expansion capital for NE Leach pad and conveyor system
    • San Antonio – $ 1 million for land and holding costs
    • San Agustin – $1 million for land and permitting (excludes construction capital)
    • Magino – $1 million for land and holding costs
    • Exploration and other – $2 million for land

Pete Dougherty, Argonaut Gold’s President & CEO said, “2015 was a challenging year for the industry and investors. However, I am pleased with our team for the achievements made during the year. We overcame many obstacles while meeting production guidance and completing key capital programs, including the payment of the final installment for the acquisition of the San Agustin project. We have reorganized our operations to operate in a lower gold price environment and have completed the bulk of our capital projects at our operating assets. These actions have placed us on solid footing to move forward and continue to maintain a strong balance sheet, even in a lower gold price environment.

During 2015, we advanced our development assets. First, at San Agustin, we completed a Preliminary Economic Assessment, submitted permits and have redesigned the project to reduce the capital costs and take advantage of synergies with El Castillo. We expect to make a construction decision on this project later this year. Second, at Magino, we completed an additional drilling campaign and will soon release the results of the updated Pre-Feasibility Study, which will incorporate this drilling and the additional land acquired to more fully realize the potential of this project. Finally, at San Antonio, we continue to engage with the recently elected officials and with the local communities to create the right climate to move the project forward. In addition, we advanced costing for this project. On an exploration front, we completed additional drilling at San Agustin, El Castillo and also drilled on another exploration target in Mexico.

We were able to fund all these advancements while maintaining a strong balance sheet, which demonstrates our ability to weather difficult market conditions.”


3 Months Ended December 31 12 Months Ended December 31
2015 2014 % Change 2015 2014 % Change
Mining (Tonnes 000s)
Total tonnes mined 6,298 7,376 -15 % 27,294 31,211 -13 %
Total mineralized tonnes mined 2,399 3,484 -31 % 10,787 14,976 -28 %
Tonnes waste 3,899 3,892 +0 % 16,507 16,234 +2 %
Tonnes per day 68 80 -15 % 75 86 -13 %
Waste/mineralized material ratio 1.63 1.12 +46 % 1.53 1.08 +42 %
Heap Leach Pad (Tonnes 000s)
Tonnes mineralized material direct to leach pad 527 -100 % 3,096 -100 %
Tonnes crushed 1,062 1,556 -32 % 5,091 6,200 -18 %
Tonnes overland conveyor 1,318 1,471 -10 % 5,644 5,750 -2 %
Gold grade (g/t)1 0.29 0.33 -12 % 0.30 0.33 -9 %
Gold loaded to leach pad (oz)2 21,938 37,986 -42 % 104,399 159,294 -34 %
Projected recoverable gold ounces loaded to pad (oz)3 11,594 24,667 -53 % 62,109 95,582 -35 %
GEOs produced4 16,731 27,870 -40 % 80,497 93,379 -14 %
Gold sold (oz) 16,219 25,292 -36 % 77,639 89,017 -13 %
Silver sold (oz) 8,004 10,649 -25 % 41,051 48,401 -15 %
1 “g/t” is grams per tonne
2 “oz” refers to troy ounce
3 Recovery rates: ROM oxide 50%, crushed oxide 70%, ROM transition 40%, crushed transition 60%, crushed sulfides argillic 30%, crushed sulfides silicic 17%
4 GEOs are based on a conversion ratio of 55:1 for silver to gold

Richard Rhoades, Chief Operating Officer of Argonaut Gold, said, “At El Castillo we achieved our production objectives while finalizing construction of the leach pads, in spite of experiencing a 10-day illegal blockade of the site by some members of a local community. The dispute was resolved and we quickly returned to normal operations. The grade increased 7% in Q4 over Q3, however, we don’t expect the grades to increase significantly until Q2 of 2016, as we open up the new phase 6 mining area. We were successful in drawing down our inventory and have organized the operation to make us more efficient going forward. During 2016, we anticipate lower capital spending as our expansion plans and leach pad builds are largely completed. Mining rates will decrease as we progress throughout the year with a full year reduction of 25% over 2015 rates due to lower stripping ratios. Production will be slightly lower as the Company is now harvesting the El Castillo Pit and will begin preparations to incorporate the proposed San Agustin Pit into the production profile in 2017.”

Mineralized tonnes 2,880,000 2,912,000 2,944,000 1,952,000 10,688,000
Waste tonnes 4,615,000 1,911,000 1,566,000 1,599,000 9,691,000
Strip ratio 1.60 0.66 0.53 0.82 0.91
GEO produced (000s) 17.5 – 19 20 – 21 22 – 23 15.5 – 17 75 – 80


3 Months Ended December 31 12 Months Ended December 31
2015 2014 % Change 2015 2014 % Change
Mining (Tonnes 000s)
Tonnes mineralized material 691 732 -6 % 2,380 2,748 -13 %
Tonnes waste 2,568 3,575 -28 % 9,880 14,248 -31 %
Total tonnes 3,259 4,306 -24 % 12,260 16,997 -28 %
Waste/mineralized material ratio 3.71 4.89 -24 % 4.15 5.18 -20 %
Tonnes rehandled 776 392 +98 % 2,898 1,009 +187 %
Heap Leach Pad (Tonnes 000s)
Tonnes crushed and loaded to pads 1,477 1,117 +32 % 5,293 3,700 +43 %
Gold grade to leach pad (g/t)1 0.50 0.55 -9 % 0.47 0.57 -18 %
Gold loaded to leach pad (oz)2 23,599 19,917 +18 % 80,228 67,576 +19 %
Projected recoverable GEOs loaded (oz)3, 4 17,229 13,426 +28 % 57,147 44,981 +27 %
Gold produced (oz) 12,866 15,682 -18 % 55,056 40,535 +36 %
Silver produced (oz) 44,092 41,787 +6 % 192,837 153,548 +26 %
GEOs produced (oz) 13,668 16,442 -17 % 58,562 43,327 +35 %
Gold sold (oz) 12,224 14,985 -18 % 54,979 40,131 +37 %
Silver sold (oz) 41,190 38,588 +7 % 193,029 162,194 +19 %
GEOs sold 12,973 15,687 -17 % 58,489 43,080 +36 %
1 “g/t” is grams per tonne
2 “oz” means troy ounce
3 Recovery rates: gold 60% and silver 30%
4 GEOs based on conversion ratio of 55:1 for silver to gold

Richard Rhoades commented, “At the La Colorada mine, we exceeded our production objectives and had a very successful year. Going forward, we will transition to process ore from the mine only as we have completed the processing of the old leach pad material. In 2016, we will operate with the main crushing circuit and therefore process less tonnes, but at higher grades. We expect to complete phase 1 of the Northeast leach pad and section 3 of the overland conveyor by mid-year, which will allow for future material placement.”

Ore tonnes 990,000 1,001,000 1,012,000 1,001,000 4,004,000
Waste tonnes 3,510,000 4,459,000 4,968,000 4,914,000 17,851,000
Strip ratio 3.55 4.45 4.91 4.91 4.46
GEO produced (000s) 12 – 13 14.5 – 15.5 15.5 – 16.5 13 – 15 55 – 60

2016 Development and Growth

Peter Dougherty said, “In 2016, we anticipate another strong year from our two operating mines. In addition, we expect to add value by advancing San Agustin to a construction decision and unlocking value at Magino based on an updated PFS.”

Capital and development spending 2016:

Sustaining Capital Capitalized Stripping Expansion Capital
El Castillo $ 1.9 M $ 2.1 M N/A
La Colorada $ 1.9 M $ 8.1 M $ 4.0 M
San Agustin N/A N/A $ 1.0 M
San Antonio N/A N/A $ 1.0M
Magino N/A N/A $ 1.0 M
Exploration & Corporate N/A N/A $ 2.0 M
TOTAL $ 3.8 M $ 10.2 M $ 9.0 M

Argonaut Gold Q4 Financial Results Conference Call and Webcast – March 16, 2016:

The Q4 financial results call is scheduled to take place on March 16, 2016 at 8:30 am ET. Details for the call-in participation are:

Q4 and Year End Conference Call Information for March 16, 2016:

Toll Free (North America): 1-877-223-4471
International: 1-647-788-4922
Toll Free Replay Call (North America): 1-416-621-4642
International Replay Call: 1-800-585-8367

The conference call replay will be available from 11:30 a.m. ET on March 16, 2016 to April 8, 2016.

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, and the Magino project in Ontario, Canada and the San Agustin project in Durango, Mexico. The Company also has several exploration stage projects, all of which are located in North America. The Company is pursuing a development strategy for the San Agustin project that it expects to rely upon common infrastructure with the nearby El Castillo mine. In the event that this strategy is proven out, the Company intends any future development of the San Agustin project to proceed as an extension of the El Castillo mine.

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; 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; the benefits of the development potential of the properties of Argonaut; success of exploration activities; synergies and financial impact of completed acquisitions; 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 has included certain non-IFRS measures including “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 management’s discussion and analysis (“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

El Castillo Mine NI 43-101 Technical Report on Resources and Reserves, Argonaut Gold Inc., El Castillo Mine, Durango State, Mexico dated February 24, 2011 and with an effective date of November 6, 2010
La Colorada Mine NI 43-101 Preliminary Economic Assessment La Colorada Project, Sonora, Mexico dated December 30, 2011 and with an effective date of October 15, 2011
San Agustín Project NI 43-101 Technical Report and Preliminary Economic Assessment on the San Agustín Heap Leach Project, Durango, Mexico dated February 19, 2015 and with an effective date of October 3, 2014
Magino Gold Project Preliminary Feasibility Study Technical Report for the Magino Project, Wawa, Ontario, Canada dated January 30, 2014 and with an effective date of December 17, 2013
San Antonio Gold Project NI 43-101 Technical Report on Resources, San Antonio Project, Baja California Sur, Mexico dated October 10, 2012 and with an effective date of September 2, 2012