Mr. Richard Young reports

ARGONAUT GOLD ANNOUNCES FIRST QUARTER FINANCIAL AND OPERATING RESULTS; PROVIDES PROJECT DEVELOPMENT UPDATE

Argonaut Gold Inc. has released financial and operating results for the three months ended March 31, 2023, and has provided a development update for its Magino project. All dollar amounts are expressed in United States dollars, unless otherwise specified.

First quarter highlights

Three months ended March 31, 2023, compared with three months ended March 31, 2022:

• Consolidated production of 38,585 gold equivalent ounces (GEOs) was 30 per cent lower compared with 55,516 GEOs from the first quarter of 2022, due to lower ore tonnes mined and lower grades placed on the leach pads at the company's three Mexican operations as part of the wind down of those operations.
• Cost of sales per ounce of $1,977, cash cost per ounce of $1,660 and all-in sustaining costs (AISC) per ounce of $1,947 were between 27 per cent and 44 per cent higher than the prior-year period; however, they were largely in line with 2023 full-year guidance. With the planned first gold pour of the Magino mine in the second half of May, cost of sales, cash cost and AISC are expected to be in line with full-year 2023 guidance.
• Revenue of $69-million was 35 per cent lower than $105.8-million from the first quarter of 2022, due to lower planned production from the company's three Mexican mines -- El Castillo, La Colorada and San Agustin. El Castillo ceased mining activities in the fourth quarter of 2022 and is now in residual leaching and reclamation.
• Gross loss of $2.5-million was $24.2-million lower than gross profit of $21.7-million from the first quarter of 2022, due to planned lower revenues from lower production, higher costs at the Mexican operations, and inventory impairment related to the inability to apply fuel tax credits, net realizable value and inventory obsolescence writedowns.
• Generated cash flow from operating activities before changes in non-cash working capital and other items totalling $10.5-million, a reduction of 58 per cent due to lower gross profit.
• Net loss of $10.4-million, or one cent per basic and diluted share, compared with net income of $5.6-million, or $0.02 per share largely due to lower gross profit.
• Adjusted net loss2 of $2.8-million, or $0.00 per basic share, compared with adjusted net income2 of $8.2-million, or three cents per share.
• Cash and cash equivalents of $58.4-million and net debt of $83.3-million.
• Undrawn debt capacity of $104-million at quarter-end.
• On March 28, 2023, the company completed the sale of the Ana Paula project for $10-million cash at closing and contingent consideration totalling $20-million subject to achievement of certain milestones.
• Construction of the company's largest and lowest-cost gold mine, the Magino project, is on track for first gold pour in the second half of May, with commercial production expected during the third quarter of 2023.

"The year is off to a solid start with our four operating mines tracking well to plan, as well as Magino, our new flagship mine. We believe Magino has the potential to be one of the largest and lowest-cost gold mines in Canada. To achieve that goal, we are embarking on a 12-to-15-month drill program, leveraging off of the 2022 drill program that significantly increased our open-pit resource base. A portion of the drill program is designed to convert open-pit resources to reserves to determine the optimal processing rates for the mine based on an expected larger reserve base. The balance of the program will test the high-grade deep potential as well as the potential west along strike," said Richard Young, president and chief executive officer.

"Argonaut's first quarter financial results were in line with plan and reflect the transformation of our production base as we continue winding down our high-cost, low-grade Mexican mines, while preparing for first gold pour at our new flagship Canadian operation. Argonaut is in a solid financial position to complete the construction and ramp-up of Magino with a quarter-end cash balance of $58.4-million, $104-million in undrawn debt and approximately $103-million left to spend on project construction," stated David Ponczoch, chief financial officer.

Growth highlights

Magino project update:

• As at March 31, 2023, the company had incurred approximately $652-million of the $755-million ($980-million (Canadian)) estimate at completion (EAC).
• Operational readiness activities continue to advance rapidly with the focus on preparing for first gold pour in the second half of May, 2023.
• Work force buildup continues but sourcing labour remains a challenge.
• Mining operations have commenced and ore is being stockpiled but at a lower rate than planned.
• Magino resources were updated based on exploration drilling in 2022; the deposit now contains 4.6 million ounces of gold in the measured and indicated category, with a further 900,000 ounces contained in the inferred resource category, inclusive of 2.4 million ounces of reserves.

"Major components critical to commissioning Magino's mill are coming together as we prepare for first gold pour, which is now expected during the second half of May, which is marginally behind the May 15 target date. The project's capital costs remain unchanged from our year-end update. The only operational areas behind schedule include our manpower buildup and mining rates; however, we have put recovery plans in place, which are putting us back on track," stated Marc Leduc, chief operating officer.

Consolidated financial statements

Argonaut's consolidated financial statements and related management's discussion and analysis (MD&A) for the three months ended March 31, 2023, are available on Argonaut's website and on under the company's issuer profile on SEDAR.

Conference call and webcast

Management will host a live conference call and webcast to discuss first quarter highlights with a question-and-answer session as follows:

Date and time: Friday, May 5, 2023, at 10 a.m. ET

Toll-free (North America): 1-888-664-6392

International: 1-416-764-8659

Conference ID: 54944086

Presentation: available for download on Argonaut Gold website

Toll-free replay (North America): 1-888-390-0541

International replay: 1-416-764-8677

Replay entry code: 944086 followed by pound key

This press release should be read in conjunction with the company's unaudited interim condensed consolidated financial statements for the three months ended March 31, 2023, and associated MD&A for the same period, which are available on the company's website, in the investors section under financial filings, and under the company's issuer profile on SEDAR.

Qualified persons, technical information and mineral properties reports

The technical information contained in this press release has been prepared under the supervision of, and has been reviewed and approved by, Brian Arkell, Argonaut's vice-president of exploration and mine technical services, and Mr. Leduc, chief operating officer; both are qualified persons as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.

About Argonaut Gold Inc.

Argonaut Gold is a Canadian gold company with a portfolio of operations and multistage assets in North America. Focused on becoming a low-cost mid-tier gold producer, the company is in the final stages of construction at its Magino project, located in Ontario, Canada. Magino is expected to achieve commercial production in the third quarter of 2023 and become Argonaut's largest and lowest-cost mine. The commissioning of Magino will be the first step in transforming the company as it enters a pivotal growth stage. The company also has three operating mines, including the Florida Canyon mine in Nevada, United States, where it is pursuing additional growth, La Colorada mine in Sonora, Mexico, and San Agustin mine in Durango, Mexico. Argonaut Gold trades on the Toronto Stock Exchange under the ticker symbol AR.

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