Mr. Richard Young reports

ARGONAUT GOLD ANNOUNCES SECOND QUARTER FINANCIAL AND OPERATING RESULTS

Argonaut Gold Inc. has released financial and operating results for the three and six months ended June 30, 2023, as well as a progress update for the Magino mine. All dollar amounts are expressed in United States dollars, unless otherwise specified.

"Argonaut delivered solid financial and operational results for the quarter, generating strong cash flows to help fund the completion of our newest mine, Magino. During the quarter, the Magino mill began ramping up, putting the mine on track for commercial production in the third quarter. We believe Magino could be one of the largest and lowest-cost gold mines in Canada. To that end, during the third quarter, while commissioning the Magino mill, we are commencing a reserve development drilling program intended to increase reserves in combination with engineering studies to increase mill throughput. At the Florida Canyon mine in Nevada, we are commencing a drill program during the third quarter as part of a proof-of-concept program on the sulphide material. We believe organic growth through mineral resource expansion will deliver significant value within the company's asset base and lays the long-term foundation to grow our current production profile as we seek to become a low-cost, mid-tier North American gold producer," stated Richard Young, president and chief executive officer of Argonaut Gold.

Second quarter highlights

Financial highlights:

• Revenues of $83.1-million was 25 per cent lower than $111.4-million from the second quarter of 2022, due to lower planned production from the company's three Mexican mines, partially offset by higher production from Florida Canyon, and includes $100,000 of initial ounces sold from the Magino mine.
• Gross profit of $15.5-million was $4.3-million lower than $19.8-million from the second quarter of 2022, due to lower revenues from planned lower production.
• Generated cash flow from operating activities before changes in working capital and other items totalling $17.4-million, a reduction of 25 per cent from Q2 2022 due to lower gross profit.
• Net income of $21.2-million, or three cents per basic and diluted share, compared with net income of $18.4-million, or six cents per share for Q2 2022, a 15-per-cent increase in net income.
• Adjusted net income of $5.7-million, or one cent per basic share, compared with adjusted net income of $7.3-million, or two cents per share from Q2 2022, a decrease of $1.6-million.
• Cash and cash equivalents of $71.8-million and net debt of $151.6-million at June 30, 2023.
• Undrawn debt capacity of $20-million at quarter-end.
• On June 29, 2023, the company obtained a waiver on certain financial covenants on its $250-million financing package (collectively referred to as the loan facilities) for the continuing development and construction of the Magino mine.
• Consolidated production of 43,492 gold equivalent ounces (GEOs), including the initial 3,295 ounces of gold from the Magino mine, was 27 per cent lower compared with 59,190 GEOs from the second quarter of 2022, due to lower ore tonnes mined and processed at the company's three Mexican operations.
• Cost of sales per ounce of $1,590, cash cost per ounce of $1,304 and AISC (all-in sustaining cost) per ounce of $1,594 were similar to the prior-year period and largely in line with 2023 full-year guidance. With the expectation of achieving commercial production at Magino in the third quarter of 2023, cost of sales per ounce, cash cost per ounce and AISC per ounce are expected to be in line with full-year 2023 guidance.

"Production and per ounce costs are largely on plan for the first half of the year, placing the company on track to meet its full-year production and cost guidance targets set at the beginning of the year. We continue to ramp up the mill at Magino to steady state and are expecting to achieve commercial production in the third quarter of this year. The plant has been running at or above nameplate throughput capacity when operating," stated Marc Leduc, chief operating officer of Argonaut Gold.

Growth highlights

Magino mine:

• During the second quarter, commissioning activities at the Magino mine were well under way, with the introduction of ore into the crushing circuit mid-May and the grinding circuit approximately one week later.
• First gold pour was achieved mid-June.
• During the month of June, the Magino mine produced an initial 3,295 ounces and sold 72 ounces. Accordingly, the company recognized $100,000 of revenues and $100,000 of cost of sales in the period related to these initial precommercial production gold ounces.
• As at June 30, 2023, the company had incurred approximately $730-million ($947-million (Canadian)) of the $755-million ($980-million (Canadian)) estimated cost to completion (EAC).
• Initial results during commissioning indicate that throughput targets in the crushing and grinding circuits should be easily achieved, and the team was focused on achieving design parameters by working through instrumentation, electrical and communications issues that are common in the start-up phase of a process plant of this size.
• Permits have been received to operate the process plant and tailings management facilities.
• Work force buildup of the permanent operating team is nearing completion but sourcing the remaining labour remains a challenge in the current economic environment; however, vacant roles are being temporarily filled by contract personnel.

Florida Canyon mine:

• Exploration and development work focused on drilling within the oxide resource tested a high-grade target in the west sulphide zone, and completed regional generative exploration work.
• In the west sulphide zone, the company completed six diamond drill holes, for a total of 1,258 metres in three drill fences; these holes were part of the company's proof-of-concept evaluation of the sulphide resources.

Mexico:

• On Aug. 4, 2023, the company signed an agreement to acquire the necessary land to complete mining of the current reserve base at the San Agustin mine. Subject to receipt of the necessary permit, expected later this year, mining is expected to continue into 2025.
• The company continues to work toward optimizing the value of its Mexican assets and it is evaluating the full spectrum of alternatives for the portfolio.

2023 outlook analysis

Production and per-ounce costs are largely on plan for the first half of the year, placing the company on track to meet its full-year production and cost guidance targets set at the beginning of the year. The Magino mine achieved first gold pour in mid-June, 2023, approximately 30 days behind schedule. The Magino mine is currently ramping up to commercial production, which is expected in the third quarter. Production is expected to increase and consolidated cost of sales per ounce, cash cost per ounce and AISC per ounce are expected to decline once the Magino mine reaches commercial production.

The only significant change in guidance relates to exploration costs which are expected to be approximately $10-million higher than planned due to exploration and reserve development programs under way at the Magino and Florida Canyon mines.

Consolidated 2023 production and cost guidance remains unchanged at 200,000 to 230,000 GEOs and an all-in sustaining cost of $1,625 to $1,725 per ounce.

This press release should be read in conjunction with the company's unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2023, and associated management's discussion and analysis (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+.

Conference call and webcast

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

Date and time: Friday, Aug. 11, 2023, at 10 a.m. ET

Telephone: toll-free (North America) 1-888-664-6392 or international 1-416-764-8659

Conference ID: 75372315

Presentation: available for download on Argonaut Gold website

Conference call replay

Telephone: toll-free replay (North America) 1-888-390-0541 or international replay 1-416-764-8677

Entry code: 372315 followed by pound key

The conference call replay will be available from 12 p.m. ET on Aug. 18, 2023.

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, the La Colorada mine in Sonora, Mexico, and the San Agustin mine in Durango, Mexico. Argonaut Gold trades on the Toronto Stock Exchange (TSX) under the ticker symbol AR.

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