Mr. Richard Young reports

ARGONAUT GOLD ANNOUNCES 2024 GUIDANCE AND PROVIDES OPERATIONAL UPDATE

Argonaut Gold Inc. has released its 2024 guidance, including production and cost per ounce, as well as capital and exploration expenditure forecasts.

Consolidated gold production for 2024, including the Mexican operations, is expected to be in the range of 225,000 gold equivalent ounces (GEOs) and 250,000 GEOs, an increase of 13 per cent to 25 per cent over 2023 production. Cost of sales and cash costs per ounce of gold sold are expected to be similar to 2023, while all-in-sustaining costs per ounce sold are expected to be higher than 2023, due to the increase in sustaining capital at Magino and Florida Canyon. Higher sustaining costs at Magino are related to the completion of the tailings management facility. At Florida Canyon, higher sustaining costs are due to the construction of the third heap-leach pad.

In 2023, Argonaut achieved a significant milestone with the commissioning of its flagship asset, the Magino mine. Ramp-up continues into 2024, and the mining and milling rates are expected to be in line with Magino's National Instrument 43-101 technical report 2022 in the second half of 2024. Analysis to date shows that total contained gold is projected to be within 1 per cent of the reserve model, compared with grade control polygons. While Argonaut believes the block model properly estimates the grade of the ore, the mine site is experiencing higher dilution rates than anticipated in the technical report due to challenges with selectively mining the high-grade parts of the orebody. As a result of the higher dilution than previously modelled in the high-grade areas of the deposit, the average grade to the mill is expected to be approximately 5 per cent to 10 per cent lower than in the technical report over the next two to three years; however, life-of-mine grades and ounces are not expected to be impacted. The company expects to have an updated technical report with the latest findings filed in the second half of 2024.

"Over the last few months, we have analyzed our mining practices, and grade and tonnes modelled and delivered to the process plant, in great detail. We have learned that selectively mining the high-grade portion of the deposit to the extent predicted in the technical report, in the initial three years, may not be achievable. In 2024, lower grades due to pit sequencing, coupled with lower mining and processing rates in the first half of the year, are expected to be offset by higher mill throughput in the second half of the year, following the completion of optimization work under way in the first half of the year, and improvements in mill availability," stated Marc Leduc, chief operating officer of Argonaut Gold. "Notably, gold recoveries are on plan, while unit costs are expected to be higher in 2024 relative to the technical report, but decline over the following 12 to 18 months as we continue to work through the ramp-up process."

"Operationally, our near-term focus continues to be the ramp-up of the Magino mine. The medium-term goal is to expand the reserve base and mill throughput in order to increase production to the 200,000-to-250,000-ounce-per-year range, while reducing the cost structure. Given the grade of the deposit, scale is important to drive strong free cash flows. We anticipate completing a refinancing of our current debt package by the end of the first quarter, to provide sufficient liquidity during this ramp-up phase and for our future growth objectives," stated Richard Young, president and chief executive officer.

Two thousand twenty-four outlook

The associated table outlines the company's 2024 outlook for key operating and financial statistics.

Magino:

• The mine is expected to complete the implementation of a fleet management system in H1 2024, which is expected to improve grade control, mining accuracy and productivity.
• Four additional haul trucks and a PC3000 shovel are expected to be added to the mobile equipment fleet in the first and second quarters, respectively, increasing hauling and loading capacity.
• As a result of the new equipment being added to the mobile fleet, mining rates are on target to increase through the first half of 2024, from 50,500 tonnes per day in December, 2023, to a daily average of 65,000 tonnes per day by the second half of the year, improving high-grade ore release.
• Total contained gold is projected to be within 1 per cent of the reserve model relative to the grade control polygons through to the end of April, 2024 (extent of current grade control drilling). However, gold grades to the mill are expected to be 5 per cent to 10 per cent lower than presented in the technical report over the next two years to three years due to higher anticipated dilution resulting from lower ore selectivity.
• Mill optimization work, under way in the first half of 2024, is expected to lead to increased throughput rates in the range of plus 10 per cent, offsetting the anticipated lower gold grades to the mill in the early years, putting the mine on schedule to meet the technical report monthly and annual production rates by the end of 2024.
• Mill recovery rates are in line with technical report design rates, however, throughput rates are expected to remain below nameplate capacity of 10,000 tonnes per day through the first half of the year, due largely to lower availability as the process team continues to address poor quality components and consumables in the mill that have caused significant unplanned downtime.
• The mill modifications and changes are expected to increase both tonnes per operating hour as well as availability, putting the mill on target for daily throughputs above nameplate capacity by the fourth quarter of 2024.
• Cost per tonne mined is more than $1.00 per tonne higher than the technical report for 2024, largely due to higher labour costs, grade control, drill and blast costs, and diesel prices.
• Labour rates have increased since the latest technical report due to inflation and scarcity of technical personnel with the large number of mining projects under construction in Ontario.
• The mine has offset the labour shortage with contractors until permanent employees are hired -- contractor costs increase cost per tonne by 30 cents.
• Grade control, and drill and blast costs are expected to move closer to the technical report over the next 12 months to 18 months as the mining team makes improvements.
• Processing costs are also higher than the technical report. This is largely due to higher labour, consumable and compressed natural gas (CNG) costs.
• General and administration costs are also significantly higher than the technical report due to a larger portion of the employee base residing in the camp, as well as higher environmental and safety costs.
• Sustaining capital expenditures include the completion of the tailings management facility 1B, completion of the assay lab, and other infrastructure and major spare components, which were deferred from the original capital cost estimate to conserve cash during the construction of the mine.
• The target for the reserve development expenditures in 2024 are anticipated to add between 500,000 ounces and one million ounces to estimated mineral reserves by the end of year.
• An updated NI 43-101 technical report is planned for the second half of 2024, reflecting the updated mineral resources and mineral reserves, as well as planned mill expansion.

Florida Canyon:

• In 2023, Florida Canyon reported its highest production total in 19 years.
• For 2024 production, material movement and grades are expected to be similar to 2023.
• Ore placed on the leach pad is expected to be approximately 20 per cent lower than last year, but ounce production is expected to be only marginally lower, benefiting from the additional process capacity being added in 2024 as part of the construction of the third leach pad, which will allow the drawdown of inventory which built up in 2023 due to limited processing capacity.
• Overall operating costs will be slightly higher than 2023 due to increases in waste stripping, equipment maintenance and employee compensation. These higher costs, combined with lower ore tonnes, will increase unit costs for mining, processing and administration by approximately 10 per cent when compared with 2023.
• In 2024, sustaining capital costs are largely related to the construction of a third leach pad and additional processing capacity to increase the flow rates to begin drawdown of the large inventory of gold placed on the pads.
• Exploration expenditures have been reduced to allow the team to update the geologic model based on oxide and sulphide drilling in 2023, and the large volume of historical work done over the last 30 years.

Mexico operations:

• For 2024, the San Agustin mine in Mexico is expected to remain operating. However, La Colorada has been placed on care and maintenance due to the large capital required to prestrip the mine. El Castillo is in reclamation.
• San Agustin's production guidance includes the assumption of receipt of the necessary federal permits to mine the remaining reserves by midyear, following the acquisition of the land in the third quarter of 2023.
• Residual leaching will take place at both La Colorada and El Castillo in 2024.
• For 2024, the Mexican operations are expected to be largely break-even from a cash-flow perspective.
• A financial adviser has been appointed to assess strategic alternatives for the Mexican operations, including the sale of one or more of the assets.

Qualified person, technical information

The technical information contained in this press release has been prepared under the supervision of, and has been reviewed and approved by Mr. Leduc, PEng, chief operating officer -- a qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects. For further information on the Magino mine, please see the technical report titled "Magino gold project, Ontario, Canada, NI 43-101 technical report, mineral resource and mineral reserve update," dated March 3, 2022 (effective date of Feb. 14, 2022), on the company's website or on SEDAR+.

About Argonaut Gold Inc.

Argonaut Gold is a Canadian-based gold producer with a portfolio of operations in North America. Focused on becoming a low-cost, mid-tier gold producer, the company's flagship asset, Magino mine, is expected to become Argonaut's largest and lowest-cost mine. The company is pursuing potential for redevelopment and additional growth at the Florida Canyon mine in Nevada, United States. Together, the Magino and Florida Canyon mines are the company's cornerstone assets that will drive Argonaut through this pivotal growth stage. The company also has two additional operating mines in Mexico: the La Colorada mine in Sonora and the San Agustin mine in Durango.

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