05:50:57 EDT Fri 31 Mar 2023
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Argonaut Gold Inc
Symbol AR
Shares Issued 311,197,075
Close 2022-03-01 C$ 2.40
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Argonaut earns $26.5-million (U.S.) in 2021

2022-03-01 17:58 ET - News Release

Mr. Dan Symons reports


Argonaut Gold Inc. has released its operating and financial results for the fourth quarter and year ended Dec. 31, 2021. For 2021, the company reports record annual production of 244,156 gold equivalent ounces (2), record annual revenue of $436.9-million and record annual cash flow from operating activities before changes in non-cash operating working capital and other items of $124.9-million, net income of $26.5-million or earnings per basic share of nine cents, and adjusted net income (3) of $57.1-million or adjusted earnings per basic share (3) of 19 cents. For the fourth quarter 2021, the company reports production of 61,926 GEOs, revenue of $102.9-million, cash flow from operating activities before changes in non-cash operating working capital and other items of $18.3-million, net loss of $37.3-million or loss per share of 12 cents, and adjusted net income (3) of $10.2-million or adjusted earning per basic share (3) of three cents. All dollar amounts are expressed in U.S. dollars, unless otherwise specified.

Dan Symons, vice-president, corporate development and investor relations, stated: "Two thousand twenty-two was a solid year operationally as we achieved record annual production, which led to record annual revenue and record annual cash flow. We achieved above our production guidance at La Colorada, near the top of production guidance at El Castillo and San Agustin and near the midpoint of our production guidance at Florida Canyon. On a consolidated basis, we achieved near the midpoint of our cost guidance. At the Magino construction project, we continue to make good progress and remain on schedule. We anticipate having secured the required financing, primarily in the form of debt financing, by the second quarter of 2022 to fund the remainder of the Magino construction capital."

The attached performance compared with guidance table outlines the company's performance compared with 2021 guidance. Capital guidance was revised concurrent with the publication of second quarter 2021 results on Aug. 10, 2021, and Magino construction capital was revised in the Dec. 14, 2021, press release. Full-year 2021 capital is reported as incurred capital.

Key operating and financial statistics for the fourth quarter and year ended Dec. 31, 2021, are outlined in the attached key operating and financial statistics table.

2021 and recent company highlights:

  • Corporate highlights:
    • Full-year 2021:
      • Record annual production of 244,156 GEOs;
      • Record annual revenue of $437-million;
      • Record annual cash flow before changes in working capital and other items of $125-million;
      • Year-over-year lost-time injury frequency rate (LTIFR) reduction of 7 per cent;
    • Fourth quarter 2021:
      • Acquired key mineral concessions surrounding the San Agustin mine for $5.75-million that more than quadruples the mineral tenure in the San Agustin district (see press release dated Oct. 12, 2021);
      • Strengthened the management team in Mexico with the appointment of Alfredo Phillips as vice-president, corporate affairs and country manager; in this role, Mr. Phillips will be responsible for leading government relations and ESG (environmental, social and governance) strategy and execution in Mexico;
      • Departure of president and chief executive officer Pete Dougherty and engagement of Korn Ferry, a leading executive recruitment firm, to conduct an immediate search for a replacement;
    • Subsequent to year-end 2021:
      • Announced the promotion of Lowe Billingsley to chief operating officer;
      • Launched a $45-million (Canadian) flow-through equity financing to finance 2022 eligible Canadian development expenditures and Canadian exploration expenditures at Magino;
  • Social and environmental responsibility:
    • Received nationally awarded, environmental, socially responsible company recognition for the 10th consecutive year for its Mexican operations;
    • Installation of solar panels to power pumps for water wells for a school in the community near San Agustin;
    • Donation of school and craft supplies to children and youth in the community near El Castillo;
    • Sponsored the Minnovacion event in the municipality of La Colorada, which included an innovative collaboration with a known local photographer showcasing its La Colorada mine in contrast to dancers in a project called Contrastes, an exhibit inaugurated by the governor of Sonora;
    • Assisted in road repairs for the local community church in Cerro del Gallo;
    • Continued meetings and monthly updates for the Magino construction project with the indigenous community leaders;
  • El Castillo:
    • Production of 48,861 GEOs for the year, an increase of 6 per cent compared with 2020;
  • San Agustin:
    • Production of 74,116 GEOs for the year, an increase of 16 per cent compared with 2020;
    • Declared initial sulphide inferred mineral resource, which has the potential to extend mine life by six to 10 years with further drilling and metallurgical work;
    • Zero lost-time accidents in 2021;
  • La Colorada:
    • Production of 66,964 GEOs for the year, an increase of 44 per cent compared with 2020;
    • Reduction in cash cost per gold ounce sold of 22 per cent in 2021 compared with 2020;
    • Discovered high-grade gold mineralization below the El Creston pit;
    • Year-over-year 68-per-cent reduction in LTIFR annual rate;
  • Florida Canyon:
    • Production of 54,215 GEOs for the year;
    • Received air quality permit modification and installed new conveying and stacking system;
  • Magino:
    • Construction:
      • Commenced construction and provided monthly newsletter updates detailing construction highlights; major milestones included:
        • Placed orders on long-lead-time components;
        • Logged project area;
        • Constructed camp facilities;
        • Made significant progress at process facility site;
        • Made significant progress at tailings management facility;
        • Commenced open-pit mining to generate waste rock;
        • Made significant progress at water quality control pond;
        • Commenced fish habitat work;
        • Continued operational readiness preparation;
      • During the fourth quarter and year ended Dec. 31, 2021, Argonaut incurred $65.6-million and $236.8-million in capital costs, respectively, related to construction of the Magino project; of this amount incurred, the majority was for securing long-lead-time components for the mineral processing plant, and for site development, camp construction and earthworks;
    • Exploration:
      • Continued to discover high-grade gold mineralization in six distinct zones below and adjacent to the planned pit: Elbow, Central, Scotland, No. 42, Sandy and South;
    • Announced updated technical report results (see press release dated Feb. 14, 2022).

2022 GEO production and cost guidance

Argonaut anticipates it will produce between 200,000 and 230,000 GEOs during 2022 at a cash cost of between $1,100 and $1,190 per gold ounce sold and an AISC of between $1,415 and $1,525 per gold ounce sold. The company also anticipates higher cash taxes will impact cash flow in 2022, particularly during the first quarter of 2022, when most of the final tax payments for 2021 are made, as a result of Argonaut's highly profitable operations in 2021 combined with the exhaustion of net operating losses at its Mexican subsidiaries.

Lower GEO production and higher AISC in 2022 are primarily driven by lower expected GEO production at La Colorada due to a higher strip ratio and lower grade and recovery, as mining transitions from the El Creston pit to the Veta Madre pit. Lower GEO production and higher cost at El Castillo are primarily related to processing less oxide ore and more transition and sulphide ore as El Castillo anticipates entering into its final full year of mining operations. Costs are also impacted by higher costs for consumables and reagents across all operations due to the current inflationary environment.

As Argonaut is currently evaluating several viable financing options to finance the rest of the Magino construction project, it intends to provide full-year 2022 capital guidance after financing is in place. The largest component of the projected 2022 capital spend will be the Magino construction project, where Argonaut forecasts it will invest approximately $340-million ($424-million (Canadian)) during 2022. In the event that financing is not available promptly and upon acceptable terms, the company may need to amend or adjust its plans for construction of the Magino project.

Argonaut fourth quarter and year ended 2021 operational and financial results conference call and webcast

The company will host a conference call and webcast to discuss its fourth quarter and year ended Dec. 31, 2021, operating and financial results at 9 a.m. EST on March 2, 2022.

Q4 and year ended 2021 conference call information

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

International:  1-416-764-8659

Conference ID:  82995499

Webcast:  at the Argonaut website

Q4 and year ended 2021 conference call replay

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

International replay call:  1-416-764-8677

Replay entry code:  995499 followed by the number sign

The conference call and replay will be available from 12 p.m. EST on March 2, 2022, until 11:59 p.m. EST on March 9, 2022.

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.

About Argonaut Gold Inc.

Argonaut is a Canadian gold company engaged in exploration, mine development and production. Its primary assets are its El Castillo mine and San Agustin mine, which together form the El Castillo complex in Durango, Mexico, its La Colorada mine in Sonora, Mexico, and the Florida Canyon mine in Nevada, United States. The company also holds the construction-stage Magino project, the advanced-exploration-stage Cerro del Gallo project and several other exploration-stage projects, all of which are located in North America.

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