05:44:19 EDT Fri 31 Mar 2023
Enter Symbol
or Name

Login ID:
Argonaut Gold Inc
Symbol AR
Shares Issued 799,670,537
Close 2022-11-03 C$ 0.36
Recent Sedar Documents

Argonaut loses $1.3-million (U.S.) in Q3

2022-11-03 22:34 ET - News Release

Mr. Larry Radford reports


Argonaut Gold Inc. has released its operating and financial results for the third quarter ended Sept. 30, 2022. For the third quarter 2022, the company reports production of 45,939 gold equivalent ounces (2), revenue of $75.3-million, cash flow from operating activities before changes in non-cash working capital and other items of $13.6-million, net loss of $1.3-million or loss per share of nil, and adjusted net loss (3) of $200,000 or adjusted loss per share (3) of nil. All dollar amounts are expressed in U.S. dollars unless otherwise specified.

(1) Cash flow refers to cash flow from operating activities before changes in non-cash operating working capital and other items.

(2) GEOs are based on a conversion ratio of 80 to 1 for silver to gold for 2022 and 85 to 1 for 2021. The silver to gold conversion ratio is based on the three-year trailing average silver to gold ratios. These are the referenced ratios for each year throughout this press release.

(3) This is a non-international financial reporting standard measure.

"We made significant progress on the completion and construction of the Magino project. We remain focused on the long-term strategic objective to generate increasing cash flow through low-cost production growth. Magino is a key driver of our future growth with a production potential of 142,000 ounces per year for the first five years of production at significantly lower life-of-mine cash costs (3) of approximately $907 per ounce," said Larry Radford, Argonaut president and chief executive officer.

"Year to date, our production results are in line with our expectations. We had a challenging third quarter at our La Colorada and Florida Canyon mines that was mostly offset by the consistent performance of our El Castillo complex. The challenge at these two mines were due to the block model performance and seasonal rains at La Colorada that are expected but were heavier than normal. With infill programs ongoing in support of revised block models, we expect improved reconciliations in the future."

Q3 2022 and recent highlights:

  • Corporate highlights:
    • Produced 45,939 gold equivalent ounces;
    • Delivered cash flow before changes in working capital and other items of $13.6-million;
  • Following due diligence by the banking syndicate and meeting the conditions precedent, closed a $250-million debt facility;
  • Closed the sale of a 2-per-cent net smelter return royalty agreement on Magino with Franco-Nevada Corp. for proceeds of $52.5-million;
  • Completed a $10-million equity private placement with Franco-Nevada;
  • Argonaut has entered into gold price protection through forward gold contracts:
    • Beginning in Q3 2023, 25,000 gold ounces per quarter at $1,860 per ounce for the first six quarters;
    • 15,000 gold ounces per quarter at $1,860 per gold ounce and 10,000 gold ounces per quarter at $1,763 per gold ounce for the next 10 quarters starting in first quarter 2025;
  • Argonaut has entered into foreign exchange forward contracts for the Canadian dollar for the next 24 months with the average rate of $1.334 (Canadian) per $1 (U.S.);
  • Magino construction:
    • At Sept. 30, 2022, of the $920-million (Canadian) estimated cost to completion, $626.0-million (Canadian) had been spent, and $726.0-million (Canadian) had been committed;
    • At Sept. 30, 2022, the Magino construction project was estimated at approximately 70 per cent complete;
    • Key leadership roles filled:
      • Advancing Stage 1A of the TMF and starting Stage 1B;
      • Received major process equipment for the mill -- the mills and tanks are in place;
      • Pumping, piping and electrical systems being installed -- enclosed and winter ready;
      • All four permanent generators have been received and are in place;
      • Formal operations readiness initiative and commissioning progressing -- 72 per cent of the action items are completed;
  • Social and environmental responsibility:
    • At El Castillo, authorization was received from the Ejido board for the closure plan;
    • At San Agustin, the CFE power line was commissioned in October, reducing future diesel consumption by approximately 300,000 litres per month;
    • At La Colorada, the summer Argonauta 2022 course was completed; the course was provided to young people in the community, and included courses in dance, singing and environmental care; the event closing was attended by a representative from the Sonora secretary of education and culture and the secretary of the city council of La Colorada;
    • At Florida Canyon, the mine sponsored several different fall youth sports programs;
    • At Cerro de Gallo, it hosted week-long summer camps in the local communities; held at public schools and in collaboration with the university, it hosted over 150 children with activities focused on arts and crafts, physical education, and a focus on the benefits of mining, water conservation and environmental awareness.

Third quarter 2022 results

Key operating and financial statistics for the third quarter ended Sept. 30, 2022, are outlined in the attached third quarter results table.

The company sold fewer ounces than it produced in the third quarter 2022 due to timing of gold sales. Those ounces in finished goods inventory were sold in October, 2022. The average realized gold price was $1,895 per gold ounce as compared with the average price of $1,728 for the third quarter 2022. This higher price was realized by delivering into the gold forward pricing contracts for the quarter and into future forward contracts.

Guidance and outlook

Argonaut maintains its 2022 GEO production guidance and, primarily due to inflationary pressures on key consumable costs, is adjusting its cost guidance higher as outlined in the attached guidance table.

Argonaut's condensed interim consolidated financial statements and management's discussion and analysis for the three- and nine-month periods ended Sept. 30, 2022, are available on Argonaut's website and will be available on SEDAR.

Argonaut third quarter 2022 operational and financial results conference call and webcast

The company will host a conference call and webcast to discuss its third quarter ended Sept. 30, 2022, operating and financial results at 9 a.m. EDT on Nov. 4, 2022.

Q3 2022 conference call information

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

International:  1-416-764-8659

Conference ID:  82292873

Webcast:  at the Argonaut website

Q3 2022 conference call replay

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

International replay call:  1-416-764-8677

Replay entry code:  292873 followed by the number sign

The conference call and replay will be available from 12 p.m. EDT on Nov. 4, 2022, until 11:59 p.m. EST on Nov. 11, 2022.

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 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.

We seek Safe Harbor.

© 2023 Canjex Publishing Ltd. All rights reserved.