Mr. Dan Symons reports

ARGONAUT GOLD ANNOUNCES UPDATED LIFE OF MINE PLAN FOR FLORIDA CANYON, WHICH GENERATES APPROXIMATELY $326 MILLION OF MINE SITE AFTER-TAX FREE CASH FLOW AT $1,700 GOLD

Argonaut Gold Inc. has provided the results of an updated life-of-mine (LOM) plan for the Florida Canyon mine in Nevada, United States, which is now 100 per cent owned by Argonaut following the closing of the merger with Alio Gold Inc. on July 1, 2020. A National Instrument 43-101 technical report will be filed within 45 days. All amounts are U.S. dollars unless otherwise stated.

Pete Dougherty, president and chief executive officer, stated: "We have updated the LOM plan for Florida Canyon to reflect the way we propose to run the mine to deliver the most value to shareholders. We envision Florida Canyon will produce an average of approximately 77,000 gold ounces per annum at all-in sustaining cost per gold ounce sold under $1,050 over 9.5 years, which yields a net present value at a 5-per-cent discount rate of over $232-million and generates mine site after-tax free cash flow of approximately $326-million at $1,700 gold. The second half of 2020 will be dedicated to making the additional capital investments in the crushing and stacking system and ancillary equipment to ensure we can to reap the benefits of lower operating costs in 2021 onward. Beyond the current 9.5-year LOM plan, we continue to see opportunities where investment in exploration at both the Florida Canyon mine and the nearby Standard mine has the potential to add oxide ore, as well as the longer term potential of evaluating transitional and sulphide ores."

Key LOM plan highlights

• Average annual production of approximately 77,000 gold ounces.
• Average cash cost per gold ounce sold of $880.
• Average all-in sustaining cost per gold ounce sold of $1,040.
• Total capital expenditures of approximately $108-million.
• After-tax net present value at a 5-per-cent discount rate (NPV 5 per cent) of approximately:
  • $85-million at $1,350 gold;
  • $148-million at $1,500 gold;
  • $232-million at $1,700 gold;
  • $357-million at $2,000 gold.
• Mine site after-tax free cash flow (FCF) of approximately:
  • $133-million at $1,350 gold;
  • $216-million at $1,500 gold;
  • $326-million at $1,700 gold;
  • $491-million at $2,000 gold.
• Mining cost per tonne of $1.59.
• Processing cost per tonne of $2.78.
• Mine G&A (general and administrative) cost per tonne of 49 cents.
• Gold recoveries of 70 per cent.
• Waste to ore ratio of 1.74:1.

Florida Canyon mineral resource estimate

A conceptual pit was generated in order to constrain the estimate of mineral resources. A gold price of $1,600 per ounce was used along with other cost, recovery and slope parameters. Mineral resources were estimated in the conceptual pit using cut-off grades between 0.147 gram per tonne and 0.175 g/t depending on mineralized zone. The "Mineral resource estimate (inclusive of mineral reserves)" table outlines undiluted indicated mineral resources and inferred mineral resources at June 1, 2020.

      MINERAL RESOURCE ESTIMATE (INCLUSIVE OF MINERAL RESERVES)

Resource category   Tonnes (Mt)   Au (g/t)   Contained Au ounces (koz)

Indicated                137.0       0.38                       1,667
Inferred                  24.7       0.34                         276            


  

Florida Canyon mineral reserve estimate

The mineral resource block model was used to determine optimal mining shells and pit phasing. Indicated mineral resources were included in the pit optimization process. Inferred mineral resources within the designed pit were treated as waste.

Detailed pit and phase designs were created based on the pit optimization results. These designs incorporated geotechnical parameters as well as ramp accesses and formed the basis of the mineral reserve estimate.

Mineral reserves were estimated based on a practical mine plan using the design price of $1,350 per ounce gold. That practical pit was designed with guidance from pit optimization software that applied $1,100 per ounce gold in order to maximize the return on investment at the design price.

Gold cut-off grades between 0.171 g/t and 0.206 g/t were used, depending on mineralized zone, to estimate the mineral reserve estimate at June 1, 2020, which is summarized in the "Mineral reserve estimate" table.

                               MINERAL RESERVE ESTIMATE

Reserve class   Diluted tonnage (Mt)   Diluted grade (g/t Au)   Contained gold Au (koz)

Probable                       74.5                     0.43                     1,019         


  

Qualified persons, technical information

The information in the press release for the Florida Canyon LOM plan was reviewed and verified by Independent Mining Consultants Inc. (IMC) and its subcontractors. Technical information included in this press release was supervised and approved by John Marek, PE, of IMC, and James Arnold, PE, an independent consultant working as a subcontractor to IMC.

About Argonaut Gold Inc.

Argonaut Gold is a Canadian gold company engaged in exploration, mine development and production. Its primary assets are the El Castillo mine and San Agustin mine, which together form the El Castillo complex in Durango, Mexico, the La Colorada mine in Sonora, Mexico, and the Florida Canyon mine in Nevada, United States. Advanced exploration projects include the Magino project in Ontario, Canada, the Cerro del Gallo project in Guanajuato, Mexico, and the Ana Paula project in Guerrero, Mexico.

We seek Safe Harbor.