Argonaut Gold Inc. (TSX: AR) announces record annual gold equivalent ounce¹ production of 186,615 during 2019 and fourth quarter 2019 GEO production of 47,521.  During the fourth quarter, production was 34,899 GEOs at the El Castillo Complex (13,896 from the El Castillo mine and 21,003 from the San Agustin mine) located in the State of Durango, Mexico and 12,622 GEOs at the La Colorada mine located near Hermosillo, Sonora, Mexico.  During 2019, the El Castillo Complex and La Colorada mine production totaled 131,277 GEOs and 55,338 GEOs, respectively.  All dollar amounts are expressed in United States dollars unless otherwise specified.

During the fourth quarter 2019, the Company increased its cash balance by $3.2 million while also paying down $4.0 million on its revolving credit facility.  At December 31, 2019, the Company’s cash balance was $38.8 million and it had $10.0 million drawn on its revolving credit facility, representing a net cash increase of $7.2 million during the fourth quarter (see Non-IFRS Measures section).

Pete Dougherty, President & CEO stated: “We achieved record annual production in 2019 of nearly 187,000 GEOs, which represents a 13% increase year-over-year.  While we fell short of our 2019 guidance of 200,000 GEOs of production, which was a target that we set for ourselves back in 2017, over the last three years we have grown our production by 53%.  The production shortfall of our 2019 guidance was driven by a number of factors, which contributed to the build up of leach pad inventory, which is under review.  We are currently in the process of optimizing our operations to maximize profitability and cash flow through cost reduction initiatives.  This review process has delayed the release of our 2020 guidance to February.  Our focus during 2020 will be on adding cash to the balance sheet while continuing to de-risk and advance our development assets.  Achieving these two key activities will put Argonaut in a solid position to execute on our strategy of transforming from a high-cost, junior producer to a lower-cost, intermediate producer.”      

2020 Guidance

The Company is currently revising its operations with an emphasis on profitability and cash flow. Before considering the increased cash flow from an improved gold price, initial indications reveal it may be more profitable for the Company to produce slightly less GEOs in 2020 than 2019 while increasing cash flow from operations. The potential changes to the operations may involve run-of-mine ore, more favourable overburden stockpile locations and changes in processing parameters.  This evaluation is ongoing and not yet conclusive. The Company expects to provide production, cash cost, all-in sustaining cost and capital guidance (see Non-IFRS Measures section) for 2020 on or before the release date of its fourth quarter and year-end operational and financial results on February 24, 2020.

San Antonio Project

The Company is currently evaluating a potential non-cash impairment on the book value of its San Antonio project given the uncertainty surrounding the timing of if and when the project will receive necessary permits to develop and construct the project.  The conclusion on the potential non-cash impairment of the San Antonio project will be announced on the release date of the Company’s fourth quarter and year end operational and financial results on February 24, 2020.  The Company is reviewing all of its options to advance the San Antonio project.  These options include seeking an amendment to the La Paz 2018 zoning plan, submitting a revised environmental permit application and legal options.

Cerro del Gallo Project

During the second quarter of 2019, the Company submitted a Unified Technical Document that includes an Environmental Impact Assessment, an Environmental Risk Assessment and the Justified Technical Study for a Change of Soil Use for its Cerro del Gallo project in Guanajuato, Mexico.  The Mexican Environmental Authority (“SEMARNAT”) has informed the Company that it will not approve the Unified Technical Document application in its current form and has requested the Company make minor revisions and re-submit the application.  The Company expects to re-submit a revised Unified Technical Document application that satisfies SEMARNAT’s requests during the first quarter of 2020 and, as per SEMARNAT’s stated policy, to receive a decision from SEMARNAT on the revised application within 60 working days of submission. 

Magino Project

The Company is pleased to announce it has executed a Community Agreement with the Michipicoten First Nation.  As part of the Community Agreement, the Company has issued 505,237 common shares to the Michipicoten First Nation.  Along with the Michipicoten First Nation, the Company now has agreements in place with the Missanabie Cree First Nation, the Batchewana First Nation, the Métis Nation of Ontario and the Red Sky Métis Independent Nation, all of which have expressed their overwhelming support for the Magino project.  The Company has also consulted with the Garden River First Nation for multiple years with the aim of coming to a reasonable agreement.  During 2019, the Company received a positive decision statement and approval of both the federal and provincial environmental assessment processes.  The Company continues to advance the federal Schedule 2 permitting process, as well as consult with and inform Indigenous communities and local stakeholders about the project.    

About Argonaut Gold

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 and the La Colorada mine in Sonora, Mexico.  Advanced exploration projects include the San Antonio project in Baja California Sur, Mexico, the Cerro del Gallo project in Guanajuato, Mexico and the Magino project in Ontario, Canada.  The Company also has several exploration stage projects, all of which are located in North America.