
Argonaut Gold Inc. (TSX: AR) reported financial and operating results for the fourth quarter and year ended December 31, 2023. All dollar amounts are expressed in United States dollars, unless otherwise specified (CA$ refers to Canadian dollars).
“In fiscal 2023, we set clear objectives for our operations. These included commissioning the Magino mine on schedule, stabilizing Florida Canyon which had underperformed for several years, and reviewing and optimizing our Mexican operations. Presently the Magino mine is steadily progressing through the ramp-up period. Both the Florida Canyon mine and our Mexican mines had a strong year, exceeding the upper end of production guidance on a combined basis by 9%. Notably, Florida Canyon achieved its highest production total in 19 years.
Looking ahead to 2024, we consider Magino to be our future and the key driver for per-share growth. Our immediate focus remains on production optimization and unlocking the significant potential at Magino through reserve expansion. Additionally, we are diligently working on optimizing mining operations at the Florida Canyon mine with the sulfide redevelopment plan. Furthermore, we plan to finalize a debt refinancing agreement to enhance liquidity and flexibility, enabling us to achieve our expansion goals. These objectives align with our mission statement, emphasizing asset growth and operational excellence.” stated Richard Young, President and Chief Executive Officer of Argonaut Gold.
Financial & Operating Highlights
Three months ended
December 31, |
Year ended
December 31, |
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Financial Data | 2023 | 2022 | % Change |
2023 | 2022 | % Change |
|
Revenues1 | $000s | 115,578 | 95,877 | 21 % | 372,457 | 388,341 | (4) % |
Cost of sales1 | $000s | 105,455 | 120,474 | (12) % | 332,294 | 364,513 | (9) % |
Gross profit | $000s | 10,123 | (24,597) | NM5 | 40,163 | 23,828 | 69 % |
Net income (loss) | $000s | 27,931 | (174,937) | NM | 38,270 | (152,202) | NM |
Earnings (loss) per basic and diluted share |
$/share | 0.03 | (0.22) | NM | 0.04 | (0.28) | NM |
Adjusted net loss2 | $000s | (17,392) | (37,722) | (54) % | (2,462) | (22,391) | (89) % |
Per basic share2 | $/share | (0.02) | (0.05) | (59) % | (0.00) | (0.04) | (100) % |
Operating cash flow | $000s | 7,659 | 2,372 | NM | 43,345 | (3,749) | NM |
Operating cash flow before changes in working capital and other items2 |
$000s | 18,341 | 8,617 | NM | 67,353 | 70,597 | (5) % |
Total sustaining capital expenditures | $000s | 14,762 | 9,936 | 49 % | 30,562 | 43,913 | (30) % |
Magino construction capital | $000s | 54,070 | 82,586 | (35) % | 297,456 | 364,701 | (18) % |
Cash and cash equivalents | $000s | 83,785 | 73,254 | 14 % | 83,785 | 73,254 | 14 % |
Net debt2 | $000s | (128,736) | (4,327) | NM | (128,736) | (4,327) | NM |
Three months ended
December 31, |
Year ended
December 31, |
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Operating Data | 2023 | 2022 | % Change |
2023 | 2022 | % Change |
|
Gold produced3 | oz | 60,619 | 41,642 | 46 % | 193,693 | 197,174 | (2) % |
Gold equivalent ounces (“GEOs”) produced3,4 |
oz | 61,523 | 42,510 | 45 % | 197,511 | 203,155 | (3) % |
Gold sold3 | oz | 59,632 | 50,606 | 18 % | 192,918 | 200,695 | (4) % |
Average realized price | $/oz sold | 1,907 | 1,860 | 3 % | 1,892 | 1,877 | 1 % |
Cost of sales | $/oz sold | 1,768 | 2,383 | (26) % | 1,722 | 1,816 | (5) % |
Cash cost2 | $/oz sold | 1,437 | 2,007 | (28) % | 1,434 | 1,443 | (1) % |
All-in sustaining costs2 (“AISC”) | $/oz sold | 1,804 | 2,266 | (20) % | 1,722 | 1,763 | (2) % |
_________________________________ | |||||||
1 In the three and twelve months ended December 31, 2023, the Company recognized $4.8 million and $26.9 million of revenues, and $4.7 million and $20.0 million of cost of sales, respectively, related to the pre-commercial production phase of the Magino mine, achieved effective November 1, 2023. | |||||||
2 This is a Non-IFRS Measure; please see “Non-IFRS Measures” section. | |||||||
3 In the three and twelve months ended December 31, 2023, 5,275 and 19,231 gold ounces were produced, and 2,002 and 13,528 gold ounces were sold, respectively, from the pre-commercial production phase of the Magino mine. | |||||||
4 Based on a silver to gold ratio of 80:1 in 2023 and in 2022. | |||||||
5 References to “NM” are certain change percentages are not meaningful. |
2023 COMPANY HIGHLIGHTS
Financial Highlights
Growth Highlights
Magino
Florida Canyon
This press release should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2023 and associated Management’s Discussion and Analysis for the same period, which are available on the Company’s website at www.argonautgold.com, in the “Investors” section under “Financial Filings”, and under the Company’s issuer profile on SEDAR+ at www.sedarplus.ca.
NON-IFRS MEASURES
The Company provides certain non-IFRS measures as supplementary information that management believes may be useful to investors to explain the Company’s financial results.
“Cash cost per gold ounce sold” is a common financial performance measure in the gold mining industry but has no standard meaning under IFRS. The Company reports cash cost per ounce on a sales basis. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure, along with sales, are considered to be key indicators of a Company’s ability to generate operating profits and cash flow from its mining operations.
Cash cost figures are calculated in accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard is considered the accepted standard of reporting cash cost of production in North America. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies.
The World Gold Council definition of AISC seeks to extend the definition of cash cost by adding corporate, and site general and administrative costs, reclamation and remediation costs (including accretion and amortization), exploration and study costs (capital and expensed), capitalized stripping costs and sustaining capital expenditures and represents the total costs of producing gold from current operations. AISC excludes income tax payments, interest costs, costs related to business acquisitions and items needed to normalize profits. Consequently, this measure is not representative of all of the Company’s cash expenditures. In addition, the calculation of AISC does not include depreciation expense as it does not reflect the impact of expenditures incurred in prior periods. Therefore, it is not indicative of the Company’s overall profitability. For the year ended December 31, 2023, along with comparative periods, the Company reclassified regional general and administrative expenses in Mexico, and accretion expenses previously classified under the corporate group, to each individual mine group. Management believes this better attributes regional general and administrative expenses and accretion expenses and also improves comparability amongst our peer companies.
“Adjusted net loss” and “adjusted net loss per basic share” exclude a number of temporary or one-time items, which management believes not to be reflective of the underlying operations of the Company, including the impacts of: unrealized losses (gains) on derivatives, non-operating income, foreign exchange losses (gains), impacts of foreign exchange on deferred income taxes, inventory impairments (reversals), impairments (reversals) of mineral properties, plant and equipment, and other unusual or non-recurring items. Adjusted net loss per basic share is calculated using the weighted average number of shares outstanding under the basic calculation of earnings per share as determined under IFRS.
“Net debt” is calculated as the sum of the cash and cash equivalents balance net of debt as at the statement of financial position date. “Net debt” calculation includes unamortized transaction costs netted against the drawn debt, but excludes Convertible Debentures and equipment loans which are currently included in total debt, in order to show the nominal undiscounted debt. This measure has no standard meaning under IFRS and other companies may calculate this measure differently.
“Operating cash flow before working capital and other items” is a non-IFRS measure as it involves adjustments to the operating cash flow metric defined by IFRS. The company presents operating cash flow that excludes certain working capital changes and other items such as income taxes and interest received, this helps investors to assess the performance of the Company’s operations.
Magino Mine | Three months ended December 31, |
Year ended December 31, |
|
2023 | 2023 | ||
Gold sold | oz | 19,535 | 31,061 |
Cost of sales | $000s | 36,971 | 52,199 |
Cost of sales per gold ounce sold | $/oz | 1,893 | 1,681 |
Production costs | $000s | 28,785 | 43,660 |
Less silver sales | $000s | (85) | (142) |
Cash Cost | $000s | 28,700 | 43,518 |
Cash cost per gold ounce sold | $/oz | 1,469 | 1,401 |
Cash Cost | $000s | 28,700 | 43,518 |
Accretion and other expenses | $000s | 130 | 520 |
Sustaining capital expenditures | $000s | 10,426 | 10,426 |
AISC | $000s | 39,256 | 54,464 |
AISC per gold ounce sold | $/oz | 2,010 | 1,753 |
Florida Canyon Mine | Three months ended December 31, |
Year ended December 31, |
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2023 | 2022 | % Change | 2023 | 2022 | % Change | ||
Gold sold | oz | 18,220 | 13,979 | 30 % | 70,427 | 49,616 | 42 % |
Cost of sales | $000s | 30,500 | 32,084 | (5) % | 114,210 | 99,280 | 15 % |
Cost of sales per gold ounce sold | $/oz | 1,674 | 2,295 | (27) % | 1,622 | 2,001 | (19) % |
Production costs | $000s | 26,035 | 28,655 | (9) % | 97,634 | 87,586 | 11 % |
Less silver sales | $000s | (346) | (194) | 78 % | (1,293) | (694) | 86 % |
Cash Cost | $000s | 25,689 | 28,461 | (10) % | 96,341 | 86,892 | 11 % |
Cash cost per gold ounce sold | $/oz | 1,410 | 2,036 | (31) % | 1,368 | 1,751 | (22) % |
Cash Cost | $000s | 25,689 | 28,461 | (10) % | 96,341 | 86,892 | 11 % |
Exploration expenses | $000s | 857 | – | NM | 1,680 | – | NM |
Accretion and other expenses | $000s | 294 | 130 | 126 % | 1,177 | 521 | 126 % |
Sustaining capital expenditures | $000s | 3,462 | 3,592 | (4) % | 17,260 | 20,417 | (15) % |
AISC | $000s | 30,302 | 32,183 | (6) % | 116,458 | 107,830 | 8 % |
AISC per gold ounce sold | $/oz | 1,663 | 2,302 | (28) % | 1,654 | 2,173 | (24) % |
La Colorada Mine | Three months ended December 31, |
Year ended December 31, |
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2023 | 2022 | % Change | 2023 | 2022 | % Change | ||
Gold sold | oz | 7,967 | 7,487 | 6 % | 25,957 | 42,349 | (39) % |
Cost of sales | $000s | 13,998 | 13,860 | 1 % | 48,556 | 59,069 | (18) % |
Cost of sales per gold ounce sold | $/oz | 1,757 | 1,851 | (5) % | 1,871 | 1,395 | 34 % |
Production costs | $000s | 10,353 | 12,103 | (14) % | 39,057 | 49,194 | (21) % |
Less silver sales | $000s | (287) | (247) | 16 % | (992) | (2,486) | (60) % |
Cash Cost | $000s | 10,066 | 11,856 | (15) % | 38,065 | 46,708 | (19) % |
Cash cost per gold ounce sold | $/oz | 1,263 | 1,584 | (20) % | 1,466 | 1,103 | 33 % |
Cash Cost | $000s | 10,066 | 11,856 | (15) % | 38,065 | 46,708 | (19) % |
Exploration expenses | $000s | 20 | – | NM | 390 | 869 | (55) % |
Accretion and other expenses | $000s | 64 | 18 | NM | 257 | 71 | NM |
Sustaining capital expenditures | $000s | 331 | 4,897 | (93) % | 1,057 | 17,495 | (94) % |
AISC | $000s | 10,481 | 16,771 | (38) % | 39,769 | 65,143 | (39) % |
AISC per gold ounce sold | $/oz | 1,316 | 2,240 | (41) % | 1,532 | 1,538 | – % |
San Agustin Mine | Three months ended December 31, |
Year ended December 31, |
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2023 | 2022 | % Change | 2023 | 2022 | % Change | ||
Gold sold | oz | 9,556 | 17,719 | (46) % | 44,148 | 65,844 | (33) % |
Cost of sales | $000s | 17,624 | 33,785 | (48) % | 81,324 | 106,335 | (24) % |
Cost of sales per gold ounce sold | $/oz | 1,844 | 1,907 | (3) % | 1,842 | 1,615 | 14 % |
Production costs | $000s | 16,000 | 27,536 | (42) % | 71,263 | 84,189 | (15) % |
Less silver sales | $000s | (751) | (1,206) | (38) % | (4,396) | (7,568) | (42) % |
Cash Cost | $000s | 15,249 | 26,330 | (42) % | 66,867 | 76,621 | (13) % |
Cash cost per gold ounce sold | $/oz | 1,596 | 1,486 | 7 % | 1,515 | 1,164 | 30 % |
Cash Cost | $000s | 15,249 | 26,330 | (42) % | 66,867 | 76,621 | (13) % |
Exploration expenses | $000s | 38 | – | NM | 75 | – | NM |
Accretion and other expenses | $000s | 59 | 10 | NM | 238 | 30 | NM |
Sustaining capital expenditures | $000s | 238 | 748 | (68) % | 1,332 | 1,871 | (29) % |
AISC | $000s | 15,584 | 27,088 | (42) % | 68,512 | 78,522 | (13) % |
AISC per gold ounce sold | $/oz | 1,631 | 1,529 | 7 % | 1,552 | 1,193 | 30 % |
El Castillo Mine | Three months ended December 31, |
Year ended December 31, |
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2023 | 2022 | % Change | 2023 | 2022 | % Change | ||
Gold sold | oz | 4,353 | 11,421 | (62) % | 21,325 | 42,886 | (50) % |
Cost of sales | $000s | 6,362 | 40,625 | (84) % | 36,005 | 99,829 | (64) % |
Cost of sales per gold ounce sold | $/oz | 1,462 | 3,557 | (59) % | 1,688 | 2,328 | (27) % |
Production costs | $000s | 6,009 | 34,904 | (83) % | 32,152 | 80,203 | (60) % |
Less silver sales | $000s | (37) | (102) | (64) % | (315) | (817) | (61) % |
Cash Cost | $000s | 5,972 | 34,802 | (83) % | 31,837 | 79,386 | (60) % |
Cash cost per gold ounce sold | $/oz | 1,372 | 3,047 | (55) % | 1,493 | 1,851 | (19) % |
Cash Cost | $000s | 5,972 | 34,802 | (83) % | 31,837 | 79,386 | (60) % |
Exploration expenses | $000s | – | – | NM | – | 533,000 | (100) % |
Accretion and other expenses | $000s | 133 | 6 | NM | 530 | 19 | NM |
Sustaining capital expenditures | $000s | – | (138) | (100) % | – | 3,923 | (100) % |
AISC | $000s | 6,105 | 34,670 | (82) % | 32,367 | 83,861 | (61) % |
AISC per gold ounce sold | $/oz | 1,402 | 3,036 | (54) % | 1,518 | 1,955 | (22) % |
All Mines | Three months ended December 31, |
Year ended December 31, |
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2023 | 2022 | % Change | 2023 | 2022 | % Change | ||
Gold sold | oz | 59,632 | 50,606 | 18 % | 192,918 | 200,695 | (4) % |
Cost of sales | $000s | 105,455 | 120,574 | (13) % | 332,294 | 364,513 | (9) % |
Cost of sales per gold ounce sold | $/oz | 1,768 | 2,383 | (26) % | 1,722 | 1,816 | (5) % |
Production costs | $000s | 87,182 | 103,201 | (16) % | 283,766 | 301,172 | (6) % |
Less silver sales | $000s | (1,506) | (1,749) | (14) % | (7,138) | (11,565) | (38) % |
Cash Cost | $000s | 85,676 | 101,566 | (16) % | 276,628 | 289,607 | (4) % |
Cash cost per gold ounce sold | $/oz | 1,437 | 2,007 | (28) % | 1,434 | 1,443 | (1) % |
Cash Cost | $000s | 85,676 | 101,566 | (16) % | 276,628 | 289,607 | (4) % |
Corporate general and administrative expenses |
$000s | 2,763 | 2,072 | 33 % | 11,807 | 10,562 | 12 % |
Regional general and administrative expenses |
$000s | 2,168 | 2,267 | (4) % | 5,979 | 4,560 | 31 % |
Share-based compensation expense | $000s | 607 | 774 | (22) % | 2,433 | 3,104 | (22) % |
Exploration expenses | $000s | 915 | (2,094) | NM | 2,145 | 1,403 | 53 % |
Accretion and other expenses | $000s | 680 | 164 | NM | 2,722 | 641 | NM |
Sustaining capital expenditures | $000s | 14,762 | 9,936 | 49 % | 30,562 | 43,913 | (30) % |
AISC | $000s | 107,571 | 114,685 | (6) % | 332,276 | 353,790 | (6) % |
AISC per gold ounce sold | $/oz | 1,804 | 2,266 | (20) % | 1,722 | 1,763 | (2) % |
Three months ended December 31, |
Year ended December 31, |
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2023 | 2022 | % Change | 2023 | 2022 | % Change | ||
Net income (loss) | $000s | 27,931 | (174,937) | NM | 38,270 | (152,202) | NM |
Unrealized (gains) losses on derivatives | $000s | (3,580) | 5,035 | NM | (5,230) | (7,165) | (27) % |
Net foreign exchange (gains) losses | $000s | (9,261) | 6,590 | NM | (8,381) | 8,662 | NM |
Impact of foreign exchange on deferred income taxes |
$000s | (9,675) | (6,413) | 51 % | (9,948) | (7,556) | 32 % |
Tax recovery on recognition of deferred tax assets |
$000s | (9,899) | – | NM | (9,899) | – | NM |
Inventory (reversal) impairment | $000s | (379) | 22,996 | NM | 5,519 | 22,879 | (76) % |
(Reversal) impairment of mineral properties, plant and equipment |
$000s | (24,031) | 135,547 | NM | (24,031) | 135,547 | NM |
Loss on disposal of mineral property | $000s | 8,724 | – | NM | 8,724 | – | NM |
Other | $000s | – | (3,849) | (100) % | – | – | NM |
Tax effect | $000s | 2,778 | (22,691) | NM | 2,514 | (22,556) | NM |
Adjusted net loss | $000s | (17,392) | (37,722) | (54) % | (2,462) | (22,391) | (89) % |
Weighted average number of common shares outstanding |
000s shares | 911,290 | 808,690 | 13 % | 866,060 | 552,547 | 57 % |
Adjusted net loss per basic share | $/share | (0.02) | (0.05) | (60) % | (0.00) | (0.04) | (100) % |
December 31, 2023 |
December 31, 2022 |
||
Cash and cash equivalents | $000s | 83,785 | 73,254 |
Loan Facilities – Term Loan | $000s | (183,276) | (77,581) |
Loan Facilities – Revolving Credit Facility | $000s | (29,245) | – |
Net debt | $000s | (128,736) | (4,327) |
December 31, 2023 |
December 31, 2022 |
||
Net cash provided by (used in) operating activities | $000s | 43,345 | (3,749) |
Less: | |||
Changes in working capital | $000s | (22,759) | (35,755) |
Income taxes paid | $000s | (3,368) | (39,837) |
Interest received | $000s | 2,119 | 1,246 |
Operating cash flow before changes in working capital and other items | $000s | 67,353 | 70,597 |
About Argonaut Gold
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, the Magino mine, in Ontario, Canada 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, USA. 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 one additional operating mine in Mexico, the San Agustin mine in Durango. Residual production is expected from two additional mines located in Mexico. The La Colorada mine in Sonora was placed on care and maintenance at the end of 2023 pending a decision on strategic options for the mine, while mining activities ceased at the El Castillo mine in Durango in 2022. The San Agustin mine and the El Castillo mine together form the El Castillo Mining Complex.
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