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Argonaut Gold Announces Second Quarter Production of 59,192 Gold Equivalent Ounces and Cash Flow(1) of $23.3 Million

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Argonaut Gold Announces Second Quarter Production of 59,192 Gold Equivalent Ounces and Cash Flow(1) of $23.3 Million

 

 

 

 

 

Argonaut Gold Inc. (TSX: AR) is pleased to announce its operating and financial results for the second quarter ended June 30, 2022.  For the second quarter 2022, the Company reports production of 59,192 gold equivalent ounces2, revenue of $111.4 million, cash flow from operating activities before changes in non-cash operating working capital and other items of $23.3 million, net income of $18.4 million or earnings per basic share of $0.06, and adjusted net income3 of $7.3 million or adjusted earning per basic share3 of $0.02.  All dollar amounts are expressed in United States dollars, unless otherwise specified (C$ refers to Canadian dollars).

 

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 conversation ratio of 80:1 for silver to gold for 2022 and 85:1 for 2021.  The silver to gold conversation 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-IFRS Measure.  Please refer to the section entitled “Non-IFRS Measures” for a discussion of these Non-IFRS Measures.

 

Larry Radford, President & CEO stated: “We were slightly ahead of our operational budget in terms of GEO production during the second quarter, which yielded over 59,000 GEOs, albeit at a slightly higher cost than budgeted due to inflationary pressures on input costs.  We recently put a financing package together that we believe fully finances the Magino construction project.  We are also tracking well against our most recent Magino capital estimate to completion of C$920 million. With the financing behind us and what I believe to the right team now in place, I feel Argonaut is in a much better position to execute on our business plan.”

 

Second Quarter 2022 Results

 

Key operating and financial statistics for the second quarter ended June 30, 2022 are outlined in the following table:

 

3 Months Ended

June 30

6 Months Ended

June 30

2022 2021 Change 2022 2021 Change
Financial Data (in millions except for
earning per share)
Revenue $111.4 $120.2 (7 %) $217.2 $225.5 (4 %)
Gross profit $19.8 $39.8 (50 %) $41.5 $67.4 (38 %)
Net income (loss) $18.4 $21.8 (16 %) $24.0 $48.8 (51 %)
Earnings (loss) per share – basic $0.06 $0.07 (14 %) $0.07 $0.16 (56 %)
Adjusted net income1 $7.3 $22.7 (68 %) $15.5 $29.7 (48 %)
Adjusted earnings per share – basic1 $0.02 $0.07 (73 %) $0.05 $0.10 (50 %)
Cash flow from operating activities
before changes in non-cash operating
working capital and other items
$23.3 $39.3 (41 %) $48.4 $67.0 (28 %)
Cash and cash equivalents $75.8 $216.0 (65 %) $75.8 $216.0 (65 %)
Net cash $(4.2) $216.0 (102 %) $(4.2) $216.0 (102 %)
Gold Production and Cost Data
GEOs loaded to the pads2 86,896 130,414 (33 %) 181,801 244,235 (26 %)
GEOs projected recoverable2,3 51,092 71,032 (28 %) 105,843 134,319 (21 %)
GEOs produced2,4 59,192 63,750 (7 %) 114,706 123,453 (7 %)
GEOs sold2 59,241 65,651 (10 %) 115,613 124,766 (7 %)
Average realized sales price $1,884 $1,812 4 % $1,879 $1,788 5 %
Cash cost per gold ounce sold1 $1,248 $876 42 % $1,202 $936 28 %
All-in sustaining cost per gold ounce
sold1
$1,474 $1,203 23 % $1,453 $1,258 16 %
1This is a Non-IFRS Measure.  Please refer to the section below entitled “Non-IFRS Measures” for a discussion of these Non-IFRS Measures.
2GEOs are based on a conversion ratio of 80:1 for silver to gold for 2022 and 85:1 for 2021. The silver to gold conversion ratio is based on the three-year trailing average silver to gold ratio.
3Expected recoverable GEOs are based on the assumptions and parameters as set forth in the El Castillo Gold Mine Technical Report dated February 14, 2022, the San Agustin Gold/Silver Mine Technical Report dated February 14, 2022, the La Colorada Gold/Silver Mine Technical Report dated February 14, 2022 and the Florida Canyon Technical Report dated July 8, 2020.  In periods where the Company mines and processes material not specifically defined in a technical report (for example: low-grade stockpile material or run-of-mine ore), management uses its best estimate of recovery based on the information available.
4Produced ounces are calculated as ounces loaded to carbon.

 

 

Second Quarter 2022 and Recent Company Highlights:

  • Corporate Highlights:
    • GEO production of 59,192 GEOs.
    • Cash flow before changes in working capital and other items of $23.3 million.
    • Executed a binding commitment with a syndicate of lenders for a $250 million debt facility, which is expected to close by the end of Q3 2022. Completed a C$195 million equity offering to fund the Magino construction project (see press release dated July 5, 2022).
    • Entered into gold price protection through forward sales contracts at a price of $1,860/oz during the life of the term loan debt facility under the following terms:
      • Beginning Q3 2023, 25,000 gold ounces per quarter for the first six quarters; and
      • 15,000 gold ounces per quarter for the remaining 10 quarters over the life of the term loan.
  • Social and Environmental Responsibility
    • Hosted Magino site tours including a visit from Bishop Dowd and Father Asorgoe from Dubreuilville, and Maskwa Aviation, a joint venture partner of Missanabie Cree First Nation (MCFN).
    • Participated in regular monthly meetings with Indigenous groups to provide project and environmental updates for Magino. Argonaut also provided sponsorships and donations to Métis Nation of Ontario and MCFN for their Annual General Meeting and Annual Gathering.
    • Provided community funding including sponsorships and donations for the Wawa Music Festival, Wawa Golf Club, Wawa Public Library Summer Youth Program and Dubreuilville Magpie Walleye.
    • Hosted a course in Durango for local small suppliers and entrepreneurs to provide resources and training for requirements to work in Mexico’s mining industry.
    • Collaborated with Coordinación Estatal de Protección Civil Durango to host a children’s course on safety in the community of San Jan del Rio.
    • Installed a new chlorinator for a main pipeline in La Colorada to provide improved water quality for the community.
    • La Colorada Mine has been included into a pilot plan to be implemented by the United Nations (“UN”) Economic Commission for Europe’s Center of Excellence of the Extractive and Energies Sectors to align our sector to the UN standards and methodologies in coordination with the Federal Ministry of Economy.
    • Hosted the health campaigns in the Cerro del Gallo communities of San Antón de las Minas and Las Lozas.
    • Sponsored a local softball team in Winnemucca, Nevada.
  • El Castillo
    • Production of 12,178 GEOs at a cash cost per gold ounce sold of $1,513 (This is a Non-IFRS Measure. Please see “Non-IFRS Measures” section).
  • San Agustin
    • Production of 19,135 GEOs at a cash cost per gold ounce sold of $1,009 (This is a Non-IFRS Measure. Please see “Non-IFRS Measures” section).
  • La Colorada
    • Production of 13,390 GEOs at a cash cost per gold ounce sold of $1,003 (This is a Non-IFRS Measure. Please see “Non-IFRS Measures” section).
  • Florida Canyon
    • Production of 14,489 GEOs at a cash cost per gold ounce sold of $1,585 (This is a Non-IFRS Measure. Please see “Non-IFRS Measures” section).
  • Magino
    • Construction
      • At June 30, 2022, the Magino construction project was estimated at approximately 54.8% complete. In Argonaut received a delay claim from Ausenco (process facility EPC contractor) that the substantial completion milestone will be delayed by 23 days due to the province-wide strike of several trades, including crane operators and carpenters, lasting 23 days. The actual impact of this delay claim on project completion has not yet been assessed. To date, this delay claim has neither been accepted nor captured in a definitive schedule, the estimated first gold pour has not yet been determined; however, indications are that first gold is expected to be delayed from March 2023 to April 2023.
      • At June 30, 2022, of the C$920 million estimated cost to completion, C$510.1 million and C$688.1 million had been spent and committed at the Magino construction project. Recent major milestones included:
        • Completed process plant building roof and wall cladding;
        • Completed primary steel for gravity tower in the process plant;
        • Completed baffle installation and structural steel for carbon in pulp tanks;
        • Completed crusher foundation concrete;
        • Completed upgrade of the access road to the air monitoring station;
        • Completed installation of the building heaters;
        • Continued hydro vac cleaning for liner placement at the Water Quality Control Pond;
        • Completed hydro seeding at the Fish Habitat Compensation Area; commissioning has commenced;
        • Completed construction of the bat hibernaculum;
        • Continued construction of the Tailings Management Facility; and
        • Continued surface water, groundwater and effluent sampling and monitoring.
      • For recent highlights and photos of the Magino project, visit the Company’s website at: https://www.argonautgold.com/English/assets/development/magino/default.aspx

 

 

Financial Results – Second Quarter 2022

 

Revenue for the second quarter of 2022 was $111.4 million, a decrease from $120.2 million in the second quarter of 2021.  During the second quarter of 2022, the Company sold 57,344 gold ounces at an average realized price per ounce of $1,884, compared to 63,000 gold ounces sold at an average realized price per ounce of $1,812 during the same period of 2021.  Gold ounces sold for the first quarter of 2022 decreased compared to the same period in 2021 primarily due to fewer ounces produced and sold at the La Colorada and El Castillo mines.

 

Net income for the second quarter of 2022 was $18.4 million or earnings per basic share of $0.06, compared with net income of $21.8 million or earnings per basic share of $0.07 for the second quarter of 2021.

 

Adjusted net income for the second quarter of 2022 was $7.3 million or $0.02 per basic share, a decrease from adjusted net income of $22.7 million or $0.07 per basic share for the second quarter of 2021 (This is a Non-IFRS Measure.  Please see “Non-IFRS Measures” section).

 

Cash flows from operating activities before changes in non-cash operating working capital and other items totaled $23.3 million during the second quarter of 2022, a decrease from $39.3 million in the second quarter of 2021, primarily due to fewer gold ounces sold and higher operating costs.

 

Financial Results – First Half 2022

 

Revenue for the six months ended June 30, 2022 was $217.2 million, a decrease from $225.5 million for the six months ended June 30, 2021. During the first half of June 30, 2022, gold ounces sold totaled 111,450 at an average realized price per ounce of $1,879, compared to 119,727 gold ounces sold at an average realized price per ounce of $1,788 during the same period of 2021. Gold ounces sold for the six months ended June 30, 2022 decreased compared to the same period of 2021 primarily due to the reduction in gold ounces sold from the La Colorada and El Castillo mines.

 

Net income for the first half of 2022 was $24.0 million or $0.07 per basic or diluted share for the first half of 2022 compared to net income of $48.8 million or $0.16 per basic or diluted share in the six months ended June 30, 2021.

 

Adjusted net income for the first half of 2022 was $15.5 million or $0.05 per basic share, a decrease from adjusted net income of $29.7 million or $0.10 per basic share for the first half of 2021 (This is a Non-IFRS Measure.  Please see “Non-IFRS Measures” section).

 

Cash flows from operating activities before changes in non-cash operating working capital and other items totaled $48.4 million during the first half of 2022, a decrease from $67.0 million in the first half of 2021, primarily due to fewer gold ounces sold and higher operating costs.

 

Operational Results – Second Quarter 2022

 

During the second quarter of 2022, the Company achieved production of 59,192 GEOs at a cash cost per gold ounce sold of $1,248 and all-in sustaining cost per gold ounce sold of $1,474 compared to 63,750 GEOs at a cash cost of $876 per gold ounce sold and an AISC of $1,203 during the second quarter 2021 (These are Non-IFRS Measures.  Please see “Non-IFRS Measures” section).  The 7% decrease in GEO production was primarily related to lower ore tonnes mined, lower grades in both gold and silver, and lower gold recoveries at the La Colorada mine.  Higher cash costs were primarily related to higher mining rates at El Castillo, La Colorada and Florida Canyon due to higher strip ratios, higher key consumable costs across all operations and lower gold ounces sold.

 

SECOND QUARTER 2022 EL CASTILLO COMPLEX OPERATING STATISTICS

 

3 Months Ended

June 30

6 Months Ended

June 30

2022 2021 Change 2022 2021 Change
Mining (in 000s except
waste/ore ratio)
Tonnes ore El Castillo 1,471 2,496 (41 %) 2,982 4,900 (39 %)
Tonnes ore San Agustin 2,954 2,718 9 % 5,771 5,588 3 %
Tonnes ore 4,425 5,214 (15 %) 8,753 10,488 (17 %)
Tonnes waste El Castillo 2,804 2,473 13 % 5,732 5,610 2 %
Tonnes waste San Agustin 1,978 1,738 14 % 3,905 3,512 11 %
Tonnes waste 4,782 4,211 14 % 9,637 9,122 6 %
Tonnes mined El Castillo 4,275 4,969 (14 %) 8,714 10,510 (17 %)
Tonnes mined San Agustin 4,932 4,456 11 % 9,676 9,100 6 %
Tonnes mined 9,207 9,425 (2 %) 18,390 19,610 (6 %)
Tonnes per day El Castillo 47 55 (14 %) 48 58 (17 %)
Tonnes per day San Agustin 54 49 11 % 54 51 6 %
Tonnes per day 101 104 (2 %) 102 109 (6 %)
Waste/ore ratio El Castillo 1.91 0.99 93 % 1.92 1.14 68 %
Waste/ore ratio San Agustin 0.67 0.64 5 % 0.68 0.63 8 %
Waste/ore ratio 1.08 0.81 34 % 1.10 0.87 27 %
Leach Pads (in 000s)
Tonnes direct to leach pads El
Castillo
1,471 2,488 (41 %) 2,982 4,890 (39 %)
Tonnes crushed to leach pads
San Agustin
2,949 2,962 — % 5,764 5,944 (3 %)
Tonnes to leach pads 4,420 5,450 (19 %) 8,746 10,834 (19 %)
Production
Gold grade loaded to leach pads
El Castillo (g/t)1
0.30 0.25 20 % 0.30 0.27 11 %
Gold grade loaded to leach pads
San Agustin (g/t)1
0.29 0.32 (9 %) 0.29 0.29 — %
Gold grade loaded to leach pads
(g/t)1
0.29 0.28 4 % 0.29 0.28 4 %
Gold loaded to leach pads El
Castillo (oz)2
14,330 19,973 (28 %) 28,604 42,149 (32 %)
Gold loaded to leach pads San
Agustin (oz)2
27,412 30,280 (9 %) 54,036 56,190 (4 %)
Gold loaded to leach pads (oz)2 41,742 50,253 (17 %) 82,640 98,339 (16 %)
Projected recoverable GEOs
loaded El Castillo4
7,337 10,859 (32 %) 14,177 20,596 (31 %)
Projected recoverable GEOs
loaded San Agustin4
18,958 21,454 (12 %) 37,254 40,342 (8 %)
Projected recoverable GEOs
loaded4
26,295 32,313 (19 %) 51,431 60,938 (16 %)
Gold produced El Castillo (oz)2,3 12,047 12,723 (5 %) 23,478 24,695 (5 %)
Gold produced San Agustin
(oz)2,3
18,033 18,105 — % 36,433 35,376 3 %
Gold produced (oz)2 30,080 30,828 (2 %) 59,911 60,071 — %
Silver produced El Castillo (oz)2,3 10,407 17,445 (40 %) 24,704 39,240 (37 %)
Silver produced San Agustin
(oz)2,3
88,160 138,470 (36 %) 208,328 280,901 (26 %)
Silver produced (oz)2,3 98,567 155,915 (37 %) 233,032 320,141 (27 %)
GEOs produced El Castillo3 12,178 12,928 (6 %) 23,787 25,156 (5 %)
GEOs produced San Agustin3 19,135 19,734 (3 %) 39,037 38,681 1 %
GEOs produced3 31,313 32,662 (4 %) 62,824 63,837 (2 %)
Gold sold El Castillo (oz)2 11,463 12,614 (9 %) 25,032 26,216 (5 %)
Gold sold San Agustin (oz)2 18,656 18,829 (1 %) 35,859 35,495 1 %
Gold sold (oz)2 30,119 31,443 (4 %) 60,891 61,711 (1 %)
Silver sold El Castillo (oz)2 11,296 19,094 (41 %) 26,196 40,212 (35 %)
Silver sold San Agustin (oz)2 93,420 144,867 (36 %) 216,898 273,788 (21 %)
Silver sold (oz)2 104,716 163,961 (36 %) 243,094 314,000 (23 %)
GEOs sold El Castillo 11,603 12,839 (10 %) 25,359 26,689 (5 %)
GEOs sold San Agustin 19,824 20,534 (3 %) 38,570 38,716 — %
GEOs sold 31,427 33,372 (6 %) 63,929 65,405 (2 %)
Cash cost per gold ounce sold El
Castillo5
$         1,513 $         1,109 36 % $         1,357 $         1,077 26 %
Cash cost per gold ounce sold
San Agustin5
$         1,009 $             801 26 % $             978 $             804 22 %
Cash cost per gold ounce sold5 $         1,201 $             916 31 % $         1,134 $             916 24 %
1 “g/t” refers to grams per tonne.
2 “oz” refers to troy ounce.
3 Produced ounces are calculated as ounces loaded to carbon.
4 Expected recoverable GEOs are based on the assumptions and parameters as set forth in the El Castillo Gold Mine Technical Report dated February 14, 2022 and the San Agustin Gold/Silver Mine Technical Report dated February 14, 2022.  In periods where the Company mines and processes material not specifically defined in a technical report (for example: run-of-mine ore), management uses its best estimate of recovery based on the information available.
5 Please refer to the section below entitled “Non-IFRS Measures” for a discussion of this Non-IFRS Measure.
 

 

 

Summary of Production Results at the El Castillo Complex

 

During the second quarter of 2022, the El Castillo Complex produced 4% fewer GEOs at a cash cost per gold ounce sold 31% higher than during the second quarter of 2021 (This is a Non-IFRS Measure.  Please see “Non-IFRS Measures” section).  El Castillo produced 6% fewer GEOs at a cash cost per gold ounce sold 36% higher (This is a Non-IFRS Measure.  Please see “Non-IFRS Measures” section), primarily due to the El Castillo mine having a remaining mine life of less than one year, so mining waste is no longer capitalized as capitalized stripping but is included in production cost, along with increased maintenance and key consumable costs. San Agustin produced 3% fewer GEOs, at a cash cost per gold ounce sold 26% higher (This is a Non-IFRS Measure.  Please see “Non-IFRS Measures” section), primarily due to lower gold grades processed and higher key consumable costs.

 

 

SECOND QUARTER 2022 LA COLORADA OPERATING STATISTICS

 

3 Months Ended

June 30

6 Months Ended

June 30

2022 2021 Change 2022 2021 Change
Mining (in 000s except for
waste/ore ratio)
Tonnes ore 976 1,150 (15 %) 2,101 2,377 (12 %)
Tonnes waste 5,711 2,173 163 % 11,048 6,187 79 %
Tonnes mined 6,687 3,323 101 % 13,149 8,564 54 %
Tonnes per day 73 37 101 % 73 48 54 %
Waste/ore ratio 5.85 1.89 210 % 5.26 2.6 102 %
Leach Pads (in 000s)
Tonnes crushed to leach pads 1,063 1,247 (15 %) 2,183 2,513 (13 %)
Production
Gold loaded to leach pads (g/t)1 0.44 0.76 (42 %) 0.44 0.65 (32 %)
Gold loaded to leach pads (oz)2 14,902 30,320 (51 %) 31,186 52,411 (40 %)
Projected recoverable GEOs
loaded4
11,573 24,101 (52 %) 23,887 41,735 (43 %)
Gold produced (oz)2,3 12,950 16,721 (23 %) 26,291 32,615 (19 %)
Silver produced (oz)2,3 35,191 48,145 (27 %) 70,559 101,057 (30 %)
GEOs produced3 13,390 17,288 (23 %) 27,173 33,804 (20 %)
Gold sold (oz)2 13,322 17,699 (25 %) 26,402 31,329 (16 %)
Silver sold (oz)2 38,194 53,153 (28 %) 73,479 97,591 (25 %)
GEOs sold 13,799 18,324 (25 %) 27,320 32,477 (16 %)
Cash cost per gold ounce sold5 $         1,003 $             608 65 % $             980 $             676 45 %
1 “g/t” refers to grams per tonne.
2 “oz” refers to troy ounce.
3 Produced ounces are calculated as ounces loaded to carbon.
4 Expected recoverable GEOs are based on the assumptions and parameters as set forth in the La Colorada Gold/Silver Mine Technical Report dated February 14, 2022.  In periods where the Company mines material not specifically defined in a technical report (for example: low-grade stockpile material), management uses its best estimate of recovery based on the information available.
5 Please refer to the section below entitled “Non-IFRS Measures” for a discussion of this Non-IFRS Measure.

 

 

Summary of Production Results at La Colorada

 

During the second quarter of 2022, the La Colorada mine produced 23% fewer GEOs at a cash cost per gold ounce sold 65% more than during the second quarter of 2021 (This is a Non-IFRS Measure.  Please see “Non-IFRS Measures” section).  Lower GEO production and higher costs were primarily due to lower ore tonnes mined, lower grade and recoveries, and higher key consumable costs.

 

 

SECOND QUARTER 2022 FLORIDA CANYON OPERATING STATISTICS

 

3 Months Ended

June 30

6 Months Ended

June 30

2022 2021 % Change 2022 2021 Change
Mining (in 000s except for
waste/ore ratio)
Tonnes ore 1,984 2,496 (21 %) 4,170 4,699 (11 %)
Tonnes waste 3,985 3,194 25 % 6,798 6,422 6 %
Tonnes mined 5,969 5,690 5 % 10,968 11,121 (1 %)
Tonnes per day 64 61 5 % 59 60 (1 %)
Waste/ore ratio 2.01 1.28 57 % 1.63 1.37 19 %
Leach Pads (in 000s)
Tonnes direct to leach pads 160 711 (78 %) 761 1,123 (32 %)
Tonnes crushed to leach pads 1,836 1,796 2 % 3,520 3,591 (2 %)
Production
Gold grade loaded to leach pads
(g/t)1
0.33 0.31 6 % 0.36 0.32 13 %
Gold loaded to leach pads (oz)2 20,976 25,313 (17 %) 49,346 49,228 — %
Projected recoverable GEOs
loaded4
13,224 14,619 (10 %) 30,526 31,646 (4 %)
Gold produced (oz)2,3 14,380 13,726 5 % 24,472 25,654 (5 %)
Silver produced (oz)2,3 8,733 6,117 43 % 18,956 13,349 42 %
GEOs produced3 14,489 13,798 5 % 24,709 25,811 (4 %)
Gold sold (oz)2 13,903 13,858 — % 24,157 26,687 (9 %)
Silver sold (oz)2 8,889 8,217 8 % 16,532 16,752 (1 %)
GEOs sold 14,015 13,954 — % 24,364 26,884 (9 %)
Cash cost per gold ounce sold5 $1,585 $1,110 43 % $1,615 $1,279 26 %
1 “g/t” refers to grams per tonne.
2 “oz” refers to troy ounce.
3 Produced ounces are calculated as ounces loaded to carbon.
4 Expected recoverable GEOs are based on the assumptions and parameters as set forth in the Florida Canyon Mine Technical Report dated July 8, 2020.  In periods where the Company mines material not specifically defined in a technical report (for example: run-of-mine or low-grade stockpile material), management uses its best estimate of recovery based on the information available.
5 Please refer to the section below entitled “Non-IFRS Measures” for a discussion of this Non-IFRS Measure.
 

 

Summary of Production Results at Florida Canyon

 

During the second quarter of 2022, the Florida Canyon mine produced 5% more GEOs at a cash cost per gold ounce sold 43% higher than during the second quarter of 2021 (This is a Non-IFRS Measure.  Please see “Non-IFRS Measures” section). Higher GEO production was primarily related to higher recoveries and higher costs were primarily related to lower ore tonnes and ounces mined and placed in previous months and higher key consumable costs.

 

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 table below.

 

2022 GEO Production and Cost Guidance

 

H1 2022 (Actual) Original Full Year
2022 Guidance
Revised Full Year
2022 Guidance
GEO production In 000s 114,706 200 – 230 200 – 230
Cash costs1 $ per oz Au 1,202 1,100 – 1,190 1,200 – 1,300
AISC1 $ per oz Au 1,453 1,415 – 1,525 1,500 – 1,600
1This is a Non-IFRS Measure.  Please see “Non-IFRS Measures” section.

 

Following the Magino construction, equity raise and Committed Credit Facilities, Argonaut is providing 2022 capital guidance.  Through June 30, 2022, Argonaut had invested approximately $207 million in capital expenditures or approximately 46% of its estimated 2022 capital spend.

 

2022 Capital Guidance by Project and Category ($M)1

 

El Castillo San Agustin La Colorada Florida
Canyon
Magino Cerro del
Gallo
Exploration Consolidated
Capital 1 3-5 3-4 17 – 20 400 – 423 1-2 11-12 436 – 467
Stripping 3 12-13 2-3 17 – 19
Total 4 3-5 15 – 17 19 – 23 400 – 423 1-2 11-12 453 – 486
1Assumes exchange rates of MXN:USD of 20:1 and CAD:USD of 1.25:1.

 

Management Changes

 

Argonaut advises that Dan Symons, Vice President, Corporate Development & Investor Relations has resigned from his position to pursue other opportunities. A search for a replacement is in progress. Larry Radford, President & CEO commented “With more than six years of service, we want to thank Dan for his contributions to the growth of Argonaut Gold.”

 

Non-IFRS Measures

 

The Company has included certain non-IFRS measures including “Cash cost per gold ounce sold”, “All-in sustaining cost per gold ounce sold”, “Adjusted net income”, “Adjusted earnings per share – basic” and “Net cash” in this press release to supplement its financial statements, which are presented in accordance with International Financial Reporting Standards (“IFRS”).  Cash cost per gold ounce sold is equal to production costs less silver sales divided by gold ounces sold.  All-in sustaining cost per gold ounce sold is equal to production costs less silver sales plus general and administrative, exploration, accretion and other expenses and sustaining capital expenditures divided by gold ounces sold.  Adjusted net income is equal to net income less foreign exchange impacts on deferred income taxes, foreign exchange (gains) losses, non-cash impairment write down (reversal) of work-in-process inventory, non-cash impairment write down (reversal) of mineral, properties, plant and equipment, unrealized (gains) losses on derivatives and care and maintenance expenses.  Adjusted earnings per share – basic is equal to adjusted net income divided by the basic weighted average number of common shares outstanding.  Net cash is calculated as the sum of the cash and cash equivalents balance net of debt as at the statement of financial position date. The net debt calculation excludes the convertible debentures and lease liabilities, due to the nature of the obligations, in order to show the nominal undiscounted debt. The Company believes that these measures provide investors with an alternative view to evaluate the performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. Therefore they may not be comparable to similar measures employed by other companies. The data 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.

 

The following table provides a reconciliation of production costs per the financial statements to cash cost per gold ounce sold:

 

El Castillo mine Three months ended
June 30,
Six months ended
June 30,
2022 2021 2022 2021
Production costs, as reported ($000s) $          17,597 $          14,492 $          34,592 $          29,321
Less silver sales ($000s) 251 509 614 1,074
Net cost of sales ($000s) $          17,346 $          13,983 $          33,978 $          28,247
Gold ounces sold 11,463 12,614 25,032 26,216
Cash cost per gold ounce sold $            1,513 $            1,109 $            1,357 $            1,077

 

San Agustin mine Three months ended
June 30,
Six months ended
June 30,
2022 2021 2022 2021
Production costs, as reported ($000s) $          20,899 $          18,969 $          40,159 $          35,853
Less silver sales ($000s) 2,083 3,891 5,083 7,323
Net cost of sales ($000s) $          18,816 $          15,078 $          35,076 $          28,530
Gold ounces sold 18,656 18,829 35,859 35,495
Cash cost per gold ounce sold $            1,009 $               801 $               978 $               804

 

La Colorada mine Three months ended

June 30,

Six months ended

June 30,

2022 2021 2022 2021
Production costs, as reported ($000s) $          14,212 $          12,176 $          27,593 $          23,772
Less silver sales ($000s) 850 1,419 1,708 2,586
Net cost of sales ($000s) $          13,362 $          10,757 $          25,885 $          21,186
Gold ounces sold 13,322 17,699 26,402 31,329
Cash cost per gold ounce sold $            1,003 $               608 $               980 $               676

 

Florida Canyon mine Three months ended

June 30,

Six months ended

June 30,

2022 2021 2022 2021
Production costs, as reported ($000s) $          22,235 $          15,604 $          39,388 $          34,590
Less silver sales ($000s) 193 219 380 446
Net cost of sales ($000s) $          22,042 $          15,385 $          39,008 $          34,144
Gold ounces sold 13,903 13,858 24,157 26,687
Cash cost per gold ounce sold $            1,585 $            1,110 $            1,615 $            1,279

 

All Mines Three months ended

June 30,

Six months ended

June 30,

2022 2021 2022 2021
Production costs, as reported ($000s) $          74,943 $          61,241 $        141,732 $        123,536
Less silver sales ($000s) 3,377 6,038 7,785 11,429
Net cost of sales ($000s) $          71,566 $          55,203 $        133,947 $        112,107
Gold ounces sold 57,344 63,000 111,450 119,727
Cash cost per gold ounce sold $            1,248 $               876 $            1,202 $               936

 

AISC includes net cost of sales at the Company’s mining operations, which forms the basis of the Company’s cash cost per gold ounce sold. Additionally, the Company includes general and administrative, exploration, accretion and other expenses, and sustaining capital expenditures. Sustaining capital expenditures exclude all expenditures at the Company’s pre-production, development stage, and advanced exploration stage projects and certain expenditures at the Company’s operating sites that are deemed expansionary in nature.

 

The following table provides a reconciliation of AISC per gold ounce sold to the consolidated financial statements:

 

Three months ended

June 30,

Six months ended

June 30,

2022 2021 2022 2021
Net cost of sales ($000s) $          71,566 $          55,203 $        133,947 $        112,107
General and administrative expenses ($000s) 4,571 3,705 9,592 8,471
Exploration expenses ($000s) 425 1,070 792 1,691
Accretion and other expenses ($000s) 3,385 2,927 6,680 5,606
Sustaining capital expenditures ($000s) 4,589 12,886 10,902 22,694
AISC ($000s) $          84,536 $          75,791 $        161,913 $        150,569
Gold ounces sold 57,344 63,000 111,450 119,727
AISC per gold ounce sold $            1,474 $            1,203 $            1,453 $            1,258

 

Adjusted net income and adjusted earnings per share – basic exclude a number of temporary or one-time items described in the following table, which provides a reconciliation of adjusted net income to the consolidated financial statements:

 

Three months ended

June 30,

Six months ended

June 30,

2022 2021 2022 2021
Net income, as reported ($000s) $          18,412 $          21,778 $          24,030 $          48,785
Unrealized (gain) loss on derivatives ($000s) (13,525) 5,335 (12,060) (14,445)
Other non-operating expense (income), net of tax 1,653 (3,644) 2,151 (3,644)
Foreign exchange loss, net of tax ($000s) 870 547 1,825 525
Impact of foreign exchange on deferred income (137) (1,445) (855) (239)
Inventory (reversal) write-down, net of tax ($000s) (8) 152 (127) (1,257)
Loss on sale of marketable securities ($000s) 534
Adjusted net income ($000s) $             7,265 $          22,723 $          15,498 $          29,725
Weighted average number of common shares 332,786,743 310,318,903 325,416,876 304,934,741
Adjusted earnings per share – basic $               0.02 $               0.07 $               0.05 $               0.10

 

Net cash is calculated as the sum of the cash and cash equivalents balance net of debt as at the statement of financial position date. The net debt calculation excludes the convertible debentures and lease liabilities, due to the nature of the obligations, in order to show the nominal undiscounted debt.

 

A reconciliation of net cash is provided below:

 

June 30,
2022
March 31,

2022

December 31,
2021
Cash and cash equivalents ($000s) $               75,816 $           166,078 $             199,235
Debt ($000s) (80,000) (80,000) (80,000)
Net (debt) cash ($000s) $                (4,184) $             86,078 $             119,235

 

This press release should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2022 and associated MD&A for the same period, which are available from the Company’s website, www.argonautgold.com, in the “Investors” section under “Financial Filings”, and under the Company’s profile on SEDAR at www.sedar.com.

 

 

Qualified Person, Technical Information and Mineral Properties Reports

 

Technical information included in this release was supervised and approved by Brian Arkell, Argonaut’s Vice President, Exploration and a Qualified Person under NI 43-101.  For further information on the Company’s material properties, please see the reports as listed below on the Company’s website or on www.sedar.com:

 

El Castillo Gold
Mine
El Castillo Gold Mine, Durango, Mexico NI 43-101 Technical Report dated February 14, 2022 (effective date of October 1, 2021)
San Agustin
Gold/Silver Mine
San Agustin Gold/Silver Mine, Durango, Mexico, NI 43-101 Technical Report dated February 14, 2022 (effective date of August 1, 2021)
La Colorada
Gold/Silver Mine
La Colorada Gold/Silver Mine, Sonara, Mexico, NI 43-101 Technical Report dated February 14, 2022 (effective date of October 1, 2021)
Florida Canyon
Gold Mine
NI 43-101 Technical Report on Mineral Resource and Mineral Reserve Florida Canyon Gold Mine Pershing County, Nevada, USA dated July 8, 2020 (effective date June 1, 2020)
Magino Gold
Project
NI 43-101 Technical Report Mineral Resource and Mineral Reserve Update dated March 3, 2022 (effective date February 14, 2022)
Cerro del Gallo
Project
Pre-Feasibility Study Technical Report on the Cerro del Gallo Project, Guanajuato, Mexico dated January 31, 2020 (effective date of October 24, 2019

 

 

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, the La Colorada mine in Sonora, Mexico and the Florida Canyon mine in Nevada, USA.  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.

 

Posted August 11, 2022

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