Argonaut Gold Announces Third Quarter 2022 Financial Results – Production of 45,939 Gold Equivalent Ounces and Cash Flow1 of $13.6 Million – QNT Press Release


TORONTO, Nov. 3, 2022 /CNW/ – Argonaut Gold Inc. (TSX:AR) (the “Company”, “Argonaut Gold” or “Argonaut”) is pleased to announce today its operating and financial results for the third quarter ended September 30, 2022. For the third quarter 2022, the Company reports production of 45,939 gold equivalent ounces (“GEO” or “GEOs”2), revenue of $75.3 millioncash flow from operating activities before changes in non-cash working capital and other items of $13.6 millionnet loss of $1.3 million or loss per share of $0.00and adjusted net loss3 of $0.2 million or adjusted loss per share3 of $0.00. All dollar amounts are expressed in United States dollars, unless otherwise specified (C$ 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 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 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.

“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 costs3 of approximately $907 per ounce,” said Larry RadfordArgonaut President and CEO.

“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% net smelter returns royalty agreement on Magino with Franco-Nevada Corporation (“Franco-Nevada”) for proceeds of US$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; and
    • 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 Q1 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 dollars per US dollar.
  • Magino Construction
    • At September 30, 2022of the C$920 million estimated cost to completion, C$626.0 million had been spent and C$726.0 million had been committed.
    • At September 30, 2022the Magino construction project was estimated at approximately 70% 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% of the action items are completed.
  • Social and Environmental Responsibility
    • At El Castilloauthorization was received from the Ejido Board for the closure plan;
    • At San Agustinthe CFE powerline was commissioned in October, reducing future diesel consumption by approximately 300,000 liters per month;
    • At La Coloradathe 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, and
    • At Cerro de Gallowe hosted weeklong summer camps in the local communities. Held at public schools and in collaboration with the university, we 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 September 30, 2022 are outlined in the following table:

3 Months Ended

September 30

9 Months Ended

September 30

2022

2021

Change

2022

2021

Change

Financial Data (in millions except for earning per share)

Revenue

$75.3

$108.6

(31%)

$292.5

$334.0

(12%)

Gross profit

$7.0

$29.1

(76%)

$48.4

$96.5

(50%)

Net income (loss)

$(1.3)

$15.0

(109%)

$22.7

$63.8

(64%)

Earnings (loss) per share – basic

$(0.00)

$0.05

(104%)

$0.05

$0.21

(77%)

Adjusted net income1

$(0.2)

$17.2

(101%)

$15.3

$46.9

(67%)

Adjusted earnings per share – basic1

$(0.00)

$0.06

(100%)

$0.03

$0.15

(78%)

Cash flow from operating activities before changes in non-cash operating working capital and other items

$13.6

$39.6

(66%)

$62.0

$106.6

(42%)

Cash and cash equivalents

$89.2

$167.6

(47%)

$89.2

$167.6

(47%)

Net cash

$9.2

$167.6

(95%)

$9.2

$167.6

(95%)

Gold Production and Cost Data

GEOs loaded to the pads2

76,144

111,584

(32%)

257,946

355,818

(28%)

GEOs projected recoverable2,3

40,445

64,768

(38%)

146,288

199,088

(27%)

GEOs produced2,4

45,939

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