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Argonaut Gold Announces Q1 Production of 30,963 Gold Equivalent Ounces, an Increase of 4% Over Prior Year

TORONTO, ONTARIO--(Marketwired - Apr 15, 2014) - Argonaut Gold Inc. ("Argonaut", "Argonaut Gold" or the "Company") (AR.TO) announced today that the Company had production of 30,963 gold equivalent ounces ("GEOs") during the first quarter ended March 31, 2014 ("Q1"). This included 22,171 GEOs at its 100% owned El Castillo Mine ("El Castillo") located in Durango, Mexico and 8,792 GEOs at its 100% owned La Colorada Mine ("La Colorada") located near Hermosillo, Mexico.

1st Quarter Change
2014 2013
Total Gold Equivalent Ounce Production:
GEOs loaded to the pads(1) 52,605 42,451 +24 %
GEOs projected recoverable ounces(1), (2) 29,325 25,004 +17 %
GEOs produced ounces(1) 30,963 29,881 +4 %
GEOs ounces sold(1) 30,165 26,586 +13 %

(1) GEOs are based on conversion ratio of 55:1 for silver to gold
(2) Recoverable ounces - see tables titled first quarter 2014 El Castillo Operating Statistics and first quarter 2014 La Colorada Operating Statistics


El Castillo

  • GEO production of 22,171 ounces consisting of 21,976 gold ounces and 10,737 silver ounces (GEOs at 55:1 conversion rate).
  • 39,924 gold ounces loaded on the leach pads equating to 22,278 projected recoverable gold ounces.
  • Mining:
    • New mining equipment added to increase capacity from 69 thousand tonnes per day ("ktpd") to 87 ktpd, or a 26% increase.
    • Mine plan has moved out of transitional ore into more oxidized material which should result in improved recoveries in the future.
  • Crushing and conveying:
    • West overland conveyor moved a new record of 1,345,339 tonnes.
    • East crusher - 1,497,323 tonnes crushed and loaded to pad.
  • Pad expansion of cell 8 is ahead of schedule
    • Cell portion 2a to be completed in June and cell portion 3c to be completed in September.
  • Renegotiated lease terms for El Castillo mining equipment to reduce the overall finance costs of the equipment by reducing interest rates from 10.4% to 5.7%.

La Colorada

  • GEO production of 8,792 ounces, consisting of 7,563 gold ("Au") ounces and 67,579 silver ("Ag") ounces (GEOs at 55:1 conversion rate).
  • An internal assessment of reprocessing old heap leach material shows positive results incorporating four million tonnes of 0.35 grams per tonne ("g/t") Au and 11.2 g/t Ag, with recoveries estimated at 50% Au and 30% Ag.
  • 10,812 gold ounces and 102,766 silver ounces loaded on the pad; 7,048 projected recoverable GEOs to leach pad.
  • An additional secondary crusher was added to the crushing circuit in March increasing the crushing circuit to five cones from four cones for a 25% increase in crushing capacity.
  • Former El Castillo crusher in place at La Colorada.


  • Two rounds of heap leach metallurgical test work have been completed at Magino; positive results warranted more test work be done to analyze the heap leach potential of the lower grade material at Magino.

San Antonio

  • The Company was notified on April 10, 2014 that the appeal to overturn the MIA ruling from 2012 was denied. The Company plans to appeal this ruling.

San Agustín

  • 11,172 metres of drilling completed to date including 10,173 metres of reverse circulation ("RC") in 103 drill holes and 999 metres of core in 13 drill holes.
  • Metallurgical test work:
    • Drilling is complete for all PQ core and it has been sent to Kappes Cassiday & Associates in Reno, Nevada to conduct metallurgical column tests.
    • Run of mine ("ROM") coarse ore samples have been collected and transported to El Castillo for bulk ROM column testing.
  • 2 RC drill rigs operating at site.
  • Drill results will be released following completion of analysis in late second quarter or early third quarter 2014.

CEO Commentary

Pete Dougherty, President and CEO said, "While we had a soft production profile in the first quarter of 2014, overall production has begun to improve at both locations (March production was up 18% over January). The Company expects a stronger second quarter of production as we continue to ramp up throughput.

The Company is encouraged by the heap leach results at Magino prompting further studies and evaluation.

At the San Antonio project, we believe that there is broad community and government support, and we are committed to moving this project forward.

Drilling at San Agustín is going extremely well and we are happy with the progress at this time. Our goal is to provide the results from over 15,000 metres of drilling by late second quarter or early third quarter."


3 Months Ended March 31
2014 2013 % Change
Tonnes ore (000's) 3,666 3,173 +16 %
Tonnes waste (000's) 4,164 3,014 +38 %
Tonnes mined (000's) 7,829 6,186 +27 %
Tonnes per day (000's) 87 69 +26 %
Waste/ore ratio 1.14 0.95 +20 %
Heap Leach Pad
Tonnes ore direct to leach pad (000's) 823 1,729 -52 %
Tonnes crushed (000's) 1,497 1,432 +5 %
Tonnes overland conveyor (000's) 1,345 NA NA
Gold grade (g/t)(1) 0. 34 0.35 -3 %
Gold loaded to leach pad (oz)(2) 39,924 36,023 +11 %
Projected recoverable gold ounces (oz)(3) 22,278 21,534 +3 %
Gold produced (oz) 21,976 23,125 -5 %
Gold sold (oz) 20,906 19,509 +7 %
(1) "g/t" is grams per tonne
(2) "oz" means troy ounce
(3) Recovery rates: ROM oxide 50%, crushed oxide 70%, ROM transition 40%, crushed transition 60%, crushed sulfides argilic 30%, crushed sulfides silicic 17%

Richard Rhoades, Chief Operating Officer, said, "At El Castillo we have expanded the fleet and increased the mining capacity. This increase will address a higher strip ratio in 2014 and lower projected mine grades of 0.315 g/t. The strip ratio was up 20% for the quarter as the final push back on the north side of the pit was initiated. The mine plan has moved production out of the transitional material which saw a reduction from 36% transitional material in the fourth quarter 2013 to 20% transitional material in the first quarter of 2014. For 2014, we anticipate 90% of mined material will be oxides and 10% will be transitional. At the west overland conveyor system, we have increased production and as a result the Company anticipates lower per tonne cost as we reduce the tonnes hauled by truck."

3 Months Ended March 31
2014 2013 % Change
Tonnes ore (000's) 560 557 +1 %
Tonnes waste (000's) 4,043 3,799 +6 %
Total tonnes (000's) 4,603 4,355 +6 %
Waste/ore ratio 7.22 6.82 +6 %
Tonnes rehandled (000's) 70 0 -
Heap Leach Pad
Tonnes ore to leach pad (000's) 635 573 +11 %
Gold grade mined (g/t)(1) 0.57 0.27 +111 %
Gold loaded to leach pad (oz)(2) 10,812 5,142 +110 %
Projected recoverable GEOs loaded(3) 7,048 3,471 +103 %
Gold produced (oz) 7,563 5,782 +31 %
Silver produced (oz) 67,579 44,879 +51 %
GEOs produced(4) 8,792 6,598 +33 %
Gold sold (oz) 7,733 5,932 +30 %
Silver sold (oz) 73,211 54,269 +35 %
GEOs sold(4) 9,064 6,919 +31 %
(1) "g/t" is grams per tonne
(2) "oz" means troy ounce
(3) Recovery rates: Gold 60%, Silver 30%
(4) GEOs based on conversion ratio of 55:1 for silver to gold

Richard Rhoades said, "At La Colorada, mine grades improved during the first quarter of 2014 to 0.57 g/t, up 111% over the prior year. Production saw an improvement to 8,792 GEOs versus 6,598 GEOs in Q1 of the prior year for a 33% increase. We have completed an internal assessment of reprocessing old heap leach material which shows positive results incorporating four million tonnes of 0.35 g/t Au and 11.2 g/t Ag, with recoveries estimated at 50% Au and 30% Ag. This will be incorporated into the mine plans in the future. In addition to adding material to the mine plan at La Colorada, the Company has added to the crushing capacity at the property. An additional secondary cone was added to the new circuit. We now have five 400 horsepower cones compared to four 400 horsepower cones in the prior circuit. We have also added a previously utilized crusher at El Castillo in parallel to increase total crushing capacity. The additional crushing capacity was installed by the end of March and should increase capacity and production throughout the year."

Magino Metallurgical Test Work

Two sets of heap leach metallurgical test work were conducted on the low grade material at Magino with results noted below. These composites were sent to Kappes, Cassiday & Associates ("KCA") in Reno, Nevada who completed column tests on the material.

Phase 1
Sample # Crush Size
Head Grade g/t Au % recovery Days of Leach Consumption
Cyanide kg/MT
Lime kg/MT
67111 B 19 0.829 37 % 94 0.56 0.50
67111 C 12.5 0.649 49 % 94 0.53 1.00
67111 D 9.5 0.694 52 % 94 0.61 1.00
Phase 2
Sample # Crush Size
Head Grade g/t Au % recovery Days of Leach Consumption
Cyanide kg/MT
Lime kg/MT
67165 A 12.5 0.725 60 % 102 0.69 1.00
67166 A 12.5 0.500 57 % 102 0.75 1.00
67167 A 31.5 0.665 41 % 102 0.75 0.50
67167 B 12.5 0.610 56 % 102 0.78 1.00
67168 A 12.5 0.431 48 % 102 0.65 1.00
67169 A 12.5 0.532 61 % 102 0.89 1.00
67170 A 31.5 0.409 40 % 102 0.61 0.50
67170 B 12.5 0.446 57 % 102 0.80 1.00
Based upon KCA's experience with mostly clean non-reactive ores, cyanide consumption in production heap leach pads would be only 25 to 33 per cent of the laboratory column test consumptions.

Bob Rose, Vice President of Technical Services, said "Results from the metallurgical test work at Magino are encouraging, and justify conducting additional test work and analysis of the material. The metallurgical test results may provide the Company with an alternative to milling the lower grade portion of the Magino resource and improve our production and economic profile."

San Antonio

The Company continues to pursue approvals for its San Antonio project. As previously disclosed, on August 2, 2012 the Secretary for Environment and Natural Resources denied the authorization for an Environmental Impact Assessment ("MIA") for the Company's San Antonio project due to municipal zoning incompatibility over a portion of the site.

In response, the Company appealed the determination in connection with its MIA before Mexican Federal Court. The Company's appeal regarding the MIA authorization was denied by the Mexican Federal Court on April 10, 2014. The Company will appeal the decision of the Mexican Federal Court and is also working with the local municipality to seek an amendment to the zoning.

Exploration at San Agustín

The majority of the Company's 2014 exploration budget is focused on the recently acquired San Agustín project, located 10 kilometres southwest of El Castillo. The two deposits lie on the same regional mineral trend and are geologically very similar. However, work to date indicates that the favorable geology that hosts mineralization may be significantly more extensive at San Agustín than at El Castillo.

Tom Burkhart, Vice President of Exploration, said "The Company believes that the San Agustín project is an intrusion related mineral system. These types of systems are normally low-grade but host large tonnages mostly contained within intrusive rocks. One characteristic of this deposit type is that mineral continuity is usually extremely good. This appears to be the case at San Agustín. It is our objective to further validate and grow the historic resource into a current resource. As hoped, our drilling continues to confirm the continuity and expansion potential of the mineral system. We are very excited about the potential of this property.

Argonaut plans to present drilling results by late second quarter or early third quarter of 2014, with metallurgical results to be presented in the third quarter. By year-end, we plan to update historic work with the release of a new resource and a preliminary economic assessment for San Agustín."

Technical Information and Mineral Properties Reports

The technical information contained in this press release has been prepared under supervision of, and reviewed and approved by Mr. Thomas H. Burkhart, Argonaut's Vice President of Exploration, a qualified person as defined by National Instrument 43-101.

About Argonaut Gold

Argonaut Gold is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production stage El Castillo mine in Durango, Mexico and the La Colorada mine in Sonora, Mexico. Advanced exploration stage projects include the San Antonio project in Baja California Sur, Mexico and the Magino project in Ontario, Canada. The recently acquired San Agustín project is the primary exploration target for Argonaut in 2014. The Company also has several exploration stage projects, all of which are located in North America.

Creating Value Beyond Gold

Cautionary Note Regarding Forward-looking Statements

This press release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the proposed transaction and the business, operations and financial performance and condition of Argonaut Gold Inc. ("Argonaut" or "Argonaut Gold"). Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and mine life of the various mineral projects of Argonaut; synergies and financial impact of completed acquisitions; the benefits of the development potential of the properties of Argonaut; the future price of gold, copper, and silver; the estimation of mineral reserves and resources; realization of metallurgical testing results; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to Argonaut, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of Argonaut and there is no assurance they will prove to be correct.

Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, variations in ore grade or recovery rates, risks relating to international operations, fluctuating metal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated.

These factors are discussed in greater detail in Argonaut's most recent Annual Information Form and in the most recent Management Discussion and Analysis filed on SEDAR, which also provide additional general assumptions in connection with these statements. Argonaut cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Argonaut believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.

Argonaut undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered if the property is developed.