TORONTO, ONTARIO--(Marketwire - Oct. 17, 2011) - Argonaut Gold Inc. ("Argonaut Gold" or the "Company") (News - Market indicators), announced today that the Company produced 16,884 ounces of gold during the 3^rd quarter of 2011 (ended September 30, 2011) at its 100% owned El Castillo Mine ("El Castillo"), located 100 km north of the city of Durango, Mexico. 

THIRD QUARTER 2011 HIGHLIGHTS:

Operations

• Continued >1.5 million total tonnes mined per month
• 29,997 ounces loaded on the pad, 24% increase over Q3 2010
• Gold production of 16,884 ounces, 33% increase over Q3 2010
• Finalized agreement with the Company's mining contractor to expand the mining fleet from 13 to 16 trucks with 100 tonne capacity
  • Two additional trucks on site in October
  • One additional truck and one loader to be added into production in November
• Finalized an agreement expanding surface rights on the western side of the property by 100 hectares, for an increase in overall surface rights to 1385 hectares.

El Castillo East Side Expansion Program

• West crusher relocated to east side for consolidated crushing circuit with design capacity of 500,000 tonnes per month ("TPM")
• East side pad loading initiated and east carbon plant operational in October with the ramp up to continue thru Q4 of 2011 

2011 Project Highlights

• El Castillo – 1,800 metre core drill program completed to obtain sulphide samples for metallurgical test work
• San Antonio – Advancements made on land and water purchases, as well as significant progress on environmental studies
  • 10,242 metres of drilling complete across 71 holes
  • Ongoing drill programs with 2 drill rigs running
    (1 exploration and 1 metallurgical)

• La Colorado – 52,000 metre drill program continues
  • 33,214 metres complete across 195 holes
  • Ongoing drill program with 3 drill rigs running
    (2 core and 1 reverse circulation drill)
  • Resource report by SRK & Associates of Denver expected by the end of October

THIRD QUARTER 2011 OPERATING RESULTS:

The third quarter operating statistics showed improvement over the prior year as well as year to date. Ore production has continued at an annualized rate of more than 11 million tonnes. The west side crusher was disassembled and relocated on the east side of the property to provide a centralized crushing facility with a capacity of 500,000 TPM. The east pad and the east side carbon plant (a duplicate plant of the west side facility with a name plate capacity of 500,000 TPM capacity) were commissioned in October. Production is still expected to finish the year at approximately 70-75,000 ounces with a $575-$600 cash cost.

Recovery rate was 56% for the quarter, up from the prior year's rate of 53% but slightly lower than last quarter. This was a result of higher stacking lifts, downtime associated with moving the crusher and some cyanide shortages at the beginning of the quarter. (Recovery rate is defined as ounces produced over ounces loaded to pads.)

During Q3 of 2011, 13,260 ounces of gold were sold. At September 30, 2011, a large inventory of approximately 6,200 gold ounces from Q3 were on hand and had not been sold, primarily due to volatility in the gold price. The Company sold 6,192 of these ounces in October at an average price of $1,658 per ounce, or roughly $10 million additional cash. 

Pete Dougherty, President and CEO of Argonaut Gold noted: "Quarterly gold production provided meaningful ounces towards our guidance for the year and was slightly impacted by the pad height on the west pad, cyanide availability and the relocation of the crushing circuit to the east side. To date 2011 has shown great promise for Argonaut Gold; key initiatives were completed to provide flexibility in our production profile with the commissioning of the east side plant, construction of heap leach pads, adding new equipment to the mining fleet and finally expanding our land position by 100 hectares to the west."

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 the State of Durango, Mexico, the advanced exploration stage San Antonio project, the past producing and advanced exploration stage La Colorada project, and several exploration stage projects, all of which are located in Mexico.

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Cautionary Note Regarding Forward-looking Statements

This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management's current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release.

Qualified Person

Preparation of this release was supervised by Thomas Burkhart, Argonaut Gold's Vice President of Exploration, and a Qualified Person under NI 43-101. For additional information on El Castillo please refer to the "NI 43-101 Technical Report on Resources and Reserves, Argonaut Gold Inc., El Castillo Mine, Durango State, Mexico" dated Nov. 6, 2010 and available at Argonaut Gold's website and profile on www.sedar.com.