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TORONTO, ONTARIO--(Marketwire - Nov. 15, 2010) - Argonaut Gold Inc.
("Argonaut" or the "Company") (TSX:AR), today announced its full financial results for
the 3rd quarter, ended on September 30, 2010. The capital expansion
program at El Castillo is nearing completion, with the east side
processing plant expected to be operational by year end.
Third Quarter Highlights
-- 2010 Q3 compared to 2009 Q3 -- Total Tonnes mined up +83% -- Ore Tonnes processed up +92% -- Gold Production up +66% -- Record ounces loaded on the pad (24,202 ounces) -- $621 Cash cost per Oz. produced (El Castillo); $605 year to date -- Revenue $9.8 million -- Operating Income $3.2 million -- Net Income $345,358
October Highlights
-- Over 1.5 million total tonnes moved in October 2010 -- Over 5,000 ounces of production in October 2010 -- Barren solution upgrade project completed
CAPEX Program Updates
West Side Improvements
-- Commissioned pad 7 and began loading ore in Q3 -- Barren solution volume capacity for the west carbon plant upgraded to 1000 cubic meters/hr of flow from 400 cubic meters per/hr of flow, more than doubling the previous flow rate
East Side Additions
-- Stage 1, cell 1 was complete -- Cell 2 and 3 of Stage 1 will be complete by year end -- Barren and PLS ponds will be complete by year end -- East Carbon plant will be commissioned by year end
CEO Commentary
Noting El Castillo's continuous improvements and increase in
production, Argonaut's President and CEO Peter Dougherty noted:
"The 3rd quarter marks the third consecutive quarter of increased
gold production at El Castillo (12,724 ounces). During the 3rd quarter
there were 24,202 ounces delivered to the pad. This was a record month
for ounces delivered to the pad at El Castillo. Upgrades to the west
side processing plant more than doubled the previous flow rate.
The capital expansion program is scheduled for completion by year end,
which will include commissioning of the east side processing plant.
Combined, the two plants' facilities will provide a processing capacity
of over 1 million tonnes of ore per month.
October demonstrated production abilities of operations at El Castillo
following the CAPEX improvements. October production was over 5,000
ounces, with over 1.5 total tonnes mined. The
improvements made at the El Castillo mine were key
to establishing a 75,000 ounce run rate in 2011."
This press release should be read in conjunction with the Company's
unaudited consolidated interim financial statements for the
quarter-ended September 30, 2010 and associated Management's Discussion
and Analysis ("MD&A") which are available from the
Company's website www.argonautgoldinc.com, in
the "Investors" section under "Financial Filings",
and under the Company's profile on SEDAR at www.sedar.com.
Summary of Production Results:
Year over year, total tonnes mined increased
by +83% for the quarter. With a full quarter of utilizing a larger,
more efficient truck fleet at El Castillo, the rate of mining
production exceeded 1.5 million tonnes per
month. The total of ounces loaded to the pads also increased. In the
3rd quarter 24,202 ounces were placed on the pad, representing a 20%
increase over 2nd quarter in 2010.
Gold production of 12,724 ounces in the third quarter of 2010 was a 66%
increase compared to the third quarter of 2009.
The 3rd quarter strip ratio was slightly higher than previous quarters.
The Company chose to begin mining the $1,000 pit limit in accordance
with the arrival of the new larger capacity fleet. This was done in
anticipation of the new 43-101 technical report to be completed and
released in January 2011. The strip ratio is expected to return to the
range historically mined at El Castillo.
Key operational metrics and production statistics for the third quarter
of 2010 compared to 2009 are presented below:
Q3 2010 Q3 2009(i) 9 Months Ended El Castillo Operating Statistics 9/30/2010 9/30/2009 9/30/2010 9/30/2009 ---------- ---------- ---------- ---------- Total Tonnes mined 4,749,610 2,594,800 11,093,516 5,966,900 Tonnes Ore 2,013,668 1,051,300 5,197,406 2,477,800 ROM Tonnes Ore 1,675,504 782,900 4,237,532 1,809,000 (direct to leach pad) Tonnes Crushed 369,275 268,300 954,559 668,800 Gold Grade (g/t) 0.37 0.42 0.37 0.48 Gold Loaded to Pad (oz) 24,202 14,100 60,744 37,851 Gold Produced (oz) 12,724 7,655 33,032 20,044 Gold Sales (oz) 7,994 7,311 26,779 19,436 (i)Note: Information obtained from Castle Gold Corporation press release dated October 21, 2009 and Castle Gold Corporation 3rd quarter MD&A dated November 25, 2009.
Financial Results - Third
Quarter 2010
During the third quarter of 2010, revenue was $9.8 million compared to
$7.0 million for El Castillo in Q3 of 2009 as reported by Castle Gold
Corporation ("Castle Gold") for the El Castillo Mine in its
Management's Discussion and Analysis for the Quarter ended September
30, 2009 posted on November 26, 2009 on www.sedar.com.
The increase in revenue is due to more gold ounces sold and higher gold
prices. During the third quarter of 2010, cost of sales and depletion,
depreciation and accretion expenses were $6.7 million. Cash cost per
gold ounce for units sold was $622. (Cash cost per gold ounce for units
sold is a non-GAAP measure and is cost of sales less silver sales
divided by gold ounces sold.) Income from mining operations was $3.2
million and net income was $345,358. Cash cost per ounce of gold
produced was $621. (Cash cost per ounce of gold produced is a non-GAAP
measure and is mining and processing cost over units produced.)
During the nine months ended September 30, 2010, revenue was $31.7
million compared to $18.1 million for El Castillo as reported by Castle
Gold. The increase in revenue is due to 7,343 more gold ounces sold and
higher gold prices. During the first nine months of 2010, cost of sales
& depletion, depreciation and accretion expenses were $25.0
million. Cost of sales included 11,032 gold ounces, of the 26,779 gold
ounces sold, that were fair valued at acquisition of Castle Gold at
market price of gold less cost to process units. The year-to-date cash
cost per gold ounce for units sold (a non-GAAP measure) was $809 which
includes the above fair value adjustment. During the first nine months
of 2010, income from mining operations was $6.6 million and net loss
was $1.6 million. During the first nine months of 2010, cash cost per
ounce of gold produced (a non-GAAP measure) was $605.
Looking Forward - 4th Quarter:
-- East side processing facility scheduled for year-end completion -- Current production rate on target to achieve 47,000 ounces in 2010 -- Vote on proposed merger with Pediment Gold Corp
Cash Requirements:
The capital expansion program is anticipated to be funded by operating
cash flow and cash on hand.
Q3 2010 Financial Results Conference Call and Webcast:
Argonaut Gold will host a conference call on Monday, November 15th,
2010 at 9:30 am EST to discuss the third quarter 2010 results and
provide an update of the Company's operating, exploration, and
development activities.
Participants may join the conference call by dialing 1(877)240-9772 or
1(416)340-8530 for calls outside of Canada and the United States. The
pass code is 6778610 followed by the # key. The conference call may
also be accessed via webcast by visiting the Company's website, www.argonautgoldinc.com.
A recorded playback of the conference call can be accessed after the
event until November 22, 2010 by dialing 1(800)408-3053 or
1(905)694-9451 for calls outside Canada and the United States. The pass
code for the conference call playback is 6778610 followed by the # key.
About Argonaut
Argonaut is a Canadian gold company engaged in exploration, mine
development and production activities. Its primary assets being the
production-stage El Castillo Project and the exploration-stage La
Fortuna Project, both located in the State of Durango, Mexico. Argonaut
was created by former executive management team members of Meridian
Gold Inc. Creating the Next Quality Mid-Tier Gold Producer in the
Americas.
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's Vice President of Exploration, and a Qualified Person under
NI 43-101. For additional information on El Castillo please refer to
the "Technical Report on the El Castillo Project in Durango,
Mexico" dated July 31, 2008 and available at Argonaut's profile on
www.sedar.com.
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