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Argonaut Gold Inc. (TSX: AR)
("Argonaut" or the "Company") is pleased to
announce fourth quarter gold production at its wholly owned El Castillo open
pit gold mine located in Durango, Mexico ("El Castillo") totaling
18,292 ounces. The 2010 total gold production of 51,324 ounces exceeded the
Company's projection of 47,000 gold ounces by 9%. Quarterly highlights
include a 110% increase in the mineral reserve estimate at El Castillo.
Fourth Quarter Highlights
- 2010 Q4 compared to
2009 Q4
- Total Tonnes mined
↑ +75%
- Ore Tonnes processed ↑
+ 102%
- Gold Production
↑ +110%
- Record ounces loaded on the pad (31,000 ounces)
- Solution
flow increase to pads at the west side to 800 m3/hr
- Increase
in NI 43-101 compliant mineral reserves and mineral resources
- Increase in mineral reserves to 1,231,000 gold ounces
- Increase in total measured and indicated mineral resources to
1,730 ,000 gold ounces
Pediment Merger Updates
- Institutional
Shareholder Services has recommended in favor of the resolution for both
sets of shareholders
- Shareholder
materials were sent to Pediment shareholders on December 23; materials
were sent to Argonaut shareholders on December 24, 2010.
- 17%
Lock-up commitments as of January 7, 2011
- 9%
Pediment shareholder voting as of January 7, 2011; estimated 100%
support
- Shareholder meeting on
January 24, 2011
Fourth Quarter Production 2010
The Company produced over 18,000 ounces of gold in
the fourth quarter 2010. This represents the highest quarterly production to
date at El Castillo. The Company continued at an average mining rate of over
1.5 million total tonnes per month during the fourth quarter. Year-to-date
production of more than 51,000 ounces of gold is a 77% increase year over
year.
El Castillo
Q4 20101
Q4 20092
% Change
Operating Statistics
12/31/2010
12/31/2009 Year
Over Year
Total Tonnes mined
4,897,000
2,799,302
+75%
Tonnes
Ore
2,558,000
1,266,400
+102%
ROM Tonnes Ore
2,053,000
932,798
+120%
(direct to leach pad)
Tonnes Crushed
511,000
293,602
+74%
Gold Grade
(g/t)
0.38
0.38
0%
Gold Loaded to Pad
(oz)
31,000
15,128
+105%
Gold Produced
(oz)
18,292
8,724
+110%
Year
Ended
Year Ended
% Change
Operating Statistics
12/31/2010
12/31/2009*
Year Over Year
Total Tonnes mined
15,989,000
8,766,215
+82%
Tonnes
Ore
7,755,000
3,704,226
+109%
ROM Tonnes Ore
6,290,000
2,741,829
+129%
(direct to leach pad)
Tonnes
Crushed
1,465,000
962,397
+52%
Gold Grade
(g/t)
0.37
0.45
-18%
Gold Loaded to Pad
(oz)
92,000
52,940
+73%
Gold Produced
(oz)
51,324
28,768
+78%
1Fourth Quarter mine production is based upon truck count and is
subject to revision after survey.
2Information obtained from Castle Gold Corporation press release dated
April 16, 2010.
Peter Dougherty, President and CEO for Argonaut noted "We are pleased
that we exceeded our production goal in 2010. Fourth quarter production gives
us the confidence that we will be able to achieve 70,000 - 75,000 ounces of
gold production in 2011. Expansion initiatives along with targeted
improvements in operating efficiencies will continue in 2011."
Mr. Dougherty added "The recently completed NI 43-101 has
significantly increased our reserves at El Castillo. The expansion changes
made in 2010, in addition to the reserve estimation, should enable Argonaut
to plan for even higher production in 2012."
New National Instrument 43-101 ("NI 43-101") Reserve and
Resource Estimation
The mineral reserve was completed by SRK Consulting
("SRK") in Lakewood, CO. Due to material changes in reserve
and resource estimates over the previously released 43-101 on the El Castillo
property (posted on Sedar under ACA Howe, July 31, 2008), an updated
technical report will be filed on SEDAR within 45 days of the date hereof.
The stated Proven and Probable mineral reserves have been prepared in
accordance with Canada's National Instrument 43-101 Standards of Disclosure
for Mineral Projects. The Qualified Person, as defined by National Instrument
43-101, for the mineral reserve update, is Principle Mining Engineer, Bret C.
Swanson BE (Mining), MAusIMM of SRK.
The Mineral Reserve for the El Castillo property is detailed in Table
1.
Table 1- Mineral Reserve of the El Castillo Pit as of November 8th, 2010.
|
Classification
|
Metric
Tonnes
(000's)
|
Gold
g/t
|
Gold
Ounces (000's)
|
|
Proven
|
|
|
|
|
Oxidized
|
85,470
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0.36
|
994
|
|
Transition
|
19,180
|
0.37
|
228
|
|
Sub
Total
|
104,650
|
0.36
|
1,222
|
|
Probable
|
|
|
|
|
Oxidized
|
772
|
0.33
|
8
|
|
Transition
|
73
|
0.35
|
1
|
|
Sub
Total
|
844
|
0.33
|
9
|
|
|
|
|
|
|
Proven and Probable
|
105,494
|
0.36
|
1,231
|
Footnotes:
Reserves are based on a gold price of US$1000/Oz Au; Full mining recovery is
assumed; Mine reserves are not diluted; An internal CoG of 0.15 g/t Au was
used on Oxide rock within the pit design; An internal CoG of 0.175 g/t Au was
used on Transition rock within the pit design; In-situ Au ounces do not
include metallurgical recovery losses; Internal CoG determination
includes metallurgical gold recoveries of 70% for oxide if ore is crushed,
50% if not; Internal CoG determination includes metallurgical gold recoveries
of 60% for Transition if ore is crushed, 0% if not; Oxide and Transition rock
types are interpreted from drill logs to estimate changes in weathering
profile of the orebody; and In Situ reserves based on end of month survey
dated November 8th, 2010,
When comparing to the prior ACA Howe reserves of 752,000 ounces less
mining to date of 165,500 ounces yields 586,000 remaining gold ounces as of
Nov. 8, 2010. This is compared to the SRK estimated reserves of 1,231,000
contained gold ounces yields a 110% increase.
"The increase in
reserves at El Castillo has added significant gold ounces and has the
potential to expand the mine life and production profile at El
Castillo." noted Tom Burkhart, Vice President of Exploration for
Argonaut. Mr. Burkhart added "We are planning further exploration at El
Castillo and look to forward continuing our drilling program in 2011."
Measured and indicated
resources at El Castillo now stand at 1,730,000 ounces of gold. When
comparing to the prior ACA Howe resource of 1,180,000 ounces less mining
to date of 165,500 ounces yields 1,014,500 remaining gold ounces as of Nov.
8, 2010. This is compared to the SRK estimated reserves of 1,740,000
contained gold ounces yields a 70% increase. The updated resource estimate is
found in table 2 below:
Table 2 - Mineral Resource Estimate with Drill Data as of November 8, 2010
(Includes Mineral Reserves).
|
Resource Category
|
Metric
Tonnes
(000's)
|
Gold g/t
|
Gold
Ounces(000's)
|
|
Measured
|
160,704
|
0.322
|
1,661
|
|
Indicated
|
7,438
|
0.290
|
69
|
|
Total
Measured
and Indicated
|
168,142
|
O.320
|
1,730
|
|
Inferred
Sulphides
|
43,071
|
0.423
|
586
|
Mineral resources that are not mineral reserves do not demonstrate economic
viability. The mineral resource estimate was also completed by SRK and is
based on a gold price of US$1,300 per ounce and a 0.15 g/t gold cutoff
grade. SRK's estimated Mineral Resources are hosted within a Whittle
Pit design demonstrating reasonable chances for economic extraction; whereas
previous NI 43-101 resource estimations were report as global resources.
The increased resource results from the 2010 drill program which included
308 drill holes, spanning more than 35,400 meters of reverse circulation
drilling, completed between December 2009 and November 2010. The 2010 drill
program expanded the extent of known mineralization approximately 500 meters
to the south and 400 meters to the east. Drilling is still open in some areas
to the south and east of the current El Castillo open pit, providing future
upside potential. We anticipate filing the revised 43-101 in compliance with
the statutory requirements as outlined under 43-101 rules.
Qualified Persons
Preparation
of this press release was supervised by Mr. Thomas Burkhart, Argonaut's Vice
President of Exploration and a 'Qualified Person' as defined by NI 43-101.
Mr. Burkhart also supervised the reverse circulation drill program and
on-site sample preparation procedures at El Castillo. The release was also
reviewed by Mr. Bart Stryhas and Mr. Bret Swanson of SRK, each of them being
a 'Qualified Person' as defined by NI 43-101.
The SRK resource estimation
is based on information from 512 holes totaling of 83,817m. The average
drillhole spacing is approximately 50m. The geologic model consists of
six rock types, four of which are mineralized and two that are post
mineralization. The primary host rocks consist of granodiorite and
meta-sediments including meta-argilite, hornfels and limestone-marbles.
The model blocks are 10m x 10m x 6m in the x,y,z directions, respectively.
All block grade estimates were made using 6m bench composites. An
Ordinary Kriging algorithm was employed to generate a categorical indicator
grade shell based on a 0.125ppm Au threshold. Ordinary Kriging was also
used for the gold grade estimation. The results of the resource
estimation provided a CIM classified Measured, Indicated and Inferred Mineral
Resource. The quality of the drilling and data is very good and the
Mineral Resource was classified mainly according to the general drillhole spacing.
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 Mine and the exploration-stage La Fortuna Project, both located in
the State of Durango, Mexico. Argonaut is a new venture 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.
For
more information, contact:
Argonaut Gold Inc.
Nichole Cowles
Investor Relations Manager
Tel: (775) 284-4422 x 101
Email: nichole.cowles@argonautgoldinc.com
www.argonautgoldinc.com
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