76% increase in reserves, a pre-tax Internal Rate of Return 'IRR' of 28%, a pre-tax Net Present Value 'NPV' of US$610 million, an average annual gold production of nearly 300,000 ounces and a payback period of 2.6 years

Toronto, Ontario - (January 18, 2016) Argonaut Gold Inc. (TSX: AR) (the 'Company', 'Argonaut Gold' or 'Argonaut') is pleased to announce the results of an updated pre-feasibility study ('PFS') for its 100% owned Magino property, located 40 kilometers ('km') northeast of Wawa, Ontario. The study was completed by JDS Energy & Mining Inc. ('JDS'), Vancouver, Canada and is based on an updated resource estimate with an effective date of December 18, 2015. The Magino project PFS more fully utilizes the resource and builds upon the study completed in January 2014. All amounts are indicated in US dollars unless otherwise stated.

In Canadian dollars the PFS gold price is C$1,540
2014 PFS adjusted to $1200 per ounce gold price, it was originally done at $1,250 per ounce

CEO Commentary
Pete Dougherty, President and CEO of Argonaut Gold, stated 'Since increasing our property position and completing additional drilling, we were able to re-assess the deposit in its entirety, including considering many alternative development approaches for the project, such as processing rates ranging from 10,000 tonnes per day ('tpd') up to 30,000 tpd. We have determined that this PFS presents the best alternative for development. Not only have the NPV and IRR increased since the previous PFS (based on a Canadian dollar denominated gold price of C$1,538/oz., which is below the current spot gold price of C$1,580/oz.), but the ounces to be produced have increased by 70% and the cash costs have decreased by 16%. Magino is a unique project - there are few gold projects of this scale and quality located in Canada, and the project's economics continue to benefit from a strong Canadian dollar denominated gold price. On an ongoing basis, we will consider alternatives to finance and develop the project in order to efficiently realize the full potential of this asset.'

The sensitivities to gold price on the project are found in the table below, all using a USD:CAD exchange rate ('FX') of 0.78:

Magino Sensitivity Study

Pre-feasibility Summary
The PFS summarizes financial projections and operational plans for the Magino property, as a conventional open pit mine and gold leaching processing circuit. The following tables summarize the results.

Note: All-in sustaining cost is calculated as cash cost plus sustaining capital (not including closure cost) divided by ounces produced. All-in cost is calculated as cash cost per ounce plus total capital and closure cost divided by ounces produced

Mineral Resource Estimate
The mineral resource estimate used in the PFS was completed in December 2015 by Michael Lechner, Resource Modeling Inc. ('RMI'), P. Geo., an independent Qualified Person ('QP'). Only surface diamond core data collected since 2006 were used for this estimate. The historic underground drilling data were not used in this estimate. The undiluted mineral resource, which is inclusive of mineral reserves, is summarized below and was tabulated using a gold price of $1,300 per ounce.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there is insufficient exploration to define these inferred mineral resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.

Mineral Reserve Estimate
The PFS mineral reserve estimate is summarized in the following table. In addition to internal dilution associated with the block model, an additional 23% dilution was incorporated into the tabulation of mineral reserves. These reserves are based on indicated resources only and were based upon a $1,200 gold price for modeling purposes. Inferred resources within the designed open pit are treated as waste.

Tom Burkhart, Vice-President of Exploration of Argonaut Gold, said 'This updated resource utilizes data obtained from our 2015 drilling campaign, part of which was directed to test for mineralization located on the ground recently acquired from Richmont Mines. Like many gold systems in Ontario, the economic potential at Magino depends in part on the occurrence of high grade veins and lenses that, in our case, are dispersed within wider zones of lower grade material. A significant effort was spent on creating a grade model that reflects both the discrete, discontinuous higher grade zones and the lower grade material surrounding them. The Company is confident that the updated resource is achievable and conservative from a geologic perspective. We are pleased to be able to increase the reserve significantly which, when combined with the new development and financial plans demonstrates that Magino is a significant gold asset.'

The plan map below shows the location of three cross sections through the block model along with the outline of the 2014 PFS reserve pit, 2015 reserve pit and 2015 resource pit.

2016 PFS Magino Plan View Showing Pit Shapes and Cross Section Lines

Image: RMI 2016

Cross Sections Showing Pit Shells and Block Gold Grades

Image: RMI 2016

Image: RMI 2016

Image: RMI 2016

Metallurgy and Mineral Processing
The metallurgical test work (Phase 1 -2013 and Phase 2 - 2015) was completed at McClelland Labs in Reno, Nevada, an independent laboratory, and included grinding and extraction test programs. Test work was conducted on drill core composites of shallow, mid-level and deep mineralization as well as select gold grade ranges. The composites were derived from 387 core samples taken from 217 drill holes distributed throughout the deposit. Based on metallurgical test work results, a flow sheet for the processing facility was developed which includes primary crushing, followed by a grinding circuit, gravity recovery circuit, leach circuit, carbon in pulp circuit, carbon in column gold recovery, electro-winning and smelting to produce gold doré. The flow sheet also includes cyanide destruction and a conventional slurry tailings pond. The process facility is designed for an average feed of 30,000 tpd. A gold recovery of 93.5% is estimated based on metallurgical test work.

Mine Plan and Production Schedule
The Magino deposit is conducive to open pit mining and was planned in the PFS to utilize conventional mining equipment including 218-tonne haul trucks, corresponding shovels and front end loaders and a fleet of standard support equipment.

The production schedule was developed to optimize the pay-back on the project while balancing a consistent feed to the mill and mining rate. In order to achieve this balance, an ore stockpile is built up and used to smooth the production while maximizing the economics and efficiencies of the project. In addition to the ore stockpile mentioned above, the mine plan contemplates mining and stockpiling low grade material which is considered as waste in the model and in the table below. This material consists of 26 million tonnes containing 215,000 gold ounces. There is an opportunity to process this material at the end of the mine life should economic circumstances warrant doing so (this has not been factored in the PFS economic model).

'M' means millions

Capital Cost Estimate
The capital cost estimate consists of $385 million for initial direct costs, $155 million in indirect (including project indirects, EPCM, owner's costs and contingency) and $196 million in sustaining, closure and associated contingency. The PFS capital includes costs for new equipment. However, the Company believes an opportunity exists due to current market conditions to reduce these cost through use of used equipment where appropriate. Capital costs for the project include: mining equipment, capitalized pre-stripping, access road improvements, upgrades to the local power source, sourcing of water for processing, processing facilities, infrastructure for camp facilities, administrative offices, maintenance shops, warehouses, assay laboratories, on-site electrical distribution and miscellaneous fire, safety and environmental infrastructure as shown in the following table

Capital cost contingency was estimated by area and averages 15% excluding mining
equipment and pre-stripping.
*numbers may not add due to rounding

Operating Cost Estimate
Operating costs were estimated using first principles as per the following summary:

Economic Results
In addition to the production plan, capital cost and operating cost estimates discussed previously, the following assumptions were used in the PFS economic model.

Ongoing Development
The Company is working with the community and Aboriginal groups in the vicinity of the project and will continue to maintain an open dialogue as the project advances. As part of the process of making application for approval of the project, the Magino project description was submitted during mid-year 2013. We have voluntarily halted the permit applications pending outcome of the PFS and now expect to re-start that process working with the provincial and federal permitting agencies and our neighbors to advance the project. On an ongoing basis, the Company will consider its alternatives to finance and develop the project in order to efficiently realize the full potential of this asset.

Technical Information and Mineral Property Report
For further information on Argonaut Gold's Magino project please see the report as listed below on Argonaut Gold's website or on www.sedar.com (the '2014 Report'):

The PFS will be filed within 45 days of the date of this press release and will supersede the 2014 Report in its entirety.

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, the advanced exploration stage San Antonio project in Baja California Sur, Mexico, the advanced exploration stage Magino project in Ontario, Canada and several exploration stage projects, all of which are located in North America.

Contribution, work and Qualified Persons
The PFS was prepared through the collaboration of four consulting firms as shown below.

The Magino PFS results were reviewed by JDS under the supervision of Mr. Michael Makarenko, P. Eng. an Independent Qualified Person. The scientific and technical information in this release has been reviewed and approved by Mr. Michael Lechner, P. Geo. (RMI) and Mr. David Salari, P. Eng. (DENM), both of whom are Independent Qualified Persons within the meaning of NI 43-101.

Mr. Thomas Burkhart, Argonaut's Vice President of Exploration, is the Company's Qualified Person responsible for the contents of this press release and has reviewed the information in the release and confirmed that it is consistent with that provided by the independent Qualified Persons responsible for the study.

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; the future price of gold, copper, and silver; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; the benefits of the development potential of the properties of Argonaut; success of exploration activities; synergies and financial impact of completed acquisitions; 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. Although Argonaut has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. 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. The reader is cautioned not to place undue reliance on forward-looking statements. 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. Comparative market information is as of a date prior to the date of this document.

Argonaut Gold Inc.
Curtis Turner, Corporate Development Officer
Tel: (775) 284-4422 x 104
Email: [email protected]
www.argonautgold.com