TORONTO, ONTARIO--(Marketwire - June 6, 2011) - Argonaut Gold Inc. (News - Market indicators) ("Argonaut" or the "Company") announces financial and operating results for the first quarter ended March 31, 2011. All dollar amounts are expressed in United States dollars unless otherwise specified. All financial results are presented in accordance with IFRS, unless otherwise noted.

FIRST QUARTER 2011 & RECENT HIGHLIGHTS

• Q1 2011 record revenue of $25.7 million
• Q1 2011 record net income of $5.9 million, $0.07 per share
• Cash flows from operating activities before changes in non-cash operating working capital and other items of $9.3 million
• Cash on hand was $34.2 million at March 31, 2011
• Gold Production and Cost
  • 28,225 ounces of gold loaded to the pad
  • Gold ounces produced in Q1 of 2011 were 18,014 ounces (↑ 76% from Q1 2010)
  • Cash cost per ounce sold - $590
• Q1 2011 El Castillo Operating Statistics:
  • Total tonnes mined - 4.8 million tonnes (↑ 65% from Q1 2010)
  • Ore tonnes mined - 2.5 million tonnes (↑ 93% from Q1 2010)
  • Tonnes crushed – 729,104 (↑ 132% from Q1 2010)
• Updated NI 43-101 compliant technical report completed for El Castillo
  • 1.23 mm oz. in gold reserves at El Castillo
  • Measured and indicated resources inclusive of mineral reserves
    • Oxide and transition - 1.7 million ounces
    • Sulfide - 1.5 million ounces
• Completed the acquisition of Pediment Gold Corp. for share consideration of 31.8 million Argonaut shares and 1.6 million options
• Announced increase in M&I ounces at San Antonio - 1.6 million oz. as compared to 1.2 million oz. in August 2010

This press release should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the three months ended March 31, 2011 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.

Financial Results – First Quarter 2011

During the first quarter of 2011, revenue was $25.6 million from gold sales of 18,461 ounces compared to $9.4 million from sales of 8,398 ounces in the first quarter of 2010. Cost of sales and depreciation, depletion and amortization expenses were $14.6 million for the quarter. Cash cost per gold ounce for units sold (see Non-IFRS measures section note below) was $590 compared to $1,107 in the same period of 2010 principally because the ounces sold in first quarter of 2010 had been fair valued on the acquisition of Castle Gold. During the first quarter of 2011, operating income from mining operations was $9.1 million compared to a $1.8 million operating loss in the first quarter of 2010. Net income for the quarter was $5.9 million, or $0.07 per share.

Cash increased by $8.8 million to $34.4 million. Cash flow from operations before changes in non-cash operating working capital and other items was $9.3 million. The cash flow provided by operating activities in the quarter was $3.3 million. 

Summary of Production Results

Total tonnes mined increased by 65% for the first quarter 2011 over the first quarter of 2010. Once again utilizing a larger, more efficient truck fleet at El Castillo for the full quarter, the rate of mining production exceeded 1.5 million tonnes per month. Total ounces loaded to the pads also increased. In the first quarter of 2011, there were 28,225 ounces placed on the pad, representing a 72% increase over the 16,430 ounces placed on the pad in first quarter of 2010.

Gold production of 18,014 ounces in the first quarter of 2011 was a 76% increase compared to the first quarter of 2010.

The strip ratio of waste to ore declined in the first quarter of 2011 to 0.88 compared to the first quarter of 2010 of 1.20. (The new NI 43-101 compliant technical report for El Castillo indicates the anticipated strip ratio is approximately 0.88 for the life of mine).

Key operational metrics and production statistics for the first quarter of 2011 compared to the respective period in 2010 are presented below:

CEO Commentary

Mr. Pete Dougherty, Argonaut's President and CEO states: "The year of 2011 began with a substantial increase in reserves and resources at El Castillo. Progress on the east side expansion has continued with barren pipe and wet testing of the new plant, laying overliner on newly built additional pad space and construction of a new crushing circuit." He added "This quarter marks the second quarter of an annualized production rate of 72,000 ounces, with cash costs at $590 per gold ounce sold. This is in line with Company guidance for 2011."

Non-IFRS Measures

The Company included the non-IFRS measure "Cash cost per gold ounce for units sold" in this press release to supplement its financial statements which are presented in accordance with International Financial Reporting Standards ("IFRS"). Cash cost per gold ounce for units sold is equal to cost of sales less silver sales divided by gold ounces sold. The Company believes that this measure provides investors with an improved ability to evaluate the performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. Therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please see the MD&A for full disclosure on non-IFRS measures.

Technical Information and Mineral Properties Reports

The technical information contained in this document has been reviewed and approved by Mr. Thomas H. Burkhart, Argonaut's Vice President of Exploration, a qualified person as defined by NI 43-101.

For further information on the Company's properties please see the reports as listed below on the Company's website or on www.sedar.com:

About Argonaut

Argonaut 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 exploration stage La Colorada project, and the exploration stage La Fortuna project, all of which are located in Mexico. Argonaut is a producing gold company 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.