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ARGONA
Diverse North American gold intermed
MINING | ARGONAUT GOLD
UT GOLD
diate continues to exceed expectations
On August 10, 2021, Argonaut Gold announced record quarterly production, record quarterly revenue and a 234% year-on-year increase in cash flow, in the best operational and financial quarter the intermediate producer has delivered to date. In the second quarter, Argonaut produced 63,749 gold equivalent ounces from its operational mines in the US and Mexico, with the increased gold sales contributing to a US$120.2 million revenue return – compared with $58 million in the corresponding COVIDimpaired quarter last year. In addition, cash costs per ounce of gold sold were 48% lower than a year ago at its La Colorada mine in Northern Mexico, and 24% down quarter-on-quarter at Florida Canyon in Nevada, where TSX-listed Argonaut is expecting further savings in conjunction with a new conveying and stacking system in the coming months. “All of the projects that we are running today are starting to hit on all cylinders,” Argonaut’s president and CEO Pete Dougherty tells RGN. “And with the nice change in the gold price environment, that’s leading to record overall cashflow from the operations as we continue to ramp up production. We’re quite excited about the second half of the year as we think that the fourth quarter will be our best yet for the company.”
MINING | ARGONAUT GOLD
Nowadays, a company’s sustainability performance is just as important as its operational and financial performance, and Argonaut has certainly acknowledged this with annual sustainability reporting going back to 2014. The development of the overarching ESG concept in the last five years or so has helped the company formulate a more cogent and comprehensive sustainability strategy, which is evident in its latest report, published in April 2021. Argonaut continued to action on ideas for reducing its overall impact on the environment, including: Installing solar panels onsite in Mexico, reducing water consumption via a new irrigation system at San Augustin in Mexico and undertaking rescue campaigns for various flora and fauna in the local vicinity of its operations in Mexico and the US.
The new conveyance stacks
whether this is through
system at Florida Canyon is
ensuring a majority of each
also set to significantly reduce
workforce is locally sourced,
the company’s greenhouse gas
or by playing an active role
emissions by eliminating the
in the communities and
need to run diesel haul trucks
positively contributing to the
from the crusher to the leach
unique civic culture in each
pads.
setting.
Part of the community
This was evident none more
Despite being a diverse, multi-
company demonstrated real
jurisdictional operator across
corporate leadership during
North America, Argonaut
the pandemic with community
is guided by a distinct
sanitising programmes at
community-based approach,
La Colorada and El Castillo
so than last year, when the
in Mexico, amongst other COVID-19 response initiatives.
AR G O N AU T GOLD AT A G L A N C E
“When it comes to the communities, that is the heart and blood of this company,” says Dougherty. “Because we are so ingrained in these small communities, they become part of the project. They own the project just as much as we
STOCK TICKER: TSX:AR MARKET CAPITALISATION: US$749 million as of September 17, 2021) aj
do.
initiatives that we are pressing. We are bringing doctors in and
“So there’s an interlinking
pushing our scholarship fund
between the company and
to try and improve not only
those communities, whether
the current generation, but
it be for local celebrations or
generations to come.”
the other education and health
MINING | ARGONAUT GOLD
Speaking of interlinking,
coming out of Mexico and
Argonaut’s corporate head
Nevada, as well as its exciting
The Magino pendant
office in Reno provides a
exploration plays slightly
Dougherty and his team
centrally positioned hub
further afield in Canada and
believe the Magino project in
with good connections to the
central Mexico.
Ontario is going to eventually
company’s core production
become the ‘pendant’ in the
“When it comes to the communities, that is the heart and blood of this company. Because we are so ingrained in these small communities, they become part of the project. They own the project just as much as we do” Pete Dougherty, Argonaut Gold president and CEO
Argonaut ‘necklace of assets’,
“We think there exists
due to the long-life potential
underneath the open pit
of the mine. Already, there is
the potential to have an
about 5 million ounces (Moz)
underground resource to
of gold in the resource base,
go along with the open pit
and that’s just in the open pit.
mine, which could lead to potentially a 300,000 ounces
“We have been drilling for
per annum type producer
the last two years on the
over a 20-year mine life, as we
underground potential of
expand the process facility and
this project and been getting
hopefully bring up to 1,000
tremendous grades and nice
tonnes per day (tpd) from the
widths, just like our next door
underground, coupled with
neighbour project Island
about 19,000 tpd tonnes from
Gold,” says Argonaut’s boss.
the open pit. That could lead to a really substantial overall
MINING | ARGONAUT GOLD
production profile under this project.” After securing an operating permit last year, Argonaut commenced construction of the mine site at Magino at the beginning of the year. The two-year building process is well underway ahead of that transformative first gold pour in Q1 of 2023. “It’s heartening to see concrete going down and structures starting to be built because that’s really the formation of this mine. Next year as we start to see metal buildings go up and equipment being moulded together, that really brings it all home. But we are quite excited by what’s already been achieved at the project.” The only minor downside of the development is the likely cost increase of around 15% that the company flagged in its recent quarterly update. Initial capex had been put at $321 million in a 2017 feasibility PETE DOUGHERTY, ARGONAUT GOLD PRESIDENT AND CEO
study, however Argonaut
MINING | ARGONAUT GOLD
secured over $400 million of finance in October after receiving total cost estimates between $360-380 million, including contingency and inflation. While rising construction costs are not to be unexpected in the current economic climate, Argonaut has not changed its full-year capital guidance. Instead it will shift $10 million of capital spending planned for the La Colorada mine over to the Magino construction project, which demonstrates another benefit in having multiple projects across a broader regional portfolio.
Exceeding expectations After a remarkable operational performance in the first half of the year, Argonaut is in a prime position to hit the top end of its annual guidance for both gold production and free cash flow. Underpinned by the imminent advancements at Florida Canyon, Dougherty expects the company to reach
the upper end of its 200-
quarter as we get this conveyed two years – adding 150,000
250,000 ounces production
stack system up and can push
ounces of gold production
target, as well as the upper
tonnage that we can bring to
per annum – and further
portion of the $100-140 million
the leach pad up one more
ounces to be added from the
free cash flow generation
step level. We think that those
current exploration activity at
guidance.
kind of items will help push
La Colorada, Argonaut could
that production profile and
easily be looking at annual
“We had a tremendous spike
we are really counting on that
production exceeding 400,000
in production in the first
fourth quarter being our best
ounces by 2023.
quarter to second quarter and
quarter of the entire year.”
we think there’s another step
In addition, there is the 4.7
change that’s going to happen
With the Magino project
Moz gold equivalent Cerro del
between the third and fourth
set to come online in under
Gallo development project
MINING | ARGONAUT GOLD
being advanced down in the
never say no to a value-
shown itself to be a flourishing
Mexican state of Guanajuato.
accretive opportunity when
gold company with a strong
With all these internal
it arises. “Right now, it’s
focus on sustainably operated
growth opportunities, one
[M&A] probably not the first
mines across Mexico and in
would forgive Argonaut
and foremost plan, but if
the US. But this really is just
for momentarily closing
something comes along that
the tip of the iceberg when
the door to any potential
is very attractive and could be
you look at the potential
merger/acquisition (M&A)
beneficial to our shareholders,
for organic growth within
propositions.
we will certainly be engaged in
the current portfolio,
that.”
matched with a keen eye for
However, Dougherty is a
developments in the North
firm believer in the notion
In the last 12 months,
that a company should
Argonaut has consistently
American gold market.
Published by Anderson Murray Media Ltd
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