"Argonaut Gold is a one-stop-shop for investors looking to play various aspects on the mining cycle."

Peter Dougherty


November 12, 2021

Why is it a good time to invest in Argonaut Gold?

Argonaut Gold presents a unique one-stop-shop intermediate producer investment opportunity type. This is because we offer everything from the excitement in the exploration phase to the development story, as we bring a project online with Magino. We also offer stability, as our cash flow from operations supports these efforts. In Magino, we released some of the best drill holes ever drilled on a property earlier this year, and in September we released additional information from drilling at La Colorado, which indicated grades between 40 - 90 g/t over a 4 - 5 m width and, in some cases, up to 20 m wide, which are spectacular results. Last quarter we saw production at 64,000 ounces and nearly US$40 million cash generated from the operation. A year ago, there were less than 50 people in Magino, yet today there are over 500 people on site.  So with the exploration sizzle at Magino and La Colorada, the growth through the development of Magino and the safety of cash flow from the existing operations, it really makes Argonaut Gold a one-stop-shop for investors looking to play various aspects on the mining cycle.

What is the timeline for the development of Magino, and once in production, how will the mine change the production profile of Argonaut Gold?

We expect to be pouring gold at Magino during the first half of 2023 and ramping up to commercial production over 3 – 6 months after first gold pour. In terms of what that means for our production profile, Magino is expected to add 150,000 ounces per year once fully ramped up. Now, we will lose about 40,000 ounces as our El Castillo mine, which has been operating since 2007, ramps down. But overall, we will add more than 100,000 ounces to our profile due to Magino and these will be much lower cost ounces than our existing operating portfolio, which will improve our margins considerably. Beyond the first phase of 150,000 ounces per year at Magino, we also believe there is an opportunity to expand early in the mine life using Magino cash flows, which could double Magino’s profile to 300,000 ounces per year.

Can you elaborate on your ESG strategy?

The key to a successful ESG strategy is to remain engaged with investors, local communities and the government. Argonaut Gold managed to strike a perfect balance in this regard and reduce its operational carbon footprint across the company. We are proud to have been recognized by the government for the 10th year in Mexico as an environmentally socially responsible company. In leaching operations, we are minimizing our use of plastic in drip lines and chemicals. We are also reducing our water consumption by placing the lines closer to the ground, which also reduces energy consumption. In Florida Canyon we are using an overland conveyance and stacking system as opposed to running diesel in trucks to haul out and stack the leach pads. In Magino we are using more energy efficient equipment. We invest in social programs in Mexico for smaller surrounding communities to elevate their living standards. We also offer a scholarship program to incentivize all age groups to pursue a formal education. A new industry is being built around these communities to create job opportunities for food services, bussing services, or supplying safety vests.

How would you describe the current operational environment from a political standpoint in Mexico?

It has been a bit challenging in the mining industry with the current administration. Any type of permitting or action where we are looking to get concessions has predominantly been stopped over the last two years. To be clear, this is not an Argonaut issue but an issue for anyone in our business in the current environment.  Much of this could be simply due to the pandemic and it is picking up slowly now. There are also areas in Sonora, as you get closer to the US border, which present some security challenges. La Colorada lies in the flats 45 km southeast of Hermosillo and about 20 km from the main Ford plant. The area we live in is not remote, and the mine sits 30 m from the police station, so it is fairly safe. As we move to Durango we face some challenges regarding cartels, especially when moving towards the mountains.

Can you provide updates regarding the Florida Canyon project?

When we started working on Florida Canyon, we saw a project with great potential that needed some time and guidance. Over the last quarter, our team submitted for a new permit with the agencies and received it in two months. Our goal with Florida Canyon was to enhance operational performance and efficiency, which we did through overland conveying and our new crushing process where we are now dumping into a drop box and eliminating rehandling. These changes had huge positive impacts on our carbon footprint and efficiency. From Q1 to Q2 production increased by around 15% and operating costs decreased by 25%. We just put the new conveying system in place in Q3 so we expect to see another positive step change by the end of the year.


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