Argonaut Gold Announces Updated Life of Mine Plan for Florida Canyon, Which Generates Approximately $326 Million of Mine Site After-Tax Free Cash Flow at $1,700 Gold

TORONTO, July 3, 2020 /CNW/ - Argonaut Gold Inc.(TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut") is pleased to announce the results of an updated life of mine ("LOM") plan for the Florida Canyon mine in Nevada, USA, which is now 100% owned by Argonaut following the closing of the merger with Alio Gold Inc. on July 1, 2020.  A National Instrument ("NI") 43-101 technical report will be filed within 45 days.  All amounts are US dollars unless otherwise stated.   

Pete Dougherty, President & CEO stated: "We have updated the LOM plan for Florida Canyon to reflect the way we propose to run the mine to deliver the most value to shareholders.  We envision Florida Canyon will produce an average of approximately 77,000 gold ounces per annum at all-in sustaining cost per gold ounce sold1 under $1,050 over 9.5 years, which yields a net present value at a 5% discount rate of over $232 million and generates mine site after-tax free cash flow of approximately $326 million at $1,700 gold.  The second half of 2020 will be dedicated to making the additional capital investments in the crushing and stacking system and ancillary equipment to ensure we can to reap the benefits of lower operating costs in 2021 onward.  Beyond the current 9.5 year LOM plan, we continue to see opportunities where investment in exploration at both the Florida Canyon mine and the nearby Standard mine has the potential to add oxide ore, as well as the longer term potential of evaluating transitional and sulphide ores."

 

Key LOM plan highlights:

 

 

Florida Canyon LOM Sensitivities to Gold Price

 

The Company evaluated the LOM plan's sensitivity to gold prices ranging from $1,000 to $2,000 per ounce.  Table 1 below illustrates the NPV5% and FCF of the Florida Canyon mine under the assumptions and parameters of the LOM plan.

 

Table 1: NPV5% and FCF Sensitivities to Gold Price

 

 

Florida Canyon Mineral Resource Estimate

 

A conceptual pit was generated in order to constrain the estimate of Mineral Resources.  A gold price of $1,600 per ounce was used along with other cost, recovery and slope parameters.  Mineral Resources were estimated in the conceptual pit using cutoff grades between 0.147 g/t and 0.175 g/t depending on mineralized zone. 

 

Florida Canyon Mineral Reserve Estimate

 

The Mineral Resource block model was used to determine optimal mining shells and pit phasing.  Indicated Mineral Resources were included in the pit optimization process.  Inferred Mineral Resources within the designed pit were treated as waste.

 

Detailed pit and phase designs were created based on the pit optimization results.  These designs incorporated geotechnical parameters as well as ramp accesses and formed the basis of the Mineral Reserve estimate.

 

Mineral Reserves were estimated based on a practical mine plan using the design price of $1,350 per ounce gold.  That practical pit was designed with guidance from pit optimization software that applied $1,100 per ounce gold in order to maximize the return on investment at the design price.

 

About Argonaut Gold

 

Argonaut Gold is a Canadian gold company engaged in exploration, mine development and production.  Its primary assets are the El Castillo mine and San Agustin mine, which together form the El Castillo Complex in Durango, Mexico, the La Colorada mine in Sonora, Mexico and the Florida Canyon mine in Nevada, USA.  Advanced exploration projects include the Magino project in Ontario, Canada, the Cerro del Gallo project in Guanajuato, Mexico and the Ana Paula project in Guerrero, Mexico.  The Company continues to hold the San Antonio advanced exploration project in Baja California Sur, Mexico and several other exploration stage projects, all of which are located in North America.

 

For more information, contact:

 

Argonaut Gold Inc.

Dan Symons

Vice President, Investor Relations

Phone:  416-915-3107

Email: dan.symons@argonautgold.com