Argonaut Gold Announces Second Quarter Production of 59,192 Gold Equivalent Ounces and Cash Flow(1) of $23.3 Million

·17 min read

TORONTO, Aug. 10, 2022 /CNW/ - Argonaut Gold Inc. (TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut") is pleased to announce its operating and financial results for the second quarter ended June 30, 2022.  For the second quarter 2022, the Company reports production of 59,192 gold equivalent ounces2 ("GEO" or "GEOs"), revenue of $111.4 million, cash flow from operating activities before changes in non-cash operating working capital and other items of $23.3 million, net income of $18.4 million or earnings per basic share of $0.06, and adjusted net income3 of $7.3 million or adjusted earning per basic share3 of $0.02.  All dollar amounts are expressed in United States dollars, unless otherwise specified (C$ refers to Canadian dollars).

Argonaut Gold Inc. Logo (CNW Group/Argonaut Gold Inc.)
Argonaut Gold Inc. Logo (CNW Group/Argonaut Gold Inc.)

1 "Cash Flow" refers to "Cash flow from operating activities before changes in non-cash operating working capital and other items". 

2 GEOs are based on a conversation ratio of 80:1 for silver to gold for 2022 and 85:1 for 2021.  The silver to gold conversation ratio is based on the three-year trailing average silver to gold ratios.  These are the referenced ratios for each year throughout this press release.

3 This is a Non-IFRS Measure.  Please refer to the section entitled "Non-IFRS Measures" for a discussion of these Non-IFRS Measures.

Larry Radford, President & CEO stated: "We were slightly ahead of our operational budget in terms of GEO production during the second quarter, which yielded over 59,000 GEOs, albeit at a slightly higher cost than budgeted due to inflationary pressures on input costs.  We recently put a financing package together that we believe fully finances the Magino construction project.  We are also tracking well against our most recent Magino capital estimate to completion of C$920 million. With the financing behind us and what I believe to the right team now in place, I feel Argonaut is in a much better position to execute on our business plan."

Second Quarter 2022 Results

Key operating and financial statistics for the second quarter ended June 30, 2022 are outlined in the following table:


3 Months Ended

June 30

6 Months Ended

June 30


2022

2021

Change

2022

2021

Change

Financial Data (in millions except for
earning per share)







Revenue

$111.4

$120.2

(7 %)

$217.2

$225.5

(4 %)

Gross profit

$19.8

$39.8

(50 %)

$41.5

$67.4

(38 %)

Net income (loss)

$18.4

$21.8

(16 %)

$24.0

$48.8

(51 %)

Earnings (loss) per share - basic

$0.06

$0.07

(14 %)

$0.07

$0.16

(56 %)

Adjusted net income1

$7.3

$22.7

(68 %)

$15.5

$29.7

(48 %)

Adjusted earnings per share – basic1

$0.02

$0.07

(73 %)

$0.05

$0.10

(50 %)

Cash flow from operating activities
before changes in non-cash operating
working capital and other items

$23.3

$39.3

(41 %)

$48.4

$67.0

(28 %)

Cash and cash equivalents

$75.8

$216.0

(65 %)

$75.8

$216.0

(65 %)

Net cash

$(4.2)

$216.0

(102 %)

$(4.2)

$216.0

(102 %)

Gold Production and Cost Data







GEOs loaded to the pads2

86,896

130,414

(33 %)

181,801

244,235

(26 %)

GEOs projected recoverable2,3

51,092

71,032

(28 %)

105,843

134,319

(21 %)

GEOs produced2,4

59,192

63,750

(7 %)

114,706

123,453

(7 %)

GEOs sold2

59,241

65,651

(10 %)

115,613

124,766

(7 %)

Average realized sales price

$1,884

$1,812

4 %

$1,879

$1,788

5 %

Cash cost per gold ounce sold1

$1,248

$876

42 %

$1,202

$936

28 %

All-in sustaining cost per gold ounce
sold1

$1,474

$1,203

23 %

$1,453

$1,258

16 %

1This is a Non-IFRS Measure.  Please refer to the section below entitled "Non-IFRS Measures" for a discussion of these Non-IFRS Measures.

2GEOs are based on a conversion ratio of 80:1 for silver to gold for 2022 and 85:1 for 2021. The silver to gold conversion ratio is based on the three-year trailing average silver to gold ratio.

3Expected recoverable GEOs are based on the assumptions and parameters as set forth in the El Castillo Gold Mine Technical Report dated February 14, 2022, the San Agustin Gold/Silver Mine Technical Report dated February 14, 2022, the La Colorada Gold/Silver Mine Technical Report dated February 14, 2022 and the Florida Canyon Technical Report dated July 8, 2020.  In periods where the Company mines and processes material not specifically defined in a technical report (for example: low-grade stockpile material or run-of-mine ore), management uses its best estimate of recovery based on the information available.

4Produced ounces are calculated as ounces loaded to carbon.

Second Quarter 2022 and Recent Company Highlights:

  • Corporate Highlights:

  • Social and Environmental Responsibility

  • El Castillo

  • San Agustin

  • La Colorada

  • Florida Canyon

  • Magino

 

Financial Results – Second Quarter 2022

Revenue for the second quarter of 2022 was $111.4 million, a decrease from $120.2 million in the second quarter of 2021.  During the second quarter of 2022, the Company sold 57,344 gold ounces at an average realized price per ounce of $1,884, compared to 63,000 gold ounces sold at an average realized price per ounce of $1,812 during the same period of 2021.  Gold ounces sold for the first quarter of 2022 decreased compared to the same period in 2021 primarily due to fewer ounces produced and sold at the La Colorada and El Castillo mines.

Net income for the second quarter of 2022 was $18.4 million or earnings per basic share of $0.06, compared with net income of $21.8 million or earnings per basic share of $0.07 for the second quarter of 2021.

Adjusted net income for the second quarter of 2022 was $7.3 million or $0.02 per basic share, a decrease from adjusted net income of $22.7 million or $0.07 per basic share for the second quarter of 2021 (This is a Non-IFRS Measure.  Please see "Non-IFRS Measures" section).

Cash flows from operating activities before changes in non-cash operating working capital and other items totaled $23.3 million during the second quarter of 2022, a decrease from $39.3 million in the second quarter of 2021, primarily due to fewer gold ounces sold and higher operating costs.

Financial Results – First Half 2022

Revenue for the six months ended June 30, 2022 was $217.2 million, a decrease from $225.5 million for the six months ended June 30, 2021. During the first half of June 30, 2022, gold ounces sold totaled 111,450 at an average realized price per ounce of $1,879, compared to 119,727 gold ounces sold at an average realized price per ounce of $1,788 during the same period of 2021. Gold ounces sold for the six months ended June 30, 2022 decreased compared to the same period of 2021 primarily due to the reduction in gold ounces sold from the La Colorada and El Castillo mines.

Net income for the first half of 2022 was $24.0 million or $0.07 per basic or diluted share for the first half of 2022 compared to net income of $48.8 million or $0.16 per basic or diluted share in the six months ended June 30, 2021.

Adjusted net income for the first half of 2022 was $15.5 million or $0.05 per basic share, a decrease from adjusted net income of $29.7 million or $0.10 per basic share for the first half of 2021 (This is a Non-IFRS Measure.  Please see "Non-IFRS Measures" section).

Cash flows from operating activities before changes in non-cash operating working capital and other items totaled $48.4 million during the first half of 2022, a decrease from $67.0 million in the first half of 2021, primarily due to fewer gold ounces sold and higher operating costs.

Operational Results – Second Quarter 2022

During the second quarter of 2022, the Company achieved production of 59,192 GEOs at a cash cost per gold ounce sold of $1,248 and all-in sustaining cost per gold ounce sold ("AISC") of $1,474 compared to 63,750 GEOs at a cash cost of $876 per gold ounce sold and an AISC of $1,203 during the second quarter 2021 (These are Non-IFRS Measures.  Please see "Non-IFRS Measures" section).  The 7% decrease in GEO production was primarily related to lower ore tonnes mined, lower grades in both gold and silver, and lower gold recoveries at the La Colorada mine.  Higher cash costs were primarily related to higher mining rates at El Castillo, La Colorada and Florida Canyon due to higher strip ratios, higher key consumable costs across all operations and lower gold ounces sold.

SECOND QUARTER 2022 EL CASTILLO COMPLEX OPERATING STATISTICS


3 Months Ended

June 30

6 Months Ended

June 30


2022

2021

Change

2022

2021

Change

Mining (in 000s except
waste/ore ratio)







Tonnes ore El Castillo

1,471

2,496

(41 %)

2,982

4,900

(39 %)

Tonnes ore San Agustin

2,954

2,718

9 %

5,771

5,588

3 %

Tonnes ore

4,425

5,214

(15 %)

8,753

10,488

(17 %)

Tonnes waste El Castillo

2,804

2,473

13 %

5,732

5,610

2 %

Tonnes waste San Agustin

1,978

1,738

14 %

3,905

3,512

11 %

Tonnes waste

4,782

4,211

14 %

9,637

9,122

6 %

Tonnes mined El Castillo

4,275

4,969

(14 %)

8,714

10,510

(17 %)

Tonnes mined San Agustin

4,932

4,456

11 %

9,676

9,100

6 %

Tonnes mined

9,207

9,425

(2 %)

18,390

19,610

(6 %)

Tonnes per day El Castillo

47

55

(14 %)

48

58

(17 %)

Tonnes per day San Agustin

54

49

11 %

54

51

6 %

Tonnes per day

101

104

(2 %)

102

109

(6 %)

Waste/ore ratio El Castillo

1.91

0.99

93 %

1.92

1.14

68 %

Waste/ore ratio San Agustin

0.67

0.64

5 %

0.68

0.63

8 %

Waste/ore ratio

1.08

0.81

34 %

1.10

0.87

27 %

Leach Pads (in 000s)







Tonnes direct to leach pads El
Castillo

1,471

2,488

(41 %)

2,982

4,890

(39 %)

Tonnes crushed to leach pads
San Agustin

2,949

2,962

— %

5,764

5,944

(3 %)

Tonnes to leach pads

4,420

5,450

(19 %)

8,746

10,834

(19 %)

Production







Gold grade loaded to leach pads
El Castillo (g/t)1

0.30

0.25

20 %

0.30

0.27

11 %

Gold grade loaded to leach pads
San Agustin (g/t)1

0.29

0.32

(9 %)

0.29

0.29

— %

Gold grade loaded to leach pads
(g/t)1

0.29

0.28

4 %

0.29

0.28

4 %

Gold loaded to leach pads El
Castillo (oz)2

14,330

19,973

(28 %)

28,604

42,149

(32 %)

Gold loaded to leach pads San
Agustin (oz)2

27,412

30,280

(9 %)

54,036

56,190

(4 %)

Gold loaded to leach pads (oz)2

41,742

50,253

(17 %)

82,640

98,339

(16 %)

Projected recoverable GEOs
loaded El Castillo4

7,337

10,859

(32 %)

14,177

20,596

(31 %)

Projected recoverable GEOs
loaded San Agustin4

18,958

21,454

(12 %)

37,254

40,342

(8 %)

Projected recoverable GEOs
loaded4

26,295

32,313

(19 %)

51,431

60,938

(16 %)

Gold produced El Castillo (oz)2,3

12,047

12,723

(5 %)

23,478

24,695

(5 %)

Gold produced San Agustin
(oz)2,3

18,033

18,105

— %

36,433

35,376

3 %

Gold produced (oz)2

30,080

30,828

(2 %)

59,911

60,071

— %

Silver produced El Castillo (oz)2,3

10,407

17,445

(40 %)

24,704

39,240

(37 %)

Silver produced San Agustin
(oz)2,3

88,160

138,470

(36 %)

208,328

280,901

(26 %)

Silver produced (oz)2,3

98,567

155,915

(37 %)

233,032

320,141

(27 %)

GEOs produced El Castillo3

12,178

12,928

(6 %)

23,787

25,156

(5 %)

GEOs produced San Agustin3

19,135

19,734

(3 %)

39,037

38,681

1 %

GEOs produced3

31,313

32,662

(4 %)

62,824

63,837

(2 %)

Gold sold El Castillo (oz)2

11,463

12,614

(9 %)

25,032

26,216

(5 %)

Gold sold San Agustin (oz)2

18,656

18,829

(1 %)

35,859

35,495

1 %

Gold sold (oz)2

30,119

31,443

(4 %)

60,891

61,711

(1 %)

Silver sold El Castillo (oz)2

11,296

19,094

(41 %)

26,196

40,212

(35 %)

Silver sold San Agustin (oz)2

93,420

144,867

(36 %)

216,898

273,788

(21 %)

Silver sold (oz)2

104,716

163,961

(36 %)

243,094

314,000

(23 %)

GEOs sold El Castillo

11,603

12,839

(10 %)

25,359

26,689

(5 %)

GEOs sold San Agustin

19,824

20,534

(3 %)

38,570

38,716

— %

GEOs sold

31,427

33,372

(6 %)

63,929

65,405

(2 %)

Cash cost per gold ounce sold El
Castillo5

$         1,513

$         1,109

36 %

$         1,357

$         1,077

26 %

Cash cost per gold ounce sold
San Agustin5

$         1,009

$             801

26 %

$             978

$             804

22 %

Cash cost per gold ounce sold5

$         1,201

$             916

31 %

$         1,134

$             916

24 %

1 "g/t" refers to grams per tonne.

2 "oz" refers to troy ounce.

3 Produced ounces are calculated as ounces loaded to carbon.

4 Expected recoverable GEOs are based on the assumptions and parameters as set forth in the El Castillo Gold Mine Technical Report dated February 14, 2022 and the San Agustin Gold/Silver Mine Technical Report dated February 14, 2022.  In periods where the Company mines and processes material not specifically defined in a technical report (for example: run-of-mine ore), management uses its best estimate of recovery based on the information available. 

5 Please refer to the section below entitled "Non-IFRS Measures" for a discussion of this Non-IFRS Measure.

Summary of Production Results at the El Castillo Complex

During the second quarter of 2022, the El Castillo Complex produced 4% fewer GEOs at a cash cost per gold ounce sold 31% higher than during the second quarter of 2021 (This is a Non-IFRS Measure.  Please see "Non-IFRS Measures" section).  El Castillo produced 6% fewer GEOs at a cash cost per gold ounce sold 36% higher (This is a Non-IFRS Measure.  Please see "Non-IFRS Measures" section), primarily due to the El Castillo mine having a remaining mine life of less than one year, so mining waste is no longer capitalized as capitalized stripping but is included in production cost, along with increased maintenance and key consumable costs. San Agustin produced 3% fewer GEOs, at a cash cost per gold ounce sold 26% higher (This is a Non-IFRS Measure.  Please see "Non-IFRS Measures" section), primarily due to lower gold grades processed and higher key consumable costs.

SECOND QUARTER 2022 LA COLORADA OPERATING STATISTICS


3 Months Ended

June 30

6 Months Ended

June 30


2022

2021

Change

2022

2021

Change

Mining (in 000s except for
waste/ore ratio)







Tonnes ore

976

1,150

(15 %)

2,101

2,377

(12 %)

Tonnes waste

5,711

2,173

163 %

11,048

6,187

79 %

Tonnes mined

6,687

3,323

101 %

13,149

8,564

54 %

Tonnes per day

73

37

101 %

73

48

54 %

Waste/ore ratio

5.85

1.89

210 %

5.26

2.6

102 %

Leach Pads (in 000s)







Tonnes crushed to leach pads

1,063

1,247

(15 %)

2,183

2,513

(13 %)

Production







Gold loaded to leach pads (g/t)1

0.44

0.76

(42 %)

0.44

0.65

(32 %)

Gold loaded to leach pads (oz)2

14,902

30,320

(51 %)

31,186

52,411

(40 %)

Projected recoverable GEOs
loaded4

11,573

24,101