CEO Commentary
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1 GEOs are based on a conversion ratio of 85:1 for silver to gold for 2021 and 80:1 for 2020. The silver to gold conversion ratio is based on the three-year trailing average silver to gold price. These are the ratios for each year throughout the press release. |
Key operating and financial statistics for the three months ended
3 months ended | Change | ||
2021 | 2020 | ||
Financial Data (in millions except for earnings per share) | |||
Revenue | 58% | ||
Gross profit | 99% | ||
Net income (loss) | ( | 382% | |
Earnings (loss) per share – basic | ( | 280% | |
Cash flow from operating activities before changes in non-cash operating working capital | 88% | ||
Cash and cash equivalents | 444% | ||
Gold Production and Cost Data | |||
GEOs loaded to the pads2 | 113,821 | 97,180 | 17% |
GEOs projected recoverable2,3 | 63,287 | 44,284 | 43% |
GEOs produced2,4 | 59,704 | 41,536 | 44% |
GEOs sold2 | 59,116 | 42,204 | 39% |
Average realized sales price | 12% | ||
Cash cost per gold ounce sold1 | 4% | ||
All-in sustaining cost per gold ounce sold1 | (1%) |
1 Please refer to the section below entitled "Non-IFRS Measures" for a discussion of these Non-IFRS Measures. |
2 GEOs are based on a conversion ratio of 85:1 for silver to gold for 2021 and 80:1 for 2020. The silver to gold conversion ratio is based on the three-year trailing average silver to gold ratio. |
3 Expected recoverable GEOs are based on the assumptions and parameters as set forth in the El Castillo Complex Technical Report dated |
4 Produced ounces are calculated as ounces loaded to carbon. |
First Quarter 2021 and Recent Company Highlights:
- Corporate Highlights:
- Set a new record for quarterly GEO production.
- Set a new record for quarterly revenue.
- Closed a
C$26.5 million bought deal of flow-through shares to fund qualifying development expenditures at Magino. - Completed a
C$10.0 million non-brokered private placement withAusenco Engineering Canada Inc. - Strengthened the management team with the appointment of
Lowe J. Billingsley in the role of Senior Vice President, Operations. - Social and Environmental Responsibility:
- Inauguration of the "
Solar Farm " solar panel park located atLa Colorada , in collaboration with theMining Fund and the municipality ofLa Colorada, Sonora . - Continue work on our education initiative, the "
Assignment's Club ", which assists mothers with pre-school and elementary school students doing at-home study in the communities near the Cerro del Gallo project. - Distribution of food baskets and scholarships in communities neighbouring the
El Castillo Complex . El Castillo Complex :- Produced 31,175 GEOs representing a 9% increase compared to the first quarter of 2020.
- Reduced cash cost per gold ounce sold to
$916 or by 3% compared to the first quarter of 2020 (see "Non-IFRS Measures" section). La Colorada :- Produced 16,516 GEOs representing a 27% increase compared to the first quarter of 2020.
- Reduced cash cost per gold ounce sold to
$765 or by 25% compared to the first quarter of 2020 (see "Non-IFRS Measures" section). - Discovered high-grade gold veins below the El Crestón open pit including 12.2 metres at 98.9 g/t Au and 30.3 g/t Ag and 21.3 metres at 44.6 g/t Au and 274.9 g/t Ag.
Florida Canyon :- Produced 12,013 GEOs representing a 6% increase compared to the previous quarter.
- Received all regulatory approvals required for the construction, installation and operation of a new conveying and stacking system.
- Magino:
- Construction, Permitting & Community
- Executed a fixed-bid contract for a significant portion of the Magino project initial capital.
- Completed a major permitting milestone with the Magino Closure Plan filing.
- Executed an Indigenous community accommodation agreement with
Garden River First Nation . - Initiated and advanced the construction project, including:
- Logging;
- Early site works;
- Assembled and mobilized teams and set up camps;
- Began installation of construction offices;
- Ordered all long lead time equipment; and,
- Held a virtual Indigenous ceremony to bless the grounds of the Magino site.
- Launched a monthly newsletter from the CEO to provide regular updates on the Magino construction project, which is available here: https://www.argonautgold.com/English/assets/development/magino/default.aspx
- Exploration
- Continued to intersect high-grade gold mineralization below and adjacent to the planned pit and identified multiple new high-grade structures hosting multiple veins:
- South zone strike length extended to 1.5 kilometers and remains open to the west and at depth.
Cerro del Gallo :- Advanced an updated permit application for the project.
Financial Results – First Quarter 2021
Record quarterly revenue was
Income from continuing operations for the first quarter of 2021 was
Cash flow from operating activities before changes in non-cash operating working capital for the first quarter of 2021 was
Operating Results – First Quarter 2021
During the first quarter of 2021, the Company achieved record quarterly production of 59,704 GEOs at a cash cost per gold ounce sold of
Higher cash cost per gold ounce sold and AISC per gold ounce sold was primarily due to the addition of the
FIRST QUARTER 2021 EL CASTILLO COMPLEX OPERATING STATISTICS
3 Months Ended | |||
2021 | 2020 | % Change | |
Mining (in 000s except waste/ore ratio) | |||
Tonnes ore | 2,404 | 1,922 | 25% |
Tonnes ore | 2,870 | 2,709 | 6% |
Tonnes ore | 5,274 | 4,631 | 14% |
Tonnes waste | 3,137 | 3,414 | (8%) |
Tonnes waste | 1,774 | 1,869 | (5%) |
Tonnes waste | 4,911 | 5,283 | (7%) |
Tonnes mined | 5,541 | 5,336 | 4% |
Tonnes mined | 4,644 | 4,578 | 1% |
Tonnes mined | 10,185 | 9,914 | 3% |
Tonnes per day | 62 | 59 | 5% |
Tonnes per day | 52 | 50 | 4% |
Tonnes per day | 114 | 109 | 5% |
Waste/ore ratio | 1.30 | 1.78 | (27%) |
Waste/ore ratio | 0.62 | 0.69 | (10%) |
Waste/ore ratio | 0.93 | 1.14 | (18%) |
Leach Pads (in 000s) | |||
Tonnes crushed East to leach pads | 0 | 214 | (100%) |
Tonnes crushed West to leach pads | 0 | 3 | (100%) |
Tonnes direct to leach pads | 2,402 | 1,732 | 39% |
Tonnes crushed to leach pads | 2,982 | 2,733 | 9% |
Tonnes to leach pads | 5,384 | 4,682 | 15% |
Production | |||
Gold grade loaded to leach pads | 0.29 | 0.55 | (47%) |
Gold grade loaded to leach pads | 0.27 | 0.36 | (25%) |
Gold grade loaded to leach pads (g/t)1 | 0.28 | 0.44 | (36%) |
Gold loaded to leach pads | 22,176 | 34,471 | (36%) |
Gold loaded to leach pads | 25,910 | 31,255 | (17%) |
Gold loaded to leach pads (oz)2 | 48,086 | 65,726 | (27%) |
Projected recoverable GEOs loaded | 9,737 | 13,072 | (26%) |
Projected recoverable GEOs loaded | 18,889 | 22,781 | (17%) |
Projected recoverable GEOs loaded4 | 28,626 | 35,853 | (20%) |
Gold produced | 11,972 | 14,435 | (17%) |
Gold produced | 17,271 | 12,835 | 35% |
Gold produced (oz)2,3 | 29,243 | 27,270 | 7% |
Silver produced | 21,795 | 23,545 | (7%) |
Silver produced | 142,431 | 75,504 | 89% |
Silver produced (oz)2,3 | 164,226 | 99,049 | 66% |
GEOs produced | 12,228 | 14,729 | (17%) |
GEOs produced | 18,947 | 13,779 | 38% |
GEOs produced3 | 31,175 | 28,508 | 9% |
Gold sold | 13,602 | 13,626 | 0% |
Gold sold | 16,666 | 13,461 | 24% |
Gold sold (oz)2 | 30,268 | 27,087 | 11% |
Silver sold | 21,118 | 23,545 | (10%) |
Silver sold | 128,921 | 85,137 | 51% |
Silver sold (oz)2 | 150,039 | 108,682 | 38% |
GEOs sold | 13,851 | 13,920 | 0% |
GEOs sold | 18,182 | 14,525 | 25% |
GEOs sold | 32,033 | 28,445 | 13% |
Cash cost per gold ounce sold | (5%) | ||
Cash cost per gold ounce sold | 3% | ||
Cash cost per gold ounce sold5 | (3%) |
1"g/t" is grams per tonne. |
2"oz" means troy ounce. |
3Produced ounces are calculated as ounces loaded to carbon. |
4Expected recoverable GEOs are based on the assumptions and parameters as set forth in the El Castillo Complex Technical Report dated |
5Please refer to the section below entitled "Non-IFRS Measures" for a discussion of this Non-IFRS Measure. |
Summary of Production Results at the
During the first quarter of 2021, the
FIRST QUARTER 2021 LA COLORADA OPERATING STATISTICS
3 Months Ended | |||
2021 | 2020 | % Change | |
Mining (in 000s except for waste/ore ratio) | |||
Tonnes ore | 1,227 | 947 | 30% |
Tonnes waste | 4,014 | 4,683 | (14%) |
Total tonnes | 5,241 | 5,630 | (7%) |
Tonnes per day | 59 | 62 | (5%) |
Waste/ore ratio | 3.27 | 4.95 | (34%) |
Leach Pads (in 000s) | |||
Tonnes crushed to leach pads | 1,266 | 966 | 31% |
Production | |||
Gold grade loaded to leach pads (g/t)1 | 0.54 | 0.35 | 54% |
Gold loaded to leach pads (oz)2 | 22,091 | 11,022 | 100% |
Projected recoverable GEOs loaded4 | 17,634 | 8,431 | 109% |
Gold produced (oz)2,3 | 15,894 | 12,349 | 29% |
Silver produced (oz)2,3 | 52,912 | 54,315 | (3%) |
GEOs produced3 | 16,516 | 13,028 | 27% |
Gold sold (oz)2 | 13,630 | 13,082 | 4% |
Silver sold (oz)2 | 44,438 | 54,198 | (18%) |
GEOs sold | 14,153 | 13,759 | 3% |
Cash cost per gold ounce sold5 | (25%) |
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 La Colorada Gold/Silver Mine Technical Report dated |
5 Please refer to the section below entitled "Non-IFRS Measures" for a discussion of this Non-IFRS Measure. |
Summary of Production Results at
During the first quarter of 2021, the
FIRST QUARTER 2021 FLORIDA CANYON OPERATING STATISTICS
3 Months | |
2021 | |
Mining (in 000s except for waste/ore ratio) | |
Tonnes ore | 2,203 |
Tonnes waste | 3,228 |
Total tonnes | 5,431 |
Tonnes per day | 58 |
Waste/ore ratio | 1.47 |
Leach Pads (in 000s) | |
Tonnes crushed to leach pads | 1,795 |
Tonnes direct to leach pads | 412 |
Production | |
Gold grade loaded to leach pads (g/t)1 | 0.34 |
Gold loaded to leach pads (oz)2 | 23,915 |
Projected recoverable GEOs loaded4 | 17,027 |
Gold produced (oz)2,3 | 11,928 |
Silver produced (oz)2,3 | 7,232 |
GEOs produced3 | 12,013 |
Gold sold (oz)2 | 12,829 |
Silver sold (oz)2 | 8,535 |
GEOs sold | 12,930 |
Cash cost per gold ounce sold5 |
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 Florida Canyon Mine Technical Report dated |
5 Please refer to the section below entitled "Non-IFRS Measures" for a discussion of this Non-IFRS Measure. |
Summary of Production Results at
As Argonaut did not own nor operate the
Argonaut has identified potentially significant operating cost savings once it can eliminate the re-handle on the back end of the secondary crushing by switching to a conveying and stacking system to transport crushed ore to the leach pads. All necessary regulatory approvals, including a modification to the existing Air Quality permit, to allow for the construction, installation and operation of a new conveying and stacking system have been received (see press release dated
Magino Construction Update
Site preparation and early site earthworks are well underway, and the Magino construction project continues to advance on schedule. Regular updates to the Magino construction project progress are available here:
https://www.argonautgold.com/English/assets/development/magino/default.aspx
Recent milestones include:
- Logging completed and commenced scaling of hardwood and hauling of softwood to local mills for processing and making firewood available to local dealers;
- Initiated red spruce seedling grow program with Lakehead University Greenhouse;
- Fish capture and relocation program initiated with biologists in preparation for construction water treat system commissioning;
- Obtained draft Permit to Take Water in support of spring construction works;
- Plant site stripping/excavation is 90% complete;
- Prep for plant footprint underway – includes drilling and blasting;
- Pre-production reverse circulation (RC) grade control drilling commenced;
- Main haul road to the open pit is established;
- Open pit overburden stripping is ongoing with production drilling commencing;
- Crushing plant mobilized in a temporary set-up;
- Screening plant mobilized;
- Main office hub in
Dubreuilville, Ontario is online and operational; - Completion of 144-person onsite camp modules 1 and 2, including a large kitchen;
- Installed hydrophones at
Goudreau Lake ; and - Installed 12 metre communications tower, server and repeater.
Upcoming milestones:
- Commencing plant site pad blasting and continuing pad development;
- Commencing open pit production drilling and blasting;
- Continuing onsite haul road construction to tailing management facility (TMF) from open pit mine area;
- Completion of modules for the onsite 144-person camp and commence pad construction for the 458-person camp at the old mill site in
Dubreuilville, Ontario ; - Testing and taking I.T. and communications servers and towers online;
- Ongoing RC grade control drilling program;
- Ordering of concrete aggregate; and
- Ausenco leadership team mobilizing on-site.
It is anticipated that the pace of capital spend will increase late second quarter 2021 or early third quarter 2021 as the following activities take place:
- Mining commences in support of construction and pre-stripping;
- Process plant construction commences; and
- TMF construction commences.
An overview of the Magino construction project timeline through 2023 is provide below:
The Magino construction project is tracking on schedule. Argonaut is currently reviewing all inputs including potential cost inflation, impacts of foreign currency exchange rates and changes in scope related to the initial capital estimate. While this review is ongoing, based on the best available information to date, the Company believes the initial capital remains within 15% of the previous guided estimate of between
Outlook
Argonaut is on track to achieve its 2021 consolidated production, cost and capital guidance. The table below outlines the first quarter of 2021 actuals compared to full year 2021 guidance:
First Quarter 2021 | Full Year 2021 Guidance | |
GEO production | 59,704 | 210,000 – 250,000 |
Cash cost per gold ounce sold1 | ||
AISC per gold ounce sold1 | ||
Capital (including exploration and excluding Magino construction capital)2 | ||
Magino construction capital2 |
1 See "Non-IFRS Measures" section. |
2 Assumes exchanges rates of MXN:USD of 20:1 and CAD:USD of 1.3:1. |
Argonaut Gold First Quarter 2021 Financial and Operating Results Conference Call & Webcast
The Company will host a conference call and webcast on
First Quarter 2021 Conference Call Information for
Toll Free ( | 1-888-231-8191 |
International: | 1-647-427-7450 |
Conference ID: | 2067781 |
Webcast: | www.argonautgold.com |
First Quarter 2021 Conference Call Replay:
Toll Free Replay Call ( | 1-855-859-2056 |
International Replay Call: | 1-416-849-0833 |
Passcode: | 2067781 |
The conference call replay will be available from |
Non-IFRS Measures
The Company has included certain non-IFRS measures including "Cash cost per gold ounce sold" and "All-in sustaining cost per gold ounce 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 sold is equal to production costs plus the total impact of impairment write downs related to work-in-process inventory less silver sales divided by gold ounces sold. AISC per gold ounce sold is equal to production costs plus the total impact of impairment write downs related to work-in-process inventory less silver sales plus general and administrative, exploration, accretion and other expenses and sustaining capital expenditures divided by gold ounces sold. The Company believes that these measures provide investors with an alternative view 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 management's discussion and analysis ("MD&A") for full disclosure on non-IFRS measures.
This press release should be read in conjunction with the Company's audited consolidated financial statements for the three months ended
Cautionary Note Regarding Forward-looking Statements
This press release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the business, operations and financial performance and condition of
Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include variations in ore grade or recovery rates, changes in market conditions, risks relating to the availability and timeliness of permitting and governmental approvals; risks relating to international operations, fluctuating metal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated.
These factors are discussed in greater detail in Argonaut's most recent Annual Information Form and in the most recent Management's Discussion and Analysis filed on SEDAR, which also provide additional general assumptions in connection with these statements. Argonaut cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Argonaut believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.
Although Argonaut has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Argonaut undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered if the property is developed. Comparative market information is as of a date prior to the date of this document.
Qualified Person, Technical Information and Mineral Properties Reports
Technical information included in this release was supervised and approved by
| NI 43-101 Technical Report on Resources and Reserves, |
NI 43-101 Technical Report on Resources and Reserves, | |
NI 43-101 Technical Report on Mineral Resource and Mineral Reserve Florida Canyon Gold Mine | |
Feasibility Study Technical Report on the | |
Pre-Feasibility Study Technical Report on the |
About
For more information, contact:
Vice President, Corporate Development & Investor Relations
Phone: 416-915-3107
Email: dan.symons@argonautgold.com
Source:
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