Argonaut Gold Announces Second Quarter 2020 Operating and Financial Results, Including $23 Million of Free Cash Flow; Provides Second Half 2020 Free Cash Flow Guidance

$30.9 million, a decrease from $40.5 million in the second quarter of 2019, primarily due to a decrease in gold ounces sold.  Cash cost per gold ounce sold (see “Non-IFRS Measures” section) was $885 in the second quarter of 2020, a decrease from $931 in the same period of 2019, primarily due to a decrease in cash cost per gold ounce sold at the El Castillo and San Agustin mines as discussed further in the discussion of operations for the respective mine.  The depreciation, depletion and amortization (“DD&A”) expense included in cost of sales for the second quarter of 2020 totaled $8.8 million, a decrease from $10.2 million in the second quarter of 2019, primarily due to a decrease in gold ounces sold, as many of the mining assets are amortized on a unit-of-production basis, partially offset by an increase in the average DD&A expense per ounce in work-in-process inventory, primarily due to significant capital additions during the second, third and fourth quarters of 2019.

$3.1 million, comparable to $3.4 million for the same period of 2019.

$12.4 million, compared to gains of $0.2 million in the second quarter of 2019, primarily due to the large increase in unrealized losses on the Company’s zero-cost collar contracts. 

June 30, 2020 were $8.2 million compared to nil for the comparative period of 2019.  On April 1, 2020, the Company temporarily suspended all mining, crushing and stacking activities in Mexico due to COVID-19 in response to the Mexican Federal Government decree.  All activities resumed on June 1, 2020.  Costs incurred during the temporary suspension associated with the suspended activities that did not generate additional inventory have been separately identified and accounted for as care and maintenance expenses within operating income in the interim condensed consolidated statements of (loss) income.

$1.0 million, a decrease from $1.3 million in the second quarter of 2019, primarily due to differences in foreign currency translation effects.

$2.2 million, compared to $1.3 million in the same period of 2019, primarily due to higher forecasted taxable income related to the increase in the price of gold, offset by a deferred income tax asset related to the unrealized loss on derivatives.

$7.7 million or $0.04 per share, a decrease from net income of $5.4 million or $0.03 per basic share for the second quarter of 2019.

$8.5 million or $0.05 per basic share, an increase from adjusted net income of $1.4 million or $0.01 per basic share for the second quarter of 2019.

June 30, 2020 was $124.5 million, a decrease from $129.9 million for the six months ended June 30, 2019.  During the first half of 2020, gold ounces sold totaled 72,876 at an average realized price per ounce of $1,642, compared to 96,426 gold ounces sold at an average realized price per ounce of $1,306 during the same period of 2019. Gold ounces sold for the six months ended June 30, 2020 decreased compared to the same period in 2019 primarily due to a decrease in gold ounces sold at the El Castillo and La Colorada mines due to a large decrease in ore tonnes to leach pads as a result of the temporary suspension of mining, crushing and stacking activities in response to the Mexican Federal government decree related to COVID-19.

June 30, 2020 were $72.5 million, a decrease from $91.5 million in the first half of 2019 primarily due to a large decrease in gold ounces sold partially offset by a slight increase in cash cost per gold ounce sold.  Cash cost per gold ounce sold (see “Non-IFRS Measures” section) was $929 in the first half of 2020, an increase from $909 in the same period of 2019, primarily due to an increase in cash cost per gold ounce sold at the El Castillo and La Colorada mines, as disclosed further in the discussion of operations for the respective mine.  DD&A expense included in cost of sales for the six months ended June 30, 2020 totaled $19.9 million, a decrease from $22.1 million in the six months ended June 30, 2019, due to the decrease in gold ounces sold, as many of the mining assets are amortized on a unit-of-production basis.

June 30, 2020 were $7.2 million, comparable to $7.2 million in the same period of 2019.

June 30, 2020 were $8.2 million compared to nil for the comparative period of 2019.  On April 1, 2020, the Company temporarily suspended all mining, crushing and stacking activities in Mexico due to COVID-19 in response to the Mexican Federal Government decree.  All activities resumed on June 1, 2020.  Costs incurred during the temporary suspension associated with the suspended activities that did not generate additional inventory have been separately identified and accounted for as care and maintenance expenses within operating income in the interim condensed consolidated statements of (loss) income.

$14.2 million, compared to gains of $0.5 million in the first half of 2019, primarily due to the large increase in unrealized losses on the Company’s zero-cost collar contracts. 

June 30, 2020 was $4.9 million, a decrease from other income of $1.9 million in the same period of 2019, primarily related to differences in foreign currency translation effects.

June 30, 2020 was $13.4 million, compared to $5.2 million in the same period of 2019.  The change is primarily due to the foreign exchange effects of the weakening Mexican peso on the calculation of deferred taxes during the first half of 2020 and to higher forecasted taxable income related to the increase in the price of gold, offset by a deferred income tax asset related to the unrealized loss on derivatives.  

June 30, 2020 was $17.2 million or $0.10 per share, a decrease from net income of $9.5 million or $0.05 per basic share for the six months ended June 30, 2020. 

June 30, 2020 was $16.9 million or $0.09 per basic share, an increase from adjusted net income² of $3.8 million or $0.02 per basic share for the six months ended June 30, 2020.

$885 per gold ounce sold and all-in sustaining cost of $1,080 per gold ounce sold compared to 40,213 GEOs at a cash cost of $931 per gold ounce sold and an all-in sustaining cost of $1,264 per gold ounce sold during the second quarter 2019 (see “Non-IFRS Measures” section).  Lower production was primarily related to the temporary shutdown of mining, crushing and stacking activities during April and May due to COVID-19 restrictions in response to the Mexican Federal Government decree.  Lower costs are primarily due to the reduction in costs related to the temporary shutdown of mining, crushing and stacking activities during April and May while gold production and sales continued.     

Pete Dougherty commented: “I commend the team for their commitment to safety protocols and the new protocols that have been developed and implemented due to COVID-19 precautions.  It is not an easy undertaking to shutdown certain activities and ramp them back up as efficiently and with the additional health and safety protocols as we have done, and our operating team deserves full credit for this successful restart.  Mining, crushing and stacking activites have ramped up very well following the temporary shutdown of these activities due to COVID-19 during April and May.  We are getting the planned tonnes to the leach pads despite the heavy rains experienced recently in Mexico.  These rains have the potential to dilute the solution on the leach pads and slow third quarter recoveries, but any delay in recoveries is expected to be temporary and all operations are functioning to plan.”