Argonaut Gold Announces First Quarter 2012 Revenue of $24.4 Million and Net Income of $7.3 Million Basic Earnings Per Share of $0.08
Basic Earnings Per Share of $0.08
TORONTO, ONTARIO -- (Marketwire) -- 05/15/12 -- Argonaut Gold Inc. (TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut") is pleased to announce its financial and operating results for the first quarter ended March 31, 2012. All dollar amounts are expressed in United States dollars unless otherwise specified.
FIRST QUARTER 2012 & RECENT HIGHLIGHTS
Financials
-- Revenue of $24.4 million.
-- Net income of $7.3 million, $0.08 per basic share.
-- Cash flows from operating activities before changes in non-cash
operating working capital and other items of $8.1 million.
-- Cash on hand was $17.8 million at March 31, 2012.
Gold Production and Cost
-- Ounces loaded to pads: 44,169 gold ounces and 861,644 silver ounces.
-- El Castillo: 35,283 ounces (up 25% from Q1 2011); La Colorada: 8,886
gold ounces and 861,644 silver ounces
-- Production of 20,884 gold ounces in the first quarter of 2012.
-- El Castillo: 17,799 gold ounces
-- La Colorada: 3,085 gold ounces and 17,182 silver ounces
-- Cash cost per gold ounce sold - $639.
Operational Improvements:
-- Cash expenditures of $12.3 million on mineral properties, plant and
equipment.
-- The Company's El Castillo mining contractor expanded the mining fleet to
18 trucks (100 tonne capacity).
-- Leach pad 7A west side pad construction initiated at El Castillo and
will be commissioned in the second quarter.
Exploration:
-- El Castillo - Three additional drill core holes were sent for testing
during the first quarter of 2012.
-- La Colorada - 14,860 metres from 54 drill holes were completed during
the first quarter. Three drills continue work on a planned 35,000 metre
drill program.
-- San Antonio - Completed 3,285 metres from 14 drill holes during the
first quarter.
This press release should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the first quarter ended March 31, 2012 and associated management's discussion and analysis ("MD&A") which are available from the Company's website, www.argonautgoldinc.com, in the "Investors" section under "Financial Filings", and under the Company's profile on SEDAR at www.sedar.com.
Three months ended March 31,
Financials 2012 2011 Change
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Revenue $24,353,000 $25,676,000 +5%
Net income $7,260,000 $5,930,000 +28%
Income per share - basic $0.08 $0.07 +14%
Income per share - diluted $0.07 $0.07 -
Cash flow from operating activities
before changes in non-cash operating
working capital and other items $8,141,000 $9,339,000 -8%
Gold ounces sold 14,498 18,461 -22%
Gold ounces produced 20,884 18,014 +16%
Average realized gold sales price $1,677 $1,388 +21%
Cash cost per gold ounce sold $639 $590 +8%
Financial Results - First Quarter 2012
During the first quarter of 2012, revenue was $24.4 million from gold sales of 14,498 ounces compared to $25.7 million from sales of 18,461 ounces in the first quarter of 2011. Cost of sales was $12.1 million for the quarter compared to $14.6 million for the first quarter of 2011. Cash cost per gold ounce sold was $639 compared to $590 in the same period of 2011. (Cash cost per gold ounce sold is a non-IFRS measure, see note below).
During the first quarter of 2012, gross profit was $12.3 million compared to $11.0 million gross profit in the first quarter of 2011. During the quarter, profit from operations was $9.7 million compared to $9.1 million for 2011. Net income for the quarter was $7.3 million or $0.08 per basic share versus $5.9 million or $0.07 per basic share in 2011.
Cash on hand decreased from $34.9 million at December 31, 2011 to $17.8 million. Capital expenditures in the first quarter were $12.3 million primarily as a result of expanding operations at the El Castillo and La Colorada mines. The 2012 capital expenditures and exploration programs for Argonaut Gold includes $38-$48 million at El Castillo, La Colorada and San Antonio which includes pre-production stripping at La Colorada of approximately $6 million. Cash flow from operations before changes in non-cash operating working capital and other items was $8.1 million during the quarter, compared to $9.3 million for the first quarter of 2011. The cash flow used in operating activities in the quarter was $5.3 million after taking into account the buildup of inventory and other working capital.
CEO Commentary
Mr. Pete Dougherty, Argonaut's President and CEO states: "The Company continues to benefit from the gold production and cash generation at El Castillo, which has enabled us to fund construction of the La Colorada mine. The developments at La Colorada since acquiring the project have been quite impressive. The mine has been put back into production less than one year after finalizing the acquisition. The startup of gold production at La Colorada will provide growth to the Company's production profile in 2012 through reprocessing the previous run-of-mine material. Expansion of the processing facility continues with final construction taking place on the desorption and recovery plant. 2012 is an important step in growth for the La Colorada mine. While much has been accomplished, there is much more work to be done with important milestones expected to be achieved in the second and third quarters."
Three months ended March
31,
El Castillo Operating Statistics 2012 2011 Change
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Mining
Tonnes ore 3,050,527 2,538,264 +20%
Tonnes waste 2,914,397 2,221,194 +31%
Tonnes mined 5,964,924 4,759,458 +25%
Waste/ore ratio 0.96 0.88 +9%
Heap Leach Pad
Direct ore tonnes to pad 2,183,893 1,813,011 +21%
Crushed ore tonnes to pad 838,378 729,104 +15%
Production
Gold grade g/t(1) 0.36 0.35 +4%
Gold ounces loaded to pad 35,283 28,225 +25%
Gold ounces produced 17,799 18,014 -1%
Gold ounces sold 14,498 18,461 -22%
Cash cost per gold ounce sold $639 $590 -8%
(1) "g/t" is grams per tonne
El Castillo Summary of Production Results
Total tonnes mined increased by 25% for the first quarter 2012 over first quarter 2011. The total ounces loaded to the pad were 35,283 in the first quarter of 2012; this represents a 25% increase over the first quarter of 2011.
The strip ratio of waste to ore was 0.96 compared to a strip ratio of 0.88 in the first quarter of 2011.
2012 guidance at El Castillo is for 75,000 to 80,000 ounces at a cash cost between $625 and $650 per gold ounce.
Three months ended,
La Colorada Operating Statistics 3/31/2012
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Mining
Total tonnes moved from ROM pads 678,310
Heap Leach Pad
Crushed ore tonnes to pad 680,396
Production
Gold grade (g/t)(1) 0.41
Silver grade (g/t)(1) 39.39
Gold ounces loaded to pad 8,886
Silver ounces loaded to pad 861,644
Gold ounces produced 3,085
Silver ounces produced 17,182
Gold equivalent ounces produced(2) 3,415
Gold ounces sold -
Silver ounces sold -
(1) "g/t" is grams per tonne
(2) Applied ratio of 52 ounces of silver per 1 ounce of
gold
La Colorada Summary of Production Results
Non-commercial mining at La Colorada began in the first quarter of 2012. Initially, production generated at La Colorada will come from reprocessing of run-of-mine ("ROM") material on site. 2012 guidance at La Colorada is for production of 13,000-17,000 ounces at a cash cost between $625 and $650 per ounce.
There was no inventory at La Colorada prior to the first quarter of 2012.
Looking Forward - 2012:
The Company plans on investing between $38 million and $48 million on capital expenditures and exploration initiatives in 2012. These expenditures are expected to include the following:
-- $26-34 million of capital expenditure investments
-- El Castillo - Capital expenditures are primarily for expanding West
heap leach pad capacity and operational improvements including a
conveying and stacking system.
-- La Colorada - Capital expenditures are primarily for new
infrastructure including crushing, screening and conveying, heap
leach pad construction, a gold recovery plant and refinery, and
other infrastructure. Additional expenditures are expected to
include land acquisition, and permitting.
-- San Antonio - Capital expenditures are allocated for engineering and
environmental studies, land and water rights purchases, permitting
for the project and infrastructure improvements.
-- $5-6 million for La Colorada pre-production stripping costs
-- $7-8 million exploration program
-- El Castillo - 1,400 metre core drilling program to collect
mineralized sulphide ore for further metallurgical test work.
-- La Colorada - 35,000 metre drill program to expand resource areas
and test multiple exploration targets within the Company's land
position is in progress. Planned drilling on mine dumps and
stockpiles was completed during the quarter. The main resource
targets for 2012 are El Creston and Veta Madre.
-- San Antonio - 10,500 metre drill program to test multiple
exploration targets and complete condemnation drilling in areas of
planned processing facilities is ongoing.
Non-IFRS Measures
The Company included the non-IFRS measure "Cash 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 cost of sales less silver sales divided by gold ounces sold. The Company believes that this measure provides investors with an improved ability 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 MD&A for full disclosure on non-IFRS measures.
Technical Information and Mineral Properties Reports
The technical information contained in this document has been prepared under supervision of, and reviewed and approved by Mr. Thomas H. Burkhart, Argonaut's Vice President of Exploration, and a qualified person as defined by National Instrument 43-101 ("NI 43-101"). For further information on the Company's properties please see the reports as listed below on the Company's website or on www.sedar.com:
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El Castillo Mine NI 43-101 Technical Report on Resources and Reserves,
Argonaut Gold Inc., El Castillo Mine, Durango State,
Mexico dated November 6, 2010
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La Colorada Property NI 43-101 Preliminary Economic Assessment La Colorada
Project, Sonora, Mexico dated December 30, 2011
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San Antonio Gold Technical Report and Mineral Resource Estimate on the
Project San Antonio Gold Project, Baja California Sur, Mexico
dated June 30, 2011
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La Fortuna Property La Fortuna, Durango, Mexico, Technical Report dated
October 21, 2008
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About Argonaut Gold
Argonaut is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production-stage El Castillo Mine in the State of Durango, Mexico, the La Colorada Mine in the State of Sonora, Mexico, the advanced exploration stage San Antonio project in the State of Baja California Sur, Mexico, and several exploration stage projects, all of which are located in Mexico.
Creating Value Beyond Gold
Cautionary Note Regarding Forward-looking Statements
This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management's current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release.
Contacts:
Argonaut Gold Inc.
Nichole Cowles
Investor Relations Manager
(775) 284-4422 x 101
nichole.cowles@argonautgoldinc.com
www.argonautgoldinc.com
