A YEAR OF
GROWTH & TRANSITION
2019 ANNUAL & SUSTAINABILITY REPORT
TSX : AR
Argonaut Gold (the “Company”, “Argonaut Gold” or “Argonaut”) 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 and the La Colorada mine in Sonora, Mexico. Advanced
exploration projects include the Cerro del Gallo project in Guanajuato, Mexico and the
Magino project in Ontario, Canada. The Company continues to hold the San Antonio
advanced exploration project in Baja California Sur, Mexico and several exploration
stage projects, all of which are located in North America.
CONTENTS
2019 Highlights
Operating, Financial & Development
Letter from President & CEO
Our Vision & Strategy
2019 Targets
Social Responsibility & Sustainability
Our People
Our Community
Our Health & Safety
Our Environment
Our Assets
Managing Risks
Leadership & Governance
Mineral Reserves & Mineral Resources
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4
8
10
12
14
16
20
22
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34
36
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Argonaut Gold Inc.
2019 HIGHLIGHTS
• We set new records for quarterly (54,169 gold equivalent
ounces ‘GEOs’1) and annual (186,615 GEOs1) production.
• We increased Mineral Reserves by 48% and Measured and
Indicated Mineral Resources, inclusive of Mineral Reserves,
by 36%.
• We continued to de-risk our development projects, while
adding $23.4M in cash to the balance sheet.
FINANCIAL
REVENUE
$268.9M
increase from
$196.1M for 2018
CASH
$38.8M
increase from
$23.4M for 2018
ADJUSTED ALL-IN SUSTAINING COST2
per gold
ounce sold
$1,181
ADJUSTED CASH COSTS2
$923
per gold
ounce sold
OPERATING
2019 PRODUCTION
186,615 GEOs1
EL CASTILLO COMPLEX
12%
increase in full year production
to 131,277 GEOs1
EL CASTILLO
38% increase in full year production
to 66,509 GEOs1
SAN AGUSTIN
Crusher expansion project completed
under budget.
LA COLORADA
15% increase in full year production
to 55,338 GEOs1
2
2019 Annual & Sustainability Report
Highlights
DEVELOPMENT
CERRO DEL GALLO
Completed a positive pre-feasibility study and published
maiden Mineral Reserve and Mineral Resource estimate:
consolidated Mineral Reserves
48% increase to Company’s
36% increase to Company’s
Measured & Indicated Mineral Resources
inclusive of Mineral Reserves
MINERAL RESOURCES3
10.4Moz. Au
MINERAL RESERVES3
4.8Moz. Au
MAGINO
Completed Federal and Provincial Environmental
Assessment processes with receipt of a positive
Decision Statement and Statement of Completion.
Initiated exploration at depth and
confirmed high-grade geological
continuity below the planned pit
and identified multiple high-grade
structures hosting multiple veins.
Signed Community
Agreements with
Batchewana First Nation
and Michipicoten
First Nation.
MAGINO
RENO
HEAD
OFFICE
TORONTO
OFFICE
PRODUCING MINE
ADVANCED EXPLORATION
PROJECT
LA COLORADA
SAN ANTONIO
EL CASTILLO COMPLEX
CERRO DEL GALLO
1 GEOs (gold equivalent ounces) are based on a conversion ratio of 75:1 for silver to gold ounces for 2019. The silver to gold conversion ratio is based on the three-year trailing average silver to gold ratio.
2 Please refer to section “Non-IFRS Measures” on page 40 for a discussion of these non-IFRS measures.
3 Please refer to section “Mineral Resource Notes & Disclosures” on page 39.
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Argonaut Gold Inc.
LETTER FROM THE
PRESIDENT & CEO
PETE DOUGHERTY, PRESIDENT AND CHIEF EXECUTIVE OFFICER
2019 was a year of growth, profitability and
optimization, with a focus on transformation.
We continued to grow our production - achieving record
annual production in 2019, producing nearly 187,000
GEOs1, which represents a 13% increase year-over-year,
and grew our cash position by over $23 million. While
we fell short of our 2019 guidance of 200,000 GEOs of
production, which was a target that we set for ourselves
back in 2017, over the last three years we have grown
our production by 53%.
As we move into a transition period, our strategy is to
increase our profitability, while lowering unit costs and
continuing to advance our strong development pipeline.
Pete Dougherty, President & CEO,
at the Magino project core shack in
Dubreuilville, Ontario Canada.
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2019 Annual & Sustainability Report
Highlights
During 2019, we continued to advance and de-risk our development projects. The completion of the Cerro del
Gallo pre-feasibility study increased our consolidated Mineral Reserves by 48% and our Measured and Indicated
Resources (inclusive of Reserves) by 36%. It is also important to mention that we received a positive decision for
both our Federal and Provincial Environmental Assessment for our Magino project. These achievements put us in
a stronger position to further the advancement of our development pipeline and unlocked value of these projects
in the future.
We experienced challenges in operations, and it showed in our production shortfall. We experienced water issues
at all mines: inadequate water supply at San Agustin during the second and third quarters that led to lower
solution flow rates and water in the pits at both El Castillo and La Colorada during the fourth quarter that slowed
mining rates, which led to suboptimal crusher utilization and fewer tonnes to the leach pads. Since then, we have
successfully drilled a new water well at San Agustin to provide an adequate water supply, improved our pit de-
watering practices and have experienced improvement so far in 2020. A key focus of the entire organization in
2020 is lowering the unit cost per tonne processed and maximizing profitability and cash flow, which will put us in
a stronger position as we transition the company to a lower-cost producer.
In terms of our safety record, we continued to improve, reducing the accident rate by 21% this year versus
2018, and also reached one million work hours without lost time accidents at El Castillo. We did experience
adversity at La Colorada where our mining contractor, after several years of earning a safety record above world
standards, suffered a loss of two members as a result of an accident. The safety and health of our workforce is
our number one priority and because of this, we continually work to improve our safety protocol and training. We
also maintained our recognition as an Environmentally Socially Responsible company in Mexico for the eighth
consecutive year. Our operations teams have worked to reduce our carbon footprint at operations by: reducing
haul distances, improving our recycling of materials and reducing waste disposal and adapting alternative energy
sources, such as solar panel use.
1 GEOs (gold equivalent ounces) are based on a conversion ratio of 75:1 for silver to gold ounces for 2019. The silver to gold conversion ratio is based on the three-year trailing average silver to gold ratio.
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Argonaut Gold Inc.
We continued to engage, consult and support our stakeholders in our communities. At Magino we signed
two additional indigenous agreements this year, completing a Community Benefits Agreement with both
Batchewana First Nation and Michipicoten First Nation. In Mexico, we had a record-breaking year in
terms of the number of positive actions executed by our team. The most impactful actions included: the
improvement of roads and maintenance of water wells in local communities, a home rehabilitation program
in La Colorada that rebuilt homes for members of the community with a high level of need, initiated
cleaning programs that included the clean-up of the Cerro del Gallo river bed and the numerous health,
education and cultural events and programs.
As we navigate challenging markets in 2020, we are committed to continuing to add cash to our balance
sheet to put us in a solid position to develop our next mine. In 2019, we laid the framework for creating a
sustainable business - by adding cash to the balance sheet, continuing to de-risk our development projects
and commencing an exploration program at Magino specifically targeting high-grade mineralization at
depth. Together, these three factors are the key to our sustainable business model: Discovery, Development
and Operations.
I am grateful for the continued hard work, initiative and resilience of the entire Argonaut team, the impactful
relationships we continue to nurture within our communities and the continued support of our shareholders.
I look forward to a bright future and moving forward together with a shared vision.
Pete Dougherty
President & CEO
Pete Dougherty, President & CEO,
at the Federal event for the Positive
Decision on the Environmental
Assessment for the Magino project.
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2019 Annual & Sustainability Report
Highlights
“Our focus during 2020 will be on adding cash to the balance
sheet while continuing to de-risk and advance our development
assets. Achieving these two key activities will put Argonaut in a solid
position to execute on our strategy of transforming from a high-cost,
junior producer to a lower-cost, intermediate producer.”
CREATING A SUSTAINABLE BUSINESS
CASH BALANCE1
OPERATIONS
MARKET VALUE1
$215M
+
+
=
$39M
ADDING
FREE CASH FLOW
$760M
DEVELOPMENT
PROJECTS2
@ $1,500 GOLD
S
N
ATI O
R
E
P
O
D
I
S
C
O
V
E
R
Y
D
E
VELO P M E
N T
1 At December 31, 2019.
2 Based on the assumptions and parameters as set out in the Magino Feasibility Study dated December 21, 2017 and the Cerro del Gallo Pre-Feasibility Study dated January 31, 2020.
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Argonaut Gold Inc.
OUR
VISION & STRATEGY
2019 FOCUS
In 2019, we continued to focus on building our balance sheet and de-risking our development projects,
and we achieved that by:
• Increasing cash by over $23M cash;
• Reducing our debt, and closing the year with $10M drawn on our corporate revolver;
• Receiving a positive Decision Statement and a positive Statement of Completion for the
Environmental Assessment of our Magino project in Ontario, Canada from the Federal and
Provincial governments, respectively;
• Completing a positive Pre-Feasibility Study for our Cerro del Gallo project in Guanajuato, Mexico;
and
• Completing two Community Benefits Agreements - Batchewana First Nation and Michipicoten
First Nation. This completes five indigenous agreements for our Magino project.
For the past three years, a key focus of the Company was to increase production by approximately 65% or
to over 200,000 GEOs. We fell short of this target in 2019 with a record annual production of 186,615 gold
equivalent ounces. We are continuously committed to optimizing our operations to maximize profitability
and cash flow through cost reduction initiatives. That’s why we are not chasing 200,000 GEOs for the sake
of producing more ounces. We identified areas where we could increase profitability, particularly at our El
Castillo mine, by eliminating crushing of ore and having our haul tracks take the ore directly from the pit to
the leach pads. While by eliminating crushing, we yield a lower metallurgical recovery and therefore fewer
ounces, we save more than $2.00 per tonne of ore processed by eliminating the costs associated with
hauling ore to the crushers, power, maintenance and G&A costs associated with running the crushers and
conveying costs to take the crushed ore to the leach pads. While this yields fewer ounces, it lowers our
unit cost and overall, we expect to improve profits with this change. Harvesting as much cash as we can
from our current operating assets is very important so that we can focus on our transformation strategy.
LOOKING AHEAD - OUR TRANSFORMATION STRATEGY
In the second half of 2019, we focused on analyzing our operations, looking at cost efficiencies and taking
the right steps towards our strategy to reduce unit costs. We made the decision to enter into a zero-cost
collar gold price protection program on 145,500 total ounces to extend the mine life at El Castillo. El Castillo
is our highest-cost, shortest life operating mine and we wanted to lock in cash flows while maintaining
some upward exposure to gold prices so that we can be in a better position to fund our development
pipeline. The monthly gold collars have a floor price of $1,450 per gold ounce and a weighted average
ceiling price of $1,707 per gold ounce from the fourth quarter of 2019 through the second quarter of 2022.
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2019 Annual & Sustainability Report
Highlights
During the year, we also optimized overburden haul distances and made changes to our processing
parameters. With these adjustments in place, we are on track to an even more profitable 2020 and are
focused on our transformation strategy to become a lower-cost, intermediate producer through sustainable
growth and replacement of ounces.
OUR TRANSFORMATION STRATEGY
Our strategy for the next few years is to transition our
production and cost profile while minimizing equity
dilution, through the sustainable growth and replacement
of ounces.
While continuing to focus on building our balance sheet
and de-risking our development assets, our strategy for
maximizing our cost efficiencies and profitability will put
Argonaut in a solid position to transform from a high-cost,
junior producer, to a lower-cost, intermediate producer of
between 300k to 500k ounces per year.
“A key focus of the entire
organization in 2020 is
lowering the unit cost
per tonne processed and
maximizing profitability
and cash flow.”
Pete Dougherty, President & CEO
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Argonaut Gold Inc.
2019
TARGETS
In 2019, we increased full-year production at all three mines, which resulted in record annual production
for the Company. Production of approximately 187,000 GEOs, while a record for the Company, fell short
of our target of over 200,000 GEOs. Operational challenges affected both production and costs during
2019. Lower than anticipated production was primarily due to water issues at all mines: inadequate water
supply at San Agustin during the second and third quarters and water in the pits at both El Castillo and
La Colorada during the fourth quarter that slowed mining rates. Higher adjusted cash cost per gold
ounce sold was primarily due to an increase in adjusted cash cost per gold ounce sold at the San Agustin
mine due to a higher waste to ore ratio and lower gold grades. Higher adjusted AISC per gold ounce
sold is primarily related to higher stripping and crushing, conveying and mining equipment costs at San
Agustin. Our capital spend was at the lower range of our guidance of between $50M and $60M at $51.8M,
with $40.8M spent on our operations, and $11.0M spent on our advancing development projects and
exploration.
2019 TARGETS
WHAT WE
DELIVERED
WHAT WENT
WRONG
HOW WE FIXED IT
FOR THE FUTURE
Production (GEOs)1
Consolidated:
200k - 215k
Actual Consolidated:
186,615 GEOs
• Insufficient solution for flow
rates at San Agustin
• Leach pad inventory build
• Water in pits at El Castillo
& La Colorada
• Drilled new water well
• Reduced leach pad
lift heights
• Changed pit de-watering
practices
Cash costs (per oz./Au)2
Consolidated:
$775 - $875
Actual Adjusted Cash costs:
$923
• Fewer ounces produced
• Higher waste to ore ratio
& lower gold grades at
San Agustin
AISC (per oz./Au)2
Consolidated:
$875 - $975
Capital (millions)3
Consolidated:
$50 - $60M
Actual Adjusted AISC:
$1,181
• Fewer ounces produced
• Higher deferred stripping
& crushing, conveying &
mining equipment costs
Actual Capital Spend:
$51.8M
• Capital spending fell
within the guidance
• N/A
• Better mine planning to meet
ounce production targets
• Process run-of-mine at El Castillo
• Optimize overburden
haul distances
• Changes in processing parameters
• Better mine planning to meet
ounce production targets
1 GEOs (gold equivalent ounces) are based on a conversion ratio of 75:1 for silver to gold ounces for 2019. The silver to gold conversion ratio is based on the three-year trailing average silver to gold ratio.
2 Please refer to section “Non-IFRS Measures” on page 40 for a discussion of these non-IFRS measures.
3 Assumes a MXN:USD exchange rate of 18.5:1.
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2019 Annual & Sustainability Report
Highlights
A PROFITABLE 2020
While we expect to produce slightly less ounces in 2020
than we did in 2019, we expect it will lead to higher
profitability and stronger cash flow.
By optimizing our operations and switching to run-of-
mine operations at El Castillo, we are able to reduce unit
costs at the El Castillo Complex. The 2020 mine plan is
expected to yield a unit cost savings of more than $2.00
per tonne processed at El Castillo and a unit cost savings
of more than $1.00 per tonne processed at San Agustin.
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Argonaut Gold Inc.
SOCIAL RESPONSIBILILTY
& SUSTAINABILITY
We continue to create value in the communities
surrounding our assets.
Our values create a framework for building a
sustainable legacy for:
Our People, Our Communities,
Our Health & Safety and Our Environment
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2019 Annual & Sustainability Report
Social Responsibility
“Argonaut’s CSR and community efforts have been focused on:
Improving community relations, communications and
promoting a mutual respectful interaction;
Increasing interaction and communication with
communities around the new projects; and
Increasing communication with Government officials in
support of approval of new projects’ permits.”
Jesús Gutiérrez Bastida
Vice President Corporate Affairs & Sustainability
“Argonaut Gold is a
pride for Sonora.”
Lic. Claudia Artemisa Pavlovich Arellano
Governor of the State of Sonora
This photo was taken on International
Women’s Day at our La Colorada mine in
Sonora, Mexico. We celebrated the day
with the Governor and unveiled our pink
CAT haul truck ‘Rosita’, which still remains
on our contractor’s fleet.
Argonaut Gold Inc.
OUR PEOPLE
HUMAN CAPITAL
2019 was a year of transformation for our team. We optimized operations by allocating the right
resources and highlighting the strengths of our best asset - Argonaut’s human capital. In an effort
to best maximize our human capital, we initiated changes within our team structure, from the top
down, that were more aligned with our Company’s transformation strategy for the next few years. As
we advanced our development projects, we began to build our Magino team in Ontario, Canada,
strengthening our geology team as we continue to focus on our exploration programs, and also
allocating team resources to advance the project development.
11%
of our workforce
are women
On March 8, 2019, Argonaut celebrated
International Women’s Day and marked
the occasion at our La Colorada mine
with a visit from the Governor of Sonora,
Claudia Pavlovich. Together, we signed a
collaboration with the Sonoran Institute of
Women (‘Instituto Sonorense de la Mujer’),
that supports the inclusion and training
of women in mining. Argonaut continues
to support efforts of diversity, and it is
important to note that the past three
leaders of Women In Mining Mexico have
been Argonaut employees.
TEAM MEMBERS
including contractors
compared to 1,447 in 2018
1,497
3.5% increase from 2018
653 are part of Argonaut subsidiaries
844 are contractors
are unionized
64% of Mexico’s Argonaut team
5%
increase in unionized
employees from 2018
56%
team members are from
neighbouring communities
“Most geologists are required to travel long
distances for work but I’m lucky to have made
my life where my work is, in the beautiful and
majestic Superior Province of Ontario!”
Sarah Davis
Geologist at Magino Project, Ontario Canada
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2019 Annual & Sustainability Report
Social Responsibility
INVESTING IN OUR TEAM
Training is a key part of team optimization, and
we completed 25,105 hours of training in 2019.
We continued to provide training and adequate
resources to support to our team, including workplace
safety, security, environmental and also introduced
workshops that discussed mental wellness, workplace
harassment and gender equality.
Training & Workshops included:
• First aid
• Environmental education
• Industrial security
• Defensive driving
• Evacuation
• Chemical & cyanide handling
• Stress management
• Workplace Harassment
INVESTING IN OUR COMMUNITIES
An investment in our communities also includes
employing team members, contractors and service
providers from the local and surrounding areas. With
56% of our workforce coming from neighbouring
communities, we are adding value to the economy.
We also promote and value local entrepreneurship
within our communities, empowering individuals
and small businesses. In 2019, we continued offering
entrepreneurial workshops and continued to support
local businesses as well.
Examples of this include: at Magino, we
work with Joan Tangie, who is a successful,
local Missanabie Cree First Nations
entrepreneur with a cleaning business
‘Cleaning By Tangeeze’, which she runs in
the Dubreuilville area.
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“We are happy to have the
opportunity to work with the
Missanabie Cree community
as an integral part of the
Argonaut ranks. We are lucky
to have Joan keeping our
work spaces clean and
organized!”
- quoted by a member of our
Magino geology team
Joan Tangie
Local entrepreneur &
Missanabie Cree First Nation
Dubreuilville, Ontario
Argonaut Gold Inc.
OUR COMMUNITIES
OUR NEIGHBOURS
2019 was a record breaking year for achieving our goals for the communities surrounding our operations
and projects. We participated in numerous joint efforts and collaborations to bring support to education,
health, culture, infrastructure and sports to as many communities as possible. In total, Argonaut Gold
carried out over 38,000 positive social actions that benefitted 40 communities in four different states in
Mexico. Key events included our 7th Health Fair in La Colorada, a collaboration with the Crescendo Music
Fund and international artist, Jorge Viladoms, where together we donated musical instruments to children
in Durango and our 3rd La Colorada Race through the mine. In Ontario, Canada, we were proud to support
the Dubreuilville Magpie Fish Derby, Métis Nation of Ontario Annual General Meeting, the Missanabie Cree
First Nation annual gathering as well as the Michipcoten First Nation annual youth and elders forum. We
also continued to progress important community indigenous agreements with the signing of Community
Benefit Agreements with Batchewana First Nation and Michipicoten First Nation.
FOCUS ON EDUCATION
to 760 individual scholars
3,894 scholarships awarded
4,042
school breakfasts
provided in Durango
school sites that received
support and improvements
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38 students provided transportation
to higher education institutions
in the nearest city
“Education is the best investment we
can make in society, making a team,
company, civil society and government
for our children and young people.
I recognize the commitment of
Argonaut Gold to work hard to
strengthen their communities.”
Maestro José Victor Guerrero González
Secretary of Education and Culture of the
Government of the State of Sonora
‘GAMBUZOS EARTH SCIENCES’ WORKSHOP
In 2019, we hosted the Gambuzos Earth Sciences
Workshop in Baja California Sur, Mexico in communities
close to our San Antonio project. The workshop,
attended by 4,789 participants to date, is a series of
hands-on events for children, youth and their families,
to educate and bring the community closer to mining
in a fun and transparent way. The program continues
to be well-received and deemed a success by the local
community. We have interest in bringing this program
to our other development project community, Cerro
del Gallo, in Guanajuato, Mexico.
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2019 Annual & Sustainability Report
Social Responsibility
A HEALTHY COMMUNITY,
IS A THRIVING COMMUNITY
The health and well-being of our community is just
as important as the health of our team. Surrounding
communities often lack access to basic health services
and workshops, and at Argonaut we work year round
to contribute where we can.
From providing free medical services and medication,
to providing access to water and support for mental
health, this year we are proud to have made an
impact in the following ways:
• Provided 1,848 free medical consultations
in 15 different categories including
optometry, dental and pediatrics;
• Provided and delivered 2,486 free
medication with prescriptions;
• Rehabilitated and equipped three ambulances;
• Provided 4,610 food pantries for the
nutritional support of 553 families
surrounding our projects;
• Support for access to water for 600 people;
• Provided 50 families with winter shelter in
areas surrounding our projects; and
• Provided 700 hours of emotional support
workshops, predominantly for women.
In 2019, we hosted our 7th Health Fair at La Colorada
in collaboration with Teletón México - Centro de
Rehabilitación e Inclusión Infantil Teletón (“CRIT”)
Sonora. At this event we were able to provide health
services to over 100 members of the community,
including pets! 50 doctors and health providers
offered 27 different services
including physical
therapy, grooming and mental health counseling.
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“GRATITUDE is the memory of the heart.
For CRIT Sonora the alliance we have built
with Argonaut Gold has been of great
satisfaction, since it has allowed us to reach
the community of La Colorada, Sonora -
offering workshops, providing closer access
to health services and above all, it has given
us the opportunity to continue working for a
better and more inclusive Mexico.
Thank you Argonaut Gold for your effort,
dedication and commitment.”
Lic. Marisol Lomelín Pacheco
General Director, CRIT Sonora, Mexico
(Centro de Rehabilitación e Inclusión Infantil Teletón)
Argonaut Gold Inc.
IMPORTANCE OF INFRASTRUCTURE
Building and leaving a legacy is important to creating a sustainable future. The impact of proper infrastructure
is key to ensuring communities function better and thrive. This includes roads, agricultural support and
support for entrepreneurial ventures. In 2019, we made key contributions including:
• The rehabilitation of 128 total kilometres of 21 different roads in Mexico;
• Built and equipped three new water wells surrounding our Mexico projects;
• Rehabilitated 18 homes in La Colorada, Sonora for the elderly and members of the community
with a high level of need;
• Produced, provided and delivered 2,500 litres of organic fertilizer to 80 local farmers in
Baja California Sur, Mexico;
• Providing funding to local initiatives including the Lochalsh road improvement helping local cottage
owners and resource users to continue access to recreational areas east of the Magino Project;
• Provided more than 400 hours of training workshops for various activities and skills; and
• Opened a Community House at La Colorada, which is open for the community to use.
COMMUNITY CULTURE
Cultural enrichment is the heart of any community - from the arts to sports, cultural activities bring our
neighbours, surrounding communities and team together. This year was a record-breaking year for
participation with 15,324 people participating in events that Argonaut organized and hosted in the
communities where we operate, including religious celebrations, holiday celebrations (Children’s Day,
Mother’s Day, Christmas), cultural workshops and sporting events. Our third race at La Colorada was our
most attended race since our inaugural race in 2017, with 900 participants. In addition to the increase
in the number of runners, volunteers and spectators, this year included participation from local vendors,
which not only enhances the spotlight on local businesses, but is also a testament to the support our
neighbours have for this type of event and the buzz it creates for their community.
PARTICIPATION BY THE NUMBERS
6,000 youth and parents that participated in
cultural tours through mining areas in
San Antonio
people went on hiking routes built in
San Antonio
1,300
1,045 youth that participated in 30 site tours at
La Colorada and learned about modern &
responsible mining
Colorada Race through the mine
900 people participated in the 3rd La
100 musical instruments provided to the
Crescendo Music Fund workshop in
Durango, Mexico
12 amateur sports teams were sponsored
with equipment & fuel
2019 Annual & Sustainability Report
Social Responsibility
19
Argonaut Gold Inc.
OUR HEALTH
& SAFETY
The health and safety of our people is our top priority at Argonaut Gold, which is why we continue to
monitor and minimize any indicators of potential incidents, disabling accidents and time lost due to
injuries, as well as increase our preventive work with appropriate training and providing health resources to
our team. In 2019, we improved on all of our general safety indicators at all three operations and reached
3,618,653 work hours, a 6% increase from 2018. This year we almost reached a milestone of four million
work hours without accidents at La Colorada, and despite adversities we continued to improve our safety
record. “The health and safety of our workforce remains our number one priority,” says Pete Dougherty,
President & CEO.
IMPROVING OUR SAFETY
21%
55%
19%
11%
reduction in accidents
at operations vs. 2018
less lost time due to
accidents vs. 2018
reduction in incidents
at operations vs. 2018
reduction in accidents
overall vs. 2018
6,771 hours
dedicated to training on
health and safety
In addition to the security and health services
provided to our team members, we also offered
health workshops. In 2019 we:
• Hosted four open health days;
• Provided 266 workers with free medical
appointments, clinical analysis and
vaccinations against influenza and tetanus;
and
• Provided 16 different health services
including vaccinations, optometry,
spirometry, nutrition and dentistry.
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2019 Annual & Sustainability Report
Social Responsibility
“YOUR SAFETY COMES FIRST”
This statement on one of our fresh water
tanks at our El Castillo Complex in Durango,
Mexico instills our number one value -
SAFETY.
In 2019, we are proud to announce that the
El Castillo mine reached: 1 MILLION work
hours without lost time accidents.
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Argonaut Gold Inc.
OUR ENVIRONMENT
& GOOD PRACTICES
Argonaut Gold confirms its commitment to the environment with continued best practices. This includes the
recycling of all the materials used in all operations, the adequate confinement of all hazardous resources,
the use of renewable energy, the preservation of species of flora and fauna, monitoring of air quality and
the generation of new alternatives to help capture water in the aquifers of our neighbours.
At La Colorada, we participated in the first Environmental Fair in Hermosillo with Proyecto Puente at Parque
La Ruina, where the community was able to meet our team and discuss our environmental actions and
sustainability. At Magino, we continued to support initiatives that focus on environmental education. We
were proud sponsors of the 2019 Mining and the Environment International Conference held in Sudbury
that saw a student sponsorship provided to assist with further reclamation research in the mining industry.
REDUCING OUR FOOTPRINT
In 2019, we increased our efforts for recycling
and disposal of materials and hazardous
waste. This included:
Proud sponsor of:
404k
423
litres of recycled oil
was available;
tonnes of
recycled metal;
120
tonnes of
recycled wood;
tonnes of
plastic; and
59
tonne of
batteries
1
ALTERNATIVE RESOURCES
In 2019, we installed and used 32 solar
panels for the clean generation of alternative
energy in remote areas of our operations
in Mexico. We continue to explore new
innovations on how we can reduce the use
of energy and costs at our operations.
22
2019 Annual & Sustainability Report
Social Responsibility
POSITIVE IMPACTS
During 2019, we offered 664 workshops and talks on
environmental care, promoting best practices among
our team. As a result, our team was able to achieve
the following this year:
• Rescued and successfully transplanted 9,580
specimens of flora. Among the species were
mosques, yucas, biznagas, maguey, ocotiyo,
viejito, siviri, pitahaya and white stick;
• Rescued and relocated 50 wildlife specimens
from our mines, including foxes, skunks,
hares, snakes, coyotes and turtles;
• Built 32 filter dams to increase the recharge in
aquifers;
• Collected 495,332 cubic metres of fertile soil,
for later use in remediation and reforestation;
• Performed 122 air quality monitoring
(PM10) procedures within the Official Mexican
Standard;
• Continued cleaning programs including the
clean-up of a cemetery in La Colorada;
• Initiated a program for cleaning of the river
bed in Guanajuato; and
• Contributed $1,302,772 pesos to the
Mexican Forest Fund.
23
A NEW NURSERY AT SAN AGUSTIN
On Earth Day in 2019 we had the inauguration of our
new on-site plant nursery at our San Agustin mine in
Durango, Mexico. Our team members participated in
planting seedlings which will be grown and used in
our planting campaigns in the areas surrounding the
mine including schools and parks.
We also have a tree nursery at our La Colorada mine,
“Vivero Forestal La Pitallita.”
Argonaut Gold Inc.
OUR ASSETS
A strong development pipeline while
generating cash flow though our operations.u
Development
Magino Ontario, Canada
Cerro del Gallo Guanajuato, Mexico
San Antonio Baja California Sur, Mexico
Operations
El Castillo Complex Durango, Mexico
La Colorada Sonora, Mexico
24
2019 Annual & Sustainability Report Our Assets
25
Argonaut Gold Inc.
PATH TO THE NEXT
GOLD MINE IN ONTARIO
ADVANCING DEVELOPMENT OF THE MAGINO PROJECT
2019 proved to be a productive year in the advancement of our Magino project located 10 kilometres
southeast of Dubreuilville, Ontario in Canada. We completed both the Federal and Provincial Environmental
Assessment process and received a positive Decision Statement and Statement of Completion, and also
attended a Federal event held in Sault St. Marie to mark this important milestone for mining in Ontario.
We also completed two Community Benefits Agreements with Batchewana First Nation and Michipicoten
First Nation, which marked our fourth and fifth indigenous agreements executed.
We continued with our 2019 strategy to de-risk our development projects by checking the right boxes at
Magino - by working on securing the permits required, continuing to consult with the local and indigenous
communities and building the project team.
EXPLORATION PROGRAM
In July 2019, we initiated a 6,000 metre exploration drilling program at Magino. Part way through this
program, we successfully identified the same gold-bearing geological structures that strike westward
into the Magino deposit from those adjacent to the Island Gold Mine. We made a decision to expand
the exploration drill program to 20,000 metres, which focused on testing the down plunge extension
of potential high-grade gold structures at depth. Previous exploration conducted by Argonaut at the
“We are especially pleased
with the results of our deeper
drilling where hole 20 intersected
some of our best results yet:
more than 700 metres vertically
below surface, with
6 metres at 10.8 g/t Au,
including a
2.95 metre interval of 21.1 g/t Au.”
Pete Dougherty, President & CEO
26
2019 Annual & Sustainability Report Our Assets
PROJECT HIGHLIGHTS1
• M&I Mineral Resources 144.0Mt at 0.91 g/t Au for 4.197 Contained Au oz.2
(inclusive of Mineral Reserves)
• P&P Mineral Reserves 59.0Mt at 1.13 g/t Au for 2.157 Contained Au oz.2
• Cash Op. Costs $669/oz3
• AISC $711/oz.3
• Initial Capital $321M
• After-tax NPV 5% $288M @ $1,250 Au
• After-tax IRR 19.5%
LEVERAGE TO GOLD PRICE
At $1,500 gold:
NPV 5% = $519M
at 0.76 CAD:US FX
Magino project concentrated solely on expanding
and upgrading the open-pit Mineral Resources and
Mineral Reserves with drilling focused primarily to a
depth of 300 metres. This is the first drill program
conducted on the Magino deposit targeting deeper,
the currently
high-grade mineralization below
designed open pit.
DISTRICT POTENTIAL
In addition to our drilling program, we are also
launching a district exploration program on our
Magino property outside of the main deposit area
where we have identified a number of potential
targets that we feel are under-explored.
Brian Arkell, Vice President of Exploration stated:
“Our property to the west and north of Magino has
seen very little exploration until last year when our
prospecting teams mapped and identified a number
of targets. These targets have the right alteration
and strong geochemistry where exposed, but
for the most part are in flat, covered ground. The
recently completed geophysics will help delineate
drill targets. Our plans for this second phase starting
in April 2020 are for an additional 20,000 metres of
drilling on the high-grade targets at Magino plus
5,000 metres of first pass scout drilling on newly
defined district targets.”
1 Based on the assumptions and parameters as set forth in the Feasibility Study dated December 21, 2017 for 10k TPD capacity.
2 Please refer to section “Mineral Resource Notes & Disclosures” on page 39.
3 Please refer to section “Non-IFRS Measures” on page 40 for a discussion of these non-IFRS measures.
27
Argonaut Gold Inc.
ADDING OUNCES
IN MEXICO
A MAIDEN MINERAL RESOURCE & MINERAL RESERVE ESTIMATE
FOR CERRO DEL GALLO
In December of 2019, we completed a positive Pre-Feasibility Study for our Cerro del Gallo project located
30 kilometres east of Guanajuato City, Mexico.
The positive pre-feasibility study results which were released in December 2019 included the following key
highlights:
• An after-tax IRR of 20.0% and NPV5% of $175 million assuming $1,350 gold and $16.75 silver;
• An increase to Argonaut’s Mineral Reserves by 48% and Measured and Indicated gold Mineral
Resources (inclusive of Mineral Reserves) by 36%;
• The project is a heap leach project in Mexico, which complements Argonaut’s existing and proven
skillsets, having successfully developed, constructed and operated precious metals mines in Mexico for
the past decade;
• Cerro del Gallo is a low-cost asset, with estimated cash costs of $597 per gold ounce sold and AISC2 of
$677 per gold ounce sold, respectively.
Cerro del Gallo fits well within our team’s abilities as another open pit heap leach
project in Mexico and is an asset that supports our transformation strategy from
being a high-cost producer to a lower-cost producer.
PROJECT HIGHLIGHTS1
• M&I Mineral Resources 201.9Mt at 0.44 g/t Au for 2,864k Au oz.3
(inclusive of Mineral Reserves)
• P&P Mineral Reserves 91.8Mt at 0.56 g/t Au for 1,638k Au oz.3
• Cash Op. Costs $597/oz2
• AISC $667/oz2
• Initial Capital $134M
• After-tax NPV 5% $175M @ $1,350 Au
• After-tax IRR 20.0%
LEVERAGE TO GOLD PRICE
At $1,500 gold: NPV 5% = $241M
19.3:1 MXN:US FX
1 Based on the assumptions and parameters of the Cerro del Gallo Pre-Feasibility Study results announced
on December 18, 2019.
2 Please refer to section “Non-IFRS Measures” on page 40 for a discussion of these non-IFRS measures.
3 Please refer to section “Mineral Resource Notes & Disclosures” on page 39.
28
2019 Annual & Sustainability Report Our Assets
A MODEL MINE
UPDATES AT SAN ANTONIO
In 2019, our goal was to continue de-risking and advancing the San Antonio project. Located near La
Paz, Baja California Sur, Mexico, we covered ground by continuing to advance the permitting process
and putting investment into the community. We continued to add value through environmental and
community initiatives, that included a successful geo-science program for youths and their families, which
was successful in bringing the community closure to mining. We continued to work with local farmers,
producing and delivering 2,500 litres of organic fertilizer, and also continued to host workshops, site tours
and educational events for the community.
In the fourth quarter of 2019, it was unfortunate to receive notice that the Mexican Environmental Authority
(“SEMARNAT”) issued a ruling to not approve the updated Environmental Impact Assessment (Manifiesto
de Impacto Ambiental or “MIA”). Argonaut is reviewing all of its options to advance the San Antonio project,
including seeking an amendment to the La Paz 2018 zoning plan, submitting a revised environmental
permit application and legal options.
Pete Dougherty stated, “We have worked hard with the local community and have had positive feedback.
We have tremendous support for the project from the local community of San Antonio and the surrounding
areas, where members of the local population marched in support of the project and voiced unwavering
support at the public information meeting during the MIA process. We continue to believe that San
Antonio provides an opportunity for a model mine with the use of clean technologies that also provides
near and long-term benefits to the region.”
“SI A LA MINA”
“YES TO THE MINE”
Members of the local communities march in La Paz in
support the San Antonio mine.
SCAN CODE for a tour of
Cerro del Gallo
San Antonio
29
Argonaut Gold Inc.
OPERATIONS
EL CASTILLO COMPLEX
INCREASED PRODUCTION & ON-BUDGET EXPANSION
During 2019, at the El Castillo Complex (El Castillo mine and San Agustin mine), we increased annual
production and completed a crusher expansion at San Agustin. We produced 12% more GEOs than 2018,
producing 131,277 GEOs, breaking our annual record at the Complex. Production at the El Castillo mine
increased by 38%. This was partly offset by a 6% decrease in production at the San Agustin mine, which
was primarily driven by the lack of sufficient water to optimize flow rates in the second and third quarter of
the year. This issue was resolved with a fourth water well that came online during August 2019.
At San Agustin, we completed the expansion of the crushing and stacking system on budget. The
expansion, which was completed in the first half of 2019, allowed us to increase the mining rate with an
increase crusher throughput capacity. In the fourth quarter we saw an 11% increase in production versus
the fourth quarter of 2018.
2020 FOCUS
• Focus on reducing unit costs;
• Processing run-of-mine vs. crushed ore at El Castillo, optimizing overburden haul distances and changes
in processing parameters;
• Focus is on profitability over production; and
• Anticipate unit cost savings of more than $2.00 per tonne processed at El Castillo and $1.00 per tonne
processed at San Agustin.
GEO PRODUCTION1
EL CASTILLO
SAN AGUSTIN
2017
59,540
10,946
2018
48,311
68,815
2019
66,509
64,768
P&P Mineral Reserves 63.8 Mt @ 0.32 g/t Au for 659K Au oz.2 at December 31, 2019
M&I Mineral Resources 108.5 Mt @ 0.30 g/t Au for 1.047M Au oz.2 at December 31, 2019 (inclusive of Mineral Reserves)
1 GEOs (gold equivalent ounces) are based on a conversion ratio of 70:1 (2017 and 2018) 75:1 (2019) for silver to gold ounces. The silver to gold conversion ratio is based on the three-year trailing average
silver to gold ratio.
2 Please refer to section “Mineral Resource Notes & Disclosures” on page 39.
30
2019 Annual & Sustainability Report Our Assets
SCAN CODE for a tour of
El Castillo
San Agustin
Location: Durango, Mexico
Ownership: 100%
Mine Type: Open Pit, Heap Leach
Metals: Gold & Silver
Acquisition: El Castillo December 2009
San Agustin December 2013
Production start: El Castillo 2007
San Agustin 2017
31
Argonaut Gold Inc.
OPERATIONS
LA COLORADA
HIGHER PRODUCTION AND GOLD GRADE
At our La Colorada mine, we increased production by 15% to 55,338 GEOs compared to 2018. The
higher production was primarily driven by a 28% increase in gold grade. The year did present operational
challenges, with water in the pit leading to slower mining rates and the height of lifts on the leach pads
leading to channeling and trapped ounces.
To resolve these challenges, we have reduced the heights of the lifts on the heap leach pads and made
changes to our pit de-watering practices.
2020 FOCUS
• Focus on reducing unit costs;
• ~12% of ore will require two-stage crushing and ~78% of ore will require three-stage crushing; and
• Anticipate crushing throughput of 13,000 tonnes per day in 2020 vs. 12,300 tonnes per day in 2019.
GEO PRODUCTION1
LA COLORADA
2017
53,286
2018
47,991
2019
55,338
P&P Mineral Reserves 19.8 Mt at 0.59 g/t Au for 375K Au oz.2 at December 31, 2019
M&I Mineral Resources 30.9 Mt at 0.65 g/t Au for 555K Au oz.2at December 31, 2019 (inclusive of Mineral Reserves)
1 GEOs (gold equivalent ounces) are based on a conversion ratio of 70:1 (2017 and 2018) 75:1 (2019) for silver to gold ounces. The silver to gold conversion ratio is based on the three-year trailing average
silver to gold ratio.
2 Please refer to section “Mineral Resource Notes & Disclosures” on page 39.
32
2019 Annual & Sustainability Report Our Assets
Location: Sonora, Mexico
Ownership: 100%
Mine Type: Open Pit, Heap Leach
Metals: Gold & Silver
Acquisition: January 2011
Production start: 2012
33
SCAN CODE
for a tour of
La Colorada
Argonaut Gold Inc.
MANAGING
RISKS
RISK MANAGEMENT SYSTEM
Argonaut’s approach to risk management is based on an outline that incorporates risk awareness across
our entire Company, where we are able to identify, assess, prioritize and manage these risks systematically.
Our senior management, operations and exploration teams continue to identify and manage risks, through
monitoring with our internal management systems within a risk governance framework.
We identified the following key risks across all aspects of our organization and outlined our top 10 risks of
emphasis throughout the 2019 year:
1
2
3
4
5
6
7
8
9
10
Access to capital**
Permitting
Land access
Guidance*
Legal actions
Country risk - Mexico*
VAT*
Project development*
Appropriate staffing*
Gold Price*
* Changes in risk level versus 2018
** New Risks in 2019
HEAT MAP
8
9
9
10
2 3 4
7
7
8
1
1**
5
6**
10
NEGLIGIBLE
IMPACT
CATASTROPHI C
#
#
#
#**
T
S
O
M
L
A
I
N
A
T
R
E
C
D
O
O
H
I
L
E
K
I
L
E
R
A
R
34
2019 Annual & Sustainability Report Managing Risks
RISK
CAUSES
IMPACTS
EXPECTED
IMPACT
RATING
EXPECTED
LIKELIHOOD
RATING
CURRENT
LEVEL OF
RISK
RISK TREATMENT PLAN
1 Access to capital**
Unable to finance development
projects at a reasonable cost of
capital.
Development projects not
constructed as planned which
would disrupt corporate life-of-
mine profile.
Catastrophic
Possible
2 Permitting
A delay or suspension of permits
required to operate an existing
mine or advance a
development project.
Suspension of existing
operations.
Delay of project start-up and
development.
Major
Likely
3 Land access
The inability to gain access to or
acquire land necessary to complete
the business objectives.
The delay in the expansion and/
or mine life extension.
Major
Likely
4 Guidance*
5 Legal actions
Failure to meet market expectations
based on guided production, costs
and capital estimates.
Loss of investor confidence
reducing the Company valuation
and increasing the Company’s
cost of capital.
Major
Likely
Suspension of operations.
Catastrophic
Unlikely
Legal actions brought against
the Company due to regulatory
non-compliance, non-government
organization interference,
community unrest or other outside
legal actions.
22
21
21
21
(18)
19
6 Country risk -
Mexico**
Change of government - tax,
nationalization, relationship
between government and congress.
Loss of operations for mines.
New tax laws.
Catastrophic
Unlikely
19
7 VAT -
Delays in tax
refunds*
The government changes its
approach to refunding tax.
Need to increase working capital.
Major
Possible
8 Project
development*
Insufficient detailed engineering.
Lack of consistent forecasting for
capital and investment projects.
Non-compliance.
Capital overruns. Loss of
stakeholder confidence.
Moderate
Likely
9 Appropriate
staffing*
The ability to attract and retain quality
employees due to mine or project
location and/or competition for quality
employees.
High employee turnover and/
or lower quality employees lead
to poor decisions at the site level.
Moderate
Likely
10 Gold Price*
A decrease in gold price negatively
impacts cash flows and the ability to
finance and develop projects at
a reasonable cost of capital.
If over an extended period, leads to
the inability to build out development
pipeline projects which would
disrupt the growth objectives for the
organization.
Catastrophic
Rare
* Changes in risk level versus 2018 (#) Risk level in 2018
** New Risks in 2019
35
18
(18)
17
(17)
17
(17)
15
(22)
1. Identify realistic financing alternatives for
optionality and best cost of capital.
2. Focus on profitability over production at
existing operations to generate optimal cash
flow.
1. Maintain compliance of existing permits.
2. Strengthen stakeholder relations.
3. Establish constructive relationships with
government regulators and political figures.
1. Complete internal comparative land
valuation.
2. Honour our existing agreements with
various land and stakeholders.
3. Strive to develop and execute new land
acquisitions in accordance with Industry
standards.
4. Establish status reporting mechanism.
5. Execute agreements.
1. Consider key risk factors to achieving plan
and report risk-adjusted external guidance.
1. Ensure regulatory compliance through
the implementation of controls and
procedures.
2. Strengthen stakeholder relations.
3. Work with other mining companies to
advocate positive improvements to the
legal structure.
1. Develop relationships with key officials in
government.
2. Active participation in mining community.
1. Work with other mining companies to
educate and inform the government on the
impacts of potential tax process, policy and
regulatory changes.
2. Maintain collaborative relationship with
the Mexican tax authorities to facilitate flow of
information.
1. Consider appropriate level of engineering by
project considering risk and capital requirements.
2. For projects without formal studies, ensure
the construction team is included in project
scheduling and budgeting.
1. Continue to build a workplace culture that
emphasizes and rewards safety and performance
and seeks learning and improvement.
2. Provide employees with a career path and
appropriate training to make it achievable.
3. Hire locally.
4. Provide competitive compensation and
benefits.
1. Hedged 145,500 ounces to ensure El Castillo
profitability and extend mine life.
2. Focus on lower initial capital projects and
production replacement versus growth until metal
prices rebound.
Argonaut Gold Inc.
ARGONAUT
LEADERSHIP & GOVERNANCE
BOARD OF DIRECTORS
James E. Kofman 2,3
Chairman
Ian Atkinson 1,3
Peter Mordaunt 2,3
Peter C. Dougherty
Dale C. Peniuk 1,2
Christopher R. Lattanzi 1,2
Audra B. Walsh 1,3
1
2
3
Audit Committee
Nominating, Compensation and Governance
Committee
Safety, Health, Environment, Sustainability and
Technical Committee
MANAGEMENT
Peter C. Dougherty
President & CEO, Director
W. Robert Rose
Vice President of Technical Services
David A. Ponczoch
Chief Financial Officer
Brian Arkell
Vice President of Exploration
Daniel A. Symons
Vice President of Investor Relations
36
2019 Annual & Sustainability Report
Leadership
CORPORATE GOVERNANCE
Argonaut Gold Inc. has been committed to good corporate governance since its formation in 2009. The
Board of Directors maintains open and direct communications with management on all the major strategic,
investment, operating, and management decisions. The Company is best served by an informed and
interactive Board which has free access to all levels of management and to all of its operations. Through
Board meetings, Board agendas and background briefing materials, monthly operating and financial reports,
and frequent conversations, management shared information with the Board. The cumulative experience and
expertise of the Company’s directors enables the Board to bring sound business judgment to its decision
making process. The independence of the Company’s directors has been fostered in order to bring an outside
perspective to its deliberations.
Argonaut has three Board Committees: the Audit Committee, the Nominating, Compensation and
Governance Committee and the Safety, Health, Environment, Sustainability and Technical Committee.
The Audit Committee, on behalf of the Board of Directors, has responsibility with respect to the integrity
of the Company’s financial statements, Management’s Discussion and Analysis, compliance with legal and
regulatory requirements, external auditor qualifications, and the independence and performance of the
Company’s internal and external audit functions. The members of the Audit Committee have the right, for
the purpose of performing their duties, to inspect all the books and records of the Company and its affiliates,
and to discuss such accounts and records and any matters relating to the financial position or condition of
the Company with the auditors of the Company or its affiliates.
The Nominating, Compensation and Governance Committee has responsibility to advise and make
recommendations to the Board of Directors on the compensation of the senior executive officers of the
Company and to develop and recommend corporate governance principles.
The Safety, Health, Environment, Sustainability and Technical Committee has responsibility to review
and discuss with management the safety, health, sustainability and environmental policies of the Company,
and to review management’s strategy with respect to sustainable development and support for communities
within the area of our operations. This Committee also oversees and makes recommendations to the Board of
Directors the technical aspect of the material exploration, development, permitting and mining operations.
37
Argonaut Gold Inc.
MINERAL RESOURCES & MINERAL RESERVES1
The following table shows the gold and silver Mineral Resources and Mineral Reserves at December 31,
2019. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves.
RESERVES
PROVEN & PROBABLE
Project
Category
Tonnes
(Millions)
Au Grade
(g/t)
Contained
Au
Ounces
(000s)
Ag Grade
(g/t)
Contained
Ag
Ounces
(000s)
Cu Grade
(% Cu)
Contained
Tonnes
Cu
(000s)
El Castillo
El Castillo
San Agustin
El Castillo Complex
Proven
Probable
Probable
Proven &
Probable
1.1
18.4
44.3
63.8
0.60
0.37
0.29
0.32
21
220
418
659
12.3
12.3
17,536
17,536
La Colorada
Probable
19.8
0.59
375
8.75
5,572
Cerro del Gallo
Cerro del Gallo
Cerro del Gallo
Magino
Magino
Magino
Consolidated Mineral
Reserves
Proven
Probable
Proven &
Probable
Proven
Probable
Proven &
Probable
Proven &
Probable
13.7
11.7
13.3
31,088
8,012
39,100
0.10
0.08
0.09
67,691
17,821
85,782
70.4
21.3
91.8
24.2
34.7
58.9
0.59
0.46
0.56
1.03
1.19
1.13
1,326
313
1,638
804
1,332
2,136
234.3
0.64
4,808
N/A
62,208
N/A
85,782
RESOURCES
MEASURED & INDICATED ("M&I")
El Castillo
San Agustin
M&I
Indicated
El Castillo Complex
M&I
La Colorada
Cerro del Gallo
San Antonio
Magino
Consolidated Mineral
Resources
Indicated
M&I
M&I
M&I
Measured
&
Indicated
36.4
72.1
108.5
30.9
201.9
65.0
144.0
0.35
0.27
0.30
0.56
0.44
0.86
0.91
409
638
1,047
555
2,864
1,735
4,197
10.4
10.4
8.4
12.2
24,106
24,106
8,334
79,103
0.09
187,100
550.2
0.59
10,388
N/A
111,543
N/A
187,100
Measured and indicated resources are inclusive of reserves.
RESOURCES
INFERRED
El Castillo
San Agustin
El Castillo Complex
La Colorada
San Antonio
Cerro del Gallo
Magino
Consolidated Mineral
Resources
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
0.7
3.8
4.6
4.3
6.2
5.1
33.2
53.4
0.35
0.29
0.30
0.65
0.34
0.43
0.83
0.67
8
36
44
90
67
71
886
12.1
12.1
11.1
833
833
1,541
11.9
1,947
0.06
1
1,158
11.6
4,321
1 Mineral Reserves and Mineral Resources have been estimated as at December 31, 2019 in accordance with NI 43-101 as required by Canadian securities regulatory authorities.
Mineral Resources are presented inclusive of Mineral Reserves. Numbers may not sum due to rounding.
Note: Refer to Mineral Resource Notes And Disclosures on page 39.
38
MINERAL RESOURCES & MINERAL RESERVES1
DISCLAIMERS
NATIONAL INSTRUMENT 43-101 AND QUALIFIED PERSON
2019 Annual & Sustainability Report
Brian Arkell, Argonaut Gold’s Vice-President of Exploration and a Qualified Person under NI 43-101, has read and approved the scientific and technical information
in this presentation as it relates to Argonaut. This presentation contains information regarding mineral resources that are not mineral reserves and do not have
demonstrated economic viability.
MINERAL RESOURCE NOTES AND DISCLOSURES
All Mineral Resources have been estimated in accordance with Canadian Institute of Mining Standards. Mineral Resources are not known with the same degree of
certainty as Mineral Reserves and do not have demonstrated economic viability. In addition, the quantity and grade of reported inferred mineral resources shown
above are uncertain in nature and there is insufficient exploration to define these inferred mineral resources as an indicated or measured mineral resource and it is
uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.
Mineral Resources are presented inclusive of Mineral Reserves. Numbers may not sum due to rounding.
The Mineral Reserves for El Castillo and San Agustin, which together form the El Castillo Complex, are based on updated models, mine plans and topography,
including depletion through mining activities and changes to recovery and cost assumptions as of December 31, 2019. El Castillo used a gold price of $1,450 per
ounce; San Agustin used a gold price of $1,350 per ounce and silver price of $16.75 per ounce. Cut-off grades for El Castillo range from 0.10 g/t Au to 0.71 g/t Au
depending on ore type; cut-off grades at San Agustin range from 0.11 g/t gold equivalent (“AuEQ”) to 0.25 g/t AuEQ depending on ore type.
The Mineral Reserves for La Colorada are based on updated models, mine plans and topography as well as updated recoveries and cost assumptions as of
December 31, 2019. La Colorada used a gold price of $1,350 per ounce and a silver price of $16.75 per ounce. Cut-off grade for La Colorada was 0.13 g/t AuEQ.
The Mineral Reserves for Cerro del Gallo were taken from the Cerro del Gallo Technical Report. The Mineral Reserves were estimated at a gold price of $1,200 per
ounce and a silver price of $14.50 per ounce. The Mineral Reserves used a gold cutoff grade of between 0.30 g/t AuEQ and 0.39 g/t AuEQ depending on ore type.
The Mineral Reserves for Magino were taken from the Magino Technical Report. The Mineral Reserve was estimated at a gold price of $1,200 per ounce. The Mineral
Reserve used a gold cutoff of 0.41 g/t.
The M&I Mineral Resources and Inferred Mineral Resources for El Castillo and San Agustin, which together form the El Castillo Complex, were based on pit cones
using $1,600 per ounce gold and $19.75 per ounce silver. Cut-off grades range from 0.08 g/t Au to 0.62 g/t Au for El Castillo and 0.11 to 0.25 g/t AuEQ for San
Agustin, depending on ore type.
The M&I Mineral Resources and Inferred Mineral Resources for La Colorada were based on pit cones using $1,600 per ounce gold and $19.75 per ounce silver.
Cut-off grade was 0.10 g/t AuEQ.
The Mineral Resources for the San Antonio Project were taken from the San Antonio Technical Report. The Mineral Resources were estimated at a gold price of
$1,500 per ounce using a cutoff grade of 0.11 g/t Au for oxide and transition and 0.15 g/t Au for sulphide.
The M&I Mineral Resources and Inferred Mineral Resources for the Cerro del Gallo Project were taken from the Cerro del Gallo Technical Report. The Mineral
Resources were estimated at a gold price of $1,600 per ounce and a silver price of $20.00 per ounce. Cut-off grades range from 0.25 g/t AuEQ to 0.30 g/t AuEQ
depending on ore type.
The M&I Mineral Resources and Inferred Mineral Resources for the Magino Project were taken from the Magino Technical Report. The Mineral Resources were
estimated at a gold price of $1,300 per ounce. The Mineral Resources used a gold cutoff of 0.25 g/t.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report uses the terms “Measured”, “Indicated” and “Inferred” Resources as defined in accordance with NI 43-101. United States readers are advised that while
such terms are recognized and required by Canadian securities laws, the United States Securities and Exchange Commission does not recognize them. Under
United States standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically
and legally produced or extracted at the time the reserve calculation is made. United States readers are cautioned not to assume that all or any part of the mineral
deposits in these categories will ever be converted into reserves. In addition, “Inferred Resources” have a great amount of uncertainty as to their existence, and as
to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. United States
readers are also cautioned not to assume that all or any part of an Inferred Resource exists, or is economically or legally mineable.
This document contains certain “forward-looking statements” and “forward-looking information” under applicable Canadian securities laws concerning the
proposed transaction and the business, operations and financial performance and condition of Argonaut Gold Inc. (“Argonaut” or “Argonaut Gold”). Forward-
looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and mine life of the various
mineral projects of Argonaut; expectations with respect to future cash flows from operations, net debt and financial results; the successful completion of proposed
acquisitions; metal or mineral recoveries; synergies and financial impact of completed acquisitions; the benefits of the development potential of the properties of
Argonaut; the future price of gold, copper, and silver; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing
and amount of estimated future production; costs of production; success of exploration activities; market volatility and disruptions in many aspects of Argonaut’s
business due to a pandemic virus outbreak, such as COVID-19, resulting from government policies restricting mobility assembly, or contact to, employees and
suppliers across the global supply chain; and currency exchange rate fluctuations. Except for statements of historical fact relating to Argonaut, certain information
contained herein constitutes forward-looking statements.
Forward-looking statements are frequently characterized by words such as “plan,” “expect,” “project,” “intend,” “believe,” “anticipate”, “estimate” and other
similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions and estimates of the
management of Argonaut at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are
based on factors and events that are not within the control of Argonaut and there is no assurance they will prove to be correct.
Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include risks of the mining industry, the spread
of COVID-19 and the impact of government policies to ameliorate COVID-19, failure of plant, equipment or processes to operate as anticipated, changes in market
conditions, variations in ore grade or recovery rates, 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 and labour disputes.
These factors are discussed in greater detail in Argonaut’s (i) most recent Annual Information Forms, and (ii) most recent Management Discussion and Analysis,
which are each filed on Argonaut’s respective SEDAR profiles and provide additional general assumptions in connection with these statements. Argonaut cautions
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NON-IFRS MEASURES
The Company has included certain non-IFRS measures including “Cash cost per gold ounce sold”, “Adjusted cash cost per gold ounce sold”, “All-in sustaining
cost per gold ounce sold”, “Adjusted all-in sustaining cost per gold ounce sold”, “Adjusted net income”, “Adjusted earnings per share – basic” and “Net cash” in
this presentation 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. Adjusted cash cost per gold ounce sold is equal to production costs plus only the impact of non-cash impairment write downs related to the
net realizable value of 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. Adjusted AISC per gold ounce sold is equal to production costs plus only the impact of non-cash
impairment write downs related to the net realizable value of 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. Adjusted net income is equal to net loss less foreign exchange impacts on
deferred income taxes, foreign exchange (gains) losses, impairment write down (reversal) of work-in-process inventory, proceeds from legal proceedings, non-
cash impairment loss (reversal) on certain non-current assets, unrealized (gains) losses on commodity derivatives and other operating expense (income). Adjusted
earnings per share – basic is equal to adjusted net income divided by the basic weighted average number of common shares outstanding. Net cash is calculated
as the sum of the cash and cash equivalents balance net of debt as at the statement of financial position date. 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.
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W W W . A R G O N A U T G O L D . C O M
T S X : A R
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@Argonaut_Gold
/ArgonautGoldInc @ArgonautGoldInc
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