TSX : AR
2021
ANNUAL &
SUSTAINABILITY
REPORT
TRANSFORMATION IN MOTION
Argonaut Gold 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, the La Colorada
mine in Sonora, Mexico and the Florida
Canyon mine in Nevada, USA. The
Company is also more than halfway
completed with the construction of its
flagship asset – the Magino project in
Ontario, Canada. The Company holds
the advanced exploration stage Cerro
del Gallo project and several other
exploration stage projects, all of which
are located in North America.
San Agustin Mine in Durango, Mexico
CONTENTS
2021 & RECENT HIGHLIGHTS
A MESSAGE FROM OUR BOARD CHAIR
EXECUTING OUR STRATEGY
COMPANY SNAPSHOT
MATERIAL MINERAL ASSETS
EL CASTILLO MINE
SAN AGUSTIN MINE
LA COLORADA MINE
FLORIDA CANYON MINE
MAGINO PROJECT
CERRO DEL GALLO PROJECT
SUSTAINABILITY
ESG SNAPSHOT
CSR EXCELLENCE AND THE PATH ESG REPORTING
OUR SAFETY
OUR PEOPLE
OUR COMMUNITY
OUR ENVIRONMENT
ARGONAUT’S MANAGEMENT
MANAGING RISKS
LEADERSHIP & GOVERNANCE
MINERAL RESOURCES & MINERAL RESERVES
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4
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
First steel lift at Magino in early 2022.
2
2021 & RECENT HIGHLIGHTS
RECORD
ANNUAL REVENUE
$436.9M
37% increase from $319.7M in 2020
RECORD
ANNUAL CASH FLOW
before changes in working capital and other items
$124.9M
31% increase from $95.08M in 2020
RECORD
ANNUAL PRODUCTION1,3
244,156 GEOs
36% increase from 179k from 2020
CASH COSTS2
$1,006 /Au oz. sold
In line with 2021 Guidance range of $950 - $1,050
ALL-IN SUSTAINING COSTS2
$1,311 /Au oz. sold
In line with 2021 Guidance range of $1,250 - $1,350
2021
& RECENT HIGHLIGHTS
We commenced construction on the Magino project and
continue to advance on schedule for first gold pour by
March 31, 2023.
Year-over-year lost time injury frequency rate (“LTIFR”)
reduction of 7%.
Received nationally awarded Environmental Socially
Responsible Company recognition for the 10th
consecutive year for its Mexican operations.
At Magino, we continued to discover high-grade gold
mineralization in six distinct zones below and adjacent
to the planned pit: Elbow, Central, Scotland, #42,
Sandy and South. We also filed an updated Technical
Report in March 2022.
At La Colorada, we discovered high-grade gold
mineralization below the El Crestón pit.
At San Agustin, we declared an initial sulphide inferred
Mineral Resource, which has the potential to extend
the mine life by six to ten years with further drilling and
metallurgical work.
At Florida Canyon, we received the air quality permit
modification and installed new a conveying and stacking
system.
All dollar amounts are expressed in US$ US dollars unless otherwise stated. C$ reflects Canadian dollars.
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 ratio.
2 Please refer to the “Notes and Disclosure” section for a discussion of these Non-IFRS Measures.
3 Produced ounces are calculated as ounces loaded to carbon.
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
JAMES KOFMAN
Chairman
A MESSAGE
FROM
OUR LEADERSHIP
TRANSFORMATION IN MOTION
We continued to execute on our three-phase
approach: Harvest, Replace and Grow.
The Argonaut Gold Inc. (“Argonaut”) 2021 year was marked by significant
accomplishments and major disappointments. Early in 2021, we kicked off
construction of our Magino project in Ontario, Canada, which is our flagship
asset. Magino’s importance to Argonaut cannot be overstated: it is planned
to provide a much lower cost, longer life mine to our operating portfolio and
will see the majority of our production and cash flow come out of the tier one
jurisdiction of Ontario, Canada. To put this in perspective, our four current
operating mines each averaged approximately 58,000/oz of gold production in
2021. Magino is expected to average 142,000 oz/year on its own over its first
five years following its ramp up period. Our consolidated all-in sustaining cost
(“AISC”) from our existing operations in 2021 are much higher than the Magino
expected AISC as reported in a recently updated technical report. Simply put,
Magino will transform Argonaut into a lower-cost, intermediate gold producer
with 100% of Argonaut’s production coming from North America.
We did, however, experience meaningful challenges during the first half of
Magino’s construction, which led to a significant capital overrun for the project.
We, as a Board, take responsibility and took swift action to institute a leadership
change and we have been working tirelessly with management to put Argonaut
on a solid financial footing to complete the construction of this important project.
While Magino’s capital overrun was clearly a disappointment and not one that
we took lightly, as evidenced by our actions, we did accomplish some significant
milestones in 2021:
4
A MESSAGE FROM OUR LEADERSHIP
Groundbreaking Ceremony at Magino in Dubreuiville, Ontario Canada
• Record annual production of 244,156 gold
equivalent ounces.
• Record annual revenue of $437 million.
• Record annual cash flow of $125 million.
• Meaningful exploration results at Magino,
La Colorada and Florida Canyon, as well as
a 400% increase in mineral tenure at San
Agustin, that all point to potential mine life
extension opportunities.
As we look forward to the next year, our primary
focus is the execution of the Magino project. We
believe that the biggest value drivers for Argonaut
over the next several years are focused on the
success of Magino through 1) the delivery of the
project on schedule and within our updated capital
budget outlined in December 2021, 2) a safe and
efficient ramp up to name plate capacity following
construction, and 3) a potential expansion to the
processing facilities and the development of a
high-grade underground mine that would operate
concurrent with the open pit mine.
We believe we have the right leadership in place with
Larry Radford’s appointment as President and Chief
Executive Officer, to lead our management team and
execute on these key value drivers. We also want
to recognize our existing management team for
stepping up during the period of transition to help
put Argonaut in the best position to succeed.
While there is no doubt that we stumbled in 2021,
the entire Argonaut team is working hard to ensure
we are well-positioned to execute on our strategy
of transitioning Argonaut from a higher-cost, junior
producer with relatively short mine lives to a much
lower-cost, intermediate producer with significantly
longer mine lives. Argonaut needs to do better for
its stakeholders. We look forward to the next year
and beyond.
Sincerely,
James E. Kofman, Chairman
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
EXECUTING
OUR STRATEGY
In 2021, we continued to execute our transformation strategy,
transitioning our Company from a high-cost, junior producer with
short mine lives to a lower-cost, intermediate producer with much
longer mine lives. We executed on all three phases of our strategy to
lay the foundation and set up the building blocks for the Company’s
transformation.
HARVEST
REPLACE
GROWTH
RECORD ANNUAL CASH
FLOW OF $125M
EXPLORATION
SUCCESS
MAGINO
CONSTRUCTION
• Harvest cash from existing
• Replace depleted gold
• Growth through the development
operations.
ounces through exploration
at existing assets.
project pipeline.
• All development stage assets
provide much longer mine life and
significantly lower operating costs.
CONTINUED OPTIMIZATION
“We are very encouraged with the possibility of significantly extending San Agustin’s mine life through potential
exploration success in the recently acquired mineral concessions and the potential to process sulphide mineralized
material. At La Colorada, the mine life currently runs through 2027. While we see good potential to extend
this further, particularly at depth, we are currently focused on optimizing the existing LOM plan by accelerating
waste stripping and/or eliminating certain waste stripping by transitioning to underground mining sooner on
the El Crestón deposit. This LOM optimization work will be a major focus of the La Colorada team this year.”
- Lowe Billingsley, Chief Operating Officer
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TRANSFORMATION STRATEGY
Pre-production drilling at Magino
“Argonaut is generating positive cash flow through its existing
operating portfolio, holds an enviable portfolio of growth assets
and, once Magino comes on line next year, has the opportunity
to transition from a higher cost, junior producer to a lower cost,
intermediate producer with a more diversified jurisdictional profile.”
Lowe Billingsley, Chief Operating Officer
San Agustin Mine
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
COMPANY SNAPSHOT
MAGINO
FLORIDA CANYON
RENO
HEAD
OFFICE
TORONTO
OFFICE
LA COLORADA
EL CASTILLO COMPLEX
CERRO DEL GALLO
CONSOLIDATED MINERAL RESOURCES & RESERVES 2021
MEASURED & INDICATED
MINERAL RESOURCES1,2
PROVEN & PROBABLE
MINERAL RESERVES2
13.7Moz. Au
121.5Moz Ag and
187.1T Cu
6.9Moz. Au
57.2Moz Ag and
85.5T Cu
2021 & RECENT UPDATED TECHNICAL REPORTS FILED FOR:
El Castillo - dated February 14, 2022 (effective date of October 1, 2021)
San Agustin - dated February 14, 2022 (effective date of August 1, 2021)
La Colorada - dated February 14, 2022 (effective date of August 1, 2021)
Magino - dated March 3, 2022 (effective date of February 14, 2022)
1 Measured and Indicated Mineral Resources are inclusive of Mineral Reserves.
2 At December 31, 2021. Refer to Notes and Disclosures page for Mineral Resource Notes and Disclosure.
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ARGONAUT’S
MATERIAL ASSETS
PRODUCING MINE
CONSTRUCTION
ADVANCED EXPLORATION
PROJECT
EL CASTILLO COMPLEX
Durango, Mexico
El Castillo Mine
Acquired: December 2009
Mine Life: 2023
San Agustin Mine
Acquired: December 2013
Mine Life: 2024+
LA COLORADA MINE
Durango, Mexico
Acquired: January 2011
Mine Life: 2027+
FLORIDA CANYON MINE
Nevada, USA
Acquired: July 2020
Mine Life: 2031+
MAGINO PROJECT
Ontario, Canada
Acquired: December 2012
Mine Life: 19+ years
Status: Construction
CERRO DEL GALLO
PROJECT
Guanajuato, Mexico
Mine Life: 15+ years
Status: Permitting
MATERIAL MINERAL ASSETS
MATERIAL
MINERAL
ASSETS
An overview of Argonaut’s material
asset porfolio for 2021
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
EL CASTILLO MINE
El Castillo Complex - Durango, Mexico
During 2021, the El Castillo Complex, comprised of the El Castillo Mine and
the San Agustin mine, produced 12% more GEOs at a cash cost per gold
ounce sold1 19% higher than during 2020.
GEO production at the El Castillo mine was 6% higher and costs were 16%
higher than 2020 due to an 11% increase in total tonnes mined, a 9% increase
in ore tonnes loaded to the leach pads and higher recoveries, offset by a 28%
reduction in gold grade.
2021 PRODUCTION
48,861 GEOs
2021 CASH COSTS1
per gold ounce sold
$1,009
MEASURED & INDICATED
MINERAL RESOURCES2
31.4Mt at 0.36 g/t Au
355k contained gold ounces
PROVEN & PROBABLE
MINERAL RESERVES3
11.3Mt at 0.39 g/t Au
142k contained gold ounces
1 Please refer to the “Notes and Disclosure” section for a discussion of these Non-IFRS Measures.
2 The Measured & Indicated Mineral Resources and Inferred Mineral Resources for El Castillo and San Agustin, which together form the El Castillo Complex, set out in the above table were based on pit cones using $1,800 per ounce gold
and $24.00 per ounce silver. Cut-off grades range from 0.07 g/t Au to 0.48 g/t Au for El Castillo and 0.11 to 0.42 g/t Au for San Agustin, depending on ore type.
3 The Mineral Reserves for El Castillo and San Agustin, which together form the El Castillo Complex, set out in the above table are based on updated models, mine plans and topography,
including depletion through mining activities and changes to recovery and cost assumptions as of October 1, 2021 for El Castillo and August 1, 2021 for San Agustin. El Castillo used a gold
price of $1,650 per ounce; San Agustin used a gold price of $1,500 per ounce and silver price of $20.00 per ounce. Cut-off grades for El Castillo range from 0.10 g/t Au to 0.27 g/t Au depending
on ore type; cut-off grades at San Agustin were 0.16 g/t AuEq except for material scheduled for mining in 2021 that used a cut-off grade of 0.13 g/t AuEq.
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MATERIAL MINERAL ASSETS
SAN AGUSTIN MINE
El Castillo Complex - Durango, Mexico
During 2021, GEO production at the San Agustin mine was 16% higher
and costs were 17% higher than 2020 due to a 16% increase in total tonnes
mined, a 19% increase in ore tonnes loaded to the leach pads and higher
recoveries, offset by a 6% reduction in gold grade.
In 2021 we acquired key mineral concessions for a cash consideration of
US$5.75 million. The mineral concessions acquired more than quadruples
Argonaut’s mineral tenure and area of potential exploration in the San
Agustin district to 5,884 hectares. The acquired mineral concessions consist
of a very large concession of 4,791 hectares surrounding all of Argonaut’s
existing concessions in the district, as well as four key concessions totaling
27 hectares immediately surrounding the San Agustin pit. The acquisition of
the four mineral concessions immediately adjacent to the San Agustin pit will
allow Argonaut to expand the pit, increase mineral reserves and extend mine
life. These strategic mineral concessions may also have potential to add
mineralization to the northeast and southwest of the current mine footprint.
The very large concession surrounding all of Argonaut’s existing mineral
concessions in the San Agustin district increases Argonaut’s area of potential
exploration by over 400%. Anomalous gold mineralization is known to occur
in numerous areas of this concession, especially to the north and northwest
of the current San Agustin mine operations.
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2021 PRODUCTION
74,116 GEOs
2021 CASH COSTS1
per gold ounce sold
$915
INDICATED
MINERAL RESOURCES2
60.0Mt at 0.27 g/t Au
and 7.6 g/t Ag
531k contained gold ounces and
14.8M contained silver ounces
PROBABLE
MINERAL RESERVES3
33.2Mt at 0.32 g/t Au
and 9.1 g/t Ag
336k contained gold ounces and
9.7M contained silver ounces
Significant increase in
INFERRED MINERAL
RESOURCE2
86.9Mt at 0.48 g/t Au
and 14.7 g/t Ag
1.3M contained gold ounces and
41.0M contained silver ounces
which includes 84.8Mt in
initial sulphide Inferred
Mineral Resource
Argonaut Gold Inc. 2021 Annual & Sustainability Report
LA COLORADA MINE
Sonora, Mexico
During 2021, the La Colorada mine produced 44% more GEOs at a cash
cost per gold ounce sold1 22% lower than 2020. Higher GEO production was
primarily due to a 47% increase in gold grade and a 34% reduction in strip
ratio, partially offset by lower recoveries.
In 2021, we initiated exploration programs at depth below the El Crestón pit
exploring zones of high-grade gold and silver mineralization, with additional
drilling is planned in 2022 to explore deeper for possible extension of the
system. Drill highlights from 2021 include:
News Release - April 26, 2021
• 20-LCRC-592 intersected 12.2m at 98.9 g/t Au and 30.3 g/t Ag,
including 3.0m of 383.0 g/t Au and 113.5 g/t Ag
• 20-LCRC-562 intersected 21.3m at 44.6 g/t Au and 274.9 g/t Ag,
including 3.0 m of 283.1 g/t Au and 858.0 g/t Ag
News Release – September 13, 2021
• South Vein: 21-LCRC-667 intersected 38.1m at 9.1 g/t Au and 126.6
g/t Ag, including 4.6 metres of 51.9 g/t Au and 28.5 g/t Ag
• North Vein: 21-LCRC-657 intersected 29.0m at 3.62 g/t Au and 10.1
g/t Ag, including 4.6m of 17.4 g/t Au and 29.0 g/t Ag
• Central Vein: 21-LCRC-673 intersected 22.9m at 6.7 g/t Au and 30.1
g/t Ag, including 1.5m of 90.0 g/t Au and 14.8 g/t Au
2021 PRODUCTION
66,964 GEOs
2021 CASH COSTS1
per gold ounce sold
$730
INDICATED
MINERAL RESOURCES2
36.1Mt at 0.62 g/t Au
and 8.3 g/t Ag
714k contained gold ounces and
9.6M contained silver ounces
PROBABLE MINERAL
RESERVES3
21.1Mt at 0.67 g/t Au
and 9.1 g/t Ag
456k contained gold ounces and
6.1M contained silver ounces
1 Please refer to the “Notes and Disclosure” section for a discussion of these Non-IFRS Measures.
2 The Indicated Mineral Resources and Inferred Mineral Resources for La Colorada set out in the above table were based on pit cones using $1,800 per ounce gold and $24.00 per ounce silver. Cut-off grade was 0.09 g/t AuEqto 0.11 g/t
AuEq, depending on ore type.
3 The Mineral Reserves for La Colorada set out in the above table are based on updated models, mine plans and topography as well as updated recoveries and cost assumptions as of October 1, 2021. La Colorada used a gold price
of $1,500 per ounce and a silver price of $20.00 per ounce. Cut-off grade for La Colorada was 0.13 g/t gold equivalent AuEq.
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MATERIAL MINERAL ASSETS
FLORIDA CANYON MINE
Nevada, USA
Argonaut acquired the Florida Canyon mine on July 1, 2020. During 2021,
the first full year under Argonaut ownership, Florida Canyon production
increased by 15.2% and cash cost increased by 5.9%.
In 2021 we received 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. The
receipt of the air quality permit modification allowed us to execute on our
plan to lower cost and also raise the production profile at Florida Canyon.
Furthermore, the conveying and stacking system will be operated on grid
power and eliminate the need to run diesel haul trucks from the crusher to
the leach pads, which we expect will reduce greenhouse gas emissions.
We completed the construction and installation of the new conveying and
stacking system, and ramped up to design capacity during the third quarter
of 2021. This change also frees up mobile equipment to transport more ore
tonnes from the open pit to the crusher and is expected to increase the
annual production profile at Florida Canyon beginning in 2022.
2021 PRODUCTION
54,215 GEOs
2021 CASH COSTS1
per gold ounce sold
$1,356
MEASURED & INDICATED
MINERAL RESOURCES2
86.5Mt at 0.42 g/t Au
1.17Mt contained gold ounces
PROVEN & PROBABLE
MINERAL RESERVES3
68.4Mt at 0.42 g/t Au
921k contained gold ounces
1 Please refer to the “Notes and Disclosure” section for a discussion of these Non-IFRS Measures.
2 The Measured & Indicated Mineral Resources and Inferred Mineral Resources for Florida Canyon set out in the above table were based on pit cones using $1,800 per ounce gold. Cut-off grade was 0.15 g/t Au.
3 The Mineral Reserves for Florida Canyon set out in the above table are based on updated models, mine plans and topography as well as updated recoveries and cost assumptions as of December 31, 2020. Florida Canyon used a
gold price of $1,500 per ounce. Cut-off grade for Florida Canyon was 0.17 g/t Au.
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
MAGINO PROJECT
Ontario, Canada
In 2021, we continued to execute our growth strategy, advancing construction
at Magino and targeting the first gold pour before the end of the first quarter
in 2023. We’ve made significant progress on construction, building our team
and collaborating with the community and indigenous groups, and have
published a monthly newsletter to provide stakeholders with regular updates.
We’ve also had continued success in our deep drilling exploration program,
which specifically targets high-grade gold mineralization below and adjacent
to the planned open pit.
2021 CONSTRUCTION MILESTONES INCLUDE:
Logged project area;
• Placed orders on long lead time components;
•
• Constructed camp facilities;
• Made significant progress at process facility site;
• Made significant progress at Tailings Management Facility;
• Commenced open pit mining to generate waste rock;
• Made significant progress at Water Quality Control Pond;
• Commenced fish habitat work; and
• Continued operational readiness preparation.
CAPITAL UPDATE
During 2021, Argonaut incurred $236.8 million in capital costs related to
construction of the Magino project. Of this amount incurred, the majority was
for securing long lead time components for the mineral processing plant and
for site development, camp construction and earthworks.
1 Based on the assumptions and parameters as set forth in the Magino Feasibility Study dated February 14, 2022.
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UPDATED FEASIBILITY
STUDY HIGHLIGHTS1
MEASURED & INDICATED
MINERAL RESOURCES
132.4Mt at 0.94 g/t Au
4.0M contained gold ounces
PROVEN & PROBABLE
MINERAL RESERVES
65.5Mt at 1.15 g/t Au
2.4M contained gold ounces
19 year mine life
142k ounces average annual
gold production during the
first 5 years following ramp up
Average annual cash cost
$888 per gold ounce sold
Average annual AISC
$963 per gold ounce sold
ESTIMATED PROJECT
CAPITAL AT COMPLETION
C$800 million
UNDERGROUND EXPLORATION SUCCESS
In 2021, we continued our drilling campaign targeting high-grade gold mineralization at depth below the planned
Magino open pit. We continued to discover high-grade gold mineralization in six distinct zones below and adjacent to
the planned pit: Elbow, Central, Scotland, #42, Sandy and South. Drill highlights from 2021 include:
MATERIAL MINERAL ASSETS
News Release - January 20, 2021
• MA20-057 intersected 10.0m at 19.0 g/t Au, including 6.3m of 30.2 g/t Au
• MA20-057 intersected 3.1m at 47.1 g/t Au, including 1.3m of 112.0 g/t Au
News Release – July 8, 2021
• MA21-070 intersected 7.0m at 13.3 g/t Au
• MA21-065 intersected 19.0m at 3.7 g/t Au
News Release – November 16, 2021
• MA21-076 intersected 16.0m at 6.1 g/t Au. including 1.0m at 85.1 g/t Au
Board visit to our Magino Core Shack
Brian Arkell, Vice President of Exploration commented: “The early-stage resource definition drilling program continues
to yield positive results with several high-grade gold intercepts at widths typically amenable to underground mining
methods. I’m also very encouraged by the continuity of the gold mineralization we are seeing within the Elbow Zone,
and we are excited to continue to test this important target.”
FIRST NATIONS & MÉTIS COMMUNITY INVOLVEMENT
Argonaut is frequently engaged with six indigenous communities and has
Community Benefit Agreements with all six communities. To date, Argonaut
has implemented four Environmental Committees during the past year and
regularly meets with all communities to engage and share information on
upcoming permitting and ongoing monitoring of the Magino Project.
Recently, Argonaut Gold committed to in kind training for Missanabie Cree
First Nation on the implementation of Bat Habitat Rehabilitation planning.
The Bat Hibernaculum* being constructed by Argonaut Gold will provide
unique opportunities to study and share bat hibernation ecology with the
Missanabie Cree First Nation’s Land and Resources Department. Argonaut
Gold also provided financial support to Missanabie Cree First Nation to
support their own bat habitat rehabilitation initiatives.
Métis Nation of Ontario site visit
*For more information on the Bat Hibernaculum Program, go to the
Environmental section of this report (on page 30).
Michipicoten First Nation Environmental Committee
site visit
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
CERRO DEL GALLO PROJECT
Guanajuato, Mexico
The Cerro del Gallo project in Guanajuato, Mexico is a long-life, low-cost,
pre-feasibility stage growth project. Currently in the permitting phase, the
project fits well within our Mexican team’s operating skill set as another
open pit heap leach project. Cerro del Gallo, like Magino, is an asset that
supports our transformation strategy from being a high-cost, short mine
life junior producer to a lower-cost, long mine life intermediate producer.
As we continue to advance permitting, we are also fostering our relationship
with the local community. Our focus is providing project education to
residents, establish long-standing relationships with key partners in the
community including gaining municipal and state support.
1 Based on the assumptions and parameters of the Cerro del Gallo Pre-Feasibility Study results announced on December 18, 2019.
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PRE FEASIBILITY STUDY
HIGHLIGHTS1
MEASURED & INDICATED
MINERAL RESOURCES
201.9Mt at 0.44 g/t Au,
12.2 g/t Ag and 0.09% Cu
2.86M contained gold ounces,
79.1M contained silver ounces,
and 187.1T contained copper
PROVEN & PROBABLE
MINERAL RESERVES
91.8Mt at 0.56 g/t Au,
13.3 g/t Ag and 0.10% Cu
1.64M contained gold ounces,
39.1M contained silver ounces
and 85.5T of contained copper
15 year mine life
77k ounces average annual
gold production during the
first 5 years following ramp up
Average annual cash cost
$597 per gold ounce sold
Average annual AISC
$667 per gold ounce sold
INITIAL PROJECT CAPITAL
$135M
SUSTAINABILITY
An overview of our commitment to socially
responsible practices and sustainability
initiatives in 2021
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
2021 ESG SNAPSHOT
Our team excelled in safety at our operations and achieved:
10th
7%
CONSECUTIVE YEAR
RECEIVING ESR
AWARD FOR MEXICAN
OPERATIONS
REDUCTION IN
YEAR-OVER-YEAR LOST
TIME INJURY FREQUENCY
RATE (“LTIFR”)
1.5M
HOURS WITHOUT
DISABLING ACCIDENTS AT
LA COLORADA
By switching to solar panels to generate alternative energy and benefited by:
24%
REDUCTION IN
GHG EMISSIONS
AT LA COLORADA
7%
2.2 tonnes
REDUCTION IN
WATER EVAPORATION RATE
AT EL CASTILLO
REDUCTION IN
GHG EMISSIONS
AT EL CASTILLO
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SUSTAINABILITY
CSR EXCELLENCE AND THE PATH
TO ESG REPORTING
Corporate social responsibility continues to be a critical aspect of our
business. As we grow, we are investing in additional resources to provide
a more comprehensive Environmental, Social and Governance (“ESG”)
reporting structure.
We are proud of the continued efforts our team lead in the areas of sustainability, health and safety and
community relations.
Our four pillars: OUR SAFETY, OUR PEOPLE, OUR COMMUNITY and OUR ENVIRONMENT continue
to serve as our framework, as we focus on creating balance to ensure we foster synergies with our
neighbours, as well as operate in a sustainable, safe environment.
ARGONAUT, A GOOD NEIGHBOUR
“Being a good neighbour means fostering dialogue with communities to strengthen
our relationship and to understand their needs in order to encourage participation
and communicate the legacy of creating sustainable benefits.”
• As we continue to transition towards a comprehensive ESG approach, our communities remain the
central axis of our efforts.
• We will continue strengthening the promotion of education in our communities. We are also
committed to the development of human capital through continuous training to reinforce the
development of talent.
• We have made progress in supporting the health of our communities by collaborating with public
prevention and care programs, particularly in these times of COVID-19 where attention has focused
on strengthening campaigns to prevent spread and prompt care.
•
Finally, we support culture and sports in our environment, promoting joint projects with public and
private institutions to promote mining as a source of economic and human development.
Alfredo Phillips Greene
Vice President, Corporate Affairs & Country Manager, Mexico
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Argonaut Gold Inc. 2021 Annual & Sustainability Report
OUR SAFETY
Safety remains our number one priority, and in 2021 we demonstrated
both excellence and leadership.
We have achieved safety milestones including a 7% year-over-year LTIFR reduction, maintaining zero accidents
for the entire year at El Castillo and exceeding 1.5 million hours without disabling accidents at La Colorada.
We also prioritized health, continuing to manage and monitor the pandemic. Health workshops were also
made available and included topics such as occupational health and mental health awareness. During the
year, our operations teams completed over 21,300 combined hours of safety related training.
3 YEAR OPERATIONAL SAFETY STATS
2019 2020 2021
El Castillo
Lost Time Accidents
Total Reportable
San Agustin
Lost Time Accidents
Total Reportable
La Colorada
Lost Time Accidents
Total Reportable
Florida Canyon1
Lost Time Accidents
Total Reportable
1
21
3
24
5
32
1
18
0
13
3
30
0
21
1
19
1
25
3
10
Safety training at San Agustin
1 Argonaut took ownership of Florida Canyon on July 1, 2020.
In 2021, we continued to provide internal training programs on risk prevention and safety protocols, with the goal of
preserving the health and safety of all workers. Safety campaigns included:
• San Agustin Safety Campaign resulted in the detection and correction of unsafe conditions. The implementation
of our internal safety system through the “Supervisor Binder” program is another action based on safety related
activities that Supervisors and workers are to carry out on a daily basis to improve their corresponding working
areas.
• Florida Canyon “The Care to Lead” safety culture workshops focused on transparent incident reporting. Employees
responded by reporting 21% more safety events overall in 2021. The 21% increase in event reports was slightly
higher than the 13% increase in headcount, which also led to the increase in overall safety events. Reportable
injuries increased by 25% and property damages increased by 28%. Near miss reporting was the lone reduction in
2021, dropping 26% from 2020.
20
SUSTAINABILITY
The team at El Castillo achieved zero accidents in each quarter of 2021.
“Safety is one of the pillars we prioritize in
our operation. We are proud that last year
we exceeded 1.5 million work hours without
disabling accidents.”
Manuel Ernesto Encinas Cabrera, General Manager of the La Colorada Mine.
MANAGING COVID-19
We continued to manage the pandemic through 2021 practicing company-
wide prevention protocols, regular sanitization, regular testing, and
monitoring. In addition to our protocols, we also continued our integral
health program at Mexico operations for vulnerable workers, ensuring
regular check-ups and medical assistance if needed. As we ramped up
construction at Magino last year, we were diligent in practicing safety
protocols when on-boarding an influx of new team members. Regular
antigen and PCR tests were taken, totaling over 13,000 tests during the
year. Over 80% of on-site employees and contractors are fully vaccinated,
and we provided over 260 on-site nurse visits in the second half of 2021.
Antigen testing at El Castillo.
21
Argonaut Gold Inc. 2021 Annual & Sustainability Report
OUR PEOPLE
As we work to transform Argonaut, we continued to invest in and
grow our best asset - our human capital.
We made significant additions to our team in 2021, as we ramped up hiring at Magino. We grew from 19
Magino employees to 141, and we are continuing to grow as we near our first gold pour in early 2023.
We also made changes in our leadership team, welcoming Alfredo Phillips Greene as the Vice President,
Corporate Affairs & Country Manager in Mexico and promoting Lowe Billingsley to Chief Operating Officer.
In March 2022, we welcomed Larry Radford as the President and Chief Executive Officer.
2021 EMPLOYEE STATS
LOCATION
EMPLOYEES
LOCAL
WOMEN
UNIONIZED
El Castillo
San Agustin
La Colorada
Florida Canyon
Magino
Cerro del Gallo
Ana Paula
San Antonio
Corporate
Corporate
Hermosillo
279
193
171
275
141
7
20
2
14
38
61%
62%
18%
80%
38%
71%
80%
100%
86%
92%
12%
11%
5%
16%
19%
14%
5%
50%
36%
66%
64%
46%
67%
n/a
n/a
n/a
80%
n/a
n/a
n/a
Workforce training at Magino
22
Florida Canyon team with the 500th doré bar in Nevada
WORKFORCE TRAINING & WORKSHOPS
Our team participates in regular training and workshops.
Training includes topics such as workplace health and
safety protocols, machine operation, environmental
monitoring, handling of materials such as cyanide and
hazardous waste, electrical and technical training, and
drone operation.
At Magino, we included simulation training on site using
an equipment simulator to allow for continued training
during the construction phase while the team prepared
for equipment delivery.
SUSTAINABILITY
Team at the El Castillo laboratory
“I am very happy Argonaut gave me the opportunity to
complete my internship and stay within the company as a
geologist. I have acquired a lot of practical knowledge while
working for El Castillo. I am originally from San Juan Del Rio,
and I can work locally, close to my family.””
Carlos Daniel Gándara Arango, Ore Control Geologist at the El Castillo mine
“The training we received on the
use of the Caterpillar forklifts
was great, and the presenters
were well informed. I think this
training is really important, since
forklifts are extremely necessary
in the area I work.”
Sonia Alvarez Santillano
Warehouse employee at the San Agustin mine
INDUSTRY LEADERSHIP IN THE COMMUNITY
The Argonaut team continues to demonstrate leadership within
the industry and are ambassadors for our values. Our team
members were key participants in events including:
• Women Who Inspire Leadership Forum by CANACINTRA
in Hermosillo, Mexico
• MINNOVACIÓN 2021 by the Sonoran Mining Cluster,
Mexico
• Mining in the NorthWest, an Indigenous Partnership
conference in Ontario, Canada
• Annual RUSH 2021 hosted by Missanabie Cree First
Nation in Ontario, Canada
23
Argonaut Gold Inc. 2021 Annual & Sustainability Report
OUR COMMUNITY
Argonaut remains committed to continued collaboration with our
neighbours. As we navigated the global pandemic for a second year,
our teams remained committed to collaborating with our communities
in a safe manner. In addition to continuing to provide COVID-19
support to the community, we remained committed to providing
infrastructure, educational and cultural support.
COVID-19 COMMUNITY SUPPORT
“The La Colorada mine is a great ally of the
municipality in the fight and prevention of COVID-19,
for which La Colorada municipality thanks them
and recognizes all their effort and dedication to the
health of citizens.”
Marcos Platt Escalante, Mayor of La Colorada
A HEALTH COMMUNITY
Our teams continued to provide local support to the community to assist with the prevention of COVID-19. This
included donations of supplies, sanitization of public spaces and homes, sharing our health services and personnel
with the local community, and participating in municipal committee meetings.
In addition to COVID-19 community support, Argonaut supported local health initiatives this year, including
supporting the Lady Dunn General Hospital in Wawa, Ontario providing C$30,000 to assist with doctor recruitment
due to the local doctor shortage. We also continued doctor and medication support for members in the community
of San Antonio in Mexico.
24
SUSTAINABILITY
Argonaut hosted a groundbreaking ceremony which hosted members of Indigenous communities, local mayors and Minister Greg
Rickford, the Ontario Minister of Northern Development, Mines, Natural Resources and Forestry.
COMMUNITY OUTREACH AND CULTURE
Community outreach and participation in community cultural events is
important for fostering meaningful relationships between Argonaut and our
neighbours. Consistent with previous years, we hosted seasonal festivities
such as Children’s Day, Mother’s Day, religious holidays in Mexico and
Christmas events. During these events we provided donations for items
such as gifts for children and youth.
In Mexico, we continued to provide support with the distribution of
grocery packages to communities in Mexico, and also provided community
workshops to assist community members with learning new skills and
encouraging entrepreneurship.
At Florida Canyon, in 2021 we supported local organizations and events
including local food bank donations, Frontier Community Coaltion
donations, softball team sponsorships, Winnemucca and Lovelock Domestic
Violence Donations, MTC Scholarships, Ranch Hand Rodeo, and the Color
the Mucc Run event.
At Magino, we participated in Town Hall meetings with the Township of
Dubreuilville regarding our plans for the camp and are also currently working
on a socio-economic base line study with the surrounding communities
as it relates to topics such as housing, traffic and roadways. Magino also
assisted many local committees from Dubrueilville and Wawa. Some
agencies and committees included Recreation Committee of Dubreuilville,
Pivot Jeunesse, Economic Development Corporation of Dubreuilville,
Wawa Alzheimers Society, Wawa Figure Skating Club, Wawa Volunteer Fire
Department, Lady Dunn General Hospital, and the Adult Learning Centre.
Community grocery package delivery by El Castillo
Florida Canyon team participating in local food bank
donation in Nevada
Christmas youth celebration in La Colorada
25
Argonaut Gold Inc. 2021 Annual & Sustainability Report
SUPPORTING EDUCATION
Investing in education remains one of Argonaut’s key community initiatives
and we continue to participate in educational programs, events, and
provide monetary support. Educational support in 2021 included:
• At La Colorada, we invested $455,400 MXN in a total of 443 scholarships
and backpacks with school supplies to 100% of the students who live in
the Community of La Colorado Sonora.
• We also have an agreement with two universities to receive interns in our
Unit. We also use these universities as a job bank for former students:
State University of Sonora and Technological University of Hermosillo.
• At El Castillo, we invested $1,620,322 MXN for a total of 758 bi-monthly
scholarships that were distributed among students in the Otilio Montaño
Community. We also offered the first local Summer Camp to children and
youth in Otilio Montaño.
• At San Agustin, we invested $3,954,184 MXN for a total of 2,078 bi-
monthly scholarships that were distributed among students in the
communities of San Agustin, San Lucas, Las Cruces and Mimbres. Grocery
packages in lieu of in-school breakfast programs for students were also
provided on a bi-weekly basis, totaling an investment of $117,428 MXN.
We also offered the first local Summer Camp to children and youth in San
Agustin and San Lucas.
• At Florida Canyon, we participated in local school events such as
the Senior Exit Interviews which assists in preparing graduating high
school seniors with college admission or job interviews, and the
Freshman Expo / 4th Grade Gold Rush exhibits which educates youth
on careers in the mining industry. We also sponsored scholarships
for the Maintenance Cooperative Training program, a local technical
college training program which provides students with technical trades
at Florida Canyon.
• At Magino, we participated in the Algoma District School Board Trades
Promo Night for students and parents of the Algoma District to discuss
different career opportunities in the trades and the highlights of our
industry.
• At Cerro del Gallo, we donated over 300 school supply packages in
partnership with the Ministry of Education, to various schools in Silleros,
Los Avilés, Santa Bárbara, Las Lozas, La Colmena and San Isidro del
Sisote, communities in the municipality of Dolores Hidalgo.
26
Student scholarships and school supply delivery
in La Colorada, Mexico
Summer Camp for children and youth in San
Agustin and San Luca, Mexico
High school students at the Freshman Expo in
Winnemucca, Nevada
SUSTAINABILITY
Rehabilitation of community buildings in La Colorada
Existing local equipment we provided maintenance for in
San Juan del Río, Mexico
Donation of materials to the communities of San Lucas,
San Agustin, Mimbres and las Cruces
Solar panels installed to provide power for water well
pumps in the community of San Lucas, Mexico
COMMUNITY INFRASTRUCTURE
Investing in proper infrastructure is key to ensuring communities have the
proper support to thrive. This includes roads, agricultural support, and
support for local businesses. In 2021, we made key contributions including:
• At La Colorada, we rehabilitated a total of 212 kilometres of
neighborhood roads in the communities of Cobachi, La Galera and
Estación Torres. Our goal of rehabilitating 100% of the houses in
the La Colorada Community continues, and in 2021 a total of 32
houses have been rehabilitated, including the three educational
centers in the municipality.
• At El Castillo, we provided maintenance of approximately eight
kilometres of a locally owned road, provided maintenance for
equipment owned by the Municipal Administration of San Juan del
Río for the municipal road works, and also donated a totem pole
and pipe lines to Ejido Otilio Montaño.
• At San Agustin, we provided road maintenance to approximately
44 kilometres in San Lucas, provided equipment to be installed at
the Los Jacales well in Ejido San Agustin and installed solar panels
to run the pump in the water well of the junior high school in the
community of San Lucas. We also donated drinking water to the
communities of San Lucas, San Agustin, Mimbres and las Cruces.
Three cleaning campaigns were also conducted, where team
members, contractors and community residents participated. This
included a campaign on the state highway access to San Juan del
Río, collecting approximately 2.7 tonnes of trash.
• At Florida Canyon, we helped build new units for the local animal
shelter, Safe Haven.
• At Magino, we assisted the Community of Dubreuilville to create
a gravel walking path for the local youth and citizen to walk to the
beach instead of walking on the side of the road. We also graded
the main road to go to the lodge and assisted with upkeep, and
provided funding for speed bumps to assist with speed reduction
of traffic coming into town to ensure pedestrian safety.
• At Cerro del Gallo, we assisted in the rehabilitation of the local
church roads, and also assisted in the rehabilitation of health
buildings in the community of San Antón de las Minas.
27
Argonaut Gold Inc. 2021 Annual & Sustainability Report
At El Castillo we migrated
from a sprinkler irrigation
system to an on-surface
drip system for our leach
pads. By switching we
were able to optimize our
water usage.
OUR ENVIRONMENT
Argonaut is committed to continuously optimizing our operations
to reduce our use of natural resources and our impact on the
environment as we continue to grow.
In 2020 we began to implement changes, and in 2021 we continued to our optimizations that resulted
in a reduction in water consumption, energy consumption and greenhouse gas emissions (“GHG”).
Argonaut also prioritizes environmental monitoring programs that measure dust and continues to
manage and meet standards in compliance with local regulatory requirements.
MINIMIZING CONSUMPTION & OPTIMIZING OPERATIONS
We began migrating from the sprinkler irrigation system to the on-surface drip hose system in early
January 2020. Leaving sprinklers only on embankments, the migration represented significant water
consumption savings and water optimization. In 2021, the migration from sprinkler irrigation to the
dripping hose system achieved the following benefits:
EL CASTILLO COMPLEX
LA COLORADA
7% reduction
in evaporation factor
5% reduction
in evaporation factor
OVERALL BENEFITS
•
•
reduced wind drift losses
•
controlled irrigation rate
reduced ponding from
moisture saturation on surface
• flow priority optimization on fresh ore
28
SUSTAINABILITY
Installing solar panels
at La Colorada allowed
us to reduce our diesel
consumption.
“By installing solar panels in some areas of the mine, we reduce
the emissions formerly generated by the processes where they
were installed, as there is no need to use any more fuel and
generators. Noise is also reduced, and all this brings economic
benefits but above all, we generate a benefit for the environment.”
Daniel Vazquez, Maintenance Superintendent at the El Castillo mine
ALTERNATIVE ENERGY
By installing solar panels for the new communication antenna and booth buildings at the El Castillo
Complex and La Colorada, we were able to reduce diesel consumption and GHG emissions. We are also
in the process of switching from diesel generator to the electric power grid at San Agustin. This change is
currently underway, which will lower the cost to $0.09 - $0.11/kWhr from the current cost is $0.29/kWhr.
In 2021, we were able to achieve the following by switching to alternative energy:
EL CASTILLO COMPLEX
LA COLORADA
4,519 kWh saved
which is equivalent to
67% diesel reduction
which is equivalent to
2.2 tonnes GHG
24% GHG reduction
IN THE COMMUNITY
Last year we donated and installed solar panels at the local high school to power the
water well pump in San Agustin. Implementing this system contributes to a savings of
approximately 4,500 litres of diesel used per year in the conventional system. We were able
to reduce the GHG emissions by approximately 12 equivalent tonnes.
29
Argonaut Gold Inc. 2021 Annual & Sustainability Report
ENVIRONMENTAL PROGRAMS AT MAGINO
BAT HIBERNACULUM
An existing mine adit at the Magino Project, in place from mining operations in the 1980s, provided bat hibernation
habitat for the northern myotis and the little brown myotis bat. Both species have experienced substantial population
declines throughout their northeastern North American range, in large part, due to mortality from White Nose Syndrome
(WNS). WNS is an infectious disease caused by fungus which grows on the skin of infected bats during hibernation. Little
brown myotis and northern myotis are designated as endangered under the Endangered Species Act, 2007 (ESA).
Prior to removal of this habitat, an overall benefit permit, issued by the Ministry of Environment, Conservation and Parks
is required. For the overall benefit to be achieved, a new hibernaculum needs to be constructed. In addition, Bat Habitat
Rehabilitation and Artificial Bat Roosting Plans will also be developed. The new bat hibernaculum is scheduled to be
constructed in the second quarter of 2022. Drafts for the Bat Habitat Rehabilitation and Artificial Roosting Plans are
underway with drafts to be completed by June 2022. The draft plans will be shared with all indigenous communities
partnered in the project, and the indigenous knowledge gained from the communities will be incorporated into the plans
prior to being submitted to the Regulatory Agency.
FISH HABITAT
To facilitate development of the Magino Project, there will be a need to
overprint or otherwise impact waterbodies (lakes, streams and wetlands)
that contain fish and/or provide fish habitat. As a result, the provision of
compensatory offsetting measures to replace the impacted fisheries values
associated with the water features will be necessary.
The following measures are being implemented to provide compensation for
the impacts and offsets to the effected fish habitat. A new diversion channel
between the Spring Lake outlet and McVeigh Creek Southwest is planned
to be constructed. The next measure will be to create new habitat south of
Webb Lake. The constructed lake basin(s) will be designed to provide in-kind
habitat replacement consistent with the majority of the habitat impacted by
the project. Whereas the majority of impacted waterbodies are baitfish or
low diversity sportfish communities, new basins will largely target supporting
a high diversity fish community consistent with community interests and the
MNRF provincial fisheries objective for this area.
The third measure is to re-introduce fish in previously industrial impacted
areas. The fish community restoration offsetting measure will reintroduce
Consultants working on fish relocation program at Magino
top-level predators (i.e. Brook Trout and/or Lake Trout) into the previously impacted lakes. Predatory fish were
historically present in these lakes but were extirpated due to the temporary water quality degradation from the severe
acid deposition. Trout species are unlikely to colonize naturally without intervention due to the lack of exiting trout
populations in the upper watershed, and the small size of the aquatic systems connecting the lakes to downstream
populations.
The fish habitat construction is underway. The reintroduction of fish into historically impacted areas is also scheduled
to begin in the second quarter of 2022.
30
SUSTAINABILITY
SPECIES AND PLANT RESCUE CAMPAIGNS AT OPERATIONS
NATIONAL FORESTRY FUND DONATION: MXN $6,247,616
Donated by La Colorada
•
La Colorada: Nearly 31 hectares were reforested in 2021. To date 62.27
hectares have been rescued, 600 meters of plant lines were laid, 77
filter dams and 6,416 plants were rescued. In 2021, the total wildlife
that were rescued included 4 turtles, 5 vipers, 2 chameleons and 1
eagle found within the property.
• El Castillo: Rescued and relocated flora including a total of 31 individual
cactus species. We also rescued and relocated a total of seven
rattlesnakes found within the property.
• San Agustin: Rescued and relocated flora including a total of 118
individuals cactus species. The nursery has a current inventory of 7000
individuals of huizaches, mezquites and yuca species.
Flora species part of the San Agustin rescue and
relocation program
“Our main goal for the El Castillo’s Restoration and Closure Plan
is using the best strategies to sustain the natural resources used
in our reforestation activities so they can be incorporated into the
environment in a harmonious fashion. Establishing a reforestation
program which reincorporates rescued flora, as well as plants
reproduced with the site’s germoplasma, will enable us to reach higher
survival percentages due to a better adaptability to the site conditions,
like weather, topography, elevation and sun exposure. Vegetation
rescue programs, as well as reproduction are fundamental for the
success of the Restoration and Closure Plan.”
Guillermo Velasco, Closure Plan Superintendent at the El Castillo mine
31
On-site plant nursery
at San Agustin in
Durango, Mexico.
32
GOVERNANCE & LEADERSHIP
ARGONAUT’S
MANAGEMENT
An overview of Argonaut’s Risk Management,
Governance and Leadership.
33
Argonaut Gold Inc. 2021 Annual & Sustainability Report
MANAGING RISKS
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 key risks across all aspects of our organization and outlined our top
10 risks throughout 2021, which included new risks and a shift in ranking for the
other risks included in 2020.
2021 TOP 10 RISKS & DESCRIPTIONS
* New Top 10 Risk in 2021
1
2
3
4
5
Project Development
Unable to deliver projects on time, on budget with
desired quality.
Permitting Risk
Risks associated with obtaining and maintaining the
necessary permits at operating and development
projects.
Operational Performance
Underperformance from operations would yield
less cash flow during a capital intensive phase for
Argonaut.
Pandemic or Endemic
Cause shortage in workers or disruption in normal
business or operational activities.
Human Resources
Lack of key personnel due to pandemic, competition
and/or inadequate succession plan.
6
7
8
9
Access to Capital*
Unable to finance development projects in the capital
markets at a reasonable cost of capital.
Gold Price
Argonaut is exposed to price fluctuations.
Jurisdiction Risk
Major changes that can impact where we can
operate.
Social License*
Individual or community opposition to mines or
projects.
10
Communication
Inadequate internal communications systems.
34
RISK MANAGEMENT
2021 TOP 10 RISKS
RISK
CAUSES
IMPACTS
1 Project
Development
(no change)
2 Permitting Risk
(2020 - Operational
Performance)
3 Operational
Performance
(2020 - Pandemic or Endemic)
Insufficient detailed engineering.
Lack of consistent forecasting for
capital and investment projects.
Changing conditions.
Loss of confidence in team / company.
Spend more than estimates.
Lost opportunity.
Inadequate technical components of
permit document.
Political influence.
Legal action brought against
Argonaut or regulatory officials.
Suspension of existing
operations.
Delay of project start-up,
expansion and development.
Operations unable to deliver the
budgeted plan.
Loss of shareholder confidence.
A reduction in cash flow.
EXPECTED
IMPACT
RATING
EXPECTED
LIKELIHOOD
RATING
Major
Almost Certain
Major
Likely
HEAT MAP
RISK LEVEL
RANKING
vs. 2020
2020 Rank: 1
▲
2020 Rank: 6
23
(18)
21
(14)
Major
Possible
18
▲
2020 Rank: 2
4 Pandemic or
Endemic
(2020 - Country Risk Mexico)
COVID-19 etc.
Employee self-isolation or
quarantine.
Impacts in locations of key
suppliers cause supply chain
disruptions.
Major
Possible
5 Human Resources
(2020 - Gold Price)
Competition for skilled employees.
Getting the right fit for the position.
Travel restrictions.
Turnover in employees.
Potential changes in compensation.
Unable to operate at full capacity.
.
Moderate
Likely
▲
2020 Rank: 3
▲
2020 Rank: 8
18
(18)
17
(13)
6 Access to Capital*
(2020 - Permitting Risk)
Windows of debt or equity markets
closed at times when Argonaut
re-quires capital.
Required capi-tal increases
significantly more than planned.
Development projects not
constructed as planned which
would disrupt the corporate LOM.
Potential default on debt
obligations.
Moderate
Likely
17
2020 Rank: n/a
7 Gold Price
(2020 - Legal Actions)
8 Jurisdiction Risk
(2020 - Human Resources)
Supply and demand changes,
geopolitical stability.
Changes in valuation of US dollar.
Changes in safe haven status
(i.e. Bitcoin, crypto).
Severe economic crisis.
Changes in government - tax
nationalization, relationship
with government, changes in
government leaders.
Variability in revenues and cash
flows.
Catastrophic
Rare
Loss of operations, mines.
Regulatory changes.
New tax laws.
Major
Unlikely
▲
2020 Rank: 5
▲
2020 Rank: 4
15
(15)
14
(15)
9 Social License*
(2020 - Tax)
Regulatory non-compliance.
NGO interference.
Community unrest.
Inadequate legal structure in Mexico.
Unable to operate.
Resources devoted to fighting
legal, community or regulatory
challenges.
10 Communications
(2020 - no change)
Lack of organizational structure.
Geographical diversity.
Lack of trust.
Unable to grow, advance.
Objectives/expectations not met.
Errors and wrong decisions.
* New Risks in 2021 (#) Risk and risk level in 2020
35
Major
Unlikely
14
2020 Rank: n/a
Minor
Likely
12
(12)
2020 Rank: 10
Argonaut Gold Inc. 2021 Annual & Sustainability Report
LEADERSHIP &
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.
BOARD COMMITTEES
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.
to
responsibility
THE NOMINATING,
COMPENSATION AND
GOVERNANCE COMMITTEE
advise
has
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
sustainability
health,
safety,
and environmental policies of
review
the Company, and
with
management’s
to
strategy
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.
36
BOARD OF DIRECTORS
GOVERNANCE & LEADERSHIP
James E. Kofman 2,3
Chairman
Ian Atkinson 1,2
Stephen Lang 1,3
Peter Mordaunt 2,3
Dale Peniuk 1,2
Paula Rogers 1,2
Audra Walsh 1,3
MANAGEMENT
1 Audit Committee
2 Nominating, Compensation and
Governance Committee
3 Safety, Health, Environment,
Sustainability and Technical
Committee
Larry Radford
President & CEO, Director
David Ponczoch
Chief Financial Officer
Lowe Billingsley
Chief Operating Officer
W. Robert Rose
Vice President of
Technical Services
Daniel A. Symons
Vice President of
Corporate Development &
Investor Relations
Brian Arkell
Vice President of
Exploration &
Mine Technical Services
37
Argonaut Gold Inc. 2021 Annual & Sustainability Report
MINERAL RESOURCES & MINERAL RESERVES1
The following table shows the gold and silver Mineral Resources and Mineral Reserves at December 31, 2021. Mineral
Resources are not Mineral Reserves. Mineral Resources hold intrinsic economic interest, which has been identified and
estimated through exploration and sampling and within which Mineral Reserves may subsequently be defined. There
is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves. Measured and
Indicated Mineral Resources listed below are inclusive of Mineral Reserves.
MMIINNEERRAALL RREESSEERRVVEESS
PPRROOVVEENN && PPRROOBBAABBLLEE
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
El Castillo2
El Castillo2
San Agustin2
EEll CCaassttiilllloo CCoommpplleexx22
El Creston
Veta Madre
LLaa CCoolloorraaddaa CCoommpplleexx33
Florida Canyon4
Florida Canyon4
FFlloorriiddaa CCaannyyoonn44
Magino5
Magino5
MMaaggiinnoo55
Cerro del Gallo6
Cerro del Gallo6
CCeerrrroo ddeell GGaalllloo66
Ana Paula7
Ana Paula7
AAnnaa PPaauullaa77
CCoonnssoolliiddaatteedd MMiinneerraall RReesseerrvveess
Proven
Probable
Probable
PPrroovveenn &&
PPrroobbaabbllee
Probable
Probable
PPrroobbaabbllee
Proven
Probable
PPrroovveenn &&
PPrroobbaabbllee
Proven
Probable
PPrroovveenn &&
PPrroobbaabbllee
Proven
Probable
PPrroovveenn &&
PPrroobbaabbllee
Proven
Probable
PPrroovveenn &&
PPrroobbaabbllee
PPrroovveenn &&
PPrroobbaabbllee
0.3
8.9
33.2
4422..44
13.8
7.3
2211..11
57.5
10.9
6688..44
26.3
39.2
6655..55
70.4
21.3
9911..88
6.5
6.9
1133..44
0.49
0.40
.32
00..3333
0.70
0.63
00..6677
0.43
0.37
00..4422
1.24
1.10
11..1155
0.59
0.46
00..5566
2.62
2.12
22..3366
4
114
336
445544
308
148
445566
790
131
992211
1,044
1,383
22,,442277
1,326
313
11,,663388
550
471
11,,002211
9.1
9,742
99,,774422
5,257
885
66,,114422
11.9
3.8
99..11
0.10
0.08
00..0099
67,691
17,821
8855,,551122
13.7
11.7
1133..33
5.3
5.1
55..22
31,088
8,012
3399,,110000
1,115
1,139
22,,225544
330022..66
00..7711
66,,991177
NN//AA
5577,,223388
NN//AA
8855,,551122
MMIINNEERRAALL RREESSOOUURRCCEESS
MMEEAASSUURREEDD && IINNDDIICCAATTEEDD ((“M&I”)
El Castillo8
San Agustin8
EEll CCaassttiilllloo CCoommpplleexx88
La Colorada Complex9
Florida Canyon10
Magino11
Cerro del Gallo12
Ana Paula open pit13
Ana Paula underground13
San Antonio14
M&I
Indicated
MM&&II
Indicated
M&I
M&I
M&I
M&I
M&I
M&I
31.4
60.0
9911..44
36.1
86.5
132.4
201.9
18.0
3.0
65.0
0.36
0.27
00..3300
0.62
.42
0.94
0.44
2.06
2.80
0.86
355
531
888866
714
1,177
4,019
2,864
1,195
267
1,735
7.6
8.3
12.2
4.9
4.2
14,766
1144,,776666
9,622
79,103
2,865
404
0.09
187,100
CCoonnssoolliiddaatteedd MMiinneerraall RReessoouurrcceess
MMeeaassuurreedd &&
IInnddiiccaatteedd
772255..77
00..5599
1133,,774433
NN//AA
112211,,552266
NN//AA
118877,,110000
Measured and indicated Mineral Resources are inclusive of Mineral Reserves
MMIINNEERRAALL RREESSOOUURRCCEESS
IINNFFEERRRREEDD
El Castillo8
San Agustin8
EEll CCaassttiilllloo CCoommpplleexx88
La Colorada9
Florida Canyon10
Magino11
Cerro del Gallo12
Ana Paula open pit13
Ana Paula underground13
San Antonio14
Inferred
Inferred
IInnffeerrrreedd
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
CCoonnssoolliiddaatteedd MMiinneerraall RReessoouurrcceess
IInnffeerrrreedd
1.8
2.1
33..99
1.4
5.8
20.9
5.1
0.2
0.6
6.2
4488..00
1 Refer to Mineral Resource Notes And Disclosures on page 37.
20
25
4455
23
54
526
71
10
41
67
8.7
10.9
11.9
8.8
3.9
603
660033
480
1,947
0.06
1
70
79
888822
NN//AA
33,,778822
NN//AA
11
0.35
0.36
00..3366
0.53
0.29
0.78
0.43
1.27
2.07
0.34
00..5577
38
DISCLAIMERS
NATIONAL INSTRUMENT 43-101 AND QUALIFIED PERSON
Technical information included in this report was supervised and approved by Brian Arkell, Argonaut’s Vice President, Exploration and a Qualified Person under NI 43-101.
For further information on the Company’s material properties, please see the reports as listed below on the Company’s website or on www.sedar.com:
El Castillo Gold Mine
El Castillo Gold Mine, Durango, Mexico NI 43-101 Technical Report dated February 14, 2022 (effective date of October 1, 2021)
San Agustin Gold/Silver Mine
San Agustin Gold/Silver Mine, Durango, Mexico, NI 43-101 Technical Report dated February 14, 2022 (effective date of August 1, 2021)
La Colorada Gold/Silver Mine
La Colorada Gold/Silver Mine, Sonara, Mexico, NI 43-101 Technical Report dated February 14, 2022 (effective date of October 1, 2021)
Florida Canyon Gold Mine
NI 43-101 Technical Report on Mineral Resource and Mineral Reserve Florida Canyon Gold Mine Pershing County, Nevada, USA dated
July 8, 2020 (effective date June 1, 2020)
Magino Project
NI 43-101 Technical Report Mineral Resource and Mineral Reserve Update,Ontario, Canada (effective date of February 14, 2022)
Cerro del Gallo Project
Pre-Feasibility Study Technical Report on the Cerro del Gallo Project, Guanajuato, Mexico dated January 31, 2020 (effective date of
October 24, 2019)
MINERAL RESOURCE NOTES AND DISCLOSURES
(1) Mineral Reserves and Mineral Resources have been estimated as at December 31, 2021 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.
(2) The Mineral Reserves for El Castillo Mine and San Agustin Mine set out in the above table 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, 2021. El Castillo used a gold price of $1,650 per ounce; San
Agustin used a gold price of $1,500 per ounce and silver price of $20.00 per ounce. Cut-off grades for El Castillo range from 0.10 g/t Au to 0.24 g/t Au depending on ore
type; cut-off grades at San Agustin were 0.16 g/t AuEQ.
(3) The Mineral Reserves for La Colorada Complex set out in the above table are based on updated models, mine plans and topography as well as updated recoveries and
cost assumptions as of December 31, 2021. La Colorada used a gold price of $1,500 per ounce and a silver price of $20.00 per ounce. Cut-off grade for La Colorada
was 0.13 g/t AuEQ.
(4) The Mineral Reserves for Florida Canyon set out in the above table are based on updated models, mine plans and topography as well as updated recoveries and cost
assumptions as of December 31, 2021. Florida Canyon used a gold price of $1,500 per ounce. Cut-off grade for Florida Canyon was 0.17 g/t Au.
(5) The Mineral Reserves for the Magino Project set out in the table above were taken from the Magino Technical Report. The Mineral Reserves were estimated at a gold
price of $1,600 per ounce. The Mineral Reserves used a variable gold cutoff grade of between 0.38 g/t Au and 0.70 g/t Au, depending on mine sequencing.
(6) The Mineral Reserves for Cerro del Gallo set out in the table above 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.
(7) The Mineral Reserves for Ana Paula set out in the table above were taken from the Ana Paula Technical Report. The Mineral Reserves were estimated at a gold price
of $1,200 per ounce and a silver price of $17.00 per ounce. The Mineral Reserves used a gold cutoff grade of 0.67 g/t Au.
(8) The M&I Mineral Resources and Inferred Mineral Resources for El Castillo and San Agustin, which together form the El Castillo Complex, set out in the above table
were based on pit cones using $1,800 per ounce gold and $24.00 per ounce silver. Cut-off grades range from 0.07 g/t Au to 0.48 g/t Au for El Castillo and 0.11 to 0.42
g/t AuEQ for San Agustin, depending on ore type.
(9) The M&I Mineral Resources and Inferred Mineral Resources for La Colorada set out in the above table were based on pit cones using $1,800 per ounce gold and $24.00
per ounce silver. Cut-off grade was 0.09 to 0.11 g/t AuEQ.
(10) The M&I Mineral Resources and Inferred Mineral Resources for Florida Canyon set out in the above table were based on pit cones using $1,800 per ounce gold.
Cut-off grade was 0.15 g/t Au.
(11) The M&I Mineral Resources and Inferred Mineral Resources for the Magino Project set out in the table above were taken from the Magino Technical Report. The
Mineral Resources were estimated at a gold price of $1,800 per ounce. The Mineral Resources used a gold cutoff of 0.28 g/t.
(12) The M&I Mineral Resources and Inferred Mineral Resources for the Cerro del Gallo Project set out in the table above 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.
(13) The M&I Mineral Resources and Inferred Mineral Resources for Ana Paula set out in the table above were taken from the Ana Paula Technical Report. The Mineral
Resources were estimated at a gold price of $1,350 per ounce and a silver price of $17.00 per ounce. The Mineral Resources used a gold cutoff grade of 0.60 g/t Au for
the Mineral Resources amenable to open pit extraction and 1.65 g/t Au for the Mineral Resources amenable to underground extraction.
(14) The M&I Mineral Resources and Inferred Mineral Resources for the San Antonio Project set out in the table above 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain “forward-looking statements” and “forward-looking information” under applicable Canadian securities laws concerning the business,
operations and financial performance and condition of Argonaut Gold. Forward-looking statements and forward-looking information include, but are not limited to
statements with respect to: the Magino construction capital estimate; the ability to finance additional construction costs on terms acceptable to Argonaut; the realization
of mineral reserve estimates; the timing and amount of estimated future production; the impact of inflation on costs of exploration, development and production; estimated
production and mine life of the various mineral projects of Argonaut; timing of approval for modifications to existing permits; permitting and legal processes in relation
to mining permitting and approval; 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; success of exploration activities; the impact of COVID-19, the response of governments to COVID-19 and the effectiveness of such
responses; 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”, “should” or “will” occur. Forward-looking statements are based on the opinions and estimates
of management 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.
39
Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include the availability and changing terms of
financing, variations in ore grade or recovery rates, changes in market conditions, changes in inflation, 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, the impact of COVID-19 and the impact and effectiveness of governmental responses to COVID-19, 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.
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 report 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 less silver sales divided by gold ounces sold. All-in sustaining cost per gold ounce sold is equal to production costs 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 ac-cordance with IFRS.
Please see under the heading “Non-IFRS Measures” in the management’s discussion and analysis (“MD&A”) for full disclosure on non-IFRS measures. The disclosure
under the heading “Non-IFRS Measures” in the MD&A is incorporated by reference herein. The MD&A is available under the Company’s profile at www.sedar.com.
This report should be read in conjunction with the Company’s audited annual consolidated financial statements for the year ended December 31, 2021 and associated
MD&A, for the same period, which are available from the Company’s website, www.argonautgold.com, in the “Investors” section under “Financial Filings”, and under the
Company’s profile on SEDAR at www.sedar.com.
40
W W W . A R G O N A U T G O L D . C O M
T S X : A R
/ArgonautGoldInc
@Argonaut_Gold
/ArgonautGoldInc @ArgonautGoldInc
CORPORATE OFFICES
9600 Prototype Court
Reno, NV United States
(775) 284-4422
Tel
info@argonautgold.com
Email
100 King Street West, Suite 5700
Toronto, ON Canada
Tel
Email
(416) 915-3107
info@argonautgold.com