Argonaut Gold Inc.

Argonaut Gold Inc. is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production-stage El Castillo mine in Durango, Mexico, and the La Colorada mine in Sonora, Mexico. Advanced exploration stage projects include the San Antonio project in Baja California Sur, Mexico, and the Magino project in Ontario, Canada. The recently acquired San Agustín project is the primary exploration target for Argonaut in 2014. The company also has several exploration stage projects, all of which are located in North America.

Expert Comments:

Jeff Killeen, CIBC World Markets (1/13/15)
"Argonaut Gold Inc. has released a PEA for its San Agustin project. . .production of approximately 50 Koz Au eq per year at cash costs of $670/oz Au eq over a 10.5-year mine life. Initial capital costs are expected to be $67M, with sustaining capital of $23.4M over the mine life (or $45/oz Au eq production). Economics based on a $1,200/oz gold price and $17/oz silver price include a 5% NPV of $70.2M and an internal rate of return of 22%. . .with the San Antonio project hung up at the permitting stage and development of Magino assumed to be longer-dated, San Agustin could provide the near-term production growth the company is currently lacking."

Mike Parkin, Desjardins Securities (1/13/15)
"Argonaut Gold Inc.'s San Agustin PEA results released yesterday call for an open-pit heap-leach operation with a 10.5-year mine life processing 72.4M tonnes grading 0.32 g/t gold and 10.6 g/t silver with average annual production of 50.4 Koz Au eq. Total metal to be recovered is estimated at 488 Koz gold and 3.8 Moz silver. Based on a $1,200/oz gold price and 5% discount rate, the company estimates the after-tax NPV at $70.2M. . .we estimate production could begin in mid-2016 after a 6–9 month permitting period and 6–9 month construction period.. .we have raised our 12-month target on Argonaut to CA$3.00 (from CA$2.70)."

Sam Crittenden, RBC Capital Markets (1/12/15)
"We view the San Agustin PEA as a slight positive for Argonaut Gold Inc., given confirmation of the project economics indicating the project remains workable in the current gold/silver price environment (22% after-tax internal rate of return at $1,200/oz gold price). San Agustin could produce 50 Koz Au eq per year with initial capital expenditures of $67M at a throughput of 7Mt/year vs. our estimates of 45 Koz Au eq per year production, 6Mt/year throughput, and capital expenditures of $50M. . .the Magino metallurgical testing study suggests potential to heap leach the lower-grade material which could improve project economics."

Ryan Hanley, Mackie Research Capital (1/12/15)
"Last week Argonaut Gold Inc. released Q4/14 operating results, with production of 44.3 Koz Au eq exceeding our 40.5 Koz Au eq forecast. . .throughput at La Colorada is now exceeding our expectations, while recoveries at El Castillo have also improved. . .El Castillo and La Colorada have reached their full potential. This year will be more about Argonaut's development pipeline, which includes San Agustin, Magino, and San Antonio. This morning, Argonaut released a PEA on the San Agustin project, located approximately 10km from El Castillo. . .projected production of 50 Koz/year Au eq at cash costs of $670/oz Au eq over a 10-year mine life."

Ovais Habib, Scotia Capital (1/12/15)
"Argonaut Gold Inc. announced results of the San Agustin PEA and provided an update on Magino metallurgical work and drill plans for 2015. . .based on the PEA, Argonaut sees San Agustin producing 50.4 Koz Au eq/year over a 10.5-year mine life at an operating cash cost of $670/oz Au eq. . .we rate Argonaut Sector Outperform."

Andrew Kaip, BMO Capital Markets (1/12/15)
"Parameters of Argonaut Gold Inc.'s San Agustin PEA were broadly in line with BMO Research's expectations. Incorporating a higher initial capital forecast, lower strip ratio and higher processing costs translate to a positive ~8% impact to the San Agustin NPV estimate at spot metal prices and a 10% discount rate. . .at Magino, BMO views the planned 8,000m drill program positively, as it looks to enhance project value by adding ounces along strike of the deposit. . .Argonaut is rated Outperform."

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