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Argonaut Gold Declares Commercial Production at the Magino Mine

Argonaut Gold Inc.  is pleased to announce that commercial production has been achieved at the Company’s Magino Mine effective November 1, 2023.

“The Board of Directors and Management would like to thank the Magino team for their hard work to achieve the commercial production milestone and celebrate the dedication of all employees, contractors, and community partners that have supported construction of the newest gold mine in Canada as we work to achieve our vision of becoming a low-cost, mid-tier North American gold producer that delivers value to all stakeholders,” stated Richard Young, President and Chief Executive Officer.

In declaring commercial production, management considers several factors, including substantial completion of construction and development activities in accordance with design, and a production ramp-up period which achieves certain design criteria. The design criteria includes an ability to deliver sufficient ore to the plant and various plant metrics including, tonnes per operating hour (crushing and grinding circuits), availability and recovery rates to ensure that the plant flowsheet is operating. “Plant commissioning and ramp-up proceeded largely on plan from June through August, ramping up from approximately 50% of nameplate capacity to 80%, placing the plant on track for commercial production in September.

However, 20 days of unplanned downtime in September, delayed the ramp-up. This was the result of two events, the first centered on the Ball Mill motor drive and inching system and the second involved the SAG Mill motor. The EPC contractor, equipment suppliers and specialized contractors were mobilized to assist the site team in facilitating equipment repairs and addressing the various causes of the unplanned downtime.

During commissioning, the greatest plant reliability issues centered on the process control system, which is comprised of several disparate systems. As a result, we are systematically centralizing all control functionality. The plant has been largely operating at nameplate capacity since the beginning of the quarter,” stated Marc Leduc, Chief Operating Officer.

Third quarter consolidated production was 53,911 gold equivalent ounces (“GEOs”), including pre-commercial production of 10,693 GEOs from the Magino Mine. Full year production for the Magino Mine will not meet the guidance set out at the beginning of the year due to the slower than planned ramp-up to commercial production.

However, the Company remains on track to meet its full year consolidated production and all in sustaining cost guidance set at the beginning of the year. As a result of the slower than planned ramp-up of Magino to commercial production, the Company will bolster its balance sheet through the sale to Franco-Nevada Corporation and certain of its subsidiaries (Franco-Nevada) of an additional 1% net smelter return royalty (“NSR”) on its Magino Mine, and its non-core royalty holdings in Canada and Mexico for an aggregate purchase price of US$29.5 million, with closing of such transactions subject to satisfactions of closing conditions. Upon the closing of this transaction Franco-Nevada will hold an aggregate 3.0% NSR on the Magino Mine.

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