Updated Life Of Mine Plan for Florida Canyon

TORONTO – Argonaut Gold Inc. reported the results of an updated life of mine (LOM) plan for the Florida Canyon mine in Nevada, which is now 100% owned by Argonaut following the closing of the merger with Alio Gold Inc. A National Instrument (NI) 43-101 technical report will be filed within 45 days.  All amounts are US dollars unless otherwise stated.  

Pete Dougherty, President & CEO said, “We have updated the LOM plan for Florida Canyon to reflect the way we propose to run the mine to deliver the most value to shareholders.  We envision Florida Canyon will produce an average of approximately 77,000 gold ounces per annum at all-in sustaining cost per gold ounce sold1 under $1,050 over 9.5 years, which yields a net present value at a 5% discount rate of over $232 million and generates mine site after-tax free cash flow of approximately $326 million at $1,700 gold.  The second half of 2020 will be dedicated to making the additional capital investments in the crushing and stacking system and ancillary equipment to ensure we can to reap the benefits of lower operating costs in 2021 onward.  Beyond the current 9.5 year LOM plan, we continue to see opportunities where investment in exploration at both the Florida Canyon mine and the nearby Standard mine has the potential to add oxide ore, as well as the longer term potential of evaluating transitional and sulphide ores.”

A conceptual pit was generated in order to constrain the estimate of Mineral Resources.  A gold price of $1,600 per ounce was used along with other cost, recovery and slope parameters.  Mineral Resources were estimated in the conceptual pit using cutoff grades between 0.147 g/t and 0.175 g/t depending on mineralized zone.  Table 2 outlines undiluted Indicated Mineral Resources and Inferred Mineral Resources.

Detailed pit and phase designs were created based on the pit optimization results.  These designs incorporated geotechnical parameters as well as ramp accesses and formed the basis of the Mineral Reserve estimate.

Mineral Reserves were estimated based on a practical mine plan using the design price of $1,350 per ounce gold.  That practical pit was designed with guidance from pit optimization software that applied $1,100 per ounce gold in order to maximize the return on investment at the design price.