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Argonaut Gold Inc.

Argonaut Gold Inc. (TSX: AR) reported its financial and operating results for the first quarter ended March 31, 2021. The Company reports record quarterly production of 59,704 gold equivalent ounces1 ("GEO" or "GEOs"), record quarterly revenue of $105.3 million, cash flow from operating activities before changes in operating working capital of $27.7 million and net income of $27.0 million or earnings per share of $0.09. All dollar amounts are expressed in United States dollars, unless otherwise specified (C$ refers to Canadian dollars).

Corporate Highlights – First Quarter 2021:

  • Set a new record for quarterly GEO production.
  • Set a new record for quarterly revenue.
  • Closed a C$26.5 million bought deal of flow-through shares to fund qualifying development expenditures at Magino.
  • Completed a C$10.0 million non-brokered private placement with Ausenco Engineering Canada Inc.
  • Strengthened the management team with the appointment of Lowe J. Billingsley in the role of Senior Vice President, Operations.

CEO Commentary:

Pete Dougherty, President and CEO stated: "It was our second consecutive quarter of record quarterly production and revenue. We demonstrated strong cash flow during the first quarter, which underpins our strategy to harvest cash from the existing operations, replace depleted ounces and invest in our growth asset portfolio to transform Argonaut from a high-cost, junior producer with short mine lives to a lower cost intermediate producer with long mine lives. With the cash we are generating, the recent announcement of an increase of Mineral Reserves by 43% and Measured and Indicated Mineral Resources by 26% year-over-year and the early progress of the Magino construction project, we are delivering on all three phases."

Financial Results – First Quarter 2021:

Record quarterly revenue was $105.3 million for the first quarter of 2021, an increase from $66.6 million from the first quarter of 2020.

During the first quarter of 2021, the Company sold 56,727 gold ounces at an average realized price per ounce of $1,761, compared to 40,169 gold ounces sold at an average price per ounce of $1,585 during the same period of 2020.

Gold ounces sold for the first quarter of 2021 increased 41% compared to the same period in 2020, primarily due to the addition of the gold ounces sold from the Florida Canyon mine and by increases in gold ounces sold at the San Agustin and La Colorada mines.

The addition of a Merrill Crowe recovery plant during the fourth quarter of 2020 at San Agustin and higher grades and better than expected recoveries at La Colorada led to higher production and sales, partially offset by a decrease in gold ounces sold at the El Castillo mine as a result of a decrease in grade and changing from crushed to run of mine material during the first quarter of 2020.

Income from continuing operations for the first quarter of 2021 was $27.8 million or $0.09 per basic or diluted share compared to a loss from continuing operations of $9.5 million or $0.05 per share in the first quarter of 2020.

Loss from discontinued operations for the first quarter of 2021 was $0.8 million as a result of the Ana Paula project being classified as a held-for-sale asset as at March 31, 2021 and as a discontinued operation for the three months ended March 31, 2021.

Net income for the first quarter of 2021 was $27.0 million or $0.09 per basic or diluted share compared to a net loss of $9.5 million or $0.05 loss per share for the same period in 2020.

Cash flow from operating activities before changes in non-cash operating working capital for the first quarter of 2021 was $27.7 million compared to $14.8 million in the first quarter of 2020.

The 88% increase is due to an 11% increase in the average realized gold price, the increase in ounces sold due to the addition of the Florida Canyon mine and the net increase in ounces sold at the three mines in Mexico.

During the first quarter of 2021, cash increased by $13.2 million due primarily to $26.3 million of cash flows from operations (including changes in non-cash operating capital and other items), $19.5 million from issuance of flow-through shares and $7.9 million from a private placement with Ausenco Engineering Canada Inc., offset by $38.4 of capital expenditures incurred, as compared to the first quarter of 2020 in which cash increased by $3.0 million due primarily to $18.6 million of cash flows from operations, partially offset by $12.5 million of capital expenditures incurred and the repayment of $3.0 million of debt.

Operating Results – First Quarter 2021:

During the first quarter of 2021, the Company achieved record quarterly production of 59,704 GEOs at a cash cost per gold ounce sold of $1,003 and an all-in sustaining cost ("AISC") per gold ounce sold of $1,313, compared to 41,536 GEOs at a cash cost of $967 per gold ounce sold and an AISC per gold ounce sold of $1,323 during the first quarter of 2020 (see "Non-IFRS Measures" section).

Higher GEO production is primarily related to the addition of the Florida Canyon mine and increased production at the San Agustin and La Colorada mines.

The addition of a Merrill Crowe recovery plant during the fourth quarter of 2020 at San Agustin and higher grades and better than expected recoveries at La Colorada led to higher production, partially offset by a decrease in GEOs produced at the El Castillo mine as a result of a decrease in grade and changing from crushed to run of mine material during the first quarter of 2020.

Higher cash cost per gold ounce sold and AISC per gold ounce sold was primarily due to the addition of the Florida Canyon mine, which is currently Argonaut's highest cost operation.

About Argonaut Gold

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 also holds the construction stage Magino project, the advanced exploration stage Cerro del Gallo project and several other exploration stage projects, all of which are located in North America.

For more information, contact: Argonaut Gold Inc., Dan Symons, Vice President, Corporate Development & Investor Relations at (416) 915-3107. Or Email: dan.symons@argonautgold.com.

For key operating and financial statistics for the 3 months ended March 31, 2021 including the El Castillo, La Colorado, and Florida Canyon operating statistics Click Here.

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