TSX-listed Argonaut Gold produced 186 615 gold-equivalent ounces (GEOs) in 2019, which, although a new record, fell short of the Mexico-focused miner’s target of 200 000 GEOs.
The shortfall of the 2019 guidance was driven by a number of factors which contributed to the build-up of leach pad inventory, president and CEO Pete Dougherty said on Friday.
The miner produced 47 51 GEOs in the fourth quarter, including 34 899 GEOs at the El Castillo Complex, in Durango, Mexico and 12 622 GEOs at the La Colorada mine in Sonora, Mexico.
During 2019, the El Castillo Complex and La Colorada mine production totalled 131 277 GEOs and 55 338 GEOs, respectively.
“While we fell short of our 2019 guidance of 200 000 GEOs of production, which was a target that we set for ourselves back in 2017, over the last three years we have grown our production by 53%,” said Dougherty.
He added that Argonaut was in the process of optimising its operations to maximise profitability and cash flow through cost reduction initiatives. It may be more profitable for Argonaut to produce slightly less GEOs in 2020 than in 2019, while increasing cash flow from operations.
The firm said that the potential changes to the operations might involve run-of-mine ore, more favourable overburden stockpile locations and changes in processing parameters. “This evaluation is ongoing and not yet conclusive.”
This review process had delayed the release of the 2020 guidance to February.
In terms of its three projects, Argonaut said that it was evaluating a potential noncash impairment on the book value of its San Antonio project, in Mexico, given the “uncertainty surrounding the timing of, if and when the project will receive necessary permits to develop and construct the project”.
At Cerro del Gallo, also in Mexico, Argonaut has submitted a unified technical document that includes an environmental impact assessment, an environmental risk assessment and the justified technical study for a change of soil use for the project, in Guanajuato. However, the Mexican environmental authority has informed the company that it would not approve the application in its current form and had requested that minor revisions be made. The company would resubmit its application in the first quarter of 2020.
At Magino, in Canada, Argonaut has executed a community agreement with the Michipicoten First Nation. As part of the agreement, the company has issued 505 237 common shares to the Michipicoten First Nation. Along with the Michipicoten First Nation, the company now has agreements in place with the Missanabie Cree First Nation, the Batchewana First Nation, the Métis Nation of Ontario and the Red Sky Métis Independent Nation, all of which have expressed their support for the Magino project. The company has also consulted with the Garden River First Nation for multiple years with the aim of coming to a reasonable agreement. During 2019, Argonaut received a positive decision statement and approval of both the federal and provincial environmental assessment processes.
“Our focus during 2020 will be on adding cash to the balance sheet while continuing to de-risk and advance our development assets. Achieving these two key activities will put Argonaut in a solid position to execute on our strategy of transforming from a high-cost, junior producer to a lower-cost, intermediate producer,” said Dougherty.