PRODUCTION FOR TODAY DEVELOPMENT FOR TOMORROW

Transcription

1 PRODUCTION FOR TODAY DEVELOPMENT FOR TOMORROW CORPORATE PRESENTATION September 206

2 FORWARD LOOKING INFORMATION This presentation contains certain forward-looking statements and forward-looking information under applicable Canadian securities laws concerning the proposed transaction and the business, operations and financial performance and condition of Argonaut Gold Inc. ( Argonaut or Argonaut Gold ). Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and mine life of the various mineral projects of Argonaut; synergies and financial impact of completed acquisitions; the benefits of the development potential of the properties of Argonaut; the future price of gold, copper, and silver; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to Argonaut, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as plan, expect, project, intend, believe, anticipate, estimate and other similar words, or statements that certain events or conditions may or will occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of Argonaut and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, changes in market conditions, variations in ore grade or recovery rates, risks relating to international operations, fluctuating metal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses and labour disputes. These factors are discussed in greater detail in Argonaut's most recent Annual Information Form and in the most recent Management Discussion and Analysis filed on SEDAR, which also provide additional general assumptions in connection with these statements. Argonaut cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Argonaut believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release. Although Argonaut has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Argonaut undertakes no obligation to update forward-looking statements if circumstances or management s estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered if the property is developed. Comparative market information is as of a date prior to the date of this document. References to dollars or $ are to U.S. dollars unless specified otherwise. 2

3 CHECKING THE RIGHT INVESTMENT BOXES ü Strong board and management ü Low all-in sustaining cost producer ü Leverage to gold through development assets ü Focus on high-return, short payback projects in the Americas ü Focus on simple projects ü Free cash flow ü Strong balance sheet OUR GOAL: REDUCE RISK IN A RISKY BUSINESS Non-IFRS measures discussed on page 20 of this presenta;on. 3

4 STRONG BOARD, MANAGEMENT & TECHNICAL Experienced Board of Directors James E. Kofman, Chairman Vice Chairman, Cormark Securi;es Work experience at UBS Securi;es, Osler, Hoskin & Harcourt Peter C. Dougherty Work experience at Meridian Gold, FMC Ian Atkinson Director of Kinross Gold and Globex Mining Work experience at Centerra, Hecla, BaNle Mountain, Hemlo, Noranda Christopher R. LaRanzi Director of Teranga Gold, Spanish Mountain Gold Work experience at Micon Peter Mordaunt Director of Ethos Gold Work experience at S;ngray Copper, Corner Bay Silver Dale Peniuk Director of Lundin Mining, Capstone Mining Work experience at KPMG Audra B. Walsh CEO of Minas de Aguas Tenidas, President & CEO of A2Z Mining, Director of Orvana Minerals Work experience at Sierra Metals, Minera, Barrick, Newmont Strong Management & Technical Team Peter C. Dougherty, President & CEO Work experience at Meridan Gold, FMC Richard Rhoades, COO Work experience at Asarco David A. Ponczoch, CFO Work experience at Twin Metals Minnesota, Yamana Gold Thomas H. Burkhart, Vice President of Explora9on Work experience at New Dimensions (Northair), Pegasus Gold W. Robert Rose, Vice President of Technical Services Work experience at Andina Minerals, Kappes, Cassiday & Associates Turner, Corporate Development Officer Work experience at Cynaco, Yamana Gold, Meridian Gold Daniel A. Symons, Vice President, Investor Rela9ons Work experience at Romarco Minerals, Renmark Financial 4

5 COMBINING STRENTHS WITH EXPERTISE Management 42 Years Combined Mining Experience 206 Guidance 30,000 to 35,000 GEOs Low cost produc<on Strong Cash Balance with $54 million 2 AGrac<ve Development Projects to Provide Growth Shareholder Value GEO is gold equivalent ounces based on a conversion of silver to gold at a 65: ratio 2 At June 30, 206 5

6 CAPITAL SUMMARY Exchange / Symbol Share Price Shares Outstanding Fully Diluted Shares Outstanding 2 Market Capitalization C$ M 64M C$598M 52 Week High / Low C$4.45 / C$0.78 Cash Balance 3 C$70M (US$54M) As at close on September 6, Includes 3.7M in-the-money stock options and 2.2M restricted shares outstanding at June 30, As at close on June 30, 206 6

7 EL CASTILLO MINE MINE DETAILS 20 kilometres from the capital of Durango in state of Durango, Mexico Open pit / Heap leach mine 205 HIGHLIGHTS Annual production of 80,497 GEOs 2 0.8M ore tonnes processed Completed construction of 3b east leach pad Reduced pad inventory by 8,643 oz GOLD RESERVES & RESOURCES (at December 3, 205) Category Tonnes (000s) Au Grade (g/t) Au Ounces (000s) Proven & Probable at $,000/oz 20, Measured & Indicated at $,300/oz 45, Inferred at $,300/oz 7, Please see resource disclosure on page 2 for full details 2 GEO is gold equivalent ounces calculated at a conversion rate of 55: for silver to gold for 205 and 65: for 206 7

8 LA COLORADA MINE MINE DETAILS 45 kilometres from the capital of Hermosillo Open pit / Heap leach mine 205 HIGHLIGHTS # small mine award in Mexico from the Mexican Centre of Philanthropy Record annual production of 58,562 GEOs Average crusher throughput of 4,500 tpd Completed construction of 6 and 9A leach pad GOLD RESOURCES (at December 3, 205) Indicated of 60k oz Au 29M 0.64 g/t Indicated of 8.5M oz Ag 29M 9.0 g/t Inferred of 5k oz Au 506k 0.90 g/t Inferred of 285k oz Ag 506k 7.5 g/t Please see resource disclosure on page 2 for full details 2 GEO is gold equivalent ounces calculated at a conversion rate of 55: for silver to gold in 205 and 65: in 206 8

9 SAN AGUSTIN PROJECT PROJECT DETAILS 0 kilometres from the El Castillo mine Low initial capital - $43M Low cash costs - $648/GEO After-tax IRR 50% After-tax NPV at 5% discount - $90M Average LOM annual production 80k GEOs Low risk project Cookie cutter approach Open pit / Heap leach GEO 2 produc@on profile first 5 years Year Year 2 Year 3 Year 4 Year 5 M&I Resources (at December 3, 205) 3 Indicated of 845K oz Au 82M tonnes at 0.32 g/t Indicated of 28.2M oz Ag 82M tonnes at 0.7 g/t CATALYSTS Targeting first gold production Q3 207 Change in Use of Soil permit Q3 206 Construction decision H2 206 Ability to finance project with existing cash and projected cash flow Excellent exploration potential Based on the assump;ons and parameters as set forth in the PEA NI 43-0 Technical Report dated June 0, GEO is gold equivalent ounces calculated at a conversion rate of 80: for silver to gold 3 Please see Resource disclosure on page 2 for full details 9

10 SAN ANTONIO PROJECT Gold profile first 5 years PROJECT DETAILS 40 km from the port city of La Paz. Low initial capital - $88M Low cash costs - $549/oz Au After-tax NPV at $,200 gold and a 5% discount - $29M.5 year payback Low risk project once permitted Cookie cutter approach Open pit / Heap leach M&I Resources Year 4 Year Year Year 2 Year 3 (at December 3, 205)2 Measured & Indicated of.7m oz Au 65M tonnes at 0.83 g/t Inferred of 67k oz Au 6M tonnes at 0.34 g/t CATALYSTS Positive ruling from Federal lawsuit Communicating with all stakeholders to advance permits Based on the assump;ons and parameters as set forth in the PEA NI 43-0 Technical Report dated October 0, 202 and cost update November Please see Resource disclosure on page 2 for full details 0

11 MAGINO PROJECT PROJECT DETAILS Location Ontario, Canada Mine life 0 years Cash cost - $582/oz Au After-tax NPV at $,200 gold and a 5% discount rate - $45M After-tax IRR 23% Initial capital - $540M US$M *Mine Fleet 70 Pre-production Mining 40 *Process Plant 80 Infrastructure & Tailings 95 Total Direct Cost 385 EPCM, Indirects, Owners Costs 00 Con;ngency 55 Total Ini@al Capital Gold produc@on profile first 5 years Year Year 2 Year 3 Year 4 Year 5 note: *Of the above, $76mm is quoted Reserves & Resources (at December 3, 205) 2 Proven & Probable Reserves of 3.0M oz Au 05M tonnes at 0.89 g/t Indicated of 4.M oz Au (inclusive of reserves) 44M tonnes at 0.88 g/t CATALYSTS Definition drilling, geotechnical drilling, Feasibility Study Permitting and First Nations agreements Based on the assump;ons and parameters as set forth in the Pre-Feasibility NI 43-0 Technical Report dated February 22, Please see Resource disclosure on page 2 for full details

12 LARGE CANADIAN ASSETS Rainy River () Hardrock (2) Magino PFS - Jan 206 Location Ontario Ontario Ontario Asset Details Mining Method Open Pit / Underground Open Pit Open Pit Latest Study Completed FS PEA PFS Date of Study 4-Feb-4 20-Mar-5 8-Jan-6 Contained Au Mined (kozs) 3,385 3,393 3,09 Daily Mill Throughput (ktpd) Average Grade Milled (gpt) 0.96 / (3) Operational Metrics Average Au Recovery (%) 9% 90% 94% Average Annual Au Production (kozs) LOM Co-Product Cash Costs (US$/oz Au) $609 $700 $582 LOM Co-Product AISC (US$/oz Au) $709 $763 $652 Development Capex (US$ mm) $877 $390 $540 Discount Rate (%) 5.0% 5.0% 5.0% Gold Price (US$/oz) $,300 $,250 $,200 Financial Highlights USD/CAD Exchange Rate (ratio) 0.80x 0.95x 0.78x Gold Price (C$/oz) $,625 $,36 $,538 Technical Report NPV (US$ mm) $446 $34 $45 After-Tax IRR (%) 3.% 9.0% 22.9% Rainy River shown excluding the Royal Gold stream. 2 Shown on a 00% basis. 2

13 TREMENDOUS LEVERAGE THROUGH DEVELOPMENT ASSETS At July 5, 206 Street Consensus ($M) Development Assets PEA/PFS at $,200 Au and 5% discount rate ($M) Development Assets PEA/PFS at $,300 Au and 5% discount rate ($M) El Castillo $5 La Colorada $79 San Agustin $3 $90 $4 San Antonio $6 $29 $265 Magino $97 $44 $55 Total $40 $723 $930 Source: FactSet, street research. Street consensus NPVs are based on analyst consensus es;mates available at September 6,

14 P/NAV vs. PEERS at September 6, x.50x.4x.40x.2x.05x.0x Median:.05x 0.96x 0.93x 0.85x 0.62x 0.32x Klondex Richmont McEwen Guyana Kirkland Lake Newmarket Argonaut Beadell Teranga Primero Perseus GoGold Source: FactSet, street consensus NAVs are based on analyst consensus es;mates available at September 6,

15 ALL-IN SUSTAINING COSTS vs. PEERS AISC 2 in line with peers that trade at.8x P/NAV vs. AR at.0x P/NAV $, Cash Costs 206 AISC $90 $830 $926 $924 $97 $94 $86 $856 $843 $842 $839 $593 $597 $650 $663 $497 $63 $734 $7 $653 $667 $556 Perseus McEwen Teranga Klondex GoGold Newmarket Primero Kirkland Lake Argonaut Beadell Richmont Guyana Source: BMO Capital Markets Equity Research at street consensus pricing Note: Street consensus used for Beadell, GoGold, and McEwen. McEwen AISC unavailable. 2 Non-IFRS measures discussed on page 20 of this presenta;on. 5

16 PROVEN ABILITY TO GROW CASH BALANCE THROUGH OPERATING CASH FLOWS $30 $25 Cash Flow from Opera;ons Cumula;ve Cash Build $US Millions $20 $5 $0 $5 $0 Q4 204 Q 205 Q2 205 Q3 205 Q4 205 Q 206 Q2 206 Cumula;ve cash build excludes $20M payment for final San Agus;n installment, proceeds from sale of La Fortuna and flow-through financing and San Agus;n construc;on capital 6

17 HOW TO ADDRESS MARKET PERCEPTIONS Market Perception è Creating Value El Castillo Perception of limited mine life. Magino High capex requirements prevent the Company from building in this market. San Antonio Failure to obtain permits in a timely manner. Low grade nature of deposits. ü Advance San Agustin. ü De-risk and evaluate funding alternatives, including partnerships. ü Working top down, bottom up approach. Legal and social licenses. ü Educate investors on similar cash flow and costs compared to to higher grade mine operations. 7

18 SUMMARY OF INVESTMENT CASE Strong balance sheet with flexibility $54 million in cash, $2 million debt (equipment leases) at June 30, 206 $30 million undrawn corporate revolver Defensive gold stock Long track record of adding cash to the balance sheet through operations Highly leveraged to upside in gold Development assets provide tremendous leverage Proven, low cost operator Low cost per tonne of ore processed Trading at a discount to peers P/NAV basis Current Assets ($M) at June 30, 206 Cash $ 54 VAT and Income Tax Prepayments Inventory Value (45k $,300) 6 58 Total $28 8

19 ADDITIONAL INFORMATION Dan Symons Vice President, Investor Relations Argonaut Gold Inc. First Canadian Place 00 King St. West, Suite 5700 Toronto, ON M5X C7 T: CORORATE PRESENTATION JULY 206 ARGONAUT GOLD

20 Notes and disclosures Argonaut Gold is a Canadian gold company engaged in explora;on, mine development and produc;on ac;vi;es. Its primary assets are the produc;on stage El Cas;llo Mine in Durango, Mexico and the La Colorada Mine in Sonora, Mexico, the advanced explora;on stage San Antonio project in Baja California Sur, Mexico, the advanced explora;on stage Magino project in Ontario, Canada and the San Agus;n project in Durango, Mexico. The Company also has several explora;on stage projects, all of which are located in North America. For further informa;on on the Company's proper;es please see the reports as listed below on the Company's website or on QUALIFIED PERSON Technical informa;on included in this release was supervised and approved by Thomas Burkhart, Argonaut Gold's Vice President of Explora;on, and a Qualified Person under Na;onal Instrument ( NI ) NATIONAL INSTRUMENT 43-0 STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS ( NI 43-0 ) Thomas Burkhart, Argonaut Gold s Vice-President of Explora;on and a Qualified Person under NI 43-0, has read and approved the scien;fic and technical informa;on in this presenta;on as it relates to Argonaut. This presenta;on contains informa;on regarding mineral resources that are not mineral reserves and do not have demonstrated economic viability. The preliminary economic assessments referenced herein are preliminary, and may include inferred mineral resources that are too specula;ve geologically to have the economic considera;ons applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessments will be realized. CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES This presenta;on uses the terms Measured, Indicated and Inferred Resources as defined in accordance with Na;onal Instrument 43-0 Standards of Disclosure for Mineral Projects. United States readers are advised that while such terms are recognized and required by Canadian securi;es laws, the United States Securi;es and Exchange Commission does not recognize them. Under United States standards, mineraliza;on may not be classified as a reserve unless the determina;on has been made that the mineraliza;on could be economically and legally produced or extracted at the ;me the reserve calcula;on is made. United States readers are cau;oned not to assume that all or any part of the mineral deposits in these categories will ever be converted into reserves. In addi;on, Inferred Resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. United States readers are also cau;oned not to assume that all or any part of an Inferred Resource exists, or is economically or legally mineable. NON-IFRS MEASURES The Company has included certain non-ifrs measures including Cash cost per gold ounce sold, All-in sustaining cost per gold ounce sold, Fully loaded cost per gold ounce sold, Adjusted net earnings (loss) and Adjusted earnings (loss) per share in this presenta;on to supplement its financial statements which are presented in accordance with Interna;onal Financial Repor;ng Standards ( IFRS ). Cash cost per gold ounce sold is equal to produc;on costs less silver sales divided by gold ounces sold. All-in sustaining cost per gold ounce sold is equal to produc;on costs less silver sales plus general and administra;ve expenses, explora;on expenses, accre;on of reclama;on provision and sustaining capital expenditures divided by gold ounces sold. Fully loaded cost per gold ounce sold is equal to produc;on costs plus expenditures on mineral proper;es, plant and equipment, general and administra;ve expenses (excluding share-based compensa;on), repayment of debt, interest paid, income taxes paid and explora;on expenses divided by gold ounces sold. Adjusted earnings is equal to net loss less the non-cash impairment write down of inventories, net of tax, and the foreign exchange effects of the weakening Mexican peso on the calcula;on of deferred taxes. Adjusted earnings (loss) per share is equal to adjusted net earnings (loss) divided by basic weighted average number of common shares outstanding. The Company believes that these measures provide investors with an improved ability to evaluate the performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. Therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide addi;onal informa;on and should not be considered in isola;on or as a subs;tute for measures of performance prepared in accordance with IFRS. 20

21 Mineral Resource notes and disclosures All Mineral Resources have been es;mated in accordance with Canadian Ins;tute of Mining ( CIM ) Standards. Mineral Resources are not known with the same degree of certainty as Mineral Reserves and do not have demonstrated economic viability. In addi;on, the quan;ty and grade of reported inferred mineral resources shown above are uncertain in nature and there is insufficient explora;on to define these inferred mineral resources as an indicated or measured mineral resource and it is uncertain if further explora;on will result in upgrading them to an indicated or measured mineral resource category. Numbers may not add up due to rounding. The Reserves for El Cas;llo set out in the above table were updated internally, are valid as of December 205 and reviewed by Qualified Person Mike Lechner and Argonaut s COO Richard Rhoades. The reserve update used a gold price of $,000. Cut-off grades, depending on rock and ore type, varied from 0.5 g/t for oxide to 0.54 g/t for silicified sulphide. The Mineral Resource for El Cas;llo in the above table were updated internally, are valid as of December 205 and reviewed by Qualified Person Mike Lechner and Argonaut s COO Richard Rhoades. The resource update used a gold price of $,300. Cut-off grades, depending on rock and ore type, varied from 0.0 g/t for oxide to 0.45 g/t for silicified sulphide. The Mineral Cone Resources used for La Colorada in the above table were updated internally, are valid as of December, 205 and reviewed by Qualified Person Mike Lechner and Argonaut s COO Richard Rhoades. The Cone Resource update used a gold price of $,300 and a silver price of $8. The gold equivalent cutoff grade varied depending on deposit and ranged from to 0.54 g/t. The Pit Design Resources used for La Colorada in the above table were updated internally, are valid as of December, 205 and reviewed by Qualified Person Mike Lechner and Argonaut s COO Richard Rhoades. The Pit Design Resource update used a gold price of $,000 and a silver price of $4. The gold equivalent cutoff grade varied depending on deposit and ranged from 0.0 to 0.20 g/t. The Mineral Resources for the San Antonio Project set out in the table above were taken from the San Antonio Technical Report, dated October 0, 202 (effec;ve date of September, 202). The gold resource was es;mated at a gold price of $,500 using a cutoff grade of 0. g/t Au for oxide and transi;on and 0.5 g/t Au for sulphide. These amounts have been reviewed and confirmed by Thomas Burkhart, who is a qualified person under NI The Mineral Resources for the Magino Gold Project set out in the table above were taken from the Magino Pre- Feasibility Study Technical Report, dated February 22, 206 (effec;ve date of January 8, 206). The resource was es;mated at a gold price of $,200. The Probable Reserve study used a gold cutoff of 0.35 g/t while the Indicate Resource study u;lized a cutoff of 0.25 g/t gold. These amounts have been reviewed and confirmed by Thomas Burkhart, who is a qualified person under NI The Mineral Resources for the San Agus;n Gold-Silver Project set out in the table above were taken from the San Agus;n Oxide Resource Es;mate, dated October 3, 204 (effec;ve date of July 8, 204). The resource was es;mated using a gold price of $,300 and silver price of $20. A gold equivalent cutoff of 0.8 g/t was used for tabula;ng Mineral Resources. These amounts have been reviewed and confirmed by Thomas Burkhart, who is a qualified person under NI