Q4 and Year End 2012 Conference Call
Forward Looking Statement FORWARD LOOKING INFORMATION ALL MONETARY AMOUNTS IN U.S. DOLLARS UNLESS OTHERWISE STATED This document 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 ). 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, 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 or the negative connotation thereof. 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 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, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated. 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 presentation. Argonaut does not undertake to update any forward looking statements that are included in this document, except in accordance with applicable securities laws. NATIONAL INSTRUMENT 43-101 STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS ( NI 43-101 ) Thomas Burkhart, Argonaut Gold s Vice-President of Exploration and a Qualified Person under NI 43-101, has read and approved the scientific and technical information in this presentation as it relates to Argonaut. This presentation contains information regarding mineral resources that are not mineral reserves and do not have demonstrated economic viability. The potential quantities and grades disclosed herein in connection with the drilling results at San Antonio and La Colorada are conceptual in nature and there has been insufficient exploration to define an updated mineral resource with these results and it is uncertain if further exploration will result in these targets being delineated as a mineral resource. For further information on the Company s properties please see the reports as listed below on the Company s website or on www.sedar.com: El Castillo Mine NI 43-101 Technical Report on Resources and Reserves, Argonaut Gold Inc., El Castillo Mine, Durango State, Mexico dated November 6, 2010 La Colorada Mine NI 43-101 Preliminary Economic Assessment La Colorada Project, Sonora, Mexico dated December 8, 2011 La Fortuna Property NI 43-101 La Fortuna, Durango, Mexico, Technical Report dated October 21, 2008 Hercules Technical Review and Mineral Resource Estimate of the Hercules Property dated May 26, 2010 Magino Gold Project NI 43-101 Technical Report and Mineral Resource Estimate on the Magino Gold Project, Ontario, Toronto, Canada dated October 4, 2012 San Antonio Gold Project NI 43-101 Technical Report and Mineral Resource Estimate on the San Antonio Gold Project, Baja California Sur, Mexico dated October 10, 2012 CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES This presentation uses the terms Measured, Indicated and Inferred Resources as defined in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects. United States readers are advised that while such terms are recognized and required by Canadian securities laws, the United States Securities and Exchange Commission does not recognize them. Under United States standards, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve calculation is made. United States readers are cautioned not to assume that all or any part of the mineral deposits in these categories will ever be converted into reserves. In addition, 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 cautioned not to assume that all or any part of an Inferred Resource exists, or is economically or legally mineable. NON-IFRS MEASURES The Company included the non-ifrs measure Cash cost per gold ounce sold in this presentation to supplement its financial statements which are presented in accordance with International Financial Reporting Standards ( IFRS ). Cash cost per gold ounce sold is equal to production costs less silver sales divided by gold ounces sold. The Company believes that this measure provides investors with an improved ability to evaluate the performance of the Company. Non-IFRS measures do not have any standardised meaning prescribed under IFRS. Therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please see the MD&A for full disclosure on non-ifrs measures. 2 2
Argonaut Investments Core Values/Foundations Leverage to Gold through +12.5 million gold ozs M&I resource base De-risked with low CAPEX and LOM Operating Cost <$100/oz CAPEX <$600 Cash Cost Favorable Jurisdictions Potential Hidden Value Drivers Fully Funded through Operational Cash Flow & $191 million Cash Balance Proven track record 3 3
Vision Creating the Next Quality Mid-Tier Gold Company in the Americas Strong management team and financial position Growth through acquisitions & exploration Honor commitments to all stakeholders Consolidation in the junior space FUTURE GROWTH EXPLORATION FOCUS CURRENT OPERATIONS EL CASTILLO -> 88 k ozs LA COLORADA -> 20 k ozs OPERATIONS EXPANSION El CASTILLO -> 105-120 k ozs LA COLORADA -> 50-60 k ozs ADVANCED PROJECTS SAN ANTONIO-> +70 k ozs MAGINO -> ~250 k ozs* ACQUISITIONS IN THE AMERICAS ULTIMATE GOAL 300,000-500,000 ozs/yr Lower quartile of cost * Argonaut will be providing a new pre-feasibility report mid-year 2013 4 4
2012 Year End Operational Highlights Operations: El Castillo West side pad construction underway East side conveying and stacking system implemented Land agreement extension La Colorada Pad construction is 65% complete Refining facility constructed Crushing circuit relocated Overburden removal commenced Financials: Revenue Q4 $52 m ( 51%) 2012 $187 m ( 79%) Net Income Q4 $19 m ( 109%) 2012 $65 m ( 147%) Income Per Basic Share Q4 $0.19 ( 90%) 2012 $0.68 ( 127%) Cash - $191 million at December 31, 2012 Exploration: El Castillo 360,000 ounces added to in-pit resource San Antonio Updated PEA >1 million ounces recovered NPV shows 261%; 66% IRR Production: Gold Ounces Q4 32,000 ozs 2012 108,000 ozs Cash cost/gold ounce sold Q4 $587 2012 $597 5 5
Progress (2012 vs. 2011) Production Growth Resource Growth 2012 2011 % Change Fourth Quarter Production 32,000 19,698 62% Year End Production 108,081 72,049 50% 2013 Guidance of 120-140,000 ounces at cash cost of $630-$660/ounce 733% (1.5 m ozs to 12.5 m ozs since taking over the operations) Financial Position Share Performance (12/31/2012 over 12/31/2011) Q4 2012 Q4 2011 YE 2012 YE 2011 Revenue $52.3 m $34.5 m $187.1 m $104.5 m EPS - basic $0.19 $0.10 $0.68 $0.30 Gross profit (Revenue COS) $26.6 m $16.7 m $95.2 m $50.2 m Cash flow from operating activities before changes in non-cash working capital and other items $24.1 m $15.3 m $83.4 m $41.9 m Cash and cash equivalents $190.8 m $34.9 m $190.8 m $34.9 m Argonaut 36% from $6.95 to $9.47 Gold 9% from $1,531 to $1,664 GDXJ 20% from $24.70 to $19.79 6 6
4th Quarter and Year End 2012 - Income Statement Earnings (in Millions) YEAR ENDED Q4 2012 Q4 2011 2012 2011 Revenue $52.3 $34.6 $187.1 $104.6 EPS basic $0.19 $0.10 $0.68 $0.30 Gross profit (Revenue Cost of Sales) $26.6 $16.7 $95.2 $50.3 Cash flow from op. activities before changes in non-cash working capital and other items $24.1 $15.3 $83.4 $41.9 Cash and cash equivalents $190.8 $34.9 $190.8 $34.9 Comments Q4 2012 sales reflect 29,502 gold ounces sold ( 44% over 20,468 ounces sold in 2011) 2012 sales 109,781 gold ounces sold ( 65% over 66,521 ounces sold in 2011) Financial Status & Projected Sources/Uses Financials (in Millions) Current Cash and Cash Equivalents $ 191 2013 Projected Cash From Gold Sales 1 $ 125 Projected Capital Expansion & Exploration 2 -($57 - $75) Projected G&A -$7 Income Taxes 3 -$36 ANTICIPATED CASH YEAR END $ 198 216 Million 1 Sales of 130,000 ozs at $1,600 gold price, net of $640 production cost per ounce. 2 CAPEX (in Millions): El Castillo $32 La Colorada $14 Magino $3 San Antonio $3-$15 Exploration $5-$11 Total $57-$75 million 3 Assumed 30% statutory tax rate for Mexico operations. 7 7
El Castillo Operating Statistics Year over Year Statistics Full Year Q4 2012 2012 2011 2010 Total Tonnes Mined (Millions) 6.7 24.1 20.0 16.0 Tonnes Ore (Millions) 3.3 12.0 11.1 7.8 Tonnes to Pad ROM (Millions) 2.0 7.6 8.1 6.3 Crushed (Millions) 1.3 4.6 3.0 1.5 Gold Grade (g/t) 0.37 0.39 0.33 0.37 Ounces to Leach Pad 39,329 151,462 117,939 91,839 Ounces Produced 25,805 87,712 72,049 51,324 Cash Cost Per Gold Oz Sold $587 $597 $622 $728 Cost Per Tonne of Ore Processed Q4 2012 2012 2011 2010 Mining $2.59 $2.58 $2.25 $2.46 Crushing $0.57 $0.58 $0.49 $0.34 Processing $2.09 $1.84 $1.37 $1.15 Mine G&A $0.42 $0.30 $0.23 $0.26 Total $5.67 $5.30 $4.34 $4.21 8 8
La Colorada Operating Statistics Statistics Q4 2012 FY 2012 Total Tonnes Moved (Millions) 2.9 7.2 Tonnes Crushed (000 s) 623 2,895 Gold Grade (g/t) 0.43 0.43 Gold Ounces to Leach Pad 8,845 40,180 Produced Gold (Ounces) 6,195 20,369 Produced Silver (Ounces) 47,890 132,805 Cash Cost Per Gold Oz Sold $292 $424 Cost Per Tonne of Ore Processed Q4 2012 FY 2012 Mining $0.86 $0.95 Crushing & Processing $1.87 $2.07 Mine G&A $0.67 $0.71 Total $3.40 $3.73 1 1 Reprocessing existing run of mine ore which doesn t require explosives. 9 9
2013 Operations El Castillo La Colorada Initiatives - $32 million New west side pad with 30 m tonne capacity to be completed in 2013 Transfer of mining equipment to the company New crushing, overland and conveying system for the west pad 8 Guidance 90-100,000 ozs @ $700-$725/oz cash cost Exploration In-fill drilling for continuing sulphide metallurgical work Initiatives - $14 million New crushing system capable of producing +4 m tonnes per year at <3/8 Pre-stripping of pit Plant and pad expansions Guidance 30-40,000 ozs @ $450-$475/oz cash cost Exploration Geochemical and physical assessment of exploration targets on trend 10 10
2013 Development Projects San Antonio Magino Constrained Pit Resource Pit 2012 Accomplishments Permits submitted 20 k metres of drilling in a new resource and PEA 2013 - $3-$15 million Permitting continues 2012 Accomplishments Finalized acquisition of the project 89,000 metre drill program Drill spacing from 45 m centers to 25 m centers 2013 - $3 million Project advancement and development Submit EIS Pre-feasibility study 11 11
Growth to 300-500,000 ozs per year Production Growth La Colorada and El Castillo Expansion Through 2013 and 2014 San Antonio Permitting Ongoing Construction 7-9 months Production Late 2014-2015 Magino Permitting 18-24 months Construction 12-24 months Production Late 2016-2017 12 12
Prodigy - Magino s Flexibility Location: Prodigy s flagship asset is the Magino gold project (40 km northwest of Wawa, Ontario) Purchase finalized (12/11/2012) Prodigy Gold transaction with purchase consideration valued at $315 million Preliminary Economic Assessment ( PEA as of 12/22/2011) Pre-tax NPV of C$939 m (pre-tax IRR of 36%) LOM average gold production of 249k oz per year over 11 year mine life at cash costs of US$461/oz LOM production of 2.6 million ounces at 1.15 g/t Total development capital expenditures of C$404 m with LOM sustaining capital expenditures of C$145 m 20,000 tpd mill achieving 95% recoveries Flexible Cutoff Grade Cutoff Grade Indicated Resource Inferred Resource Tonnes Grade Ounces Tonnes Grade Ounces 0.35 223,480 0.87 6,251 13,809 0.80 355 0.50 159,681 1.04 5,339 9,021 1.00 290 1.00 55,306 1.69 3,005 2,795 1.71 154 13 13
Magino Drilling Project to Date Drilling since June 19 2012 Metres 220,000 89,000 Holes 1,210 340 Drill Spacing 40 metres 25 metres 14 14
Magino Drilling New PD Zone LEGEND 15 15
Prodigy - Magino s Flexibility Constrained Pit Resource Pit 16 16
El Castillo La Colorada Exploration Program - $5 to $11 Million ACCOMPLISHMENTS Sulphide metallurgical work adds 360,000 ounces to the pit GOALS 2,000-3,000 metre drill program for sulphide metallurgical work ACCOMPLISHMENTS 36,000 metres of drilling Expanded Veta Madre GOALS 1- Further testing of multiple satellite deposits surrounding the La Colorada mine 2- Continue regional exploration in the La Colorada district OVERALL PROGRAM GOALS Company Wide Targeted acquisition of three or more mid-level to advanced precious metal properties in central to northern Mexico Agua Grande +5,000 metres over three targets Additional Exploration San Antonio, Wind Mountain, and various grass roots projects in Mexico 17 17
Future Value Drivers Gold Production 300-500,000 ozs/year El Castillo Sulphide Mineralization Continuing geological and metallurgical work (Resource of 1.5 m ozs contained in 30-50 metres of drilling underneath pit) Magino La Colorada Exploration Upside Veta Madre drilling Underground exploration (Historical records show 3 m ozs recovered underground) San Antonio San Antonio Exploration Potential La Colorada El Castillo Prodigy / Magino Heap Leach Potential Underground Potential Cutoff Flexibility 18 18
Upcoming 2013 Milestones Q1 2013 - La Colorada Veta Madre resource Mid Year 2013 - Magino updated Preliminary Economic Assessment Exploration - San Antonio, Mexico - Agua Grande, Mexico - Grass roots projects, Mexico - Wind Mountain, NV 19 19
The Difference Value Beyond Gold Leverage to Gold >12.5 million ozs M&I Resource De-risked with low CAPEX and LOM Operating Cost <$100/oz CAPEX <$600 Cash Cost Favorable Jurisdictions Potential Hidden Value Drivers Fully Funded thru Operational Cash Flow & $191 million Cash Balance Proven track record 20 20
For Additional Information www.argonautgold.com Nichole Cowles Investor Relations Manager Argonaut Gold Inc. 9604 Prototype Ct. Reno, NV 89521 Ph.: 775-284-4422 ext. 101 Cell.: 775-240-4172 Fax: 775-284-4426 21 21