TORONTO, ONTARIO--(Marketwire - Aug. 15, 2011) - Argonaut Gold Inc. (TSX:AR) ("Argonaut" or the "Company") announces financial and operating results for the second quarter ended June 30, 2011. All dollar amounts are expressed in United States dollars unless otherwise specified. All financial results are presented in accordance with IFRS, unless otherwise noted.


  • Q2 2011 revenue of $21.6 million
  • Q2 2011 net income of $5.2 million, $0.06 per share
  • Cash flows from operating activities before changes in non-cash operating working capital and other items of $7.6 million
  • Cash on hand was $32.3 million at June 30, 2011
  • Gold production and cost
    • 29,555 ounces of gold loaded to the pad (up 47% from Q2 2010)
    • Gold ounces produced in Q2 of 2011 were 17,453 ounces (up 73% from Q2 2010)
    • Cash cost per ounce sold - $578
  • Q2 2011 El Castillo operating statistics:
    • Record total tonnes mined – 4.97 million tonnes (up 44% from Q2 2010)
    • Record ore tonnes mined – 2.8 million tonnes (up 49% from Q2 2010)
    • Record tonnes crushed – 860,289 (up 218% from Q2 2010)
  • Updated NI 43-101 compliant technical report completed for San Antonio
    • 1.6 mm oz. in measured and indicated resources at San Antonio (up 33% over previous NI 43-101)
  • Exploration
    • El Castillo – Sulphide holes completed for metallurgical work
    • La Colorada – 56% complete of increased 52,000 metre drill program
    • San Antonio – 58% complete of 10,000 metre drill program

This press release should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the three months ended June 30, 2011 and associated Management's Discussion and Analysis ("MD&A") which are available from the Company's website,, in the "Investors" section under "Financial Filings", and under the Company's profile on SEDAR at

Argonaut Financial Statistics
2nd Quarter 6 Months
6/30/2011 6/30/2010 6/30/2011 6/30/2010
Revenue $21,631,900 $12,509,430 $47,308,354 $21,862,797
Net income (loss) $5,178,575 $855,673 $11,109,014 ($1,303,504)
Income (loss) per share – basic & diluted $0.06 $0.02 $0.13 ($0.02)
Gold ounces sold 14,331 10,387 32,792 18,785
Cash cost per ounce for units sold $578 $712 $585 $889

Financial Results – Second Quarter 2011

During the second quarter of 2011, revenue was $21.6 million from gold sales of 14,331 ounces compared to $12.5 million from sales of 10,387 ounces in the second quarter of 2010. Cost of sales and depreciation, depletion and amortization expenses were $11.0 million for the quarter. Cash cost per gold ounce for units sold (see Non-IFRS measures section note below) was $578 compared to $712 in the same period of 2010 principally because some ounces sold in the second quarter of 2010 had been fair valued on the acquisition of Castle Gold. During the second quarter of 2011, operating income from mining operations was $10.6 million compared to a $3.5 million operating income in the second quarter of 2010. Net income for the quarter was $5.2 million, or $0.06 per share.

Cash on hand decreased from $34.2 million at March 31, 2011 to $32.3 million, as a result of $11.3 million in cash used for payment of expenditures on mineral properties, plant and equipment and the timing of delivery and sale of ounces produced during the quarter that were not sold until early July. Cash flow from operations before changes in non-cash operating working capital and other items was $7.6 million. The cash flow provided by operating activities in the quarter was $8.4 million; again this was impacted by the timing of gold shipments and sales.

Summary of Production Results

Total tonnes mined increased by 44% for the second quarter 2011 over the second quarter of 2010. Once again utilizing a larger, more efficient truck fleet at El Castillo for the full quarter, the rate of mining production exceeded 1.65 million tonnes per month. Total ounces loaded to the pads also increased. In the second quarter of 2011, there were 29,555 ounces placed on the pad, representing a 47% increase over the 20,112 ounces placed on the pad in second quarter of 2010.

Gold production of 17,453 ounces in the second quarter of 2011 was a 73% increase compared to the second quarter of 2010.

The strip ratio of waste to ore declined in the second quarter of 2011 to 0.78 compared to the second quarter of 2010 of 0.85. (The new NI 43-101 compliant technical report for El Castillo indicates the anticipated strip ratio is approximately 0.88 for the life of mine).

Key operational metrics and production statistics for the second quarter of 2011 compared to the respective period in 2010 are presented below:

El Castillo Operating Statistics
2nd Quarter 6 Months
6/30/2011 6/30/2010 Percent
6/30/2011 6/30/2010 Percent
Tonnes ore 2,786,349 1,867,191 49% 5,324,613 3,183,738 67%
Tonnes waste 2,184,486 1,583,381 38% 4,405,680 3,160,168 39%
Tonnes mined 4,970,835 3,450,572 44% 9,730,293 6,343,906 53%
Waste/ore ratio 0.78 0.85 -8% 0.83 0.99 -16%
Tonnes direct to leach pad 1,920,657 1,562,907 23% 3,733,668 2,562,028 46%
Tonnes crushed 860,289 270,879 218% 1,589,393 585,284 172%
Average grams per tonne of gold to leach pad 0.33 0.34 -3% 0.34 0.36 -5%
Gold ounces to leach pad 29,555 20,112 47% 57,780 36,542 58%
Gold ounces produced 17,453 10,066 73% 35,467 20,308 75%
Cash cost per gold ounce sold $578 $712 -19% $585 $889 34%

CEO Commentary

Pete Dougherty, Argonaut's President and CEO states: "Argonaut continued to deliver production in Q2 which is in line with our guidance for 2011. We are pleased with the progress made during the first half of the year in terms of consistent production at El Castillo, and a 33% increase in resources at San Antonio. Meanwhile, our exploration team has been extensively drilling La Colorada, we have doubled the 2011 budget to a total of $7.7 million (+52,000 meters). Exploration success and operational improvements are trademark strengths of the Company which we strive to continually deliver for our shareholders." He added "We are pleased with the forward momentum of the Company and progress being made at the three projects. This quarter marks the third quarter of production gains that will meet our guidance of 70-75,000 ounces, with cash costs at $575 to $600 per ounce sold."

Non-IFRS Measures

The Company included the non-IFRS measure "Cash cost per gold ounce for units sold" in this press release to supplement its financial statements which are presented in accordance with International Financial Reporting Standards ("IFRS"). Cash cost per gold ounce for units sold is equal to cost of sales 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 standardized 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.

Technical Information and Mineral Properties Reports

The technical information contained in this document has been prepared under supervision by Mr. Thomas H. Burkhart, Argonaut's Vice President of Exploration, a qualified person as defined by NI 43-101.

The 1.6 million ounces consist of a measured resource found in oxide, transition and sulphide zones of 620,000 ounces represented by more than 18 million tonnes at 1.03 g/t and an indicated resource of more than 995,000 ounces represented by more than 32 million tonnes at 0.96 g/t. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

For further information on the Company's properties please see the reports as listed below on the Company's website or on

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 Fortuna Property La Fortuna, Durango, Mexico, Technical Report dated October 21, 2008
San Antonio Gold Project Technical Report and Mineral Resource Estimate on the San Antonio Gold Project, Baja California Sur, Mexico dated June 30, 2011
La Colorada Property Geological Report on the La Colorada Property with a Resource Estimate on La Colorada and El Creston Mineralized Zones – Sonora, Mexico dated November 30, 2009

About Argonaut

Argonaut is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production-stage El Castillo Mine in the State of Durango, Mexico, the advanced exploration stage San Antonio project, the past producing and advanced exploration stage La Colorada project, and several exploration stage projects, all of which are located in Mexico.

Creating the Next Quality Mid-Tier Gold Producer in the Americas.

Cautionary Note Regarding Forward-looking Statements

This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management's current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release.

Contact Information:

Argonaut Gold Inc.
Nichole Cowles
Investor Relations Manager
(775) 284-4422 x 101