Argonaut Gold reports financial and operating results

PRESS RELEASE

(This is an abridged version of the press release. For the full version click here)

Toronto, Ontario - (March 20, 2017) Argonaut Gold Inc. (TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut") is pleased to announce its financial and operating results for the fourth quarter and year ended December 31, 2016. All dollar amounts are expressed in United States dollars unless otherwise specified (C$ represents Canadian dollars).

¹Please refer to the section below entitled "Non-IFRS Measures" for a discussion of these Non-IFRS Measures.

²Gold equivalent ounces ("GEO" or "GEOs") are based on a conversion ratio of 65:1 for silver to gold for 2016 and 55:1 for 2015. This is the referenced ratio for each year throughout the release.

³Recoverable ounces - El Castillo expected recovery rates: ROM oxide 50%, crushed oxide 70%, ROM transition 40%, crushed transition 60%, crushed sulphides argillic 30% and crushed sulphides silicic 17%; La Colorada expected recovery rates: gold 60% and silver 30%.

⁴Produced ounces are calculated as ounces loaded to carbon.

Fourth Quarter 2016 Financial Highlights:

• Revenue of $35.3 million from sales of 28,891 gold ounces at an average price of $1,186 per ounce.
• Net income of $0.5 million or $0.00 per basic share. Adjusted net income of $5.7 million or $0.04 per basic share. See Non-IFRS Measures section.
• Cash flow from operating activities before changes in non-cash operating working capital and other items was $8.5 million.
• Production of 34,384 GEOs at a cash cost of $746 per gold ounce sold and all-in sustaining cost ("AISC") of $894 per gold ounce sold. See Non-IFRS Measures section.

2016 and Recent Company Highlights:

• Corporate Highlights:
  • Acquisition of San Juan mineral concession (see press release dated February 23, 2017).
  • Successful C$40.1 million equity financing.
  • Strengthened board and management team.
  • Entered into a $30 million revolving credit facility, adding further flexibility to a strong balance sheet.
• El Castillo:
  • Fourth quarter production of 16,747 GEOs and annual production of 62,766 GEOs.
• La Colorada:
  • Fourth quarter production of 17,637 GEOs and annual production of 59,331 GEOs.
  • Completed construction of Northeast leach pad ahead of schedule and on budget.
  • Completed confirmation drill program at El Creston deposit that showed evidence of higher grades and thicknesses.
• San Agustin:
  • Completed updated Preliminary Economic Assessment.
  • Received major permits and commenced construction.
• Magino:
  • Completed updated Pre-Feasibility Study.
  • Completed C$4.5 million flow-through financing.
  • Completed successful 350-hole reverse circulation drill program on two-year starter pit, de-risking the project.
  • Completed geotechnical drilling program.
  • Filed Environmental Impact Statement and continued to advance permitting.

CEO Commentary

Pete Dougherty, President and CEO stated: "We had a very strong fourth quarter operationally after a challenging and particularly rainy third quarter. I'm pleased with the efforts of the team and the continued commitment toward proper stewardship of the environment. We expect to see similar annual production in 2017, as we saw this past year, followed by significant production growth over the next several years as we bring San Agustin online and unlock value at the recently acquired San Juan concession as part of the El Castillo/San Agustin complex. In addition to production growth, we continue to provide additional optionality through our development-stage assets. We are de-risking the Magino project and expect a Feasibility Study to be published during the second half of 2017."

Financial Results - Fourth Quarter 2016

Revenue for the three months ended December 31, 2016 was $35.3 million, an increase from $32.0 million for the three months ended December 31, 2015. During the fourth quarter of 2016, gold ounces sold totaled 28,891 at an average realized price per ounce of $1,186 (compared to 28,443 gold ounces sold at an average price per ounce of $1,099 during the same period of 2015).

Production costs for the fourth quarter of 2016 were $22.6 million, a slight increase from $21.6 million in the fourth quarter of 2015 primarily due to the increased gold ounces sold. Cash cost per gold ounce sold (see Non-IFRS Measures section) increased to $746 in the fourth quarter of 2016 from $733 in the same period of 2015, principally due to an increase in mine operating costs.

Net income for the fourth quarter of 2016 was $0.5 million or $0.00 per basic share, an increase from the net loss of $182.5 million or $1.18 per share for the fourth quarter of 2015. The net loss in the fourth quarter of 2015 is primarily due to the non-cash impairment of non-current assets.

Financial Results - Year End 2016

Revenue for the year ended December 31, 2016 was $144.8 million, a decrease from $158.6 million for the year ended December 31, 2015. Gold ounces sold totaled 113,853 at an average realized price per ounce of $1,239 (compared to 132,618 gold ounces sold at an average price per ounce of $1,168 for 2015). Gold ounces sold decreased in 2016 primarily due to the following factors at the El Castillo mine: additional ounces produced in 2015 associated with the re-leach program of previously placed tonnes, higher than anticipated rainfall and changes in mine sequencing.

Production costs for the year ended December 31, 2016 were $94.2 million, a decrease from $103.9 million in 2015, primarily due to decreased gold ounces sold. Cash cost per gold ounce sold (see Non-IFRS Measures section) increased to $795 in 2016 from $755 in 2015, primarily due to the lower number of ounces produced and sold, as total operating costs are spread across a lower number of ounces.

Other expense for the year ended December 31, 2016 was $4.8 million, an increase from $2.2 million in 2015, primarily due to differences in foreign currency translation effects.

Net income for the year ended December 31, 2016 was $4.3 million or $0.03 per basic share, an increase from the net loss of $202.7 million or $1.31 per share for the year ended December 31, 2015. The net loss in 2015 is primarily due to the non-cash impairment of non-current assets.