Argonaut progressing Mexico projects to shovel-ready state

Argonaut Gold is working to advance its development projects in Mexico to a shovel-ready state.

The company, which has the El Castillo and La Colorada gold mines in the country, has acquired all land needed to progress its San Agustín project in Durango state and expects to have a final permit in Q3, CEO Pete Dougherty told an earnings call.

This will enable Argonaut to reach a construction decision in H2.

"Should the board make a decision to take the project to construction by December, we should be in a position to start producing gold in 3Q17," the CEO added.

In addition, the Toronto-based company referred to a favorable legal ruling relating to an environmental impact assessment (EIA) at its San Antonio gold project in Baja California Sur state last month.

"This allows us the opportunity to move forward with further discussions with stakeholders in and around the project," Dougherty added.

The ruling, announced last month, gave Mexico's environmental authority Semarnat three working days to issue a new decision on the EIA. A 15-day extension has since been granted, he added.

NET LOSS

Argonaut recorded a US$700,000 net loss for Q2, compared to a net loss of US$10.5mn in the same period last year, when results were impacted by a US$9.3mn write-down of the leach pad inventory value.

Revenue was US$39.1mn, down from US$43.5mn, due to lower gold volumes sold partly offset by higher average realized prices.

The company, Mexico's sixth biggest gold miner in Q1, produced 29,237oz gold equivalent, down from 36,529oz, due to mine sequencing resulting in more sulfide and transition ore placed on the pads at El Castillo and low-grade ore gains at La Colorada.

The company expects grades to improve in H2, contributing to increased output. Cash cost was US$794/oz gold, up from US$779/oz, with all-in sustaining costs at US$947/oz, up from US$909/oz.

CAPEX

Argonaut revised up its 2016 capex guidance to US$34mn from US$23mn, including a rise to US$8.0mn from US$4.0mn at El Castillo for additional stripping and equipment overhauls.

Capex at La Colorada was cut by US$1.0mn to US$13mn. The company plans to invest US$1.0mn at San Antonio, US$2.0mn at San Agustín, US$5.0mn at Magino in Canada and US$5.0mn on exploration and other items.