Argonaut Gold

Website: www.argonautgold.com
Primary ticker: TSX:AR
Stage of development: Production
Commodity: Gold
Project to promote: Multiple producing and development assets
Project location: Mexico, USA and Canada
Company presentation: Click here

Live financials

Cash: USD$39M
Debt: USD$10M

Major shareholders:
GMT Capital Corp. – 12.2%
Connor, Clark & Lunn Investment Management LTD – 7.2%
Van Eck Associates Corp. – 6.3%
Dimensional Fund Advisors, L.P. – 5.9%
Sprott Asset Management USA Inc. – 5.2%
Management ownership – 3%

Argonaut Gold is a Canadian gold company engaged in exploration, mine development and production. Its primary assets are the El Castillo mine and San Agustin mine, which together form the El Castillo Complex in Durango, Mexico and the La Colorada mine in Sonora, Mexico. Advanced exploration projects include the Cerro del Gallo project in Guanajuato, Mexico and the Magino project in Ontario, Canada. The Company continues to hold the San Antonio advanced exploration project in Baja California Sur, Mexico and several exploration stage projects, all of which are located in North America.

Management Profile

Pete Dougherty, President & CEO

Mr. Dougherty is the President and Chief Executive Officer of Argonaut Gold Inc. He served as the Vice President of Finance and Chief Financial Officer of Meridian Gold Inc. (“Meridian”) from 2002 to 2007. Mr. Dougherty has also served as: Chief Accounting Officer and Corporate Controller of Meridian from 1997 to 2002; IBS Financial Manager of FMC Chemicals Group from 1994 to 1997; Group Financial Analyst of FMC Chemicals Group from 1993 to 1994 and the Controller of Paradise Peak Mine, FMC Gold from 1990 to 1993. Mr. Dougherty hold a B.S. in Accounting from Southern Oregon State College and an M.B.A. from Drexel University.


What is your rationale for attending 121 Mining Investment?

Marketing the company post a merger with Alio Gold Inc. that is scheduled to close early June.


What recent news would you like to highlight to investors attending?

Friendly, at-market merger with Alio Gold Inc.


What is the focus of your management team for the next 12 months, and what are the key milestones you are looking to reach that you think will add value to the business?

3 Month:

Close friendly, at-market merger with Alio Gold Inc.

6 Month:

Magino project exploration program

12 Month:

Add $50 million to the balance sheet and be in a position to move a development asset towards a construction decision.


What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?

Mining operations shut down due to COVID-19. This will be overcome through our strong balance sheet and the fact that we run heap leach mines, which means we are still producing and selling metal.


What do you think makes your company such a compelling investment?

We screen as inexpensive on several valuation metrics (P/NAV, P/CF, EV/EBITDA)

Analyst Insight – provided by Independent Investment Research

Argonaut Gold is a TSX-listed gold company engaged in exploration, mine development and production activities.

Its primary assets are the production stage El Castillo mine and San Agustin mine, which together form the El Castillo Complex in Durango, Mexico; and the production-stage La Colorada mine in Sonora, Mexico.

Advanced exploration stage projects include the San Antonio project in Baja California Sur, Mexico, the Cerro del Gallo project in Guanajuato, Mexico and the Magino project in Ontario, Canada. The company also has several exploration-stage projects, all of which are located in North America.

Argonaut recently announce its operating and financial results for the first quarter ended March 31, 2020. It reported quarterly production of 41,536 gold equivalent ounces, a quarterly net cash increase of US$6.0 million, cash flow from operating activities before changes in operating working capital of US$14.8 million, a net loss of US$9.5 million or loss per share of US$0.05, and adjusted net income of US$8.4 million or adjusted earnings per share of US$0.05.

The company achieved higher than expected production at the El Castillo mine, similar production to plan at the La Colorada mine, and lower than planned production at the San Agustin mine. On a consolidated basis, first quarter production was generally in line with expectations. Costs per ounce were higher than anticipated since a higher portion of the quarterly production was from El Castillo and a lower portion of production was from San Agustin – its highest and lowest cost operations, respectively. At the El Castillo Complex, it has made positive strides in lowering its unit cost per tonne processed and this will continue to be a focus of the organization.

During March 2020, Argonaut and Alio Gold announced an at-market merger, whereby Argonaut will acquire all of the issued and outstanding shares of Alio on the basis of 0.67 of an Argonaut common share per each Alio common share. Combining complementary assets into one larger, more relevant company generates significant synergies. The merged group would boast a production base of over 235,000 gold-equivalent ounces this year, a strong balance sheet and strong cash flow generation at current gold prices.