Argonaut Gold to Further Consolidate Mexican Assets

Q: In 2020, Peter Dougherty mentioned that Cerro del Gallo was the cornerstone of Argonaut’s operation in Mexico. How has that project changed in recent years?
A: Pete left the company in December 2021. Our CEO is now Richard Young, who comes from a very successful mining company in West Africa called Taranga. Richard's vision is different, as he is more focused on ESG issues and incorporating international standards, particularly those of the World Gold Council, ICMM, and MAC.

Cerro del Gallo is a very important project, especially because it demonstrates that our goal is to implement better ESG practices. We did the traditional baseline studies to build the mine but we also incorporated more studies to address relevant regional and community issues, such as mental health and water balance. We seek to understand the psychological dynamics of communities because we want to meet their needs.

We apply our best practices to all our projects, not just Cerro del Gallo. For example, at the Castillo project in Durango, we are already in a process of restoration as part of the closure of the mine and are incorporating measures to mitigate and prevent any additional impacts. We are applying the ICMM standard to achieve a quality closures.

We are also in the process of a vocational analysis study to understand the strengths and the weaknesses of our communities. With this, we will be able to develop actions to provide communities with new productive means to sustain their gained level of economic development after mining ends. We want them to be able to maintain the economic level to which they have become accustomed with us. We are considering promoting agricultural activities, improving infrastructure and increasing efficient water consumption, among others. 
We are also working to turn the La Colorada mine in Sonora into a mining ecotourism destination. There is a ranch next to the mine called La Esmeralda that has mountain bike trails and, as it turns out, many people are interested. In fact, Gov. Alfonso Durazo has been very supportive of the project.

Q: Why did the company decide to withdraw the Ana Paula project from its mining portfolio in Mexico?
A: Argonaut Gold had many projects in Mexico and needed to focus on its most promising projects. We are now focusing on a project in Ontario, Canada, that will generate 150,000oz to 200,000oz AuEq/y for the next 10-15 years. The advantage of Canada is that there is more regulatory stability. However, the climate and the fact that it is far away are also challenges.
Moreover, we felt that consolidating La Colorada, restoring El Castillo and continuing with Cerro de Gallo was already too much. Ana Paula was a project that was ready but had been put on hold. However, as I said, we could not take on everything. 

Q: What trends has Argonaut Gold identified in the Mexican mining sector? 
A: The most important trend is the relevance of ESG standards, which makes it possible to see the good that mining does for the country. There are already many companies that have been meeting ESG criteria for years but the problem is that they do not communicate it. The industry is preparing now to fight misconceptions and fake news.
For example, a mine like Cerro del Gallo consumes the same water as one and a half golf courses per year. However, not many people believe this. It is important that we share key data, such as that of CONAGUA, which shows that the mining sector consumes 0.35% of the 5% of the water consumed by the industrial sector.
Another important trend is the focus on all stakeholders, including communities. This new wave has led to the creation of community development committees, such as those of Torex, Peñoles, Fresnillo and Grupo México. This trend is important because it promotes co-development, in which the community decides what it wants to do with the support of the company. This creates a sense of belonging and makes it possible to address communities’ needs.

Q: From Argonaut Gold’s perspective, what is the future of the mining industry? 
A: The potential of the Mexican mining sector is enormous. Mining has been a key sector for Mexico since before the colonization era. To unlock its potential, greater political stability must be given. Government decisions must be made based on scientific analysis and not on misconceptions. Once the Mining Law regulations are published and clarified, there will be more certainty about the future of mining. 
We have many opportunities, as CAMIMEX previously mentioned. Minerals have become key to the energy transition. With Mexico being one of the world's largest producers of various minerals, the potential is enormous. 
Regarding Argonaut Gold, we are focusing on consolidating our operations in Mexico and implementing the best standards to satisfy community demands. There will always be a great deal of criticism against the sector because there are many misconceptions. However, our best defense is to highlight our ESG performance and the impact we have on communities. 

Argonaut Gold is a Canadian gold company with a portfolio of operations and multistage assets in North America. The company aims to become a low-cost midtier gold producer, holding ownership of the Cerro del Gallo, la Colorada and el Castillo Complex in Mexico, as well as the Florida Canyon project in the US and its flagship project, the Magino mine in Canada.