Argonaut Gold’s Year-Over-Year Production, Sales Decrease

The Canada-based gold producer Argonaut Gold presented its 4Q22 and full-year 2022 results. The company faced a difficult year, characterized by decreases in production and sales as well as increasing costs. For 2023, Argonaut expects a “pivotal growth stage” once a key project comes online.

Argonaut Gold reported a production of 203,155oz AuEq in 2022, 17% less than the 244,156oz AuEq produced in 2021. Nevertheless, the company’s production was according to its amended 2022 guidance, which estimated a production between 200,000oz and 230,000oz.

Regarding costs, the company exceeded its 2022 guidance. In 2022, cash costs totaled US$1,443/oz. All-in sustaining costs (ASIC) registered US$1,765, while the 2022 guidance estimated cash costs between US$1,300/oz and US$1,350/oz and ASIC between US$1,650 and US$1725. The company associates these costs with inventory write-downs and low year-over-year production.

In 2022, the company sold 207,158oz of AuEq, which is less than the 242,333oz AuEq sold in 2021. This led Argonaut to register an 11% decrease in its revenue, totaling US$388.3 million, compared to US$436.9 million registered in 2021. "Last year was a challenging year for the company on two fronts. First, the increase in construction costs at the Magino project required a large capital raise, including debt, equity and the sale of a royalty. Second, the inflationary pressures had a significant impact on operating results of our low-grade heap leach operations, resulting in an impairment of our Mexican assets and Florida Canyon mine," said David Ponczoch, CFO, Argonaut Gold. 

The results are similar for 4Q22: Argonaut Gold produced 41,510oz of AuEq, a 31% decline from 4Q21’s 61,926oz. Sales totaled 51,615oz of AuEq, a reduction of 9% when compared to the 56,961oz AuEq sold in 4Q21. This performance resulted in a 7% decrease in the quarter’s revenue to US$95.9 million.

Marc Leduc, COO, Argonaut Gold said that as part of the company’s efforts to focus on core assets, Argonaut Gold sold two non-core projects, the Ana Paula and San Antonio Gold projects. It also revised the mine plans of the remaining three Mexican mines, which will allow it to focus on cash flow generation. The company furthermore suspended mining activities at the El Catillo mine in Durango.

Argonaut expects mining activities at San Agustin and La Colorada to temporarily pause by the end of this year until permits are received. "Looking ahead, management is laser-focused on completing the Magino project, with the first pour planned for mid-May followed by commercial production in the third quarter. The commissioning of Magino will be the first step in transforming the Company as it enters a pivotal growth stage. We believe Magino has the potential to be one of the 10 largest and lowest-cost gold mines in Canada,” said Richard Young, President and CEO, Argonaut Gold.