Argonaut Gold Announces Second Quarter 2019 Operating and Financial Results

TORONTO, Aug. 7, 2019

CEO Commentary
Pete Dougherty, President and CEO stated: "We successfully completed the construction of the crushing and stacking expansion at San Agustin from 20,000 tonnes per day to 30,000 tonnes per day on time and slightly under budget.  However, San Agustin production during the quarter was adversely affected by the underperformance of one of our three water wells, and while we have the ability to crush and stack ore at the 30,000 tonne per day rate, we have not done so due to solution constraints.  We are currently completing the drilling of a fourth water well at San Agustin, which will be brought online this month.  With this additional water well, we anticipate catching up on recovered ounces during the second half of 2019 with sufficient water to meet planned solution flow levels.  In terms of our development project pipeline, we remain on track to deliver a pre-feasibility study for our Cerro del Gallo project before the end of the year and continue to advance environmental permitting at both Cerro del Gallo and San Antonio."

Outlook
The Company remains on track to achieve its 2019 production guidance.  However, due to the elevated costs experienced during the first half of the year, primarily due to the shortage of water at the San Agustin mine, the Company is revising its cost guidance. The Company anticipates it will produce between 200,000 and 215,000 GEOs during 2019 at a cash cost of between $800 to $900 per gold ounce sold (previously $775 to $875 per gold ounce sold) and all-in sustaining costs of between $1,025 and $1,125 per gold ounce sold (previously $975 to $1,075 per gold ounce sold) (see "Non-IFRS Measures" section).  The Company expects costs to trend lower in the second half of the year due to:

• sufficient water at the San Agustin mine to meet planned solution flow rates of the expanded 30,000 tonne per day crushing and stacking rate;
• a reduction of crushing costs at the El Castillo mine due to run-of-mine ore available in Phases 9 and 10 of the pit;
• improved grades and a lower waste to ore ratio at the La Colorada mine; and
• a higher proportion of production from the lower cost San Agustin mine and a lower proportion of production from the higher cost El Castillo mine in the second half of 2019.

Due to savings experienced in the first half of the year with respect to the leach pad construction at the El Castillo Complex and the expansion of the crushing and stacking system at the San Agustin mine, the Company has narrowed its 2019 capital estimate to the lower end of its original guidance range.  The Company plans to invest between $50 million and $55 million in capital programs during 2019 (previously between $50 million and $60 million), of which approximately $30 million was spent during the first half of 2019.

With approximately 60% of the 2019 capital spend completed during the first half of 2019 and significantly reduced capital requirement in 2020 compared to 2019, as the Company has no leach pad expansion requirements in 2020 and has completed its $15 million crushing and stacking expansion at San Agustin, the Company expects to generate increased free cash flow through the end of 2020 (see "Non-IFRS Measures" section).