Florida Canyon Gold — Argonaut Gold — Q2 2020 Earnings Presentation
26 slides from Florida Canyon Gold's earnings presentation, Aug 12, 2020
Slide 1: Gold producer with advanced exploration projects in the Americas
Gold producer with advanced exploration projects in the Americas CORPORATE PRESENTATION Second Quarter Ended June 30, 2020 Conference Call TSX:AR August 12, 2020
Slide 2: Forward Looking Information
FORWARD LOOKING INFORMATION This presentation contains certain “forward-looking statements” and “forward-looking information” under applicable Canadian securities laws concerning the proposed transaction and the business, operations and financial performance and condition of Argonaut Gold Inc. (“Arg
Slide 3: Q2 and Recent Milestones
Q2 and Recent Milestones March 31, 2020 to July 31, 2020 – AR vs. GDXJ JUL. 28/20 Magino Drilling Results MAR. 30/20 JUL. 23/20 Announce Alio Friendly C$126.5M Equity Financing At-Market Merger Closing JUL. 3/20 JUL. 6/20 LOM Plan for Florida Canyon $23M Q2 FCF, Updated 2020 Guidance JUN. 11/20 JUL.
Slide 4: Q2 2020 and Recent Highlights
Q2 2020 and Recent Highlights Financial Performance Production and Cost • Added $23M in Free Cash Flow1 • Consolidated production of 31.5k GEOs2 • Cash position increased to $65M in Q2 • Cash cost per gold ounce sold1 of $885 • Completed $90M equity raise in July • AISC per gold ounce sold1 of $1,08
Slide 5: COVID-19 Protocols
COVID-19 Protocols Back to work on June 1st after 2 months off. Tier #1 protocols for COVID-19. Everyone tested and cleared before entry at mine sites. TSX:AR Second Quarter Ended June 30, 2020 Conference Call – AUGUST 12, 2020 | ARGONAUT GOLD 5
Slide 6: Financial Performance
Financial Performance Second Quarter Ended June 30 6 Months Ended June 30 % % 2020 2019 2020 2019 Change Change Sales (GEO)1 34,196 43,185 (21%) 76,400 99,859 (23%) Revenue ($M) $58.0 $56.0 4% $124.5 129.9 (4%) Net income (loss) ($M) $(7.7) $5.4 (243%) $(17.2) $9.5 (281%) Earnings (loss) per share -
Slide 7: Operations Overview
Operations Overview Second Quarter Ended June 30 6 Months Ended June 30 % % Production (GEO)1 2020 2019 2020 2019 Change Change El Castillo 9,394 14,758 (36%) 24,125 38,021 (37%) San Agustin 14,268 13,259 8% 28,047 28,063 0% La Colorada 7,869 12,196 (35%) 20,897 28,298 (26%) TOTAL 31,531 40,213 (22%
Slide 8: Q2 2020 Capital Spending And Cash Flow ($M)
Q2 2020 Capital Spending And Cash Flow ($M) Investing in the future Cash Flow Reconciliation Capital Spend Opening balance cash 41.8 Cash flow from ops excl. working capital 11.8 Sustaining Expansion Stripping El Castillo 2.0 - - Changes in working capital 18.4 La Colorada 1.1 - - Cash before invest
Slide 9: 2020 Guidance
2020 Guidance Second Half 2020 FCF2 Sensitivity to Gold Price ($M) $1,700 $1,800 $1,900 $2,000 $2,100 33 - 58 41 - 68 49 - 79 57 - 89 65 - 99 2020 GEO2 Production Guidance (in 000s) Full Year 2020 Mine Q1 Actual Q2 Actual H2 Estimate Estimate El Castillo 15 9 21 – 26 45 – 50 San Agustin 14 14 34 – 4
Slide 10: Argonaut's Vision & Strategy
Argonaut’s Vision & Strategy Transitioning our production and cost profile while minimizing equity dilution: High-Cost Producer Low Cost Intermediate Producer 150k – 200k oz 300k – 500k oz per year per year SUSTAINABLE GROWTH & REPLACEMENT of ounces Generating cash flow Favourable gold price De-risk
Slide 11: Executing Our Strategy – Our 3-Phase Approach
Executing Our Strategy – Our 3-Phase Approach HARVEST REPLACE GROWTH § HARVEST cash from § REPLACE short mine § GROWTH through existing operations life operations the development project pipeline § Significant free cash § Florida Canyon flow as capital comes provides immediate § All development stag
Slide 12: Phase 1 – Harvest Cash
Phase 1 – HARVEST CASH Not sexy assets, but they make MONEY! El Castillo Complex La Colorada Florida Canyon El Castillo San Agustin M&I 36.4 Mt at 0.35 g/t Au for 409k M&I 72.1 Mt at 0.27 g/t Au for 638k M&I 30.9 Mt at 0.65 g/t Au for 555k Indicated 137.0 Mt at 0.38 g/t Au for Contained Au oz.1 Cont
Slide 13: Phase 2 – Replace
Phase 2 - REPLACE Acquired Florida Canyon to Replace Ounces § Average annual production of approximately 77,000 gold ounces over 9.5 years § Average cash cost of per gold ounce sold1 of $880 § Average all-in sustaining cost per gold ounce sold1 of $1,040 1 Please refer to section on slide 25 entitle
Slide 14: Phase 3 – Growth: The Development Pipeline
Phase 3 - GROWTH THE DEVELOPMENT PIPELINE Magino4 Cerro del Gallo3 Ana Paula5 Ontario, Canada Guanajuato, Mexico Guerrero, Mexico M+I 144.0 Mt @ 0.91 g/t, 4.2M oz Au6 M+I 201.9 Mt @ 0.44 g/t, 2.86M oz Au6 M+I 20.9Mt @ 2.17 g/t, 1.26M oz. Au6 P+P 59.0 Mt @ 1.13 g/t, 2.1 Moz Au6 P+P 91.8 Mt @ 0.56 g/t
Slide 15: Conceptual Magino Project Timeline
Conceptual Magino Project Timeline 2020 2021 2022 2023 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Fixed Bid Price Closure Plan filed Project Construction First Gold Commissioning and Ramp Up Magino Drill Results CONTINUOUS Expansion Studies Underground Resource Expansion Studies including underground
Slide 16: Path to Financing – Magino Coming Into Focus
Path to Financing – Magino Coming Into Focus Initial capital of $321M1 Does not include any cash flow from 2021 onward. 1 Based on the assumptions and parameters as set forth in the Magino Feasibility Study dated December 21, 2017. TSX:AR Second Quarter Ended June 30, 2020 Conference Call – AUGUST 1
Slide 17: Potential to Add Mineral Resources and Reserves - Magino
Potential to Add Mineral Resources and Reserves - Magino MAGINO PROPERTY ALAMOS GOLD’S Lower ISLAND GOLD MINE grade at surface INCREASING GRADE CENTRAL ELBOW Higher Current program testing down to 1,000m grade at depth TSX:AR Second Quarter Ended June 30, 2020 Conference Call – AUGUST 12, 2020 | ARG
Slide 18: Phase 2 Drilling Update
Phase 2 Drilling Update TSX:AR Second Quarter Ended June 30, 2020 Conference Call – AUGUST 12, 2020 | ARGONAUT GOLD 18
Slide 19: Phase Two Magino Drill Program Shows Promising Continuity
Phase Two Magino Drill Program Shows Promising Continuity Between High-Grade Intercepts in the Elbow Zone TSX:AR Second Quarter Ended June 30, 2020 Conference Call – AUGUST 12, 2020 | ARGONAUT GOLD 19
Slide 20: Phase Two Magino Drill Program Shows Promising Continuity
Phase Two Magino Drill Program Shows Promising Continuity Between High-Grade Intercepts in the Elbow Zone Continue to intersect high-grade gold. High-grade continuity within the Elbow Zone where we have now tightened drill spacing averaging between 40 metres and 50 metres in two areas. TSX:AR Second
Slide 21: Recent and Upcoming Milestones
Recent and Upcoming Milestones Q2 Q3 Q4 Focus on reduction of unit costs at operations CONTINUOUS Close Alio merger Ramp-up mining, crushing and stacking operations Complete leach pad construction Magino drill results CONTINUOUS Magino Schedule 2 permit Completed Equity Raise Magino Ausenco Fixed Pr
Slide 22: Our Focus
Our Focus MAXIMIZE DE-RISK cost efficiencies and development projects profitability BUILD TRANSFORMATION balance sheet strategy 3-Phase Approach for Transformation Strategy HARVEST REPLACE GROWTH TSX:AR Second Quarter Ended June 30, 2020 Conference Call – AUGUST 12, 2020 | ARGONAUT GOLD 22
Slide 23: Additional Information
TSX:AR Diversified Intermediate Producer and Developer in North America ADDITIONAL INFORMATION /ArgonautGoldInc @Argonaut_Gold Dan Symons Vice President, Investor Relations @ArgonautGoldInc Argonaut Gold Inc. company/Argonaut-Gold-Inc First Canadian Place 100 King St. West, Suite 5700 Toronto, ON M5
Slide 24: Mineral Resource Notes and Disclosures
Mineral Resource Notes and Disclosures Mineral Reserves and Mineral Resources have been estimated as at December 31, 2019 in accordance with NI 43-101 as required by Canadian securities regulatory authorities. Mineral Resources are presented inclusive of Mineral Reserves. Numbers may not sum due to
Slide 25: Notes and Disclosures
Notes and Disclosures 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. Advance
Slide 26: Consolidated Mineral Resources & Mineral Reserves
Consolidated Mineral Resources & Mineral Reserves(1) Contained Au Contained Ag Tonnes Au Grade Ag Grade Cu tonnes Project Category Ounces Ounces Cu % (millions) (g/t) (g/t) (000s) (000s) (000s) Mineral Reserves Proven & Probable El Castillo Proven 1.1 0.60 21 El Castillo Probable 18.4 0.37 220 San A