Florida Canyon Gold — Argonaut Gold — Merger or Acquisition (March 2020)
24 slides from Florida Canyon Gold's merger presentation, Mar 30, 2020
Slide 1: Argonaut Gold & Alio Gold Agree to Friendly At-Market Merger
Argonaut Gold & Alio Gold Agree to Friendly At-Market Merger BUILDING AN INTERMEDIATE GOLD PRODUCER WITH A DIVERSIFIED OPERATING PLATFORM TSX : AR TSX, NYSE-A : ALO March 30, 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: Call Participants
Call Participants Pete Dougherty Mark Backens President, Chief Executive Officer & Director Chief Executive Officer & Director Dave Ponczoch Paul Jones Chief Financial Officer Senior VP, Corporate Development Dan Symons VP, Investor Relations TSX:AR TSX, NYSE-A:ALO | Argonaut Gold & Alio Gold Agree
Slide 4: Argonaut's Strategy – Goal: ~300-500k oz Au/year
Argonaut’s Strategy – Goal: ~300-500k oz Au/year SUSTAINABILITY § Create Sustainable Environmental & Community Value § Reclamation EXTEND MINE LIFE § With Near-Mine Exploration PRODUCTION § Have produced over 1 million GEOs1 since 2010 OPERATING EXCELLENCE § 10 Year Track Record of Profitable Mining
Slide 5: At-Market Merger, creating a North American, Diversified Producer
Our New Vision for New Argonaut Gold At-Market Merger, creating a North American, Diversified Producer with a Strong Operating Base and Pipeline of Development Assets TSX:AR TSX, NYSE-A:ALO | Argonaut Gold & Alio Gold Agree to Friendly Business Combination - March 30, 2020 5
Slide 6: Transaction Rationale
Transaction Rationale DIVERSIFIED INTERMEDIATE PRODUCER § Diversified platform with production from 4 operations totaling 235k+ GEOs per year § Enhanced asset portfolio, reserve and resource base § Improved geographical diversification with assets in Mexico, USA and Canada OPERATING & JURISDICTION S
Slide 7: Transaction Overview
Transaction Overview § Argonaut to acquire all of the issued and outstanding shares of Alio via a Plan of Transaction Arrangement Summary § New Argonaut expected to have an initial combined market capitalization of C$251M § Share exchange ratio of 0.67 of an Argonaut share for each Alio share Consid
Slide 8: Pro Forma Capitalization, Production and Resource Base
Pro Forma Capitalization, Production and Resource Base Units Argonaut Alio New Argonaut Share Price (TSX) (C$/sh) $1.06 $0.69 Basic Shares Outstanding M 179 86 237 Basic Market Capitalization C$ 191 59 251 Cash & Short Term Investments1 US$ $39M $17M $55M Debt1 US$ $10M $15M $25M GEO Production 2019
Slide 9: Why an At Market Merger Makes Sense
Why an At Market Merger Makes Sense ARGONAUT ALIO § EXTENDS CORPORATE MINE LIFE § GAINS OPERATIONAL § Florida Canyon adds immediate DIVERSIFICATION growth then replaces El Castillo, § Three additional operating scheduled to close in 2022 mines. No longer a single mine § DIVERSIFICATION IN A GREAT co
Slide 10: North American Focused Intermediate Producer
North American Focused Intermediate Producer PRODUCING MINE DEVELOPMENT PROJECT MAGINO Ontario, Canada FLORIDA CANYON Mine Nevada, USA EL CASTILLO COMPLEX ARGONAUT Durango, Mexico Reno Office EL CASTILLO Mine SAN AGUSTIN Mine CERRO DEL GALLO Guanajuato, Mexico LA COLORADA Mine Sonora, Mexico ANA PAU
Slide 11: Pro Forma Asset Profile & Diversification
Pro Forma Asset Profile & Diversification Magino San Antonio Florida Canyon La Colorada Ana Paula San Agustin El Castillo Cerro del Gallo 2019A GEO Production 2020E GEO Production M&I Mineral Resources by Asset1 koz by Asset1 koz by Asset2 Moz Au 6% 4% 28% 5% 29% 35% 35% Before 187k 180k 41% 10.4 Mo
Slide 12: Transaction Growth: Gold Profile
Transaction Growth: Gold Profile Mineral Reserves1 M&I Mineral Resources1,2 Moz Au Moz Au 6.8 13.6 31% 42% 10.4 3.2 4.8 2.0 in M&I in Reserves Resources Argonaut Pro-Forma Argonaut Pro-Forma 2020E GEO Production3 2020E Analyst Operating Cash Flow Est.4 koz Au US$M 89 245 25% 36% 71 in Analyst 18 180
Slide 13: Enterprise Value Re-rate Potential
Re-rate Potential § New Argonaut is well positioned to re-rate to the size of larger gold peers Enterprise Value vs. 2019A Production1 US$M | koz GEO $800M New Gold $700M $600M Resolute $500M Enterprise Value K92 Golden Star Westgold $400M Pan African $300M McEwen Strong re-rate New potential Argona
Slide 14: Transaction Benefits
Transaction Benefits Benefits to Argonaut Shareholders § Enhanced Size: Elevates Argonaut within its peer group through an expanded asset portfolio and market presence. § Improved Life of Mine Profile: Florida Canyon adds immediate growth then replaces El Castillo, which is scheduled to close in 202
Slide 15: Florida Canyon – Production Growth Flexibility
Florida Canyon – Production Growth Flexibility Stats Location: Nevada, USA Status: Production Processing: Open Pit, Heap Leach Project Highlights1 Mineral Reserves1 November 1, 2018 $1,250/oz Au Assumptions Gold Price (US$/oz) US$1,300 Category Tonnes Grade (g/t) Contained Discount Rate 5% (000s) oz
Slide 16: Florida Canyon Possibilities
Florida Canyon Possibilities Argonaut Plan Exploration Upside § Optimize mine plan § Connection in pit § Evaluate in-pit crushing & § Transitional and sulphide ores stacking § Standard pit § Capital investment to reduce § Land package of over 11,800 operating costs hectares TSX:AR TSX, NYSE-A:ALO |
Slide 17: The Development Pipeline
The Development Pipeline Magino Cerro del Gallo Ana Paula Location: Ontario, Canada Location: Guanajuato, Mexico Location: Guerrero, Mexico M+I Resources1: M+I Resources1: M+I Resources1: 144.0 Mt @ 0.91 g/t, 4.2M oz Au 47.9 Mt @ 0.60 g/t, 0.9M oz Au 18.0 Mt @ 2.06 g/t, 1.2M oz Au P+P Reserves1: P+P
Slide 18: Transaction Summary Recap
Transaction Summary Recap ü Increased company profile and critical mass § Size being rewarded in the market with premium valuations ü Leverages Argonaut’s proven technical team and experience in operating open pit, heap leach mines ü Improved portfolio diversification § Argonaut will have gold produ
Slide 19: For Additional Information
For Additional Information TSX : AR TSX : ALO Contact Information NYSE-A: ALO Dan Symons Paul Jones Vice President, Investor Relations Senior Vice President, Corporate Argonaut Gold Inc. Development First Canadian Place 100 King St. West Alio Gold Inc. Suite 5700 Toronto, ON M5X 1C7 700 West Pender
Slide 20: 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 21: Mineral Resource Notes and Disclosures
Mineral Resource Notes and Disclosures All Mineral Resources have been estimated in accordance with Canadian Institute of Mining Standards. Mineral Resources are not known with the same degree of certainty as Mineral Reserves and do not have demonstrated economic viability. In addition, the quantity
Slide 22: Strong Board, Management & Technical
Strong Board, Management & Technical Pro Forma Board of Directors James E. Kofman, Chairman Peter Mordaunt Vice Chairman, Cormark Securities Work experience at Barrick/Camflo, Kennecott Copper, Muscocho, Work experience at UBS Securities, Osler, Hoskin & Harcourt Stingray Copper, Corner Bay Silver P
Slide 23: Argonaut's Consolidated Mineral Resources & Mineral Reserves
Argonaut’s Consolidated Mineral Resources & Mineral Reserves1 Contained Au Contained Ag Contained Tonnes Au Grade Ag Grade Cu Grade Project Category Ounces Ounces Tonnes Cu (Millions) (g/t) (g/t) (% Cu) (000s) (000s) (000s) RESERVES PROVEN & PROBABLE El Castillo Proven 1.1 0.60 21 El Castillo Probab
Slide 24: Florida Canyon and Ana Paula Mineral Reserves & Mineral Resources
Florida Canyon and Ana Paula Mineral Reserves & Mineral Resources1 Florida Canyon Mine Proven Probable Proven & Probable Metric Tonnes Gold Grade Contained Gold Metric Tonnes Gold Grade Contained Gold Metric Tonnes Gold Grade Contained Gold (000s) (gpt) Ounces (000s) (000s) (gpt) Ounces (000s) (000s