Argonaut lowers FY guidance as abnormal weather, mine sequencing impedes output

SAO PAULO, Brazil (miningweekly.com) – Canadian gold producer Argonaut Gold has lowered its full-year guidance by 15 000 gold-equivalent ounces (GEOs) to between 115 000 GEOs and 120 000 GEOs, after abnormally high rainfall and changes in mine sequencing impacted on production at the El Castillo mine, in Mexico.

During the three months ended September 30, the TSX-listed company produced 26 322 GEOs, down 9% year-on-year. El Castillo produced 13 161 GEOs and its La Colorada mine, also in Mexico, recorded output of 13 161 GEOs.

Toronto-based Argonaut said it had encountered below-plan grades at El Castillo, with increased sulphide ore, resulting in lower mill recovery.

The increased ore tonnes impacted on mine sequencing, which delayed mining of the higher-grade oxide ore phases of the openpit that were planned for access during 2016. This, therefore, lowered production. However, this change will have a positive impact on 2017 output, as Argonaut originally had no oxide ore scheduled to be mined during 2017 in the life-of-mine plan, but now expects to mine about 60% oxide ore during 2017.

The company added that it had discovered more economic low-grade ore at the La Colarada mine, the processing of which lowered output despite being partially offset by higher-than-budgeted-for throughput and a reduced stripping ratio.

President and CEO Pete Dougherty stressed that it was important to note that the company had not changed its cutoff grades at La Colarada. “Much of what was classified as waste in our mine model turned out to be above our cutoff grade and is now considered economic. This positive development increases our tonnages, lowers the strip ratio and extends mine life. Additionally, the recent drilling at the El Creston deposit shows encouraging results as we begin preparing this pit for production,” he said.