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Argonaut Gold: Digging Into The FY2020 Reserve Update

Apr. 01, 2021 9:09 AM ETArgonaut Gold Inc. (ARNGF), AR:CA15 Comments
Taylor Dart profile picture
Taylor Dart


  • Argonaut Gold released its updated Reserves & Resource statement this week, finishing the year with significant growth in reserves from the Florida Canyon acquisition.
  • Excluding Ana Paula, which remains under conditional sale, the company's mineral reserve base stands at 5.83 million ounces of gold.
  • Based on a market cap of ~$528 million, Argonaut is being valued at just $90.51/oz, which is a valuation per ounce that is typically reserved for developers, not producers.
  • I continue to see Argonaut Gold as a solid organic growth play in the mid-tier space, and I would expect any dips below US$1.63 to provide low-risk buying opportunities.

Wheel loader unloading sand into mining truck at the open pit
Photo by Maksim Safaniuk/iStock via Getty Images

The Q4 Earnings Season for the Gold Juniors Index (GDXJ) is nearing its close, which means that several miners are busy reporting their year-end Reserve & Resource statements to underpin their future production. The most

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Taylor Dart profile picture
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Comments (15)

Brian Cellars profile picture
Thanks, Taylor. I'm a little late catching up on my reading and glad I did buy while it was down in March. I remembered that you weren't big on them before but felt it was getting too cheap to ignore. I took a fair bit off the table this week at 2.85 CAD average, given its history of falling sharply from extended rallies.
I always look forward to your articles, but the bottom line at this point, as I see it is DO we have a bottom in this market, or is nothing we think about it relevant? I am tired, have no tolerance to speculate, but after 7 months of grief, I look forward to some HOPE of a bottom in place. Nobody wants to address this.
@jamerson Next rallye for the miners will come for sure! Don´t worry! Sometimes it needs some time!
@jamerson PS: look to chart of HMY today!
Imo there is buying the big money now! ;)

Long HMY, AR.to, KGC, EGO, SSRM GFI, PAAS, EMAN, VUZI, etc. ;))
jjs22 profile picture
Another great read Taylor! Hugo below sees the sale falling through as a positive, do you agree? Clearly the sale was intended to help with funding the development pipeline.
Taylor Dart profile picture
Hi Jjs,

Thanks so much for the kind words. I think it's fine either way. I think their development timeline is probably Magino, CDG, then AP, and AP is a solid project, but I'm less and less excited about Mexico these days. Between funding it, the risks of Mexico and going back into that jurisdiction after gravitating towards weighting to Tier-1 with FC and MG, and uncertainty around Mexico 5-10 years out with higher taxes, etc, I'd be just as happy to see them selling it for $30MM to $50MM. Mexico gets a huge discount, and Guerrero State gets an even larger one, one only needs to look at Torex.

After-Tax NPV (5%) might be over $200MM, but if you slap a 0.40x multiple on it, it's about $80MM, which I think is fair considering that producers like Torex trade at 0.80x or less, so I'd personally prefer they just sell it. Use cash-flow from MG to buy another Tier-1 project, let the legacy Mexican mines produce cash flow cause they're already there, but I wouldn't be putting more $ into Mexico. If you're going to gravitate towards Tier-1 with MG and FC, why go back and lose the better multiple with CDG and AP - divest them, clean up the balance sheet, and acquire another bolt-on Tier-1 operation, but that's just my opinion.
@Taylor Dart Hi Taylor. Thx for your opinion and answer.
I agree and it’s good to point out the Problems in México.

But the people there are don’t really like the actually politic of the left president. So with next election this could be change.

And also like your discount - the 0.4x multiple. If it’s $80MM (At Gold at $1250 - could be increase with higher price) - this is much more then the Deal about $35MM.

And i think too, we will see increase on R&R also for Magino. Would you agree?
Taylor Dart profile picture
Hi Hugo,

Certainly possible. The problem is Guerrero Projects get the violence discount too, even if the government isn't leaning on them for more taxes, so AP is a tough one. I'd prefer to just sell it for $50MM - $60MM and grow cash.

Agree on increased R&R at Magino.
hulubalang profile picture
The Ana Paula sale fell through.

Taylor Dart profile picture
Yes, still working on my predicting the future skill. Articles generally take 24-48 hours to be published after submission. I'm now well aware of the deal expiry.
@hulubalang This are very good news! Because NPV of Ana Paula is $ 223m at cash-costs of around $500.

Could not understand, why they wanted to sell it.

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