Argonaut Gold facing blockade in Mexico; production continues

Argonaut’s El Castillo gold mine in Sonora, Mexico. Source: Argonaut Gold Inc.

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Argonaut Gold Inc. [AR-TSX; ARNGF-OTC] said Tuesday October 29 it is dealing with an illegal blockade at its El Castillo Mine in Mexico. The company has a legal and binding agreement with the Atotonilco ejido (Aboriginal group) that was signed and recognized by both the Atotonilco ejido and the Mexican government in 2012 and runs through 2022.

Argonaut said it understands that certain members of the Atotonilco ejido are seeking to amend the binding agreement in a manner that is inconsistent with the existing agreement and law. The company said it is attempting to work with the Atotonilco ejido and the government to resolve this issue in a mutually satisfactory manner.

“At this time, leaching and gold absorption operations are continuing and metal production has not been impacted,” the company said in a press release, Tuesday.

On Tuesday, Argonaut shares eased 3.9% or $0.085 to $2.04. The shares are currently trading in a 52-week range of $1.18 and $2.87.

Argonaut is aiming to create the next quality mid-tier gold producer in the Americas with production of between 300,000 and 500,000 ounces.  Its Mexican operations include the Castillo Complex in Durango and its La Colorada Mine in Sonora.

The El Castillo Complex is made up of the El Castillo and San Agustin mines which share infrastructure and resources. Back in March, 2018, Argonaut Gold reported a 74% increase in contained gold ounces at El Castillo, where reserves now stand at 40.8 million tonnes, grading 0.40 g/t, containing 522,000 ounces of gold.

That compares to a previous update in December, 2016, when reserves stood at 22.4 million tonnes, grading 0.42 g/t gold, containing 300,000 ounces.

That amounts to an increase of 18.4 million tonnes, or 74% in contained gold ounces.

It said the increase was largely achieved through the addition of the San Juan concessions that were recently acquired from Fresnillo PLC [FRES-LON], a Mexico-based precious metals company.

In addition, the latest update returned maiden reserves at both La Colorada and San Agustin. It is worth noting that Argonaut outlined 220,000 ounces of gold in the measured and indicated resources category at El Castillo, thus highlighting the potential for reserve additions through future upgrades of material that is currently in the resource category.

At La Colorada, the company continues to demonstrate its ability to consistently replace the ounces it depletes annually through mining due to successful exploration programs.

Aside from El Castillo and the La Colorada Mine, Argonaut’s portfolio includes a basket of advanced stage exploration projects. They include San Antonio in Baja. Argonaut reaffirms its commitment to treat all local ejidos fairly and work with its local communities in an open and transparent manner for the benefit of all stakeholders.


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