Name fo the Project
San Agustin heap-leach silver/gold project.

Location
Mexico.

Client
The project is owned by Minera Real del Oro, a wholly owned subsidiary of Argonaut Gold.

Project Description
The San Agustin property comprises four mineral claims totaling 1 065 ha in the northern San Lucas de Ocampo mining district.

The project has been designed as an openpit mine with a heap-leach operation using two separate multiple-lift, single-use leach pads.

The pit has been designed with five mining phases and contains 72.4-million tonnes of indicated mineral resources at an average grade of 0.32 g/t of gold and 10.6 g/t of silver. Total life-of- mine (LoM) production of 488 000 oz of gold and 3.8-million ounces of silver is estimated from the indicated mineral resource. The LoM strip ratio is 0.39:1.

Pit resources have been divided into high- and low-grade material types designated for heap-leach processing.

At a production rate of six-million tonnes of high-grade material a year during the first year, increasing to 10.8-million tonnes a year from the second year to the end of the mine’s life, it is expected that the potential mine life will be 6.5 years. The production schedule has targeted a consistent total mine tonnage of about 18-million tonnes a year, comprising high-grade, low-grade and waste material.

Separate circuits will be used to crush higher- and lower-grade material – the higher-grade material is two-stage fine-crushed to 80% passing 22 mm, and the lower-grade material is single-stage coarse-crushed to 80% passing 100 mm.

The projected gold and silver field recoveries for the fine-crushed material are 66% and 16% respectively, and for coarse-crushed material 57% and 9% respectively. The Phase 1 heap-leach pad will contain both types of crushing circuits. The final products from each will be combined and conveyed to a stacking system at the heap- leach pads.

During Phase 2 of the project, an additional fine-crushing circuit, along with a new heap-leach pad and ponds, will be added to meet the targeted production. No coarse-crushed material is planned for this phase. The stacked material will be leached using a low-concentration sodium cyanide solution.

The gold- and silver-bearing solution will be collected in individual pregnant solution ponds and pumped into separate carbon adsorption circuits to extract the precious metals.

Both phases will have independent heap-leach pads, process solution ponds and barren tanks, as well as reagent mix/storage and carbon adsorption circuits.

The loaded carbon will be shipped to Argonaut’s La Colorada facility, in Sonora, Mexico, where the metal from the loaded carbon will be processed and recovered.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The technical report and updated preliminary economic assessment, completed in April 2016, estimates a pretax net present value (NPV), at a 5% discount rate, of $126-million and an after-tax NPV of $89.9-million. Payback will take about 3.1 years from the start of production.

San Agustin offers an internal rate of return of 57.7%, compared with the company’s preliminary economic assessment, completed in December 2015, which calculated an after-tax internal rate of return of 50%.

Value
Total project costs are estimated at $84.8-million, which includes $42.6-million preproduction capital and $42.2-million sustaining capital.

Duration
Not stated.

Latest Developments
Argonaut declared commercial production at its San Agustin project, in Mexico, on October 1, two weeks after pouring first gold.

All aspects of the San Agustin mine have been transitioned to the operations team. The company plans to disclose the total initial capital and precommercial production operating results for San Agustin when it releases its third-quarter 2017 operating and financial results on November 2.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The company has completed construction of the project on schedule and more than 20% under budget.

Contact Details for Project Information
Argonaut Gold VP investor relations Dan Symons, tel +1 416 716 6466 or email dan.symons@argonautgold.com.