November 2012 presentation - Argonaut Gold Inc.
November 2012 presentation - Argonaut Gold Inc.
November 2012 presentation - Argonaut Gold Inc.
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
1
Forward Looking Statement<br />
Forward Looking Information<br />
All monetary amounts in U.S. dollars unless otherwise stated<br />
This document contains certain “forward-looking statements” and “forward-looking information” under applicable Canadian securities laws concerning the proposed transaction and the business, operations and financial<br />
performance and condition of <strong>Argonaut</strong> <strong>Gold</strong> <strong>Inc</strong>.( “<strong>Argonaut</strong>”). Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and mine life of the<br />
various mineral projects of <strong>Argonaut</strong>; synergies and financial impact of completed acquisitions; the benefits of the development potential of the properties of <strong>Argonaut</strong>; the future price of gold, copper, silver; the estimation of<br />
mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations.<br />
Except for statements of historical fact relating to <strong>Argonaut</strong>, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan,”<br />
“expect,” “project,” “intend,” “believe,” “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur or the negative connotation thereof. Forward-looking statements are<br />
based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual<br />
events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of <strong>Argonaut</strong> and there is no assurance they<br />
will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, variations in ore grade or recovery rates, risks<br />
relating to international operations, fluctuating metal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks<br />
of the mining industry, failure of plant, equipment or processes to operate as anticipated. Although <strong>Argonaut</strong> has attempted to identify important factors that could cause actual actions, events or results to differ materially from<br />
those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove<br />
to be accurate, as actual results and future events could differ materially from those anticipated in such statements. <strong>Argonaut</strong> undertakes no obligation to update forward-looking statements if circumstances or management’s<br />
estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Statements concerning mineral reserve and resource<br />
estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered if the property is developed. Comparative market information is as of a<br />
date prior to the date of this <strong>presentation</strong>. <strong>Argonaut</strong> does not undertake to update any forward looking statements that are included in this document, except in accordance with applicable securities laws.<br />
NATIONAL INSTRUMENT 43-101 – STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS (“NI 43-101”)<br />
Thomas Burkhart, <strong>Argonaut</strong> <strong>Gold</strong>’s Vice-President of Exploration and a Qualified Person under NI 43-101, has read and approved the scientific and technical information in this <strong>presentation</strong> as it relates to <strong>Argonaut</strong>. This<br />
<strong>presentation</strong> contains information regarding mineral resources that are not mineral reserves and do not have demonstrated economic viability. The potential quantities and grades disclosed herein in connection with the drilling<br />
results at San Antonio and La Colorada are conceptual in nature and there has been insufficient exploration to define an updated mineral resource with these results and it is uncertain if further exploration will result in these<br />
targets being delineated as a mineral resource. For further information on <strong>Argonaut</strong>’s El Castillo mine, please see the “NI 43-101 Technical Report on Resources and Reserves. <strong>Argonaut</strong> <strong>Gold</strong> <strong>Inc</strong>. El Castillo Mine, Durango State,<br />
Mexico” dated Nov. 6, 2010 and available on <strong>Argonaut</strong>’s profile at www. sedar.com.<br />
For further information on <strong>Argonaut</strong>’s La Fortuna property please see the “La Fortuna, Durango, Mexico, Technical Report” dated October 21, 2008 and available on <strong>Argonaut</strong>’s profile at www. sedar.com.<br />
For further information on <strong>Argonaut</strong>’s San Antonio Project, please see the “Technical Report and Mineral Resource Estimate on the San Antonio <strong>Gold</strong> Project, Baja California Sur, Mexico” dated June 22,2011and <strong>Argonaut</strong>’s press<br />
release dated May 9, 2011, available on <strong>Argonaut</strong>’s profile at www.sedar.com. For further information on <strong>Argonaut</strong>’s La Colorada Property please see the “Geological Report on the La Colorada Property with a Resource Estimate<br />
on La Colorada and El Creston Mineralized Zones – Sonora, Mexico” dated <strong>November</strong> 30, 2009 and available on <strong>Argonaut</strong>’s profile at www.sedar.com.<br />
CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES<br />
This <strong>presentation</strong> uses the terms “Measured”, “Indicated” and “Inferred” Resources as defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects. United States readers are advised that<br />
while such terms are recognized and required by Canadian securities laws, the United States Securities and Exchange Commission does not recognize them. Under United States standards, mineralization may not be classified as a<br />
“reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve calculation is made. United States readers are cautioned not to assume<br />
that all or any part of the mineral deposits in these categories will ever be converted into reserves. In addition, “Inferred Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal<br />
feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. United States readers are also cautioned not to assume that all or any part of an Inferred Resource exists, or is<br />
economically or legally mineable.<br />
NON-IFRS MEASURES<br />
The Company included the non-IFRS measure “Cash cost per gold ounce sold” in this press release to supplement its financial statements which are presented in accordance with International Financial Reporting Standards<br />
(“IFRS”). Cash cost per gold ounce sold is equal to cost of sales less silver sales divided by gold ounces sold. The Company believes that this measure provides investors with an improved ability to evaluate the performance of the<br />
Company. Non-IFRS measures do not have any standardised meaning prescribed under IFRS. Therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional<br />
information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please see the MD&A for full disclosure on non-IFRS measures. 2<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
2
Creating Value Beyond <strong>Gold</strong><br />
Generating<br />
Cash<br />
Near Term<br />
Potential<br />
Exploration<br />
Potential<br />
Q3 Year to date ~ 76,000 ozs. Produced<br />
2011 Full Year ~ 72,000 ozs. Produced<br />
San Antonio advanced exploration stage<br />
project<br />
• 1.7 mm ozs gold in M&I (↑43%)<br />
Magino (following year end acquisition)<br />
• 6.3 mm ozs gold in M&I<br />
La Fortuna<br />
• 300,000 gold ozs in M&I<br />
Hercules (Prodigy project)<br />
• 300,000 gold ozs<br />
11 projects in the Sonora Mojave<br />
Megashear<br />
3<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
3
Vision<br />
Creating the Next Quality Mid-Tier <strong>Gold</strong> Company in the Americas<br />
Strong management team and financial position<br />
Growth thru acquisitions & exploration<br />
Honor commitments to all stakeholders<br />
Consolidation in the junior space<br />
PRIMARY<br />
ASSET<br />
EL CASTILLO<br />
84-85 k ozs.<br />
SECOND MINE<br />
LA COLORADA<br />
17-18 k ozs<br />
OPERATIONS<br />
EXPANSION<br />
El Castillo<br />
-> 105-120 k ozs<br />
La Colorada<br />
-> 50-60 k ozs<br />
ADVANCED<br />
PROJECT<br />
San Antonio<br />
-> +70 k ozs<br />
FUTURE GROWTH<br />
EXPLORATION FOCUS<br />
ACQUISITIONS<br />
IN THE AMERICAS<br />
Prodigy ~ Magino<br />
ULTIMATE GOAL<br />
• 300,000-500,000 oz/yr<br />
• Lower quartile of cost<br />
4<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
4
<strong>Argonaut</strong> Mexican Assets<br />
2 producing gold mines in <strong>2012</strong><br />
• Good infrastructure and political stability<br />
• Open pit heap leach<br />
<br />
<br />
1 advanced exploration stage project<br />
9 grass roots projects staked in<br />
a prolific gold belt<br />
La Colorada – Mine<br />
<strong>2012</strong> Guidance 17 – 18,000 ozs<br />
M&I Resources<br />
M&I: 1.1 M ozs Au<br />
14 M ozs Ag<br />
El Castillo - Mine<br />
<strong>2012</strong> Guidance 84 - 85,000 ozs<br />
Reserves and<br />
M&I Resources<br />
(incl. of Reserves)<br />
P+P: 1.23 M ozs Au<br />
M&I: 1.73 M ozs oxide<br />
1.5 M ozs sulphide<br />
La Fortuna - Exploration<br />
Potential Production n/a<br />
M&I Resources M&I: 0.31 M ozs<br />
San Antonio – Development Stage<br />
LOM Production<br />
and cash costs<br />
M&I Resources<br />
69,700 ozs Au @ US$553/oz<br />
for 15 year Mine Life<br />
M&I: 1.7 M ozs<br />
Portfolio also includes 9 Grass Roots projects including<br />
+47,000 hectares of land in the Sonora Mojave Megashear<br />
5<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
5
<strong>Argonaut</strong> Operations<br />
El Castillo La Colorada San Antonio<br />
YTD Accomplishments<br />
• Production of 62k ozs<br />
• New stacking /conveying system<br />
• Pad 7A complete<br />
• Pad 8 permit granted<br />
Guidance<br />
• Production 84-85k ozs @<br />
$625 -$650<br />
• Q4 estimates 22-23k ozs<br />
YTD Accomplishments<br />
• Production of 14k ozs Au<br />
• Refinery Complete<br />
• New crusher for overliner<br />
• 35k meters of expansion drilling<br />
• Pad Construction 1/3 complete<br />
• Explosives Permit received<br />
Guidance<br />
• Production 17-18k oz @<br />
$450 -$500<br />
• Q4 guidance ~ 3-4k ozs<br />
YTD Accomplishments<br />
• 20k meters of drilling<br />
• Permits submitted<br />
• New resource and PEA<br />
6<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
6
<strong>Argonaut</strong> Q3 Results<br />
Highlights<br />
Record Quarter performance:<br />
• Record gold production of 31, 074 ounces<br />
• 24,575 ounces at El Castillo (↑46% over Q3 2011)<br />
• 6,499 ounces at La Colorada (↑42% over Q2 <strong>2012</strong>)<br />
• Record sales of 42,534 ounces of gold<br />
• Record revenue of $72.9 million<br />
• Record net income of $29.2 million ($0.29 /basic share)<br />
• Cash Flow of $36.5 million<br />
10,242 10,066<br />
El Castillo Production (oz Au)<br />
12,724<br />
18,300 18,064 17,453 16,884<br />
19,700<br />
17,799<br />
19,533<br />
20,500<br />
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3<br />
Guidance<br />
2010 2011 <strong>2012</strong><br />
24,575<br />
Q3<br />
Actual<br />
Fourth Quarter Outlook<br />
• El Castillo estimate of 22,000 - 23,000 ounces of gold<br />
• La Colorada estimate of 3,000 - 4,000 ounces of gold<br />
La Colorada Production (oz Au)<br />
6,499<br />
Full year guidance for <strong>2012</strong> of 101,000 - 103,000 ounces of<br />
gold (<strong>Inc</strong>reased from 88,000 – 97,000)<br />
• El Castillo: 84,000 - 85,000 ounces of gold<br />
• La Colorada: 17,000 - 18,000 ounces of gold<br />
4,590<br />
3,085<br />
3,000<br />
Q1 Q2 Q3 Guidance Q3 Actual<br />
<strong>2012</strong><br />
Source: Company Filings 7<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
7
<strong>Argonaut</strong>’s Value Creation Beyond <strong>Gold</strong><br />
$16<br />
$14<br />
$12<br />
$10<br />
$8<br />
$6<br />
$4<br />
$2<br />
$0<br />
200<br />
150<br />
100<br />
50<br />
0<br />
-50<br />
AR Realized Value<br />
$3 $13.42<br />
IPO<br />
347%<br />
Today<br />
Valuations<br />
PEZ Realized Value<br />
31%<br />
1.6 -0.5 0 5<br />
51%<br />
$2.20 $2.56 $6.53<br />
Offer Closing Today<br />
Cash Flow from Operations<br />
42<br />
228%<br />
150<br />
2007 2008 2009 2010 2011 2014<br />
Castle <strong>Gold</strong><br />
<strong>Argonaut</strong> <strong>Gold</strong> Analyst<br />
Consensus<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
7<br />
6<br />
5<br />
4<br />
3<br />
2<br />
1<br />
0<br />
San Antonio<br />
La Colorada<br />
El Castillo<br />
Operations (k oz)<br />
17-18<br />
2 14 29 51 72 84-85 107<br />
2007 2008 2009 2010 2011 <strong>2012</strong> E 2014<br />
Castle <strong>Gold</strong> <strong>Argonaut</strong> <strong>Gold</strong><br />
Analyst<br />
Consensus<br />
Resource Growth (m oz)<br />
San Antonio<br />
La Colorada<br />
La Fortuna<br />
El Castillo Total<br />
1.0 1.0 1.0<br />
5.4<br />
200 - 300<br />
2007 2008 2009 2010 <strong>2012</strong><br />
Castle <strong>Gold</strong><br />
<strong>Argonaut</strong> <strong>Gold</strong><br />
70<br />
63<br />
6.5<br />
8<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
8
Building the Next Intermediate <strong>Gold</strong> Company<br />
Core Values/Foundations<br />
Leverage to <strong>Gold</strong> thru large resource base<br />
De-risked with low CAPEX and<br />
Operating Cost<br />
‣ 12 million ozs M&I Resource<br />
4 Mines<br />
• 500k Ozs/year<br />
9<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
9
<strong>Argonaut</strong> – Production Funding Growth<br />
Production Growth<br />
500<br />
+500k ozs.<br />
400<br />
Magino<br />
300<br />
200<br />
100<br />
0<br />
$700<br />
$600<br />
101-103k ozs.<br />
150-180k ozs.<br />
220- 250k ozs.<br />
<strong>2012</strong> Expansion New Mine -<br />
San Antonio<br />
Sources of Funding (US$mm)<br />
New Mine - Magino<br />
$564<br />
San Antonio<br />
La Colorada<br />
El Castillo<br />
<strong>Argonaut</strong> expects to have<br />
sufficient cash to fund the<br />
development of Magino,<br />
avoiding shareholder<br />
dilution<br />
$500<br />
$419<br />
$145<br />
$400<br />
$300<br />
$200<br />
$162<br />
$204<br />
$42<br />
$290<br />
$85<br />
$130<br />
$130<br />
$100<br />
$114<br />
--<br />
$47<br />
<strong>Argonaut</strong> End of Year Cash<br />
+ Dilutive Instruments<br />
Prodigy End of<br />
Year Cash<br />
<strong>Argonaut</strong><br />
2013E FCF<br />
<strong>Argonaut</strong><br />
2014E FCF<br />
Source: Equity Research. Note: Free cash flow estimates based on average broker estimates for operating<br />
cash flow and capital expenditures between <strong>2012</strong> and 2015 at broker estimated gold prices<br />
<strong>Argonaut</strong><br />
2015E FCF<br />
10<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
10
Prodigy - Magino’s Flexibility<br />
Dec 2011<br />
Prodigy’s flagship asset is the Magino gold project<br />
(40 km northwest of Wawa, Ontario)<br />
On December 22, 2011, Prodigy released an updated<br />
Preliminary Economic Assessment (“PEA”):<br />
• Pre-tax NPV of C$939 mm and pre-tax IRR of 36%<br />
• LOM average gold production of 249k oz per year<br />
over 11 year mine life at cash costs of US$461/oz<br />
• LOM production of 2.6 million ounces at 1.15 g/t<br />
• Total development capital expenditures of C$404 mm<br />
with LOM sustaining capital expenditures of C$145<br />
mm<br />
• 20,000 tpd mill achieving 95% recoveries<br />
Resource Flexibility<br />
• Tremendous grade flexibility without the loss of<br />
significant ounces<br />
• Mine development that balances returns with scale<br />
• Multiple development scenarios have been evaluated<br />
by <strong>Argonaut</strong> management in assessing the merits of<br />
this transaction<br />
• Pre-feasibility study (2013 target) which will explore<br />
the development of Magino, focusing on a higher<br />
grade, lower scaled operation balancing returns for<br />
the project<br />
• Project funding through <strong>Argonaut</strong> cash flow<br />
PEA<br />
Cutoff<br />
Grade<br />
Indicated Resource<br />
Magino Project Mineral Resource Estimate<br />
Source: Prodigy SEDAR Company Filings as described on the slide “About Prodigy”<br />
Note: The December 2011 PEA is shown here for comparative purposes only, readers should note<br />
that the current technical report states as the new resource estimate is significantly different from<br />
the existing one, the mine plan and process disclosure in the PEA is no longer current<br />
(US$1,200/oz gold price and 0.93 USD:CAD exchange ratio)<br />
Inferred Resource<br />
Tonnes Grade Ounces Tonnes Grade Ounces<br />
(g/t) (000's) (g/t) (k oz) (000's) (g/t) (k oz)<br />
0.35 67,555 1.00 2,176 54,242 0.99 1,721<br />
Current Indicated Resource Inferred Resource<br />
Cutoff<br />
Grade<br />
Tonnes Grade Ounces Tonnes Grade Ounces<br />
(g/t) (000's) (g/t) (k oz) (000's) (g/t) (k oz)<br />
0.35 223,480 0.87 6,251 13,809 0.80 355<br />
0.40 199,897 0.92 5,913 11,920 0.87 333<br />
0.50 159,681 1.04 5,339 9,021 1.00 290<br />
0.60 128,135 1.16 4,779 7,006 1.13 255<br />
0.70 102,970 1.29 4,271 5,430 1.27 222<br />
1.00 55,306 1.69 3,005 2,795 1.71 154<br />
The December 2011 PEA is shown here for comparative purposes only, readers should note that the<br />
current technical report states as the new resource estimate is significantly different from the<br />
existing one, the mine plan and process disclosure in the PEA is no longer current; Prodigy is<br />
currently working on prefeasibility study which will supersede previous technical reports<br />
11<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
11
Transaction Rationale<br />
<strong>Argonaut</strong> Shareholders<br />
Multi-million ounce deposit with<br />
tremendous grade flexibility<br />
Growth beyond <strong>Argonaut</strong>'s existing<br />
organic growth profile<br />
Prodigy Shareholders<br />
Significant premium of 54% to Prodigy<br />
based on both companies 20-day VWAPs<br />
as at October 12, <strong>2012</strong><br />
Provides Prodigy shareholders with<br />
exposure to current production and<br />
strong gold price environment, and<br />
continued growth<br />
Entry into another of the world's most<br />
supportive mining jurisdictions<br />
Substantially decreases the financing risk<br />
for Magino<br />
Significantly accretive to all of <strong>Argonaut</strong>'s<br />
per share metrics<br />
Once full production is achieved, expects<br />
to reach goal of 300 - 500k oz per year of<br />
production and enter the ranks of<br />
intermediate producers<br />
Leverages <strong>Argonaut</strong>'s highly experienced<br />
and successful management team to<br />
develop Magino<br />
<strong>Argonaut</strong>'s shares provide improved<br />
trading liquidity for Prodigy shareholders<br />
12<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
12
Future Value Drivers<br />
<strong>Gold</strong> Production<br />
300-500,000 ozs / year<br />
El Castillo<br />
Sulphide Mineralization<br />
Preliminary met work encouraging<br />
New test results to be released in Q4<br />
(Resource of 1.5 mm ozs contained in 30-50 meters of<br />
drilling underneath pit)<br />
Magino<br />
La Colorada<br />
Exploration Upside<br />
Veta Madre drilling<br />
Underground Exploration<br />
(Historical records show 3 mm ozs. recovered underground)<br />
San Antonio<br />
San Antonio<br />
Exploration Potential<br />
La Colorada<br />
El Castillo<br />
Prodigy / Magino<br />
Heap Leach Potential<br />
Underground Potential<br />
Cutoff Flexibility<br />
13<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
13
Upcoming News<br />
Q4 <strong>2012</strong><br />
- December 6 th – Special Meeting to<br />
approve merger<br />
- El Castillo Sulphide study update<br />
Q1 2013 - La Colorada Veta Madre resource<br />
14<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
14
The Difference<br />
Value Beyond <strong>Gold</strong><br />
• Leverage to <strong>Gold</strong><br />
‣ >6 million ozs M&I Resource growing to over<br />
12 million ozs<br />
• De-risked with low CAPEX and Operating Cost<br />
‣
Appendix<br />
16<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
16
Indexed Performance<br />
<strong>Argonaut</strong> Position<br />
Chairman<br />
Brian J. Kennedy<br />
Directors<br />
Peter C. Dougherty<br />
James E. Kofman<br />
Christopher R. Lattanzi<br />
Peter Mordaunt<br />
Dale C. Peniuk<br />
Board of Directors<br />
Prior Experience<br />
President /CEO Meridian <strong>Gold</strong> <strong>Inc</strong>.<br />
CFO Meridian <strong>Gold</strong> <strong>Inc</strong>.<br />
Vice Chairman UBS Securities Canada <strong>Inc</strong>.<br />
President Micon International Limited<br />
Director of Pediment <strong>Gold</strong><br />
Assurance partner KPMG LLP<br />
Management Team<br />
President & CEO Prior Experience<br />
Peter C. Dougherty CFO Meridian <strong>Gold</strong> <strong>Inc</strong>.<br />
Chief Operating Officer<br />
Richard Rhoades General Manager Asarco LLC<br />
Chief Financial Officer<br />
Barry L. Dahl CFO Hettinger Welding LLC.<br />
Vice President of Exploration<br />
Thomas H. Burkhart Vice President of New Dimensions (Northair)<br />
Corporate Development Officer<br />
Curtis K. Turner CFO Cyanco Corp.<br />
Financial Status (End of Q3)<br />
Cash Balance ~ C $43 million Debt ~ 0<br />
350%<br />
300%<br />
250%<br />
200%<br />
150%<br />
100%<br />
50%<br />
Performance since IPO<br />
↑ 236% AR<br />
↑ 57% <strong>Gold</strong><br />
↑ 1.4% PHLX <strong>Gold</strong>/Silver<br />
--<br />
1-Jan-10 1-Jun-10 1-Nov-10 1-Apr-11 1-Sep-11 1-Feb-12 1-Jul-12<br />
TSX Share Summary : AR / AR.WT<br />
Outstanding Shares<br />
93.3 million<br />
Warrants / In the Money Value 24.1 million / $108 million<br />
(C$4.50 expire 12/29/<strong>2012</strong>)<br />
Fully Diluted Shares<br />
118.5 million Management ~ 5%<br />
Market Cap (Fully Diluted)<br />
$1.2 billion<br />
Share Price Range (52 week) $6.02 - $11.08<br />
Institutional ~ 83%<br />
Warrant Price Range (52 week) $1.90 - $6.99 Retail ~ 12%<br />
*Updated as of <strong>November</strong> 19, <strong>2012</strong><br />
BMO<br />
Canaccord Genuity<br />
Dahlman Rose<br />
GMP (Griffiths McBurney)<br />
Macquarie Securities<br />
Mackie Research<br />
Scotia<br />
Stonecap Securities<br />
Analyst Research<br />
Andrew Kaip<br />
Rahul Paul<br />
Adam Graf<br />
Craig West<br />
Michael Siperco<br />
Barry Allen<br />
Ovais Habib<br />
Christos Doulis<br />
17<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
17
Prodigy Transaction Overview<br />
Offer Terms<br />
• 0.1042 of an <strong>Argonaut</strong> share and C$0.0001 cash for each Prodigy share<br />
• Friendly plan of arrangement<br />
• Pro forma ownership: 78% <strong>Argonaut</strong> / 22% Prodigy (1)<br />
Key Conditions<br />
• 66 ⅔ Prodigy shareholder approval<br />
• 50.1% <strong>Argonaut</strong> shareholder approval<br />
• Stock exchange and court approvals<br />
Other Terms<br />
Indicative Timeline<br />
• Unanimous <strong>Argonaut</strong> and Prodigy board approval<br />
• No solicitation and 5 business day right to match Superior Proposal<br />
• Termination fee of C$10.25 million payable under certain circumstances<br />
• Prodigy options and warrants roll at exchange ratio<br />
• Support agreements signed by Prodigy’s management and board<br />
• Prodigy to receive one Board seat on <strong>Argonaut</strong> Board<br />
• Mailing of Circular: <strong>November</strong> <strong>2012</strong><br />
• <strong>Argonaut</strong> and Prodigy shareholder votes: December <strong>2012</strong><br />
• Transaction close: December <strong>2012</strong><br />
1. Based on share capital as of June 30, <strong>2012</strong>, adjusted for subsequent events on a fully diluted in-the-money basis 18<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
18
Pro Forma Capitalization and Balance Sheet<br />
<strong>Argonaut</strong> Prodigy Combined<br />
TSX Share Price (12-October-12) (C$) $10.48 $0.69 n.a.<br />
Basic Shares Outstanding (1) (mm) 93 293 123<br />
FD ITM Shares Outstanding (1) (mm) 118 307 151<br />
Basic Market Capitalization (1) (C$ mm) $970 $202 $1,173<br />
FD ITM Market Capitalization (1) (C$ mm) $1,242 $212 $1,454<br />
Cash (2) (C$ mm) $42 $50 $93<br />
Cash including Proceeds from<br />
ITM Instruments (2) (C$ mm) $159 $57 $220<br />
YTD Avg. Daily Value Traded (C$ mm) $5.7 $0.3 $6.0<br />
Source: Bloomberg, Company Filings, FactSet<br />
1. Based on closing prices as of October 12, <strong>2012</strong> on the TSX and TSX Venture Exchange and share capital as of June 30, <strong>2012</strong>, adjusted for subsequent events<br />
2. Based on September 30, <strong>2012</strong> financial for <strong>Argonaut</strong> balance and June 30, <strong>2012</strong> financials for Prodigy balance, adjusted for subsequent events<br />
19<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
19
About The Companies<br />
About <strong>Argonaut</strong> <strong>Gold</strong><br />
<strong>Argonaut</strong> <strong>Gold</strong> is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production-stage El Castillo Mine in the State of Durango, Mexico, the La<br />
Colorada Mine in the State of Sonora, Mexico, the advanced exploration stage San Antonio project in the State of Baja California Sur, Mexico, and several exploration stage projects, all of which are located in Mexico.<br />
Creating Value Beyond <strong>Gold</strong><br />
Resource Tonnes Au Ounces Ag Ounces<br />
Category<br />
Grade (g/t)<br />
Grade (g/t)<br />
Mineral Reserves<br />
Castillo - Oxide Proven 84,470,000 0.36 994,000<br />
Castillo - Transition Proven 19,180,000 0.37 228,000<br />
Sub Total Proven - Oxide & Transition 104,650,000 0.36 1,222,000<br />
Castillo – Oxide Probable 772,000 0.33 8,000<br />
Castillo – Transition Probable 73,000 0.35 1,000<br />
Sub Total Probable - Oxide & Transition 844,000 0.33 9,000<br />
Total Proven and Probable Reserves 105,495,000 0.36 1,231,000<br />
Measured and Indicated Mineral Resources<br />
(<strong>Inc</strong>luding P&P Reserves)<br />
Castillo - Oxide in Pit Measured 114,300,000 0.293 1,220,100<br />
Castillo - Oxide in Pit Indicated 4,900,000 0.293 45,700<br />
Castillo - Oxide in Pit M&I 119,200,000 0.331 1,268,000<br />
Castillo - Transition in Pit Measured 44,600,000 0.295 423,200<br />
Castillo - Transition in Pit Indicated 1,900,000 0.278 17,100<br />
Castillo - Tranistion in Pit M&I 46,500,000 0.294 439,900<br />
Total Castillo Oxide and Transition in Pit Measured 158,900,000 0.322 1,645,300<br />
Total Castillo Oxide and Transition in Pit Indicated 6,800,000 0.289 62,900<br />
Total Castillo Oxide and Transition in Pit M&I 165,700,000 0.32 1,704,700<br />
Castillo Sulphide (Global) Measured 70,600 0.328 744,800<br />
Castillo Sulphide (Global) Indicated 91,200 0.272 797,500<br />
Total Castillo Sulphide (Global) M&I 161,800,000 0.296 1,540,000<br />
San Antonio, Las Colinas - Oxide & Transition Indicated 1,910,000 0.62 38,000<br />
San Antonio, Las Colinas - Sulphide Indicated 8,103 0.69 179,000<br />
San Antonio, Los Planes - Oxide & Transition Measured 12,351,000 0.76 303,000<br />
San Antonio, Los Planes - Oxide & Transition Indicated 8,408,000 0.67 181,000<br />
San Antonio, Los Planes - Sulphide Measured 6,649,000 1.17 250<br />
San Antonio, Los Planes - Sulphide Indicated 22,065,000 0.92 653,000<br />
San Antonio, Intermediate - Oxide & Transition Indicated 643,000 0.39 8,000<br />
San Antonio, Intermediate - Sulphide Indicated 4,961,000 0.77 123,000<br />
All San Antonio Deposits - Oxide & Transition M&I 23,312,000 0.71 530,000<br />
All San Antonio Deposits - Sulphide M&I 41,778,000 0.90 1,205,000<br />
Total San Antonio Deposits - Oxide / Transition / Sulphide M&I 65,089,000 0.83 1,735,000<br />
La Colorada, Gran Central - La Colorada Indicated 29,915,053 0.724 696,336 5.1 4,905,135<br />
La Colorada, Gran Central - La Colorada Inferred 2,500,000 1.204 95,149 8.4 661,000<br />
La Colorada, El Creston Deposit Indicated 14,438,662 0.618 286,658 12.1 5,635,385<br />
La Colorada, El Creston Deposit Inferred 2,199,713 0.88 62,703 13.3 943,734<br />
La Colorada, Veta Madre Indicated 2,900,000 0.491 46,261 3.3 307,155<br />
La Colorada, Veta Madre Inferred 8,799 0.665 200 2.4 700<br />
La Colorada, ROM Pad Indicated 2,700,000 0.429 38,000 36.5 3,200,000<br />
Total La Colorada Deposits M&I 50,000,000 0.664 1,067,255 8.7 14,047,675<br />
La Fortuna Measured 1,538,000 2.956<br />
La Fortuna Indicated 3,287,000 1.533<br />
Total La Fortuna M&I 4,800,000 1.98 308,000<br />
Inferred Mineral Resources<br />
San Antonio Inferred 6,215,000 0.34 67,000<br />
La Colorada Inferred 4,700,000 1.04 158,000 10.6 1,605,000<br />
Total Inferred Resources 10,915,000 225,000 1,605,000<br />
Total Measured and Indicated Resources 447,389,000 6,354,955 14,047,675<br />
The technical information contained in this document has been prepared under supervision of, and<br />
reviewed and approved by Mr. Thomas H. Burkhart, <strong>Argonaut</strong>’s Vice President of Exploration, and a<br />
qualified person as defined by National Instrument 43-101 (“NI 43-101″). For further information on<br />
the Company’s properties please see the reports as listed below on the Company’s website or on<br />
www.sedar.com:<br />
El Castillo Mine NI 43-101 Technical Report on Resources and Reserves, <strong>Argonaut</strong> <strong>Gold</strong> <strong>Inc</strong>.,<br />
El Castillo Mine, Durango State, Mexico dated <strong>November</strong> 6, 2010<br />
La Colorada<br />
NI 43-101 Preliminary Economic Assessment La Colorada Project, Sonora,<br />
Property<br />
Mexico dated December 30, 2011<br />
San Antonio<br />
Technical Report and Mineral Resource Estimate on the San Antonio <strong>Gold</strong><br />
<strong>Gold</strong> Project<br />
Project, Baja California Sur, Mexico dated October 10, <strong>2012</strong><br />
La Fortuna<br />
Property La Fortuna, Durango, Mexico, Technical Report dated October 21, 2008<br />
The preliminary economic assessment is preliminary in nature, includes inferred mineral resources<br />
that are considered too speculative geologically to have the economic considerations applied to<br />
them that would enable them to be categorizes as mineral reserves, and that there is no certainty<br />
that the preliminary economic assessment will be realized.<br />
Mineral resources are not mineral reserves and do not have demonstrated economic viability.<br />
There is no certainty that all or any part of the mineral resource will be converted into mineral<br />
reserves<br />
About Prodigy<br />
Prodigy is currently evaluating the development of the Magino mine gold project in Ontario as an<br />
open-pit mining opportunity with the potential for deeper, higher grade gold production. The Magino<br />
project contains Indicated gold resources of 6,250,990 ounces grading 0.87 g/t gold (223.5 million<br />
tonnes), and 355,190 ounces of Inferred gold resources grading 0.80 g/t gold (13.8 million tonnes)<br />
at a cut-off grade of 0.35 g/t gold. For more information please refer to the “Technical Report on the<br />
Magino Property, Wawa, Ontario dated October 4, <strong>2012</strong> available on SEDAR or Prodigy’s website.<br />
Mineral resources are not mineral reserves and do not have demonstrated economic viability. There<br />
is no certainty that all or any part of the mineral resource will be converted into mineral reserves.<br />
20<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
20
For Additional Information<br />
www.argonautgold.com<br />
Nichole Cowles<br />
Investor Relations Manager<br />
<strong>Argonaut</strong> <strong>Gold</strong> <strong>Inc</strong>.<br />
9604 Prototype Ct.<br />
Reno, NV 89521<br />
Ph.: 775-284-4422 ext. 101<br />
Cell.: 775-240-4172<br />
Fax: 775-284-4426<br />
21<br />
TSX:AR TSX:AR.WT<br />
<strong>Argonaut</strong><strong>Gold</strong>.com<br />
<strong>November</strong> <strong>2012</strong><br />
21