Argonaut Gold Produces 34,384 and 122,097 Gold Equivalent Ounces During the Fourth Quarter and Year Ended 2016 Respectively and Provides 2017 Guidance

January 16, 2017

Toronto, Ontario – (January 16, 2017) Argonaut Gold Inc. (TSX: AR) (the “Company”, “Argonaut Gold” or “Argonaut”) announces gold equivalent ounce1 (“GEO” or “GEOs”) production of 34,384 during the fourth quarter ended December 31, 2016 (“Q4”) and 122,097 during the year ended December 31, 2016 (“YE”).  During Q4, production was 16,747 GEOs at its 100% owned El Castillo Mine (“El Castillo”) located in the State of Durango, Mexico and 17,637 GEOs at its 100% owned La Colorada Mine (“La Colorada”) located near Hermosillo, Mexico.  During 2016, El Castillo and La Colorada GEO production totaled 62,766 and 59,331, respectively.  Management expects YE consolidated cash costs2 to be below the lower end of the range of revised 2016 guidance of $825 to $875 per gold ounce sold.  At YE, the Company had a cash balance of $42 million and $30 million available on an undrawn corporate revolver.  All dollar amounts are expressed in United States dollars unless otherwise specified.

Pete Dougherty, President & CEO stated: “Production at El Castillo normalized during the fourth quarter after a challenging third quarter, while La Colorada provided consistent production throughout 2016.  The 34,384 GEOs of production during the fourth quarter represents our strongest quarter of the year and also is the largest quarterly production total since the second quarter of 2015.  I’m also pleased to report that construction at San Agustin is advancing on schedule and on budget.  With first gold production from San Agustin targeted for the third quarter of this year and the following ramp up, we expect our highest quarterly production and lowest costs during the fourth quarter of 2017.  Looking forward in terms of operations, we remain focused on operating in a safe and environmentally conscious manner while providing production growth over the next several years as we construct and ramp up operations at San Agustin.”

2017 Guidance

The Company anticipates it will produce between 115,000 to 130,000 GEOs during 2017 at a cash cost2 of between $725 to $775 per gold ounce sold and an all-in sustaining costs (“AISC”)2 of between $910 to $960 per gold ounce sold.  Due to the anticipated start up at San Agustin during the third quarter 2017 and the following ramp up, the Company expects the fourth quarter 2017 to provide the strongest production and lowest costs during 2017.  Table 1 below illustrates the 2017 production and cost guidance:

Table 1 – 2017 Production and Cost Guidance

(1) San Agustin guidance reflects full year expected production and cost guidance.  Production and costs prior to declaration of commercial production will be capitalized on the balance sheet.
(2) Assumes a MXN:USD exchange rate of 19:1. 
(3)Please refer to section “Non-IFRS Measures” below for a discussion of these non-IFRS measures.

The Company plans to invest $75.8 million in capital expenditures during 2017, primarily in the areas of construction at San Agustin ($34.0 million) and capitalized stripping at the El Creston pit at La Colorada ($18.7 million).  Table 2 below illustrates the projected capital expenditures for 2017:

Table 2 – 2017 Capital Estimate ($M)(1)

(1) Assumes exchanges rates of MXN:USD of 19.1 and CAD:USD of 1.3:1.

Over the next three years, the Company expects production at the El Castillo pit to decrease annually and production at San Agustin to ramp up resulting in overall production growth at a lower cost at the El Castillo/San Agustin Complex.  At La Colorada, the Company is investing in a significant capital stripping program to open the El Creston pit during 2017 with the goal of increasing annual production at La Colorada over the next several years.  The Company is currently updating its life of mine plans and intends to publish these during the first quarter 2017 in conjunction with the filing of its Annual Information Form.

The Company advises that it will no longer pre-release its first, second and third quarter production results, unless there is a material change which would require such an announcement, and will publish its operating results with its quarterly financial disclosure.

Argonaut Gold Fourth Quarter and Year End Financial Results Conference Call and Webcast
The Company anticipates releasing its fourth quarter and year end financial results before market open on March 13, 2017 and will host a conference call and webcast on March 13, 2017 at 8:30 am EDT to discuss the results.

The conference call replay will be available from 11:30 am EDT on March 13, 2017 to March 27, 2017.