Argonaut Gold Announces Three-Year Production Outlook; Provides Updated Mineral Reserves and Resources

Toronto, Ontario – (February 16, 2017) Argonaut Gold Inc. (TSX: AR) (the “Company”, “Argonaut Gold” or “Argonaut”) is pleased to provide its three-year production outlook, updated mineral reserves and resources at its operating mines and a general corporate update.  All dollar amounts are expressed in United States dollars unless otherwise specified.

Three-Year Production Outlook

Based on life-of-mine planning at December 31, 2016, the Company anticipates it will achieve  production growth on a gold equivalent ounce (“GEO”) basis as its San Agustin and La Colorada projects ramp up and lower the overall cost profile. The Company’s goal is to achieve annual all-in sustaining costs per gold ounce sold at or below $950.  Table 1 below illustrates the Company’s three-year GEO production outlook:

Table 1 – Three-Year GEO Production Outlook

Mineral Reserve and Resource Estimates

Table 2 below outlines the Company’s Mineral Reserve and Resource estimates at December 31, 2016.  Mineral Resources are presented inclusive of Mineral Reserves and do not have demonstrated economic viability.  There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves.

Table 2 – Consolidated Mineral Reserve and Resource Estimates(1)

(1) Mineral Resources are presented inclusive of Mineral Reserves.

(2) The Mineral Reserves for El Castillo set out in the above table were updated internally, are valid as of December 31, 2016 and reviewed by Mike Lechner and Richard Rhoades, each of whom is a "qualified person" for purposes of National Instrument 43-101 (“NI 43-101”). The reserve update used a gold price of $1,200. Cut-off grades, depending on rock and ore type, varied from 0.15 g/t for oxide to 0.44 g/t for silicified sulphide.

(3) The Mineral Reserves for Magino set out in the table above were taken from the Magino Technical Report dated February 22, 2016 (effective January 18, 2016).  The Mineral Reserve was estimated at a gold price of $1,200.  The Probable Reserve study used a gold cutoff of 0.35 g/t.  These amounts have been reviewed and confirmed by Thomas Burkhart, who is a “qualified person” for purposes of NI 43-101. 

(4) The M&I Resource and Inferred Resource for El Castillo in the above table were updated internally, are valid as of December 31, 2016 and reviewed Mike Lechner and Richard Rhoades, each of whom is a "qualified person" for purposes of NI 43-101. The Mineral Resource update used a gold price of $1,400. Cut-off grades, depending on rock and ore type, varied from 0.091 g/t for oxide to 0.374 g/t for silicified sulphide.

(5) The Mineral Resources for the San Agustin Gold-Silver Project set out in the table above were taken from the San Agustin Technical Report dated June 10, 2016 (effective date of April 29, 2016). The Mineral Resource was estimated at a gold price of $1,300 and silver price of $20. A gold equivalent cutoff of 0.18 g/t was utilized for the resource. These amounts have been reviewed and confirmed by Thomas Burkhart, who is a "qualified person" for purposes of NI 43-101.

(6) The M&I Resource and Inferred Resource used for La Colorada in the above table were updated internally, are valid as of December 31, 2016 and reviewed by Mike Lechner and Richard Rhoades, each of whom is a "qualified person" for purposes of NI 43-101. The Mineral Resource update used a gold price of $1,400 and a silver price of $20. The gold equivalent cutoff grade varied depending on deposit and ranged from 0.086 to 0.13 g/t.

(7) The Mineral Resources for the Magino Project set out in the table above were taken from the Magino Technical Report dated February 22, 2016 (effective date of January 18, 2016). The Mineral Resource was estimated at a gold price of $1,300. The Indicate Resource study used a cutoff of 0.25 g/t gold. These amounts have been reviewed and confirmed by Thomas Burkhart, who is a "qualified person" for purposes of NI 43-101.

(8) The Mineral Resources for the San Antonio Project set out in the table above were taken from the San Antonio Technical Report dated October 10, 2012 (effective date of September 1, 2012). The gold resource was estimated at a gold price of $1,500 using a cutoff grade of 0.11 g/t Au for oxide and transition and 0.15 g/t Au for sulphide. These amounts have been reviewed and confirmed by Thomas Burkhart, who is a "qualified person" for purposes of NI 43-101.

San Agustin Construction Progress

The Company is pleased to report its San Agustin project is currently tracking on schedule and budget with construction approximately 26% complete and first gold production anticipated during the third quarter of 2017.  The crusher pad, leach pad and pond construction are well underway and the Company anticipates it will commence laying leach pad liner and begin relocating the west crusher from El Castillo prior to the end of the first quarter.  The San Agustin project has an initial capital budget of $43 million and is expected to produce an average of approximately 80,000 GEOs per year at a cash cost per gold ounce sold of approximately $650 (see Non-IFRS Measures section).  To view photos of the San Agustin construction progress, please visit:

http://www.argonautgold.com/gold_operations/san_agustin/construction_progress/

Currency Hedging

The Company has entered into a $30 million Mexican peso/United States zero-cost collar program with the purchase of call options at an average strike price of 20.00 Mexican pesos per US dollar and sale of put options at an average strike price of 24.58 Mexican pesos per US dollar.  The contracts settle on a monthly basis between February and November 2017.  There was no cost exposure to put this program in place.  This hedging strategy safeguards the Company to currency volatility during the construction of its San Agustin project.  The Company’s 2017 budget assumed a 19:1 MXN:USD exchange rate and its San Agustin capital guidance assumed a 16:1 MXN:USD exchange rate.

Management Departure

Curtis Turner, the Company’s former Corporate Development Officer, left the Company at the end of January 2017.  The Company thanks Mr. Turner for his contributions during his tenure with Argonaut Gold and extends its best wishes to Mr. Turner in his future endeavours.  

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.

Fourth Quarter and Year End Conference Call Information for March 13, 2017: