March 6, 2024 (Investorideas.com Newswire) Mining Stock News Bites – Argonaut Gold Inc. (TSX: AR) reported financial and operating results for the fourth quarter (“Q4”) and year ended December 31, 2023. All dollar amounts are expressed in United States dollars, unless otherwise specified (CA$ refers to Canadian dollars).
The stock is upon news trading at $0.3000, gaining $0.0450, with a move of +17.6471%.
“In fiscal 2023, we set clear objectives for our operations. These included commissioning the Magino mine on schedule, stabilizing Florida Canyon which had underperformed for several years, and reviewing and optimizing our Mexican operations. Presently the Magino mine is steadily progressing through the ramp-up period. Both the Florida Canyon mine and our Mexican mines had a strong year, exceeding the upper end of production guidance on a combined basis by 9%. Notably, Florida Canyon achieved its highest production total in 19 years.
Looking ahead to 2024, we consider Magino to be our future and the key driver for per-share growth. Our immediate focus remains on production optimization and unlocking the significant potential at Magino through reserve expansion. Additionally, we are diligently working on optimizing mining operations at the Florida Canyon mine with the sulfide redevelopment plan. Furthermore, we plan to finalize a debt refinancing agreement to enhance liquidity and flexibility, enabling us to achieve our expansion goals. These objectives align with our mission statement, emphasizing asset growth and operational excellence.” stated Richard Young, President and Chief Executive Officer of Argonaut Gold\\Financial Highlights
Revenues for the year ended December 31, 2023 of $372.5 million were 4% lower than the $388.3 million from the prior year as a result of the planned lower production from the Company’s three Mexican mines – La Colorada, San Agustin and El Castillo, partially offset by the initial production at the Magino mine and higher production at the Florida Canyon mine.
Revenues included $60.0 million from the Magino mine, of which $26.1 million were pre-commercial production ounces. The Magino mine achieved commercial production effective November 1, 2023.
Gross profit of $40.2 million was 69% higher than $23.8 million from the prior year due to lower production costs and depreciation and depletion expense.
Generated cash flow from operating activities before changes in working capital and other items totalling $67.4 million, comparable to the prior year amount of $70.6 million.
Net income of $38.3 million, or $0.04 per basic and diluted share, compared to a net loss in 2022 of $152.2 million, or $(0.28) per basic and diluted share, with the increase largely due to $24.0 million of impairment reversals recorded for mineral properties, plant and equipment in the current year compared to $135.5 million of impairments recorded in the prior year. Higher gross profit and higher income tax recovery also contributed to the increase in net income year over year.
Adjusted net loss of $2.5 million, or $0.00 per share, compared to an adjusted net loss of $22.4 million, or $(0.04) per share in the previous year, a reduction in the loss of $19.9 million primarily due to higher gross profit as a result of lower depreciation, depletion and amortization in 2023.
Cash and cash equivalents of $83.8 million and net debt of $128.7 million as at December 31, 2023.
Consolidated production of 197,511 GEOs was 3% lower compared to 203,155 GEOs from the prior year. The decrease in production was largely due to lower production from the Company’s Mexican mines, partially offset by the initial production from the Magino mine, and higher production from the Florida Canyon mine.
Cost of sales per gold ounce sold of $1,722, cash cost per ounce of $1,434 and AISC per ounce of $1,722 were all lower than the prior year comparative driven primarily due to lower unit costs at El Castillo and La Colorada.
During November 2023, the Company closed the sale of an additional 1.0% net smelter return (“NSR”) royalty on its Magino mine for $28.0 million to a subsidiary of Franco-Nevada Corporation (“Franco-Nevada”). Franco- Nevada holds an aggregate 3.0% NSR royalty on the Magino mine.
On December 12, 2023, the Company completed a bought deal public offering, through a syndicate of underwriters, under which the Company sold a total of 223,685,000 common shares of the Company at a price of CA$0.38 per common share, for gross proceeds of $62.5 million (CA$85.0 million) and net proceeds to the Company of $59.6 million (CA$81.1 million).
On December 15, 2023, the Company obtained a waiver on certain financial covenants on its $250 million financing package (collectively referred to as the “Loan Facilities”). It was anticipated the Company would not be in compliance with certain financial covenants as at December 31, 2023 and accordingly obtained the waiver to prevent a default event which could trigger the Loan Facilities becoming immediately due and payable. On February 28, 2024, the Company received a further waiver on financial and nonfinancial covenants until March 8, 2024 . The Company continues to work through its refinancing plans with both current and prospective lenders. The Company will require an additional waiver from its current lenders on or about March 8, 2024, to avoid a breach of covenants, and anticipates the current constructive refinancing process to continue thereafter. An unremedied breach of covenants can have an adverse impact on the Company’s liquidity and solvency.
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