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El Castillo History El Castillo (El Cairo) was a grass roots discovery by Battle Mountain Gold in 1995
Newmont purchased Battle Mountain in 2000 and turned the property back to Government of Mexico
Castle Gold purchased the property in 2002
In 2005, Castle constructed and began leaching two test heaps
In 2006, further metallurgical column test leaching completed by Castle
Castle was federally incorporated in 2007 through an amalgamation of Morgain and Aurogin
Pad and carbon plant construction was initiated in 2007
First gold pour was in Q4 2007 with commercial gold production in Q3 2008
Castle Gold was purchased by Argonaut Gold on December 30, 2009
Argonaut Gold began trading on the TSX on December 31, 2009
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El Castillo Mine Location
The property is located in the State of Durango, Mexico
Approximately 117 km from Durango City on paved and gravel roads
Topography is relatively flat rolling hills with elevation ranges of 1640 to 1820 meters above sea level
Land position—15 to 20 year agreements
216 hectares of mining concessions
1385 hectares of surface rights
Four surface agreements Ejido Antotonilco—agreement dated 2005
Ejido Montana—agreement dated 2010
Rancher Gandera—agreement dated 2011
Rancher Gallegos—agreement dated 2010
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El Castillo—Setting
Semi‐arid environment Approximately 533 mm of precipitation annually
June through August rainy season
Temperature range from 2◦C to 35◦C
Vegetation consists of small trees, bushes and cacti Program for protected cacti species
There are no endangered species
Fox, coyote, rabbit, snakes, cougar, javelina, white tail deer, road runner, etc
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Human Resources Personnel
484 people working at El Castillo at end of Q3—115 full time El Castillo employees and 369 contract employees Camsa: 283 (mining) Trigusa: 60 (crushing and pad construction) Agustine: 13 ( special projects) Alamo: 13 (security and transportation)
Multiple shifts with 24/7 coverage in laboratory, leach pads & carbon plant, mining, and crushing
New miner and Red Cross training —all personnel on site first responder trained Winter and summer university student programs—sponsored student to
Colorado School of Mines Student program with local Durango Industrial University Internal promotion program External support sourced only when required
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Community Relations
More than 90% of employees are local to the area MRO philosophy in local communities is to support projects
and services versus cash donations Support requests from local schools Provided support to San Juan Municipality for road and
water improvements, backhoe, bus repairs, etc Repaired roads and irrigation systems for neighboring
communities Currently Developing social improvement programs for
Ejidos
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SHE One lost time accident in 2011
Expansion project work with contractors began on April 4, 2010 ‐‐to‐date continue working with “0” LTA’s
Approved safety program by regulatory agency Applying to the Federal Labor Ministry to obtain “Safe Industry”
Certification Routinely scheduled safety and training meetings
MRO and contractors have on‐site safety personnel No environmental sanctions
Expect “Clean Industry” Certification before year‐end Routine environmental training for employees “Ampliacion Unidad El Castillo” permit received three weeks early
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SHE cont.
“Unidad El Castillo” –March 13, 2007 Environmental Impact Statement and Environmental Risk Study ( Allows preparation and
construction, disturbance, operations, pad capacity, pit depth, etc for ten years with extension as many times as necessary)
Change of Use of Land (allows clearing of land for construction and operations, etc for 15 years which can be extended)
Program for Prevention of Accidents (Use and Management of Dangerous Substances and prevention of accidents while using cyanide )
“Ampliacion Unidad El Castillo” –February 5, 2010 Environmental Impact Statement and Environmental Risk Study (as above) Change of Use of Land (as above) Program for Prevention of Accidents (as above) Unique Environmental License (Integration into a sole document impacts, risks and other
studies) Generator of Hazardous Waste (used oil, filters, industrial garbage, etc) Annual License of Operation for the operation of both projects—Unidad and Ampliacion
All other required permits such as Explosive Permit—use and storage
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Mining Current Mining Fleet
18 ‐100 ton haul trucks 4 ‐ 992 loaders 6 – production drills Support equipment
Standby/Project Fleet 10 – 40 ton haul trucks 2— 988 loaders
Ore delivery to pad or crusher Six year mining contract with Camsa Mining rate of plus 1.5mm tpm
since July 2010
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Ore Processing—Highlights
Metallurgical highlights Columns and test heaps indicate rapid leach kinetics (43‐101)
50‐55% recovery from ROM ore (43‐101) 68‐72% recovery from crushed ore (43‐101) 60% cumulative recovery (43‐101) 75% of total recoverable gold from ROM ore in 25 days (43‐101)
Cyanide consumption: .17 kg/t Lime consumption: 4.2 kg/t Loaded carbon shipped off‐site for processing Metallurgical test‐work performed at KCA in Reno
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Ore Processing—Highlights 5 and 10 meter lifts 60 day leach cycle 46 l/s water rights from two
wells—sufficient water Flow rates increased from 390
cubic meters /hr to nominal 700 cubic meters/hr (840 max.)
350 kg carbon capacity columns to 5 tonnes carbon capacity columns
West and East carbon plants—KCA design with five columns per train
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Ore Processing—West Carbon Plant
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Five new columns in place replacing 24 old columns
Early July commissioning and start‐up
Extraction efficiencies and cost reductions realized
Additional surplus storm water pond constructed
Barren solution pumping system upgraded—1000 meters³/hour
Ore Processing—West and East Heap Leach Pads
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Heap Leach Capacity Increases East pad expansion design awarded to Golder
Associates of Denver, Colorado West Pad
Completion of Pad 5 and Pad 6, providing approximately 5 million tonnes capacity
Completion of pad 7 —approx. five million tonne capacity
Storm water pond construction complete East Pad
Barren, PLS and Storm water ponds complete
Cells 1, 2 ,3a, and 4 complete Cell 5 construction underway—
December 20, 2011 completion 30‐35 mm tonne capacity cells 1,2,3a, 4,
and 5 West/east pad capacities to 30 meter pad
height constructed by YE 2011: 45mm tonne
Pad 7
Pad 6
Pad 5
Pad 7Pad 6
Pad 5
Projects Status Since Acquisition by Argonaut on December 30, 2009
Work scopes developed for carbon plant and pad construction on January 4, 2010
Constructed two new carbon plants Five new west side 4 meter X 4.3 meter carbon columns operational by July 4, 2010 Five new east side 4 meter X 4.3 meter carbon tanks operational in September 2011 Engineering , design and construction by KCA del Norte and Dinko of Chihuahua West heap barren solution upgrade complete in October—1000 m³/hour capacity Bids received and contractors selected before month end January—rolling steel in March
Constructed new heap leach pads and process water ponds 593,954 meters ² of heap leach pad constructed with clay and 60 mil HDPE synthetic liners 130,400 meters ² under construction with clay and 60 mill HDPE synthetic liners—December 20,
2011 completion date Four process ponds constructed –clay liners and two 60 mil HDPE liners with leak detection Construction of heap leach pads and ponds completed by Trigusa, a Durango construction
company
Expansion of Land Surface rights with two ranchers and one Ejido: three new twenty year agreements completed for 550 hectares of additional surface rights
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Projects Status Since Acquisition by Argonaut on December 30, 2009 – cont. Initiated extensive exploration program in January 2010 to extend mine life
110% increase in reserve estimate to 1,230,000 gold ounces 95% increase in total M&I to 1,730,000 gold ounces
SRK contracted to produce NI 43‐101—published in Q1, 2011 Metallurgical test work at KCA on ROM, Hi‐grade, transition and sulfide ores Camsa mining equipment fleet expanded to 100 ton trucks and 992 FELs
18 100 ton trucks and 4 992 Loaders Negotiated new six year contract Production rate exceeds 1.5mm tonnes per month
New east side crushing equipment Fully operational in August/September 2011 Closed circuit, primary and secondary crushing and screening operation Optional ability to generate overliner material while at the same time producing crushed ore 500,000 tonne per month name plate capacity Agreement with Trigusa for supervision, operating and maintenance personal—flat monthly fee
All permits approved for current mining operation Increase in gold production:
29k ounces in 2009 ( Castle Gold) → 51k ounces in 2010 (Argonaut) →72k ounces in 2011 (Argonaut)
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