Canadian gold producer Argonaut Gold (TSX:AR) is no doubt pleased with the resource estimate for its San Agustin project. Last Friday, the company announced that the project now has a constrained indicated resource of 845,000 ounces of gold and 28.3 million ounces of silver.
In total, that adds up to 1,280,000 gold equivalent ounces contained within 82.2 million tonnes of material at grades of 0.32 grams per tonne gold and 10.7 grams per tonne silver. The project also has an additional 103,000 gold equivalent ounces in the inferred resource category. San Agustin is 100-percent owned by Argonaut. Hard work brings a 200-percent increase The company has undoubtedly been working hard to prove up reserves at the project. Friday's estimate was the result of the first phase of a multi-phase drill program, the second phase of which will total 16,000 meters and aim to continue expanding the resource area and test further targets. Argonaut Gold's president and CEO, Pete Dougherty, commented on the success of the drill program, stating, "[w]e are very pleased with the work done on the San Agustin project to date. The Phase I drill program was completed ahead of schedule and under budget." "The upside potential to add mineralization by expanding the current resource area and assessing other defined targets immediately surrounding the resource is the primary focus for our ongoing drilling activities," the CEO said. Certainly, Argonaut looks to be reaching that goal so far. As Dougherty noted, "[t]he new San Agustin resource represents an increase of more than 200% in indicated contained gold ounces in the oxides compared to the historic understanding of the property."
El Castillo synergies Notably, San Agustin is located just 10 kilometers from the company's operating El Castillo mine. El Castillo, also 100-percent owned by Argonaut, is an open-pit, heap leach project located just one hour north of Durango, Mexico. That operation has a measured and indicated resource of 1.7 million ounces of gold, 1.23 million ounces of which are proven and probable reserves, and Argonaut has set its production guidance at 90,000 to 100,000 ounces of gold for this year.