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.
Not surprisingly, Dougherty drew attention to the proximity of the two projects in Friday's release, stating that he sees "many potential operational synergies between the two projects in terms of overlapping infrastructure and personnel." Overall, it's good news for the company. "The San Agustin project is a very exciting opportunity for Argonaut," Dougherty said.Furthermore, the results support the positive thesis of a Seeking Alpha author from August 15. That writer said that despite reporting a loss for Q2, "a lot of [Argonaut's] value is in its project pipeline, which is not reflected in financials." To be sure, interested investors will want to keep an eye out to see how Argonaut progresses. In terms of what investors can expect next for the San Agustin project specifically, Dougherty said, "[a]ll of the necessary engineering work, base-line permitting studies, land acquisition and other activities are well underway. We anticipate that a PEA for the project will be completed by year-end." Reiterating the possible synergies with El Castillo, Dougherty noted that conceptually, the PEA is intended to evaluate San Agustin as another heap leach operation. At close of day Friday, shares of Argonaut Gold were up 3.87 percent, trading at $4.03. Securities Disclosure: I, Teresa Matich, hold no investment interest in any of the companies mentioned. Argonaut Gold Releases Mineral Resource Estimate for San Agustin, Mexico from Gold Investing News