La Colorada

Latest Updates

53,286

GEOs Produced in 2017(1)

$691

Cash cost per gold ounce sold in 2017(2)

34,310

GEOS PRODUCED 9 MONTHS ENDED SEPTEMBER 30, 2018(1)

9%

AHEAD OF CRUSHING THROUGHPUT RATE BUDGET IN Q3 2018

Gold equivalent ounces (‘GEO” or “GEOs”) are based on a conversion ratio of 70:1 for silver to gold.(1)

See Non-IFRS measures in Disclaimer (2)

Key Facts
Location Sonora, Mexico
Ownership 100%
Status Operating
Mine Type Open Pit
Metals Gold & Silver
Acquisition January 2011

La Colorada Mineral Resources and Reserves

Category Tonnes
(millions)
Au Grade
(g/t)
Contained
Au ounces
(000s)
Ag Grade
(g/t)
Contained
Ag ounces
(000s)
Probable(2) 18.7 0.66 398 11.6 6,937
Indicated(1,3) 29.1 0.61 568 10.3 9,655
Inferred(3) 1.8 0.79 47 10.8 641

(1)Mineral Resources are presented inclusive of Mineral Reserves. Numbers may not sum due to rounding.

(2) The Mineral Reserves for La Colorada set out in the above table were taken from the La Colorada Technical Report dated March 27, 2018, including depletion from July 1, 2017 to December 31, 2017 through mining activities, are valid as of January 1, 2018 and used a gold price of $1,200 per ounce and silver price of $17 per ounce. Cut-off grades, depending on deposit, varied from 0.10 g/t AuEq to 0.16 g/t AuEq.

(3) The M&I Resource and Inferred Resource set out in the above table were taken from the La Colorada Technical Report dated March 27, 2018, including depletion through mining activities from July 1, 2017 to December 31, 2017, are valid as of January 1, 2018 and used a gold price of $1,400 per ounce and silver price of $20 per ounce. Cut-off grades, depending on deposit, varied from 0.09 g/t AuEq to 0.12 g/t AuEq.

Overview

The past producing La Colorada gold-silver mine property is located approximately 40 km southeast of Hermosillo, Sonora State, Mexico. La Colorada originally operated as a high-grade underground mine, which closed at the start of the Mexican Revolution in 1914. During the main historic mining period from 1876-1914 the production of more than three million ounces of gold was recorded.

In I990, the Mexican Geological Service (SGM) measured 1.5 million tons of tailings that were utilized at the start of the open pit production by Eldorado Gold Corp in 1993. During the period 1993-2000 Eldorado Gold Corp developed a bulk tonnage heap leach operation from several open pits; although the operation was sold in late 2000, production continued by a private Mexican owner until April 2002, yet La Colorada was never shut down for the lack of gold.

Geology

The geology of La Colorada consists of Paleozoic to Early Mesozoic metasediments cut by Upper Cretaceous volcanics. All of these units are intruded by Tertiary intrusives that include granitic to dioritic phases and andesitic porphyry. Late-Cretaceous to Tertiary volcanic rocks and associated continental clastic rocks unconformably overlie the Triassic and older rocks. There are two distinct divisions of the volcanics: A Lower Volcanic Complex dated at 100 to 45 m.y. and an Upper Volanic Complex dated at 34 to 27 m.y. The Lower Volcanic Complex is composed mainly of andesite with interstratified rhyolitic ignimbrites and minor interstratified basalt. The overlying Upper Volcanic Complex is composed of extensive rhyolite and rhyodacite ignimbrites with minor interstratified basalt. It constitutes the largest ignimbrite field in the world. The upper sequence unconformably overlies on the older sequence and infills deeply incised paleotopography in the older rocks. Late Cretaceous to Early Tertiary plutonic rocks (diorite, granodiorite to granite) of the Sonoran Batholith outcrop throughout the region and have been dated from 90 to 40 m.y.

The La Colorada Gold District has many of the characteristics of a low sulphidization epithermal-vein type gold-silver deposit. The district underwent a complex hydrothermal history related to Cretaceous plutonic activity, later higher-level plutonic events, and finally a mid-Tertiary vein system which shares characteristics in common with both a deep epithermal environment and a high-level mesothermal system. Alteration can be seen in the older metamorphic and intrusive units mostly as silicification, hematization and argillic alteration. The Tertiary volcanic rocks in the district are clearly post-mineral and are unaltered.

History

The La Colorada Mine concessions were first staked by Jesuit missionaries in 1740 and saw fairly continuous underground production by various ownerships until 1916, when operations were discontinued during the Mexican Revolution. The district was mostly idle until 1991 when ownership was transferred to Explorations La Colorada, S.A. de C.V. ("EESA") who mined gold and silver on the property from three separate open pits.

Various historical resource estimations have been completed on the project, including Nordin 1992, Giroux and Charbonneau 1992 and Giroux 1999. All of the "historical" estimations are superseded by the current La Colorada Technical Report resource estimation dated March 27, 2018.

EESA produced approximately 290,000 ounces of gold and about one million ounces of silver. EESA sold the mine and plant to a local Hermosillo mine contractor, Grupo Minero FG S.A. de C.V., who continued limited production and is estimated to have produced approximately 70,000 additional ounces of gold.

Pediment Gold Corp. ("Pediment") optioned and eventually purchased the key concessions, surface ownership and infrastructure from EESA. Further key concessions were also acquired in 2008 and 2010 by Pediment. In 2007, Pediment began compiling the previous work accompanied by an exploration program that included surface sampling and mapping. A drill program commenced in 2008 focusing in the known mineralization zones of El Crestón, La Colorada/Gran Central, Veta Madre and La Verde. These results were followed up by a +10,000 metre drill program in 2009 which combined diamond and RC drilling. Much of this work was directed at the Veta Madre zone.

In 2010, Argonaut acquired Pediment, including the La Colorada Mine, held under Pediment's wholly owned Mexican subsidiary, Compania Minera Pitalla S.A de C.V. ("CMP").

Argonaut began open-pit mining within the La Colorada and Gran Central pit areas in July of 2012 and the expansion of these open pits are the current focus of mining activity.

“Our La Colorada mine benefits from excellent infrastructure, as it is within an hour drive on paved highway from Hermosillo, the capital of the State of Sonora. This location assists our ability to attract a talented, skilled workforce and also provides the benefit of close proximity to our suppliers.”

Bill Zisch, Chief Operating Officer

Technical Reports