Argonaut's earnings fall as costs rise

Adjusted EPS fell to $0.02 in Q2, down from $0.07 a year earlier

 Argonaut's Magino

Argonaut's Magino

The company's adjusted earnings per share fell to US$0.02 in Q2, which is down from $0.07 a year earlier.

"We were slightly ahead of our operational budget in terms of [gold equivalent ounces] production during the second quarter, which yielded over 59,000 GEOs, albeit at a slightly higher cost than budgeted due to inflationary pressures on input costs," president and CEO Larry Radford said.

Canaccord Genuity Capital Markets analyst Michael Fairbairn said the earnings per share missed the consensus estimate of $0.04 while slightly beating CG's $0.01.

The adjusted EBITDA of $31 million also beat CG's estimate of $25 million, "driven largely by production beats at both San Agustin and La Colorada", Fairbairn said.

Argonaut's Q2 production of 59,100 gold-equivalent ounces slightly beat the consensus view of about 54,000 oz AuEq, National Bank of Canada Financial Markets noted, while all-in sustaining costs of $1,474/oz were slightly above NBF's forecast of $1,353/oz and in line with CG's $1,491/oz.

Argonaut's AISC guidance for 2022 has been lifted to $1,500-$1,600/oz, from $1,415-$1,525/oz. And cash costs are now $1,200-$1,300/oz, rather than $1,100-$1,190/oz.

GEO guidance is unchanged at 200,000-230,000oz.

CG bumped its price target for Argonaut up from C$0.50 to C$0.55 (US$0.39 to US$0.43), while BMO brought its down from C$1.50 to C$1.00.

Argonaut's share price dropped 7% day on day to C$0.54 on 11 August.

Meanwhile, Argonaut said its Magino project is on budget but it has received a delay claim from its EPC contractor Ausenco for 23 days due to a province-wide strike of several trades.

"To date, this delay claim has neither been accepted nor captured in a definitive schedule, the estimated first gold pour has not yet been determined; however, indications are that first gold is expected to be delayed from March 2023-April 2023," the company said.

At 30 June, the project construction was estimated to be about 54.8% complete, Argonaut said.

Of the C$920 million estimated cost to completion, C$510.1 million and C$688.1 million have been spent and committed to the project as of 30 June, it added.

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