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Argonaut Gold Q1
Operating and Financial Results

For the first quarter ended March 31, 2020, Argonaut Gold (TSX: AR) reported quarterly production of 41,536 gold equivalent ounces ("GEO" or "GEOs"), a quarterly net cash increase of $6.0 million, cash flow from operating activities before changes in operating working capital of $14.8 million, net loss of $9.5 million or loss per share of $0.05 and adjusted net income1 of $8.4 million or adjusted earnings per share1 of $0.05. All dollar amounts are expressed in United States dollars, unless otherwise specified (C$ refers to Canadian dollars).

CEO Commentary

Pete Dougherty, President and CEO noted: “Mining has been deemed an essential business in Mexico and the Mexican federal government has now outlined June 1, 2020 as the restart for mining operations. Therefore Argonaut Gold is preparing to restart operations on June 1, 2020.”

Commenting on first quarter results Dougherty stated: "We are starting to see the benefits of the operational changes we implemented in late 2019 and early 2020 and expect to see the positive impact of these benefits throughout the balance of the year. During the quarter, we delivered strong cash flow that allowed us to reduce our accounts payable balance by $10 million, reduce our debt by $3 million, invest nearly $13 million in capital projects and still increase our cash balance by $3 million. While mining, crushing and stacking operations were ceased in early April due to the COVID-19 restrictions in Mexico, we are preparing to restart these activities on May 18, 2020. The safety and security of our workforce and the communities in which we operate is paramount and we are going above and beyond the government requirements for re-opening full operations. Given the nature of heap leach operations, metal production and sales have not been impacted to date. Also, since we were ahead on our leach pad construction year-to-date, we will have the opportunity to quickly ramp production back up to planned levels given our ability to place ore very close to plastic."

First Quarter 2019 and Recent Company Highlights:

Corporate

• Announced friendly, at-market merger with Alio Gold Inc. ("Alio") to create a diversified, North American intermediate producer.

• Increased net cash by $6.0 million (see "Non-IFRS Measures" section).

Social Responsibility

• Participated in a signing ceremony with the Michipicoten First Nation for the Community Agreement for the Magino project.

• Delivered Argonaut's 3,000th academic scholarship in Mexico.

• Initiated a local program with the community of Cerro del Gallo for the cleaning of the San Antón de las Minas River in Guanajuato, Mexico.

• Provided 150 food support pantries for families in San Juan del Rio, a community near the El Castillo Complex.

• Held the opening ceremony for the Argonaut Community House in La Colorada, a centre that the Company donated to the community that is open for local stakeholders to interact with Argonaut team members and attend courses.

El Castillo Complex

• First quarter production of 28,508 GEOs.

• El Castillo production of 14,729 GEOs.

• San Agustin production of 13,779 GEOs.

• Zero lost time incidents.

• Initiated construction of two El Castillo leach pad expansions, which were approximately 90% and 40% complete at May 1, 2020.

• Averaged nearly 30,000 tonnes per day crushing and stacking at San Agustin.

La Colorada

• First quarter production of 13,028 GEOs.

• Initiated construction of a leach pad expansion, which was approximately 80% complete at May 1, 2020.

Cerro del Gallo

• Prepared revised permit applications that are ready to submit once the regulatory agency staff returns to work following the temporary closure of these services due to COVID-19.

• Magino

• Completed over 25,000 metres of drilling in phase one drill program targeting deeper, higher-grade mineralization adjacent to and below the proposed pit.

• Continued to intersect high-grade mineralization below the proposed pit (see press release dated March 3, 2020).

Financial Results – First Quarter 2020

Revenue for the three months ended March 31, 2020 was $66.6 million, a decrease from $73.9 million for the three months ended March 31, 2019. During the first quarter of 2020, gold ounces sold totaled 40,169 at an average realized price per ounce of $1,585, compared to 54,779 gold ounces sold at an average realized price per ounce of $1,309 during the same period of 2019. Gold ounces sold for the three months ended March 31, 2020 decreased compared to the same period in 2019 primarily due to a decrease in gold ounces produced at the El Castillo mine due to a decrease in ore tonnes to leach pads and at the La Colorada mine due to a decrease in grade.

Production costs for the first quarter of 2020 were $41.6 million, a decrease from $51.1 million in the first quarter of 2019, primarily due to a decrease in gold ounces sold.

Cash cost per gold ounce sold (see "Non-IFRS Measures" section) was $967 in the first quarter of 2020, an increase from $892 in the same period of 2019, primarily due to an increase in cash cost per gold ounce sold at the El Castillo and La Colorada mines due to lower ounces sold at both mines and lower grades processed at the La Colorada mine.

The depreciation, depletion and amortization ("DD&A") expense included in cost of sales for the first quarter of 2020 totaled $11.1 million, a decrease from $11.9 million in the first quarter of 2019, due to a decrease in gold ounces sold offset by the increase in average DD&A expense per ounce due to the significant capital additions during 2019.

General and administrative expenses for the first quarter of 2020 were $4.1 million, an increase from $3.8 million for the same period of 2019, primarily due to Alio acquisition-related costs.

Losses on derivatives for the first quarter of 2020 were $1.8 million, compared to gains of $0.2 million in the first quarter of 2019, primarily due to unrealized mark-to-market losses on the Company's outstanding zero-cost collar commodity contracts entered into in August 2019.

Other expense for the first quarter of 2020 was $5.9 million, a decrease from other income of $0.6 million in the first quarter of 2019, due to differences in foreign currency translation effects as a result of the significant weakening of the Mexican peso and Canadian dollar against the US dollar during the quarter.

Income tax expense for the first quarter of 2020 was $11.2 million, compared to $3.9 million in the same period of 2019. The change is due to the foreign exchange effects of the weakening Mexican peso on the calculation of deferred taxes during the first quarter of 2020.

Net loss for the first quarter of 2020 was $9.5 million or $0.05 per basic share, a decrease from net income of $4.1 million or $0.02 per basic share for the first quarter of 2019. Adjusted net income for the first quarter of 2020 was $8.4 million or adjusted earnings per basic share of $0.05, an increase from adjusted net income of $2.4 million or adjusted earnings per basic share of $0.01 for the first quarter of 2019.

Operational Results – First Quarter 2020

During the first quarter 2020, the Company achieved quarterly production of 41,536 GEOs at a cash cost of $967 per gold ounce sold and all-in sustaining cost of $1,323 per gold ounce sold compared to 54,169 GEOs at a cash cost of $892 per gold ounce sold and an all-in sustaining cost of $1,123 per gold ounce sold during the first quarter 2019.

The El Castillo Complex produced 28,508 GEOs at a cash cost of $941 per gold ounce sold during the first quarter of 2020 versus 38,067 GEOs at a cash cost of $867 per gold ounce sold during the first quarter of 2019 (see "Non-IFRS Measures" section). Higher cash costs per ounce are related to lower gold ounces sold, which was driven by a planned reduction in recovery rates at the El Castillo mine due to the processing of a higher percentage of transitional and sulphide ores and switching to run-of-mine ore versus crushed ore.

La Colorada produced 13,028 GEOs at a cash cost of $1,021 per gold ounce sold during the first quarter of 2020 compared to 16,102 GEOs at a cash cost of $952 per gold ounce sold during the first quarter of 2019 (see Non-IFRS Measures section). Higher cash cost per ounce is due to lower gold ounces sold as a result of lower gold grades processed.

Pete Dougherty commented: "We achieved higher than expected production at the El Castillo mine, similar production to plan at the La Colorada mine and lower than planned production at the San Agustin mine.

On a consolidated basis, first quarter production was generally in line with expectations. Costs per ounce were higher than anticipated since a higher portion of the quarterly production was from El Castillo and a lower portion of production was from San Agustin – our highest and lowest cost operations, respectively. At the El Castillo Complex, we have made positive strides in lowering our unit cost per tonne processed and this will continue to be a focus of the organization."

Summary of Production Results at the El Castillo Complex

During the first quarter 2020, the El Castillo Complex produced 25% fewer GEOs at a cash cost per gold ounce sold (see "Non-IFRS Measures" section) 9% higher compared to the first quarter 2019. Lower production was driven by a planned reduction in recovery rates at the El Castillo mine due to the processing of a higher percentage of transitional and sulphide ores and the switch to run-of-mine ore versus crushed ore. Higher cash costs were primarily due to lower gold ounces sold. On a unit cost basis, El Castillo and San Agustin experienced a cost per tonne processed reduction of 14% and 15%, respectively, during the first quarter of 2020 compared to the first quarter of 2019. San Agustin averaged nearly 30,000 tonnes per day through the crushing and stacking circuit during the first quarter of 2020 following the expansion of this circuit from 20,000 tonnes per day to 30,000 tonnes per day in 2019. This led to an inventory build on the heap leach pad at San Agustin during the first quarter that is expected to be drawn down over the course of 2020.

Summary of Production Results at La Colorada

During the first quarter 2020, La Colorada produced 19% fewer GEOs at a cash cost per gold ounce sold (see "Non-IFRS Measures" section) 7% higher compared to the first quarter 2019. Lower production was primarily related to lower grades processed, as the Company experienced difficulty meeting planned mining rates due to increased water at the bottom of the pit. This led to a reduction of phase two ore tonnes, which were supplemented with ore from low-grade stockpiles in order to maintain crusher feed. The Company has added additional pumping at La Colorada to confront the water challenges in the pit. The Company anticipates production at La Colorada will dip lower in the second quarter of 2020 compared to the first quarter of 2020 since mining and placement of ore tonnes from phase two (the bottom) of the El Créston pit is currently behind schedule. The Company anticipates stronger production during the second half of 2020, as mining returns to the upper benches of the El Créston pit. Higher cash cost per ounce was primarily due to lower gold ounces sold as a result of lower grades processed.

Alio Transaction

The Company mailed and filed the joint-circular in connection with its friendly, at-market merger with Alio on April 22, 2020 and will hold its Annual and Special Meeting in a virtual-only format on May 20, 2020.

Leading proxy advisory firms, Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co., have both recommended that shareholders vote FOR the transaction. The Company anticipates the transaction will close in June 2020.

For First Quarter of 2020 Key Operating and Financial Statistics for El Castillo Complex and La Colorada View Results Here:

About Argonaut Gold Inc.

Argonaut Gold Inc. is a Canadian gold company engaged in exploration, mine development and production. Its primary assets are the El Castillo mine and San Agustin mine, which together form the El Castillo Complex in Durango, Mexico and the La Colorada mine in Sonora, Mexico. Advanced exploration projects include the Cerro del Gallo project in Guanajuato, Mexico and the Magino project in Ontario, Canada. The Company continues to hold the San Antonio advanced exploration project in Baja California Sur, Mexico and several other exploration stage projects, all of which are located in North America.

For more information on Argonaut Gold, contact: Dan Symons, Vice President, Investor Relations at (416) 915-3107. Email: dan.symons@argonautgold.com or visit the company's website: www.argonautgold.com.

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