VANCOUVER — Argonaut Gold (TSX: AR; US-OTC: ARNGF) is attempting to walk a fine line by expanding its production profile while simultaneously controlling operating costs in a bid to maximize free cash flow. The company's goal is to boost its annual gold output to between 300,000 oz and 500,000 gold equivalent oz, but volatile precious metals' prices have made it imperative that capital spending and development be pursued with a careful eye on the balance sheet.
During the second quarter Argonaut produced approximately 37,000 gold equivalent oz at overall cash costs of roughly US$779 per oz. The result marks a 21% production improvement compared to the same period in 2014, though quarterly cash costs jumped around US$20 to US$756 per oz. The company's production assets include the wholly owned El Castillo open pit mine and La Colorada underground operation in Sonora, Mexico.
Though operating costs were on the rise Argonaut did generate positive cash flow for its third consecutive quarter. The company registered quarterly cash flow from operations before changes in non-cash working capital of US$11.4 million, and a net increase in cash balance of US$2.8 million to bring the total to US$23.2 million.
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