BMO Nesbitt Maintains $4 TargetArgonaut Gold (AR-TSX) Rating: Outperform Target Price: $4.00 Total Return: 130% Price (3-Jul): $1.74 July 6, 2015 Research Comment Summary Andrew Kaip, P.Geo. 416-359-7224 BMO Nesbitt Burns Inc. andrew.kaip@bmo.com Nik Priebe / Jean-Paul Tsotsos, P.Geo. BMO Nesbitt Burns Inc. 416-359-4293 / 416-359-4906 nikolaus1.priebe@bmo.com / jeanpaul.tsotsos@bmo.com San Agustin EIA Submitted; Updated Project Assessment Targeted for Year-End Event Argonaut Gold reported a drilling update for its San Agustin project located in Durango, Mexico. Subsequent to completion of the PEA earlier this year, 31 wide-spaced RC holes have been completed with most drilling designed to test the northwest extension of known mineralization. AR indicated that drilling suggests potential to expand mineralization over an additional 1.0km with potential for a 50% increase in the existing resource area. The company has also undertaken step-out drilling on the Consejo 1 claim (acquired in 2014) with an objective of expanding the mineralized footprint. AR is currently in the process of acquiring necessary surface rights for the San Agustin project. The company also announced that it has submitted the Environmental Impact Statement (EIS) and expects the process to take between six and nine months. AR expects to complete an updated project assessment by year-end to incorporate drilling completed subsequent to release of the PEA. Impact & Analysis Slightly Positive. Submission of the EIS reflects a key milestone for the project. In our view, drilling completed in 2015 also continues to support potential for future resource expansion. The project shares a similar geological signature to the El Castillo operation (located 10km away), which provides flexibility with respect to development options. BMO Research estimates a US$77M NPV for the San Agustin project using BMO metal price assumptions and a 5% discount rate, or ~18% of total project NPV. Valuation & Recommendation BMO Research forecasts 2015E gold-equivalent sales of 152.3koz at co-product cash costs of US$697/oz gold. AR trades at 0.5x the 5% nominal NPV of US$2.98 using BMO metal price assumptions, below intermediate and junior producer average of 1.1x. Argonaut is rated Outperform with a C$4.00 target price. The target price is based on 1.1x the nominal NPV at spot metal prices.