Corporate

Argo Gold Update – June 2022 – Mitigating Crippling Oil & Gas Prices and Supply Concerns

Late January 2022 I was filling up my car with gasoline watching the $$$ continue to climb.  As a geologist; I said to myself  “this is ridiculous – there is lots of oil & gas in the world – we don’t need to be paying this prices!”

Shortly thereafter I noted an article indicating Crescent Point was selling $500M worth of non-core assets.  “Why would they be selling given the high commodity prices?”.  A little research found that the previous year they had purchased Shell’s Canadian assets for $900M; so it was basically the 80-20 rule where you focus on your big assets and sell off the smaller non-core assets.  More interesting however was the valuations that long life producing assets were selling for.  The Price to Cash Flow multiples of publicly traded companies were shockingly low relative to the broader market PE multiples.  Not only are producing assets inexpensive; after 8 years of low oil & gas prices there are significant exploration and development to production opportunities.

Argo Gold subsequently reviewed more than 20 Oil & Gas opportunities and has signed a dozen CA/NDA’s and has retained multiple oil & gas experts on a consulting basis for due diligence.  In June 2022, Argo Gold entered into 2 LOI’s on 2 prospects in southern Alberta to earn 100% of the mineral rights subject to a GOR (Gross Overriding Royalty) in exchange for drilling one vertical exploration hole on each prospect.  The oil prospects are seismically defined and are located within in a well-known producing trend with proven oil zones and surrounding infrastructure.  Four additional well locations have been identified on the two prospects.   Estimated yield on the two initial exploration wells is estimated to be 100 bbl/day to 150 bbl/day in range and the estimated ultimate recovery (EUR) of the two initial wells is expected to be 275,000 bbl oil and 300,000 bbl oil respectively.  Conservatively, the cost per well into production is C$0.7M per well and estimated annual revenue is C$5M per well with an operating life of 6 years per well.  The math is compelling.  Canada has the highest environmental standards for oil & gas exploration and production so it is the best place to increase production to mitigate crippling prices and supply concerns.

Argo Gold Uchi Project

Argo Gold is not abandoning its gold assets.  Argo Gold’s is the 100% owner of three gold projects in northwestern Ontario; the Uchi Gold Project, the Angela Lake Gold Project and the Talbot Lake Gold Project.  The company has continued to advance the high-grade Uchi Gold Project.  Preliminary work has been completed at the Angela Lake Gold Project.  Argo Gold is in the permitting process for the Talbot Lake Gold Project.

Hurdman Silver-Zinc Project

Argo Gold is also the 100% owner of the Hurdman Silver-Zinc Project, Four blocks covering 50 square kilometres of copper-nickel exploration claims surrounding Copper Lake’s Marshall Lake Copper Project, and the Keelow Lake Cobalt Project.  The plan is to spinout these assets into a CPC as “Argo Silver” whereby Argo Gold shareholders will receive 1 share of Argo Silver for every 4 shares of Argo Gold.

Share Structure

Argo Gold currently has 66 M shares outstanding.  Eric Sprott is the largest shareholder of Argo Gold with an 18% interest.  The current $6 million market capitalization is an intriguing opportunity.

CSE: ARQ, OTCQB: ARBTF and XFRA, XSTU, XBER: A2ASDS