Argonaut Gold Produces 51,324 oz Gold in 2010; 18,292 oz in Q4

TORONTO, ONTARIO--(Marketwire - Jan. 10, 2011) - Argonaut Gold Inc. (TSX:AR) ("Argonaut" or the "Company") is pleased to announce fourth quarter gold production at its wholly owned El Castillo open pit gold mine located in Durango, Mexico ("El Castillo") totaling 18,292 ounces. The 2010 total gold production of 51,324 ounces exceeded the Company's projection of 47,000 gold ounces by 9%. Quarterly highlights include a 110% increase in the mineral reserve estimate at El Castillo. Fourth Quarter Highlights /T/ -- 2010 Q4 compared to 2009 Q4 -- Total Tonnes mined increased +75% -- Ore Tonnes processed increased +102% -- Gold Production increased +110% -- Record ounces loaded on the pad (31,000 ounces) -- Solution flow increase to pads at the west side to 800 m3/hr -- Increase in NI 43-101 compliant mineral reserves and mineral resources -- Increase in mineral reserves to 1,231,000 gold ounces -- Increase in total measured and indicated mineral resources to 1,730,000 gold ounces /T/ Pediment Merger Updates /T/ -- Institutional Shareholder Services has recommended in favor of the resolution for both sets of shareholders -- Shareholder materials were sent to Pediment shareholders on December 23; materials were sent to Argonaut shareholders on December 24, 2010. -- 17% Lock-up commitments as of January 7, 2011 -- 9% Pediment shareholder voting as of January 7, 2011; estimated 100% support -- Shareholder meeting on January 24, 2011 /T/ Fourth Quarter Production 2010 The Company produced over 18,000 ounces of gold in the fourth quarter 2010. This represents the highest quarterly production to date at El Castillo. The Company continued at an average mining rate of over 1.5 million total tonnes per month during the fourth quarter. Year-to-date production of more than 51,000 ounces of gold is a 77% increase year over year. /T/ El Castillo Q4 2010(1) Q4 2009(2) % Change Operating Statistics 12/31/2010 12/31/2009 Year Over Year --------------- ---------- -------------- Total Tonnes mined 4,897,000 2,799,302 +75% Tonnes Ore 2,558,000 1,266,400 +102% ROM Tonnes Ore 2,053,000 932,798 +120% (direct to leach pad) Tonnes Crushed 511,000 293,602 +74% Gold Grade (g/t) 0.38 0.38 0% Gold Loaded to Pad (oz) 31,000 15,128 +105% Gold Produced (oz) 18,292 8,724 +110% Year Ended Year Ended % Change Operating Statistics 12/31/2010 12/31/2009(i) Year Over Year --------------- ------------- -------------- Total Tonnes mined 15,989,000 8,766,215 +82% Tonnes Ore 7,755,000 3,704,226 +109% ROM Tonnes Ore 6,290,000 2,741,829 +129% (direct to leach pad) Tonnes Crushed 1,465,000 962,397 +52% Gold Grade (g/t) 0.37 0.45 -18% Gold Loaded to Pad (oz) 92,000 52,940 +73% Gold Produced (oz) 51,324 28,768 +78% (1)Fourth Quarter mine production is based upon truck count and is subject to revision after survey. (2)Information obtained from Castle Gold Corporation press release dated April 16, 2010. /T/ Peter Dougherty, President and CEO for Argonaut noted "We are pleased that we exceeded our production goal in 2010. Fourth quarter production gives us the confidence that we will be able to achieve 70,000 - 75,000 ounces of gold production in 2011. Expansion initiatives along with targeted improvements in operating efficiencies will continue in 2011." Mr. Dougherty added "The recently completed NI 43-101 has significantly increased our reserves at El Castillo. The expansion changes made in 2010, in addition to the reserve estimation, should enable Argonaut to plan for even higher production in 2012." New National Instrument 43-101 ("NI 43-101") Reserve and Resource Estimation The mineral reserve was completed by SRK Consulting ("SRK") in Lakewood, CO. Due to material changes in reserve and resource estimates over the previously released 43-101 on the El Castillo property (posted on Sedar under ACA Howe, July 31, 2008), an updated technical report will be filed on SEDAR within 45 days of the date hereof. The stated Proven and Probable mineral reserves have been prepared in accordance with Canada's National Instrument 43-101 Standards of Disclosure for Mineral Projects. The Qualified Person, as defined by National Instrument 43-101, for the mineral reserve update, is Principle Mining Engineer, Bret C. Swanson BE (Mining), MAusIMM of SRK. The Mineral Reserve for the El Castillo property is detailed in Table 1. Table 1- Mineral Reserve of the El Castillo Pit as of November 8th, 2010. /T/ --------------------------------------------------------------------------- Metric Tonnes Gold Ounces Classification (000's) Gold g/t (000's) --------------------------------------------------------------------------- Proven --------------------------------------------------------------------------- Oxidized 85,470 0.36 994 --------------------------------------------------------------------------- Transition 19,180 0.37 228 --------------------------------------------------------------------------- Sub Total 104,650 0.36 1,222 --------------------------------------------------------------------------- Probable --------------------------------------------------------------------------- Oxidized 772 0.33 8 --------------------------------------------------------------------------- Transition 73 0.35 1 --------------------------------------------------------------------------- Sub Total 844 0.33 9 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Proven and Probable 105,494 0.36 1,231 --------------------------------------------------------------------------- /T/ Footnotes: Reserves are based on a gold price of US$1000/Oz Au; Full mining recovery is assumed; Mine reserves are not diluted; An internal CoG of 0.15 g/t Au was used on Oxide rock within the pit design; An internal CoG of 0.175 g/t Au was used on Transition rock within the pit design; In-situ Au ounces do not include metallurgical recovery losses; Internal CoG determination includes metallurgical gold recoveries of 70% for oxide if ore is crushed, 50% if not; Internal CoG determination includes metallurgical gold recoveries of 60% for Transition if ore is crushed, 0% if not; Oxide and Transition rock types are interpreted from drill logs to estimate changes in weathering profile of the orebody; and In Situ reserves based on end of month survey dated November 8th, 2010. When comparing to the prior ACA Howe reserves of 752,000 ounces less mining to date of 165,500 ounces yields 586,000 remaining gold ounces as of Nov. 8, 2010. This is compared to the SRK estimated reserves of 1,231,000 contained gold ounces yields a 110% increase. "The increase in reserves at El Castillo has added significant gold ounces and has the potential to expand the mine life and production profile at El Castillo." noted Tom Burkhart, Vice President of Exploration for Argonaut. Mr. Burkhart added "We are planning further exploration at El Castillo and look to forward continuing our drilling program in 2011." Measured and indicated resources at El Castillo now stand at 1,730,000 ounces of gold. When comparing to the prior ACA Howe resource of 1,180,000 ounces less mining to date of 165,500 ounces yields 1,014,500 remaining gold ounces as of Nov. 8, 2010. This is compared to the SRK estimated reserves of 1,740,000 contained gold ounces yields a 70% increase. The updated resource estimate is found in table 2 below: Table 2 - Mineral Resource Estimate with Drill Data as of November 8, 2010 (Includes Mineral Reserves). /T/ --------------------------------------------------------------------------- Metric Tonnes Resource Category (000's) Gold g/t Gold Ounces(000's) --------------------------------------------------------------------------- Measured 160,704 0.322 1,661 --------------------------------------------------------------------------- Indicated 7,438 0.290 69 --------------------------------------------------------------------------- Total Measured and Indicated 168,142 O.320 1,730 --------------------------------------------------------------------------- Inferred Sulphides 43,071 0.423 586 --------------------------------------------------------------------------- /T/ Mineral resources that are not mineral reserves do not demonstrate economic viability. The mineral resource estimate was also completed by SRK and is based on a gold price of US$1,300 per ounce and a 0.15 g/t gold cutoff grade. SRK's estimated Mineral Resources are hosted within a Whittle Pit design demonstrating reasonable chances for economic extraction; whereas previous NI 43-101 resource estimations were report as global resources. The increased resource results from the 2010 drill program which included 308 drill holes, spanning more than 35,400 meters of reverse circulation drilling, completed between December 2009 and November 2010. The 2010 drill program expanded the extent of known mineralization approximately 500 meters to the south and 400 meters to the east. Drilling is still open in some areas to the south and east of the current El Castillo open pit, providing future upside potential. We anticipate filing the revised 43-101 in compliance with the statutory requirements as outlined under 43-101 rules. Qualified Persons Preparation of this press release was supervised by Mr. Thomas Burkhart, Argonaut's Vice President of Exploration and a 'Qualified Person' as defined by NI 43-101. Mr. Burkhart also supervised the reverse circulation drill program and on-site sample preparation procedures at El Castillo. The release was also reviewed by Mr. Bart Stryhas and Mr. Bret Swanson of SRK, each of them being a 'Qualified Person' as defined by NI 43-101. The SRK resource estimation is based on information from 512 holes totaling of 83,817m. The average drillhole spacing is approximately 50m. The geologic model consists of six rock types, four of which are mineralized and two that are post mineralization. The primary host rocks consist of granodiorite and meta-sediments including meta-argilite, hornfels and limestone-marbles. The model blocks are 10m x 10m x 6m in the x, y, z directions, respectively. All block grade estimates were made using 6m bench composites. An Ordinary Kriging algorithm was employed to generate a categorical indicator grade shell based on a 0.125ppm Au threshold. Ordinary Kriging was also used for the gold grade estimation. The results of the resource estimation provided a CIM classified Measured, Indicated and Inferred Mineral Resource. The quality of the drilling and data is very good and the Mineral Resource was classified mainly according to the general drillhole spacing. About Argonaut Argonaut is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets being the production-stage El Castillo Mine and the exploration-stage La Fortuna Project, both located in the State of Durango, Mexico. Argonaut is a new venture created by former executive management team members of Meridian Gold Inc. Creating the Next Quality Mid-Tier Gold Producer in the Americas. Cautionary Note Regarding Forward-looking Statements This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management's current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release.

Contact Information: Argonaut Gold Inc. Nichole Cowles Investor Relations Manager (775) 284-4422 x 101 nichole.cowles@argonautgoldinc.com www.argonautgoldinc.com