A copy of this preliminary short form prospectus has been filed with the securities regulatory authorities in each of the provinces of Canada other than Québec but has not yet become final for the purpose of the sale of securities. Information contained in this preliminary short form prospectus may not be complete and may have to be amended. The securities may not be sold until a receipt for the short form prospectus is obtained from the securities regulatory authorities.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. These securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any U.S. state securities laws. Accordingly, these securities may not be offered or sold within the United States or to a U.S. Person (as such term is defined in Regulation S under the U.S. Securities Act) except in transactions exempt from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This short form prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of these securities within the United States of America. See "Plan of Distribution".

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of Argonaut Gold Inc. by sending a written request to First Canadian Place – 100 King St. W., Suite 5700, Toronto, ON, M5X 1C7 telephone: 416-915-3107, and are also available electronically at www.sedar.com.

PRELIMINARY SHORT FORM PROSPECTUS

ARGONAUT GOLD INC.

$23,000,202

8,156,100 FLOW-THROUGH SHARES

This preliminary short form prospectus (the "Prospectus") qualifies the distribution (the "Offering") of 8,156,100 common shares of Argonaut Gold Inc. ("Argonaut" or the "Corporation") issued as "flow-through shares" (the "Flow-Through Shares") within the meaning of the Income Tax Act (Canada) (the "Tax Act") at a price of $2.82 per Flow-Through Share (the "Offering Price"). The Flow-Through Shares are being issued and sold pursuant to an underwriting agreement dated January 29, 2021 (the "Underwriting Agreement") among the Corporation, Cormark Securities Inc. (the "Lead Underwriter") as the lead underwriter and sole bookrunner, together with Canaccord Genuity Corp., Echelon Wealth Partners Inc., Laurentian Bank Securities Inc., Paradigm Capital Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc., and Stifel Nicolaus Canada Inc. (collectively with the Lead Underwriter, the "Underwriters"). The Offering Price was determined based on arm's length negotiations between the Corporation and the Lead Underwriter, on behalf of the Underwriters, with reference to the prevailing market prices of the issued and outstanding common shares of the Corporation (the "Common Shares"). See "Description of Securities Being Distributed" and "Plan of Distribution".

The Corporation will incur (or be deemed to incur) sufficient "Canadian development expenses" ("CDE") as defined in the Tax Act, on or before December 31, 2021, so as to enable the Corporation to renounce, on or before December 31, 2021, in favour of the purchasers of Flow-Through Shares, an amount equal to the gross proceeds raised from the issuance of Flow-Through Shares. See "Flow-Through Shares – Renunciation of CDE" and "Certain Canadian Federal Income Tax Considerations".

The Common Shares are listed and posted for trading on the Toronto Stock Exchange (the "TSX") under the trading symbol "AR". On January 22, 2021, the last full trading day prior to the announcement of the Offering, the closing price of the Common Shares on the TSX was $2.48. On January 28, 2021, the last full trading day prior to the date of this Prospectus the closing price of the Common Shares on the TSX was $2.32. The Corporation has applied to list the Offered Shares on the TSX. Such listing will be subject to the Corporation fulfilling all of the listing requirements of the TSX and there is no assurance that the TSX will approve the listing application.

Price: $2.82 per Flow-Through Share

	Price to the Public	Underwriters' Fee(1)(2)	Net Proceeds to Argonaut(2)(3)
Per Flow-Through Share	$2.82	$0.14	$2.68
Total Offering(2)	$23,000,202	$1,150,010	$21,850,192

Notes:

(1) In consideration for the services rendered by the Underwriters in connection with the Offering, the Corporation has agreed to pay the Underwriters a cash commission equal to 5.0% (the "Underwriters' Fee") of the gross proceeds of the Offering (including, for greater certainty, on any exercise of the Over-Allotment Option (as defined herein)).

(2) The Corporation has granted the Underwriters an over-allotment option (the "Over-Allotment Option"), exercisable in whole or in part in the sole discretion of the Underwriters at any time up to 30 days from and including the Closing Date (as defined herein), to purchase up to an additional 1,223,415 Flow-Through Shares (the "Over-Allotment Shares"), at the Offering Price, to cover over-allocations, if any, and for market stabilization purposes. The grant of the Over-Allotment Option is qualified by this Prospectus. A person who acquires securities forming part of the Underwriters' over-allocation position acquires those securities under this Prospectus regardless of whether the Underwriters' over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases; provided, however, that the Underwriters have agreed not to fill any over-allocation position through secondary market purchases, as such Common Shares purchased in the secondary market would not be Flow-Through Shares. If the Over-Allotment Option is exercised in full, the total "Price to the Public", "Underwriters' Fee" and "Net Proceeds to Argonaut" (before payment of the expenses of the Offering) will be $26,450,232.30, $1,322,511.62 and $25,127,720.68, respectively. See "Plan of Distribution" and the table below.

(3) After deducting the Underwriters' Fee, but before deducting expenses relating to the Offering, estimated to be $150,000, which, together with the Underwriters' Fee, will be paid by the Corporation. See "Plan of Distribution".

The following table sets out the number of securities that may be issued by the Corporation in connection with the Offering:

Underwriters' Position	Maximum Size or Number ofSecurities Available	Exercise Period	Price
Over-Allotment Option	1,223,415Over-Allotment Shares	At any time up to 30 days afterthe Closing Date	$2.82 per Over-Allotment Share

Unless the context otherwise requires, all references to the "Offering" and the "Flow-Through Shares", in this Prospectus shall include the Over-Allotment Option and the Over-Allotment Shares, respectively.

Subject to applicable laws and in connection with the Offering, the Underwriters may over-allot or effect transactions which stabilize or maintain the market price of the Common Shares at levels other than those which might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time. See "Plan of Distribution".

An investment in the Common Shares, including the Flow-Through Shares, is highly speculative and involves a high degree of risk, and should only be made by persons who can afford the total loss of their investment. The risk factors included or incorporated by reference in this Prospectus should be carefully reviewed and considered by purchasers in connection with an investment in the Common Shares, including the Flow-Through Shares. See "Notice to Investors – Forward-Looking Information" and "Risk Factors" in this Prospectus and in the AIF (as defined herein), which is available electronically on SEDAR at www.sedar.com and is incorporated by reference herein**.**

The Underwriters, as agents, conditionally offer the Flow-Through Shares, subject to prior sale, if, as and when issued by the Corporation and accepted by the Underwriters in accordance with the conditions contained in the Underwriting Agreement referred to under "Plan of Distribution" and subject to the approval of certain legal matters on behalf of the Corporation by Bennett Jones LLP and on behalf of the Underwriters by Cassels Brock & Blackwell LLP.

Subscriptions for the Flow-Through Shares will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. It is anticipated that the Flow-Through Shares will be delivered under the book based system through CDS Clearing and Depository Services Inc. ("CDS") or its nominee and deposited in registered or electronic form with CDS on the closing of the Offering, which is expected to be on February 11, 2021, or such other date as may be agreed upon by the Corporation and the Underwriters, but in any event not later than 42 days following the date of the receipt for the final short form prospectus (the "Closing Date"). Except in limited circumstances, a purchaser of Flow-Through Shares will receive only a customer confirmation from the registered dealer through which the Flow-Through Shares are purchased.

Certain directors of the Corporation and certain executive officers of the Corporation who have signed certificates in this Prospectus and certain persons who have signed consents required to be filed in connection with the filing of this Prospectus reside outside of Canada. Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process. See "Enforcement of Judgments Against Foreign Persons or Companies".

BMO Nesbitt Burns Inc. and Scotia Capital Inc. are wholly-owned subsidiaries of Canadian chartered banks that have extended a US$100 million revolving credit facility with the ability to increase the total commitment to US$125 million (the "Revolving Credit Facility") to the Corporation. James E. Kofman, Vice Chairman of the Lead Underwriter is a director and the Chairman of the Corporation. Accordingly, under certain circumstances, the Corporation may be considered to be a "connected issuer", within the meaning of National Instrument 33-105 – Underwriting Conflicts ("NI 33-105"), of the Lead Underwriter, BMO Nesbitt Burns Inc. and Scotia Capital Inc. under applicable Canadian securities legislation. See "Plan of Distribution".

The Corporation's registered office is located at One First Canadian Place, Suite 3400, Toronto, Ontario, Canada, M4X 1A4. The Corporation's head office is located at 9600 Prototype Court, Reno, Nevada, United States of America, 89521.

NOTICE TO INVESTORS 2
ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS OR COMPANIES 4
CURRENCY PRESENTATION AND FINANCIAL INFORMATION 4
NOTICE REGARDING NON-IFRS MEASURES 4
TECHNICAL INFORMATION 4
DOCUMENTS INCORPORATED BY REFERENCE 5
MARKETING MATERIALS 6
ELIGIBILITY FOR INVESTMENT 6
THE CORPORATION 7
SUMMARY DESCRIPTION OF THE BUSINESS 9
RECENT DEVELOPMENTS 9
CONSOLIDATED CAPITALIZATION 10
USE OF PROCEEDS 10
PLAN OF DISTRIBUTION 13
DESCRIPTION OF SECURITIES BEING DISTRIBUTED 15
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS 17
PRIOR SALES 19
TRADING PRICE AND VOLUME 20
RISK FACTORS 21
AUDITORS, TRANSFER AGENT AND REGISTRAR 24
LEGAL MATTERS 24
INTERESTS OF EXPERTS 24
LEGAL PROCEEDINGS 25
PURCHASERS' STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION 25
CERTIFICATE OF THE CORPORATION C-1
CERTIFICATE OF THE UNDERWRITERS C-2

NOTICE TO INVESTORS

About this Short Form Prospectus

Readers should rely only on the information contained in this Prospectus (including the documents incorporated by reference) and should not rely on some parts of the Prospectus to the exclusion of others. The Corporation has not, and the Underwriters have not, authorized any other person to provide investors with additional or different information. If anyone provides you with additional, different or inconsistent information, including information or statements in articles about the Corporation or through other forms of media, readers should not rely on it. The Corporation is not, and the Underwriters are not, offering the securities in any jurisdiction in which the Offering is not permitted. Investors should assume that the information contained in this Prospectus is accurate only as of the date on the front of this Prospectus and that information contained in any document incorporated by reference is accurate only as of the date of that document, regardless of the time of delivery of this Prospectus or of any sale of the securities pursuant thereto. The Corporation's business, financial condition, results of operations and prospects may have changed since the date on the front of this Prospectus.

Information contained in this Prospectus should not be construed as legal, tax or financial advice and readers are urged to consult their own professional advisors in connection therewith.

Forward-Looking Information

This Prospectus contains certain statements which contain "forward-looking information" and "forward-looking statements" within the meaning of applicable securities legislation (each a "forward-looking statement"). No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this Prospectus should not be unduly relied upon. Forward-looking information is by its nature prospective and requires the Corporation to make certain assumptions and is subject to inherent risks and uncertainties. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "plan", "contemplate", "continue", "estimate", "expect", "intend", "propose", "might", "may", "will", "shall", "project", "should", "could", "would", "believe", "predict", "forecast", "pursue", "potential", "budget" and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, among others, statements pertaining to: the Corporation's future operating and financial results, interpretation of drill results, the geology grade and continuity of mineral deposits and conclusions of economic evaluations, metal prices, demand for metals, currency exchange rates, cash operating margins, expenditures on property, plant and equipment, increases and decreases in exploration activity, changes in project parameters, joint venture operations, mineral resources, mineral reserves and anticipated grades and recovery rates, schedules and timing of certain projects of the Corporation, anticipated cash needs and needs for additional financing, the Corporation's competitive position and its expectations regarding competition, treatment under governmental and other regulatory regimes and tax, environmental and other laws, and certain statements relating to "flow-through" shares as defined in the Tax Act, and the tax considerations relating thereto.

The forward-looking statements within this document are based on information currently available and what management believes are reasonable assumptions. Forward-looking statements speak only as of the date of this Prospectus. In addition, this Prospectus may contain forward-looking statements attributed to third party industry sources, the accuracy of which has not been verified by the Corporation.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. A number of factors could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking statements in this Prospectus, including, but not limited to, the following material factors:

the speculative nature of mining operations;
the ability of the Corporation to attract and retain qualified management to grow its business;
fluctuations in currencies;
changes in gold and other metals prices associated with the primary metals mined at properties of the Corporation;
the performance of the subsidiaries of the Corporation and other companies in the investment portfolio of the Corporation;
failure to complete future acquisitions or dispositions;
economic and market conditions;
future financial needs and availability of adequate financing;
laws governing the Corporation or the properties of the Corporation;
the Corporation's ability to make accurate assumptions regarding the valuation, timing and amount of ore in the properties of the Corporation;
the production at or performance of the properties of the Corporation;
changes in estimates of mineral resources and mineral reserves of the properties of the Corporation;
acquisition and maintenance of permits and authorizations, completion of construction and commencement and continuation of production at the properties of the Corporation;
ramp-up risks relating to operations at the properties of the Corporation;
risks relating to environmental or social factors or incidents which may adversely impact operations at the properties of the Corporation;
mine operating and ore processing facility problems (including, but not limited to, labour disputes resulting in work stoppages and/or delays), pit wall or tailings dam failures, natural catastrophes such as floods or earthquakes and access to raw materials, water and power on the properties of the Corporation;
publication of inaccurate or unfavourable research by securities analysts or other third parties;
the timing of renunciation of CDE, and risks relating to "flow-through" shares as defined in the Tax Act;
the listing of the Offered Shares on the TSX;
the undisclosed risks and liabilities relating to the Alio Business Combination (as defined herein);
the anticipated benefits of the Alio Business Combination;
the ability of the Corporation to increase, over time, Argonaut's future gold production, in order to unlock shareholder value at the Corporation's projects and provide superior returns to investors; and
COVID-19 related risks, which may continue to impact the Corporation's business, operations and financial condition to an unknown, but potentially material, extent.

Such factors are discussed in more detail under the heading "Risk Factors" in this Prospectus and in the AIF, which is incorporated by reference herein*.* New factors emerge from time to time, and it is not possible for management to predict all of those factors or to assess in advance the impact of each such factor on the Corporation's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forwardlooking statement.

The forward-looking statements contained in this Prospectus are expressly qualified by the foregoing cautionary statements and are made as of the date of this Prospectus. Except as may be required by applicable securities laws, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statement to reflect events or circumstances after the date of this Prospectus or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise. Readers should read this Prospectus and consult their own professional advisors to ascertain and assess the income tax and legal risks and other aspects of their investment in the Offered Shares.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS OR COMPANIES

Certain directors of the Corporation and certain executive officers of the Corporation who have signed certificates in this Prospectus and certain persons who have signed consents required to be filed in connection with the filing of this Prospectus reside outside of Canada. Each of (i) Peter Dougherty, President, Chief Executive Officer and a director of the Corporation, (ii) Peter Mordaunt, a director of the Corporation, (iii) Audra Walsh, a director of the Corporation, (iv) Ian Atkinson, a director of the Corporation, (v) David Ponczoch, Chief Financial Officer of the Corporation; (vi) Stephen Lang, a director of the Corporation, (vii) Robert Rose, Vice President of Technical Services of the Corporation, and (viii) Brian Arkell, Vice President, Exploration, reside outside of Canada. These individuals have appointed the following agent for service of process:

Name of Persons	Name and Address of Agent
Peter Dougherty, David Ponczoch, Peter Mordaunt, Audra Walsh, Ian	Bennett Jones LLP, One First Canadian Place, Suite 3400, Toronto,
Atkinson, Stephen Lang, Robert Rose and Brian Arkell	Ontario, Canada, M4X 1A4

Additionally, the following experts who have signed consents required to be filed in connection with the filing of this Prospectus reside outside of Canada: Brian Arkell, John Marek, James Arnold, Michael Makarenko, Dino Pilotto, Michael Lechner, Luiz Castro, Dr. Ian Hutchison, Carl Defilippi, Thomas Dyer, Todd Minard, Neb Zurik, John Tinucci, Bret Swanson, Eric Olin, Jeff Osborn and Mark Allan Willow.

Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.

CURRENCY PRESENTATION AND FINANCIAL INFORMATION

Unless otherwise indicated, all references to monetary amounts in this Prospectus are denominated in Canadian dollars. The financial statements of the Corporation incorporated herein by reference are reported in United States dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS") or in accordance with IAS 34 – Interim Financial Reporting as applicable. Unless otherwise indicated, all references to "$","C$" and "dollars" in this Prospectus refer to Canadian dollars. References to "US$" or "USD" in this Prospectus refer to United States dollars. On January 28, 2021, the daily average exchange rate for one United States dollar expressed in Canadian dollars, as quoted by the Bank of Canada, was US$1.00=C$1.2810 (or C$1.00=US$0.7806).

NOTICE REGARDING NON-IFRS MEASURES

This Prospectus and the documents incorporated by reference herein include certain terms or performance measures that are not defined under IFRS, including, but not limited to, cash cost per gold ounce sold, adjusted cash cost per gold ounce sold, all-in sustaining cost per gold ounce sold, adjusted all-in sustaining cost per gold ounce sold, adjusted net income, adjusted earnings per share - basic and net cash. The Corporation believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Corporation's performance. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-IFRS measures should be read in conjunction with the Corporation's financial statements and management's discussion and analysis incorporated by reference herein. See "Non-IFRS Measures" in the Corporation's management's discussion and analysis for the year ended December 31, 2019, and for the three and nine months ended September 30, 2020, regarding the Corporation's use of non-IFRS measures.

TECHNICAL INFORMATION

Scientific and technical information relating to Argonaut's mineral projects indicated below are supported by the technical information contained within the AIF incorporated by reference herein. See "Documents Incorporated by Reference".

• Magino project in Wawa, Ontario, Canada (the "Magino Project");

Cerro del Gallo project in the State of Guanajuato, Mexico (the "Cerro del Gallo Project");
La Colorada mine in the State of Sonora, Mexico (the "La Colorada Mine"); and
El Castillo complex in the State of Durango, Mexico (the "El Castillo Complex").

The technical report summaries for the material properties referred to above are subject to certain assumptions, qualifications and procedures described therein. Reference should be made to the full text of the technical reports, which have been filed with Canadian securities regulatory authorities pursuant to National Instrument 43-101 – Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI 43-101") and are available for review on SEDAR under the issuer profile of Argonaut at www.sedar.com. The technical reports are not and shall not be deemed to be incorporated by reference in this Prospectus.

Subsequent to the date of the AIF, Argonaut completed the acquisition of Alio Gold Inc. ("Alio"), and indirectly acquired the Florida Canyon mine, located in Nevada, United States ("Florida Canyon Mine") amongst other assets. Scientific and technical information relating to Florida Canyon Mine, a mineral project material to Argonaut, is supported by the Florida Canyon Mine Technical Information (as defined herein), which is incorporated by reference in this Prospectus.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents filed by the Corporation with securities commissions or similar authorities in Canada are specifically incorporated into this Prospectus:

(a) the annual information form of the Corporation dated March 25, 2020 for the year ended December 31, 2019 (the "AIF");
(b) the audited consolidated financial statements of the Corporation as at and for the year ended December 31, 2019, together with the notes thereto and the report of the auditors thereon (the "Annual Financial Statements");
(c) the management's discussion and analysis of financial condition and results of operations of the Corporation for the year ended December 31, 2019 (the, "Annual MD&A");
(d) the unaudited condensed interim financial statements of the Corporation as at and for the three and nine months ended September 30, 2020 and 2019, together with the notes thereto (the "Interim Financial Statements");
(e) the management's discussion and analysis of financial condition and results of operations of the Corporation for the three and nine months ended September 30, 2020 (the "Interim MD&A");
(f) the joint management information circular of the Corporation and Alio dated as of April 17, 2020 for the annual and special meeting of shareholders of Argonaut and securityholders of Alio held on May 20, 2020 (the "Information Circular"); provided, however, that the information contained in Schedule "K" – Information Concerning Alio – Documents Incorporated by Reference – item 1. Annual Information Form dated March 30, 2020 for the year ended December 31, 2019 under the heading "Material Properties" is not incorporated by reference in this Prospectus.
(g) the material change report dated April 9, 2020 in respect of the acquisition of all outstanding shares of Alio Gold Inc. by the Corporation (the "Alio Business Combination");
(h) the material change report dated July 7, 2020 in respect of the closing of the Alio Business Combination;
(i) the business acquisition report in respect of the Alio Business Combination, dated July 7, 2020 (the "Alio BAR");
(j) the material change report dated July 16, 2020 in respect of the C$126.5 million "bought deal" offering of Common Shares of the Corporation (the "July 2020 Offering");
(k) the section entitled "Technical Information Florida Canyon Mine" in the final short form prospectus of the Corporation dated July 17, 2020, in respect of the July 2020 Offering (the "Florida Canyon Mine Technical Information"); and
(l) the "template version" (as such term is defined in National Instrument 44-101 Short Form Prospectus Distributions) of the term sheet dated January 25, 2021 in connection with the Offering (the "Term Sheet").

Any documents of the type required by National Instrument 44-101 – Short Form Prospectus Distributions to be incorporated by reference in a short form prospectus, including those types of documents referred to above and press releases issued by the Corporation specifically referencing incorporation by reference into this Prospectus, if filed by the Corporation with the provincial securities commissions or similar authorities in Canada after the date of this Prospectus and before the distribution of the securities being qualified hereunder, are deemed to be incorporated by reference in this Prospectus.

Documents referenced in any of the documents incorporated by reference in this Prospectus but not expressly incorporated by reference therein or herein and not otherwise required to be incorporated by reference therein or in this Prospectus are not incorporated by reference in this Prospectus.

Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not constitute a part of this Prospectus, except as so modified or superseded. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of such a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it is made.

MARKETING MATERIALS

The Term Sheet does not form part of this Prospectus to the extent that the contents of the Term Sheet have been modified or superseded by a statement contained in this Prospectus.

Any "template version" of "marketing materials" (each as defined in National Instrument 41-101 – General Prospectus Requirements) filed after the date of this Prospectus and before the termination of the distribution under the Offering (including any amendments to, or an amended version of, the Term Sheet and any template version of any marketing materials) are deemed to be incorporated by reference into this Prospectus.

ELIGIBILITY FOR INVESTMENT

In the opinion of Bennett Jones LLP, counsel to the Corporation, and Cassels Brock and Blackwell LLP, counsel to the Underwriters, based on the provisions of the Income Tax Act (Canada) and the regulations thereunder (collectively, the "Tax Act") in force on the date of this Prospectus, the Offered Shares will be a "qualified investment" under the Tax Act for trusts governed by registered retirement savings plans, registered retirement income funds, registered education savings plans, registered disability savings plans, tax-free savings accounts (collectively, "Registered Plans") and deferred profit sharing plans ("DPSPs"), all as defined in the Tax Act, provided that the Offered Shares are listed on a "designated stock exchange" as defined in the Tax Act (which currently includes the TSX) or the Corporation is a "public corporation" (other than a mortgage investment corporation) as defined in the Tax Act.

Notwithstanding that an Offered Share may be a qualified investment for a Registered Plan, if the Offered Share is a "prohibited investment" within the meaning of the Tax Act for the Registered Plan, the annuitant, holder or subscriber, as the case may be (the "Controlling Individual") of the Registered Plan, will be subject to a penalty tax under the Tax Act. The Offered Shares generally will not be a prohibited investment for a Registered Plan provided the Controlling Individual of the Registered Plan: (i) deals at arm's length with the Corporation for the purposes of the Tax Act; and (ii) does not have a "significant interest" (as defined in the Tax Act for purposes of the prohibited investment rules) in the Corporation. The Offered Shares will not be a prohibited investment if such securities are "excluded property" (as defined in the Tax Act for purposes of the prohibited investment rules) for the Registered Plan. Persons who intend to hold Offered Shares in a

Registered Plan should consult their own tax advisors in regard to the application of these rules in their particular circumstances.

It is not anticipated that Registered Plans or a DPSP will subscribe for Flow-Through Shares as Registered Plans and DPSPs, or the holders, annuitants, beneficiaries or subscribers of such Registered Plans or DPSPs, as the case may be, would not benefit from the deduction of CDE renounced by the Corporation.

THE CORPORATION

Incorporation

Argonaut Gold Inc. is a corporation existing under the Business Corporations Act (Ontario). The Corporation's registered office is located at One First Canadian Place, Suite 3400, Toronto, Ontario, Canada, M4X 1A4. The Corporation's head office is located at 9600 Prototype Court, Reno, Nevada, United States of America, 89521.

Subsidiary Corporate Governance and Internal Controls

The Corporation has implemented a system of corporate governance, internal controls over financial reporting, and disclosure controls and procedures that apply at all levels of the Corporation and its subsidiaries. These systems are overseen by the board of directors of the Corporation, and implemented by the Corporation's senior management. The relevant features of these systems are set forth below.

Control over Mexican Subsidiaries

The Corporation has five material Mexican subsidiaries: (i) Minera Real del Oro, S.A. de C.V.; (ii) Compañía Minera Pitalla, S.A. de C.V.; (iii) Kings-San Antón, S.A. de C.V.; (iv) San Antón de las Minas, S.A. de C.V.; and (v) Timmins Goldcorp Mexico, S.A. de C.V.

The Corporation's corporate structure has been designed to ensure that the Corporation controls the operations of its subsidiaries. The Corporation's subsidiaries are 100% beneficially owned, controlled or directed, directly or indirectly, by the Corporation. The Corporation, as the ultimate shareholder, has internal policies and systems in place which provide it with visibility into the operations of its subsidiaries, including its subsidiaries operating in emerging markets, and the Corporation's management team is responsible for monitoring the activities of the subsidiaries.

The Corporation, directly or indirectly, controls the appointments of all of the directors of its subsidiaries. The directors of the Corporation's subsidiaries are ultimately accountable to the Corporation as the shareholder appointing him or her, and the board of directors and senior management of the Corporation. As well, the annual budget, capital investment and exploration program in respect of the Corporation's mineral properties are established by the Corporation.

Further, signing officers for subsidiary foreign bank accounts are either employees of the Corporation or employees of the subsidiaries. In accordance with the Corporation's internal policies, all subsidiaries must notify the Corporation's corporate treasury department of any changes in their local bank accounts including requests for changes to authority over the subsidiaries' foreign bank accounts. Monetary limits are established internally by the Corporation as well as with the respective banking institution. Annually, authorizations over bank accounts are reviewed and revised as necessary. Changes are communicated to the banking institution by the Corporation and the applicable subsidiary to ensure appropriate individuals are identified as having authority over the bank accounts.

Strategic Direction

While the mining operations of each of the Corporation's subsidiaries are managed locally, the board of directors of the Corporation is responsible for the overall stewardship of the Corporation and, as such, supervises the management of the business and affairs of the Corporation. More specifically, the board of directors of the Corporation is responsible for reviewing the strategic business plans and corporate objectives, and approving acquisitions, dispositions, investments, capital expenditures and other transactions and matters that are material to the Corporation including those of its material subsidiaries.

Internal Control Over Financial Reporting

The Corporation prepares its consolidated financial statements on an annual basis in accordance with IFRS as issued by the International Accounting Standards Board and on a quarterly basis in accordance with IFRS as applicable to interim financial reports including International Accounting Standard 34, Interim Financial Reporting. This requires financial information and disclosures from its subsidiaries. The Corporation implements internal controls over the preparation of its financial statements and other financial disclosures to provide reasonable assurance that its financial reporting is reliable and that the quarterly and annual financial statements are being prepared in accordance with the relevant reporting framework and securities laws.

These internal controls include the following:

The Corporation has established a quarterly reporting package relating to its subsidiaries that standardizes the information required from the subsidiaries in order to complete the consolidated financial statements and management's discussion and analysis. Management of the Corporation has direct access to relevant financial management of its subsidiaries in order to verify and clarify all information required.
All public documents and statements relating to the Corporation and its subsidiaries containing material information (including financial information) are reviewed by senior management, including the Chief Executive Officer and the Chief Financial Officer before such material information is disclosed, to make sure that all material information has been considered by management of the Corporation and properly disclosed.
The board of directors of the Corporation obtains confirmation from the Chief Executive Officer and Chief Financial Officer as to the matters addressed in the quarterly and annual certifications required under National Instrument 52-109 – Certification of Disclosure in the Corporation's Annual and Interim Filings.
The Corporation's annual financial statements, interim financial statements and related management's discussion and analysis must receive the approval of the board of directors of the Corporation prior to their publication or release.
Although not a management control, the Corporation engages its external auditor to perform interim reviews of the Corporation's quarterly financial statements and an audit of the annual consolidated financial statements prepared in accordance with IFRS.
The Corporation designs and evaluates the effectiveness of its internal controls over financial reporting on a regular basis, including based on an evaluation of the tests performed by third party consultants, to ensure that these controls and procedures are effective.

Disclosure Controls and Procedures

The responsibilities of the board of directors of the Corporation include oversight of the Corporation's internal control systems including those systems to identify, monitor and mitigate business risks as well as compliance with legal, ethical and regulatory requirements.

CEO and CFO Certifications

In order for the Corporation's Chief Executive Officer and Chief Financial Officer to be in a position to attest to the matters addressed in the quarterly and annual certifications required by National Instrument 52-109 – Certification of Disclosure in the Corporation's Annual and Interim Filings, the Corporation has developed internal procedures and responsibilities throughout the organization for its regular periodic and special situation reporting, in order to provide assurances that information that may constitute material information will reach the appropriate individuals who review public documents and statements relating to the Corporation and its subsidiaries containing material information, is prepared with input from the responsible officers and employees, and is available for review by the Chief Executive Officer and Chief Financial Officer in a timely manner.

These systems of corporate governance, internal control over financial reporting and disclosure controls and procedures are designed to ensure that, among other things, the Corporation has access to all material information about its subsidiaries, including those operating in emerging markets.

Regional Experience

The directors and executive officers of the Corporation have significant experience conducting business in Mexico, including (i) international corporate finance and mergers and acquisitions experience in Mexico and throughout Latin America, (ii) planning, supervising and managing experience with mining operations in Mexico, (iii) executive officers and / or directors experience with other publicly-listed mining companies with operations in Mexico, (iv) visiting the Corporation's projects in Mexico on a regular basis, and (v) communicating frequently with Canadian officials in Mexico and Mexican governmental officials. Further, many of the directors and executive officers of the Corporation are fluent or conversational in Spanish.

SUMMARY DESCRIPTION OF THE BUSINESS

The Corporation is engaged in the business of gold production and related activities including the exploration, development and acquisition of gold-bearing properties. The Corporation's material properties are:

the Florida Canyon Mine;
the El Castillo Complex;
the Magino Project;
the Cerro del Gallo Project; and
the La Colorada Mine.

For more information, see "Technical Information" and in the AIF under the heading "Description of the Business of the Corporation – Description of Mineral Properties".

RECENT DEVELOPMENTS

On October 14, 2020, Argonaut announced the closing of the previously announced "bought deal" private placement of an aggregate of 3,002,650 Common Shares that qualify as "flow-through shares" within the meaning of the Tax Act for aggregate gross proceeds of C$11.5 million (the "October 2020 FTS Private Placement") including the full exercise of the underwriters' option. In addition, the Corporation announced the approval by the board of directors of construction of the Magino Project, receipt of a fixed price proposal for approximately 50% of the initial capital estimate for the Magino Project, the extension and expansion of the Revolving Credit Facility to US$100 million, with an accordion feature of US$25 million, with a three year term and the US$57.5 million in convertible debenture issuance. In authorizing the commencement of construction the Corporation anticipates construction will commence in the first quarter of 2021 with the first gold pour anticipated to occur during the first half of 2023. The board of directors of the Corporation authorized initial capital expenditures of between US$360 million and US$380 million (C$480 million and C$510 million), which exceeds the estimate of US$321 million in the technical report for the Magino Project.

On October 30, 2020, Argonaut announced the closing of a "bought deal" offering of US$57.5 million of 4.625% senior unsecured convertible debentures of the Corporation (the "Debentures") (including the full exercise of the underwriters' over-allotment option) at a price of $1,000 per Debenture (the "October 2020 Debenture Offering").

On November 23, 2020, Argonaut announced that it had discovered four new, high-grade zones below or adjacent to the planned open pit at the Magino project in Ontario, Canada.

On January 4, 2021, Argonaut announced that it had executed a fixed bid engineering, procurement, construction and commissioning contract with Ausenco Engineering Canada Inc. for the construction of the Magino processing facility and other parts of the Magino construction project. Argonaut also announced that it had amended its agreement with AP Mining for the previously announced sale of the Ana Paula project to AP Mining to allow more time to meet the regulatory and government approvals required for closing. In connection with the amendment, AP Mining agreed to pay an additional US

$1.0 million at 15 months from the closing date and to reimburse all of Argonaut's costs incurred associated with the Ana Paula project incurred between January 1, 2021 and the closing of the transaction. Closing continues to be subject to financing and receipt of all necessary approvals, which is expected in the first quarter of 2021.

On January 19, 2021, Argonaut announced record fourth quarter 2020 gold equivalent ounce production of 56,986 and 2020 annual gold equivalent ounce production of 203,483. Argonaut also provided 2021 production and cost guidance.

On January 20, 2021, Argonaut announced that it had intersected 10.0 metres at 19.0 grams per tonne at the Magino project in Ontario, Canada, and that the South Zone has now been intersected in numerous drill holes over a strike length of 1.5 kilometres and remains open at depth and to the west.

On January 21, 2021, Argonaut announced that the province of Ontario filed the Closure Plan for the Magino project.

CONSOLIDATED CAPITALIZATION

Other than as disclosed below and under the heading "Prior Sales", there have been no material changes to the share and loan capital of Argonaut since September 30, 2020, being the date of the Interim Financial Statements.

The following table sets out the share and loan capital of Argonaut: (i) as at September 30, 2020, being the date of the Interim Financial Statements; (ii) as at September 30, 2020 after giving effect to the October 2020 FTS Private Placement and October 2020 Debenture Offering, (iv) as at September 30, 2020 after giving effect to the October 2020 FTS Private Placement, October 2020 Debenture Offering and the Offering, and (v) as at September 30, 2020 after giving effect to the October 2020 FTS Private Placement, October 2020 Debenture Offering, the Offering and assuming the Over-Allotment Option is exercised in full, as though they had closed on September 30, 2020. The table should be read in conjunction with the Annual Financial Statements, Annual MD&A, the Interim Financial Statements, the Interim MD&A, which are incorporated by reference in this Prospectus as well as the other disclosure contained in this Prospectus, including the risk factors described under the heading "Risk Factors" in this Prospectus and in the AIF.

	As at September 30,2020(1)	As at September 30, 2020(2)(after giving effect to theOctober 2020 FTS PrivatePlacement and October2020 Debenture Offering)	As at September 30, 2020(2)(after giving effect to theOctober 2020 FTS PrivatePlacement, October 2020Debenture Offering and theOffering)	As at September 30, 2020(2)(3)(after giving effect to theOctober 2020 FTS PrivatePlacement, October 2020Debenture Offering, theOffering and the OverAllotment Option)
Shareholder Capital	$993,285	$1,002,262	$1,020,216	$1,022,909
Common Shares	290,721,447	293,724,097	301,880,197	303,103,612
Liabilities	$206,546	$264,046	$264,046	$264,046

Notes:

(1) These figures have been derived from the Interim Financial Statements. Expressed in thousands of US dollars.

(2) Assumes that the Debentures are not converted into Common Shares.

(3) Assumes the Over-Allotment Option is exercised in full.

USE OF PROCEEDS

Proceeds

The gross proceeds of the Offering will be $23,000,202 ($26,450,232.30 if the Over-Allotment Option is exercised in full). The estimated net proceeds of the Offering will be $21,700,191.90 ($24,977,720.68 if the Over-Allotment Option is exercised in full), after deducting (i) the Underwriters' Fee of $1,150,010.10 ($1,322,511.62 if the Over-Allotment Option is exercised in full) and the estimated expenses of the Offering of $150,000. The Corporation intends to use an amount equal to the gross proceeds of the Offering for expenditures in respect of the Magino project that qualify as CDE, as set out below.

Principal Purposes

The Corporation will use an amount equal to the gross proceeds of the Offering resulting from the sale of the Flow-Through Shares to incur CDE, relating to the development of the Magino project, as set out below.

The total capital costs of full site mobilization, inclusive of the development work, is expected to be up to C$510 million. The ability of the Corporation to complete full site mobilization towards commercial production, is dependent upon forecast availability of a combination of cash on hand, cash flow from operations at the producing assets of the Corporation and debt facilities. See "Risk Factors".

As of the date of this Prospectus, the Corporation is a producing issuer with three gold projects in production and producing revenues from operations. The Corporation (as of September 30, 2020) had cash on hand of approximately US$177.9 million and approximately US$22 million in receivables and approximately US$57.4 million in inventory. A portion of the Corporation's cash on hand and expected cash inflows from the above-noted operations, as well as the proceeds raised from prior offerings and the Offering (as detailed below), are expected to provide the Corporation with sufficient funding to complete development of the Magino project.

Specifically, the Corporation intends to use the proceeds of the Offering as follows:

Proceeds	$	US$(3)
USE OF PROCEEDS(1)(2)(3)
Development of the Magino project, including:
ON-SITE DEVELOPMENT
Pre Stripping	30,000,000	23,418,000
Earth Works	18,000,000	14,050,800
TOTAL	48,000,000	37,468,800

Notes:

(1) The difference between the proposed work described above and the available proceeds of the Offering to the Corporation will be funded by the Corporation's cash-on-hand and the proceeds of operations of the Corporation's producing assets.

(2) Assuming the Over-Allotment is not exercised (in whole or in any part). To the extent that the Over-Allotment Option is exercised, in whole or in part, the amount of the Corporation's cash-on-hand required to partially fund the development work on the Magino Project will be reduced by an amount corresponding to the additional proceeds to the Corporation to be received therefrom.

(3) Using the daily average exchange rate on January 28, 2021 for one United States dollar expressed in Canadian dollars of US$1.00=C$1.2810, as quoted by the Bank of Canada.

Prior Financing

July 2020 Offering

On July 23, 2020, the Corporation closed the July 2020 Offering raising gross proceeds of C$126.5 million, representing the issuance of 49,608,700 Common Shares priced at C$2.55 per Common Share. The underwriters were paid a fee in connection with the July 2020 Offering of C$6.0 million. Other issuance costs of approximately C$0.4 million were paid, including legal and listing fees. The net proceeds of the July 2020 Offering of approximately C$120.1 million are to be used for the advancement of the Magino project and for general corporate purposes as described below.

July 2020 Offering (All amounts are approximate, expressed in millions of

Canadian dollars)
Description	PriorDisclosure	ActualSpent(2)	Remaining	Total	Variance
MINING
Pre-Stripping	$31.2	$0	$31.2	$31.2	Nil
Mine Mobile Equipment	$25.2	$0	$25.2	$25.2	Nil
Bulk Earthworks (Pads)	$10.2	$0	$10.2	$10.2	Nil
Public By-Pass Road	$5.6	$0	$5.6	$5.6	Nil
On-Site Roads	$2.0	$0	$2.0	$2.0	Nil
Site Water Management Structures	$8.4	$0	$8.4	$8.4	Nil
Tailings Management Area	$19.1	$0	$19.1	$19.1	Nil
OFF-SITE INFRASTRUCTURE
Power Transmission Line	$18.6	$0	$18.6	$18.6	Nil
ENGINEERING & PROJECT MANAGEMENT
Detailed Engineering & Procurement	$16.8	$0	$16.8	$16.8	Nil
TOTAL(1)	$137.1	$0	$137.1	$137.1	Nil

Notes:

(1) The remaining portion of the proposed use of proceeds in anticipated initial development costs not funded by the net proceeds of the July 2020 Offering continues to be expected to be funded by cash-on-hand.

(2) As at September 30, 2020.

October 2020 FTS Private Placement

On October 14, 2020, the Corporation closed the October 2020 FTS Private Placement of 3,002,650 Common Shares of the Corporation that qualify as "flow through shares" at a price of C$3.83 per Common Share for gross proceeds of C$11,500,150. Fees were paid by the Corporation to the underwriters and other issuance costs were paid by the Corporation in connection with the October 2020 FTS Private Placement. The proceeds of the October 2020 FTS Private Placement are to be used for exploration expenditures in respect of the Magino project that qualify as "Canadian exploration expenses" as described below.

October 2020 FTS Private Placement(All amounts are approximate, expressed in millions ofCanadian dollars) (1)
Description	PriorDisclosure	ActualSpent(2)	Remaining	Total	Variance

Magino project	C$11.5	$0	C$11.5	C$11.5	Nil

Notes:

(1) Remaining funds are held in the form of cash and are expected to be used by the Corporation to incur exploration expenses in respect of the Magino project that qualify as "Canadian exploration expenses" as defined in the Tax Act.

(2) As at September 30, 2020.

October 2020 Debenture Offering

On October 30, 2020, the Corporation closed the October 2020 Debenture Offering of US$57.5 million principal amount of Debentures (including the full exercise of the Underwriters' over-allotment option) at a price of $1,000 per Debenture. Fees were paid by the Corporation to the underwriters and other issuance costs were paid by the Corporation in connection with the October 2020 Debenture Offering.

October 2020 Debenture Offering

(All amounts are approximate, expressed in millions of

United States dollars)
Description	PriorDisclosure	ActualSpent(2)	Remaining	Total	Variance
Development of the Magino Project, including:
ON-SITE DEVELOPMENT
Mine Rock Storage Facility	US$4.5	$0	US$4.5	US$4.5	Nil
ORE CRUSHING AND RECLAIM
Crushing	US$8.3	$0	US$8.3	US$8.3	Nil
Coarse Ore Stockpile and Reclaim	US$7.8	$0	US$7.8	US$7.8	Nil
PROCESS PLANT
Process Plant Building	US$14.0	$0	US$14.0	US$14.0	Nil
ON-SITE INFRASTRUCTURE
Office and Ancillary Buildings	US$1.8	$0	US$1.8	US$1.8	Nil
Plant Site Area Ancillary Buildings	US$1.2	$0	US$1.2	US$1.2	Nil
Truck Shop Area Ancillary Buildings	US$8.6	$0	US$8.6	US$8.6	Nil
Site Water Systems	US$0.7	$0	US$0.7	US$0.7	Nil
Waste Management Systems	US$0.9	$0	US$0.9	US$0.9	Nil
TOTAL(1)	US$47.8	$0	US$47.8	US$47.8	Nil

Notes:

(1) The prior disclosure does not include the additional proceeds of US$7.2 million relating to the exercise of the over-allotment option.

(2) As at September 30, 2020.

The Corporation intends to spend the funds available to it as stated above. However, there may be circumstances where, for sound business reasons, a reallocation of the net proceeds may be necessary. The actual amount that the Corporation spends in connection with each of the intended uses of proceeds will depend on a number of factors, including those referred to under "Risk Factors" in this short form prospectus, in the AIF and in the Information Circular.

The proposed use of proceeds relating to development expenditures as disclosed in this section has been reviewed and passed upon by Brian Arkell, Registered Member SME, Member AusIMM, Fellow SEG, Argonaut's Vice President, Exploration, who is a "qualified person" within the meaning of NI 43-101.

PLAN OF DISTRIBUTION

Pursuant to the Underwriting Agreement dated January 29, 2021 among the Corporation and the Underwriters, the Corporation has agreed to sell and the Underwriters have agreed severally, and not jointly or jointly and severally, to purchase or arrange for purchase by substituted purchasers, on the Closing Date, of an aggregate of 8,156,100 Flow-Through Shares at the Offering Price for gross proceeds of $23,000,202 payable in cash to the Corporation against delivery of the Flow-Through Shares, subject to the terms and conditions of the Underwriting Agreement. The obligations of the Underwriters under the Underwriting Agreement may be terminated at their discretion on the basis of the "disaster out", "regulatory out", "material change out" and "breach out" provisions in the Underwriting Agreement and may also be terminated upon the occurrence of certain other stated events. The Underwriters are, however, obligated to take up and pay for all of the Flow-Through Shares if any of the Flow-Through Shares are purchased under the Underwriting Agreement. The Offering Price was determined by arm's length negotiation between the Corporation and the Lead Underwriter, on behalf of the Underwriters, with reference to the prevailing market price of the Common Shares.

The Corporation has also granted the Underwriters the Over-Allotment Option, exercisable in whole or in part in the sole discretion of the Underwriters for a period of 30 days from and including the Closing Date, to purchase or arrange for purchase up to 1,223,415 Over-Allotment Shares at the Offering Price, to cover over-allotments, if any, and for market stabilization purposes.

If the Over-Allotment Option is exercised in full for Over-Allotment Shares, the total "Price to the Public", "Underwriters' Fee" and "Net Proceeds to Argonaut" (before payment of the expenses of the Offering) will be $26,450,232.30, $1,322,511.62 and $25,127,720.68, respectively. This Prospectus also qualifies the grant of the Over-Allotment Option and the distribution of the Over-Allotment Shares to be issued upon exercise of the Over-Allotment Option. A purchaser who acquires securities forming part of the Underwriters' over-allocation position acquires those securities under this Prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases; provided, however, that the Underwriters have agreed not to fill any over-allocation position through secondary market purchases, as such Common Shares purchased in the secondary market would not be Flow-Through Shares.

In consideration for the services provided by the Underwriters in connection with the Offering and pursuant to the terms of the Underwriting Agreement, the Corporation has agreed to pay the Underwriters the Underwriters' Fee, equal to 5.0% of the aggregate gross proceeds of the Offering (including in respect of any exercise of the Over-Allotment Option). Pursuant to the terms of the Underwriting Agreement, the Corporation and Underwriters have agreed that each party is responsible for their own expenses related to the Offering, and the Corporation has agreed to indemnify the Underwriters, their affiliates and their respective partners, directors, officers and employees against certain liabilities and expenses and to contribute to payments that the Underwriters may be required to make in respect thereof.

The Offered Shares will be offered in all the provinces of Canada, other than Québec, through the Underwriters or their affiliates who are registered to offer the Offered Shares for sale in such provinces and such other registered dealers as may be designated by the Underwriters. The Corporation has applied to list the Offered Shares on the TSX. Such listing will be subject to the Corporation fulfilling all of the listing requirements of the TSX and there is no assurance that the TSX will approve the listing application.

Pursuant to the rules and policy statements of certain Canadian securities regulators, the Underwriters may not, throughout the period of distribution under this Prospectus, bid for or purchase Common Shares for their own account or for accounts over which they exercise control or direction. The foregoing restriction is subject to certain exceptions, on the condition that the bid or purchase not be engaged in for the purpose of creating actual or apparent active trading in or raising the price of the Common Shares. These exceptions include a bid or purchase permitted under the Universal Market Integrity Rules for Canadian marketplaces administered by the Investment Industry Regulatory Organization of Canada relating to market stabilization and passive market-making activities and a bid or purchase made for or on behalf of a client where the client's order was not solicited during the period of distribution. Subject to applicable laws and in connection with the Offering, the Underwriters may over-allot or effect transactions in connection with the Offering intended to stabilize or maintain the market price of the Common Shares at levels other than those which otherwise might prevail on the open market. Such transactions, if commenced, may be discontinued at any time.

Pursuant to the Underwriting Agreement, the Corporation has also agreed that it will cause each of the directors and executive officers of the Corporation to enter into lock-up agreements in a form satisfactory to the Corporation and the Lead Underwriter, each acting reasonably, to be executed concurrently with the closing of the Offering, pursuant to which each such person agrees to not, for a period ending 90 days following the Closing Date, without the prior written consent of the Lead Underwriter, on behalf of the Underwriters, such consent not to be unreasonably withheld or delayed, directly or indirectly offer, sell, contract to sell, grant any option to purchase, make any short sale or otherwise dispose of, transfer, or announce any intention to do so, any Common Shares, with respect to which each has beneficial ownership or enter into any transaction or arrangement that has the effect of transferring, in whole or in part, any of the economic consequences of ownership of Common Shares, whether such transaction is settled by the delivery of Common Shares, other securities, cash or otherwise, other than pursuant to a takeover bid or any other similar transaction made generally to all of the shareholder of the Corporation.

The Offered Shares have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws and, subject to registration under the U.S. Securities Act and applicable U.S. state securities laws or certain exemptions therefrom, may not be offered, sold, transferred, delivered or otherwise disposed of, directly or indirectly, within the United States or to, or for the account or benefit of, any U.S. Person. Each Underwriter has agreed that, except as permitted under the Underwriting Agreement, it will not offer, sell, transfer, deliver or otherwise dispose of, directly or indirectly, the Offered Shares at any time within the United States or to, or for the account or benefit of, any U.S. Person.

This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the Offered Shares in the United States or to, or for the account or benefit of, U.S. Persons. In addition, until 40 days after the commencement of the Offering, an offer or sale of the Offered Shares within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with an exemption from registration under the U.S. Securities Act and similar exemptions under applicable state securities laws.

In connection with the Offering, the Corporation may be considered a "connected issuer" within the meaning of NI 33-105 of the Lead Underwriter. James E. Kofman, Vice Chairman of the Lead Underwriter is a director and the Chairman of the Corporation. The decision to distribute the Flow-Through Shares, including the determination of the terms of the Offering, was made through arm's length negotiations between the Corporation and the Lead Underwriter, on behalf of the Underwriters. The Lead Underwriter will not receive any benefit in connection with the Offering, other than its share of the Underwriters' Fee payable by the Corporation.

The Corporation may also be considered to be a "connected issuer" of each of BMO Nesbitt Burns Inc. and Scotia Capital Inc. under applicable Canadian securities legislation. BMO Nesbitt Burns Inc. and Scotia Capital Inc. are wholly-owned subsidiaries of Canadian chartered banks which have extended a credit facility (being the Revolving Credit Facility) to the Corporation. As of the date hereof, no funds have been drawn under the Revolving Credit Facility. The Revolving Credit Facility is secured by all of the Corporation's assets and the Corporation is, and has been since the establishment of such facility, in compliance with the terms of the Revolving Credit Facility. As of the date hereof, the Corporation has not been required to obtain a waiver in respect of any breach under such facility. The decisions of BMO Nesbitt Burns Inc. and Scotia Capital Inc., respectively, to participate in this Offering were made independently of its bank parent, being the lender under the Revolving Credit Facility. Other than payment of its portion of the Underwriters' Fee, none of the proceeds of the sale of the Offered Shares will be applied, directly or indirectly, for the benefit of BMO Nesbitt Burns Inc. or Scotia Capital Inc.

Flow-Through Shares

Subscriptions for the Flow-Through Shares will be made pursuant to one or more subscription and renunciation agreements (collectively, the "Flow-Through Share Subscription Agreements") to be made between the Corporation and the purchasers, but executed by one or more of the Underwriters or one or more sub-agents of an Underwriter, as agent for, on behalf of and in the name of all purchasers of the Flow-Through Shares. The execution and delivery of a Flow-Through Share Subscription Agreement by the Underwriters or a sub-agent of an Underwriter, as agent on behalf of the purchaser, will bind such purchaser to the terms thereof as if such purchaser had executed the Flow-Through Share Subscription Agreement personally. Each purchaser who places an order to purchase Flow-Through Shares with an Underwriter or any sub-agent of an Underwriter will be deemed to have authorized any of such Underwriters or such sub-agents to execute and deliver, on the purchaser's behalf, the Flow-Through Share Subscription Agreement. The Underwriters acknowledge that they will have the authority to bind a purchaser to the Flow-Through Share Subscription Agreement upon receipt of an order to purchase Flow-Through Shares from the said purchaser.

The Corporation understands that purchasers of Flow-Through Shares may subsequently immediately donate such Flow-Through Shares to registered charitable organizations and/or sell such Flow-Through Shares to purchasers arranged by the Underwriters, and the registered charitable organizations may also choose to sell such Flow-Through Shares to purchasers arranged by the Underwriters. The Redistributed Shares will only qualify as "flow-through shares" for purposes of the Tax Act for the original purchaser and will not qualify as "flow-through shares" for a registered charity or any subsequent purchaser and consequently the Corporation will only renounce CDE to the original purchaser of the Flow-Through Shares and Over-Allotment Shares, including the Redistributed Shares. This Prospectus qualifies the issuance of the Flow-Through Shares as well as the subsequent resale of the Redistributed Shares on the Closing Date or the closing date for the Over-Allotment Option, as applicable, to purchasers arranged by the Underwriters.

DESCRIPTION OF SECURITIES BEING DISTRIBUTED

Common Shares

The Corporation is authorized to issue an unlimited number of Common Shares without nominal or par value, of which, as at January 28, 2021, there were 294,795,487 Common Shares issued and outstanding.

The rights, privileges, conditions and restrictions attaching to the Common Shares, as a class, are equal in all respects and include the following rights:

Dividends

Subject to the rights and restrictions attaching to any series of preferred shares, the holders of the Common Shares shall have the right to receive, if, as and when declared by the board of directors of the Corporation, any dividend on such dates and for such amounts as the board of directors of the Corporation may from time to time determine.

Participation in case of Dissolution or Liquidation

Subject to the rights and restrictions attaching to any series of preferred shares, the holders of the Common Shares shall have the right, upon the liquidation, dissolution or winding-up of the Corporation, to receive the remaining property of the Corporation.

Right to Vote

The holders of the Common Shares shall have the right to one (1) vote per Common Share held at any meeting of the shareholders of the Corporation, except meetings at which only holders of any series of preferred shares are entitled to vote.

Common Shares have not been, and will not be, registered under the U.S. Securities Act, or any U.S. state securities laws.

Flow-Through Shares – Renunciation of CDE

The Flow-Through Shares will be Common Shares issued as "flow-through shares" as that term is defined under subsection 66(15) of the Tax Act and, except as a consequence of an agreement to which the Corporation is not a party, should not be "prescribed shares" as defined in the regulations to the Tax Act. Pursuant to the Flow-Through Share Subscription Agreements, the Corporation will incur (or be deemed to incur) sufficient CDE, on or before December 31, 2021 so as to enable the Corporation to renounce, on or before December 31, 2021, in favour of the purchasers of Flow-Through Shares, an amount equal to the gross proceeds raised from the Offering of Flow-Through Shares (the "Flow-Through Funds"). There is no guarantee that an amount equal to the Flow-Through Funds will be expended by the Corporation as indicated.

If the Corporation is unable to renounce an amount equal to the entire amount of the Flow-Through Funds, in accordance with the Flow-Through Share Subscription Agreements, or if there is a reduction in such amount renounced pursuant to the provisions of the Tax Act, the amount of deductions purchasers will be able to claim for income tax purposes will be correspondingly reduced. Under the Flow-Through Share Subscription Agreements, the Corporation agrees to indemnify a purchaser as to, and pay in settlement therefor to the purchaser, an amount equal to the amount of any tax payable under the Tax Act (and under any corresponding provincial legislation) by the purchaser as a consequence of such failure or reduction. See "Certain Canadian Federal Income Tax Considerations". The Flow-Through Share Subscription Agreements will contain additional representations, warranties, covenants and agreements by the Corporation in favour of the purchaser of Flow-Through Shares which are consistent with and supplement the Corporation's obligations as described in this Prospectus.

The Flow-Through Share Subscription Agreements will also provide representations, warranties and agreements of the purchaser, and by its purchase of Flow-Through Shares, each purchaser of Flow-Through Shares offered hereunder will be deemed to have represented, warranted and agreed, for the benefit of the Corporation and the Underwriters that: (i) the purchaser, if an individual, is of the full age of majority and otherwise is legally competent to enter into the Flow-Through Share Subscription Agreements; (ii) other than as provided herein and in the Flow-Through Share Subscription Agreements, the purchaser waives any right that it may have to any potential incentive grants, credits and similar or like payments or benefits which accrue as a result of the operations relating to CDE and acknowledges that all such grants, credits, payments or benefits accrue to the benefit of the Corporation; (iii) the purchaser has received and reviewed a copy of this Prospectus; and (iv) the purchaser has not entered into and will not knowingly enter into any agreement or arrangement to which the Corporation is not a party which will cause the Flow-Through Shares to become "prescribed shares" within the meaning of Section 6202.1 of the regulations to the Tax Act.

The Flow-Through Share Subscription Agreements will contain additional representations, warranties and covenants by the purchaser in favor of the Corporation. In addition, each purchaser will acknowledge that the purchaser has been encouraged to and should obtain independent legal and tax advice with respect to such purchaser's subscription of Flow-Through Shares and, accordingly, has been independently advised as to the meanings of all terms contained in the Flow-Through Share Subscription Agreements relevant to the purchaser for the purposes of giving representations, warranties and covenants under the Flow-Through Share Subscription Agreements.

Notwithstanding the foregoing, the Corporation may enter into one or more subscription and renunciation agreements for Flow-Through Shares on such other terms as may be agreed to by the Corporation and the applicable purchaser.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Bennett Jones LLP, counsel to the Corporation, and Cassels Brock and Blackwell LLP, counsel to the Underwriters, the following is, as at the date of this Prospectus, a summary of the principal Canadian federal income tax considerations under the Tax Act generally applicable to purchasers who acquire Flow-Through Shares pursuant to the Offering and who, at all relevant times for purposes of the Tax Act, hold their Flow-Through Shares as capital property, deal at arm's length with, and are not affiliated with, the Corporation or the Underwriters, and are resident or deemed to be resident in Canada. The Flow-Through Shares will generally be considered capital property to a purchaser unless either the purchaser holds or uses or is deemed to hold or use such Flow-Through Shares in the course of carrying on a business of buying and selling securities or the purchaser has acquired or has been deemed to acquire the Flow-Through Shares in a transaction or transactions considered to be an adventure in the nature of trade.

This summary is not applicable to a purchaser (i) that is a "principal-business corporation" within the meaning of the Tax Act, (ii) whose business includes trading or dealing in rights, licences or privileges to explore for, drill or take minerals, oil, natural gas or other related hydrocarbons, (iii) an interest in which constitutes a "tax shelter investment" within the meaning of the Tax Act, (iv) that is a "financial institution" as defined in the Tax Act for the purpose of the "mark-to-market" provisions of the Tax Act, (v) that is a partnership or a trust, (vi) that is a "specified financial institution" for purposes of the Tax Act; (vii) that has made a "functional currency" election under the Tax Act to determine its Canadian tax results in a currency other than the Canadian currency; (viii) that has entered or will enter into a "derivative forward agreement" or "synthetic disposition arrangement" (each as defined in the Tax Act) in respect of Flow-Through Shares; (ix) that is exempt from tax under Part I of the Tax Act; or (x) that is a corporation resident in Canada that is, or becomes, controlled by a non-resident person (or group of non-resident persons that do not deal with each other at arm's length) for purposes of the "foreign affiliate dumping" rules in Section 212.3 of the Tax Act. Such purchasers should consult their own tax advisors.

In addition, this summary does not address the deductibility of interest by a purchaser of Flow-Through Shares that has borrowed money or otherwise incurred debt to acquire Flow-Through Shares pursuant to the Offering.

This summary is based on the Tax Act and the regulations thereunder in force as at the date hereof taking into account all published proposals for the amendment thereof to the date hereof (the "Proposed Amendments") and upon counsel's understanding of the current administrative policies and assessing practices of the Canada Revenue Agency published in writing prior to the date hereof. This summary does not otherwise take into account or anticipate any change in law or administrative practice, nor does it take into account provincial or territorial tax laws of Canada or tax laws of any foreign country. No assurances can be given that the Proposed Amendments will be enacted as proposed or at all or that legislative, judicial or administrative changes will not modify or change the statements expressed herein.

This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any particular purchaser of Flow-Through Shares. This summary is not exhaustive of all Canadian federal income tax considerations and in particular does not discuss all of the tax consequences to purchasers of Redistributed Shares. Accordingly, prospective purchasers of Flow-Through Shares should consult their own tax advisors having regard to their own particular circumstances.

This summary assumes that (i) the Corporation will incur CDE in an amount not less than the aggregate gross subscription proceeds for the issuance of the Flow-Through Shares (the "Commitment Amount"), (ii) CDE in an amount equal to the Commitment Amount will be renounced to purchasers who purchase Flow-Through Shares hereunder with an effective date or dates of no later than December 31, 2021, (iii) such CDE will be incurred during a period (the "Expenditure Period") commencing on the Closing Date and ending on the earlier of (A) the date on which the Commitment Amount has been fully incurred in accordance with the terms of the relevant subscription agreements and (B) December 31, 2021, and (iv) all expenses discussed herein will be reasonable in amount. This summary also assumes that the Corporation will make all filings in respect of the issuance of the Flow-Through Shares and the renunciation of CDE in the manner and within the time required by the Tax Act and that all renunciations will be validly made. In addition, while the Corporation will furnish each purchaser of Flow-Through Shares hereunder with information with respect to renounced CDE for purposes of filing income tax returns, the preparation and filing of returns will remain the responsibility of each purchaser. This summary is based upon the representation of the Corporation that it will be a "principal-business corporation" at all material times and that its Flow-Through Shares, when issued, will be "flow-through shares" and will not be "prescribed shares", all within the meaning of the Tax Act. If any of the above assumptions are incorrect, the Corporation may be unable to renounce some or all of the CDE which it has agreed to renounce hereunder.

The Canadian federal income tax consequences to a particular purchaser of Flow-Through Shares will vary according to a number of factors, including the particular province in which the purchaser resides, carries on business or has a permanent establishment, the legal characterization of the purchaser as an individual or a corporation, the amount that would be the purchaser's taxable income but for the investment in the Flow-Through Shares and the manner in which the proceeds from the issuance of the Flow-Through Shares are expended.

Canadian Development Expense

The Corporation will be entitled to renounce to a purchaser of Flow-Through Shares hereunder certain CDE incurred by the Corporation during the Expenditure Period in an amount equal to the relevant subscription price of the Flow-Through Shares as permitted by and in accordance with the Tax Act. The CDE will be renounced to the purchaser with an effective date or dates on or before December 31, 2021. Such CDE that is properly renounced to a purchaser will be deemed to have been incurred by that purchaser on the effective date of the renunciation and will be added to such purchaser's "cumulative Canadian development expense" (as defined in the Tax Act) ("CCDE") account.

A purchaser may deduct in computing such purchaser's income from all sources for a taxation year an amount not exceeding 30% of the balance of such purchaser's CCDE account at the end of that taxation year. Deductions claimed by a purchaser reduce the purchaser's CCDE account. To the extent that a purchaser does not deduct the balance of such purchaser's CCDE account at the end of the taxation year, the balance may be carried forward and deducted in subsequent taxation years in accordance with the provisions of the Tax Act. The right to deduct CCDE accrues to the initial purchaser of Flow-Through Shares and is not transferable. A purchaser may generally deduct in respect of the purchaser's CCDE account an additional 15% of the purchaser's "accelerated Canadian development expense" as defined in, and subject to the detailed rules contained in, the Tax Act. The amount of aggregate CCDE deductions is not increased, rather, the deduction for the first year is generally increased from 30% to 45% with the purchaser being able to deduct 30% of the purchaser's remaining CCDE account in subsequent years.

Certain restrictions apply in respect of the deduction of CCDE following an acquisition of control and on certain reorganizations of a corporate purchaser. Corporate purchasers should consult their own independent tax advisors for advice with respect to the potential application of these rules to them having regard to their own particular circumstances.

If a purchaser acquires Flow-Through Shares through a Registered Plan (as defined above under the heading "Eligibility for Investment"), the CDE renounced will not be available as a deduction against the income of the annuitant, holder or beneficiary of such plan and the associated tax benefits will be lost.

Dividends on Flow-Through Shares

Dividends received or deemed to be received on a purchaser's Flow-Through Shares will be included in the purchaser's income as taxable dividends received from a taxable Canadian corporation. The normal gross-up and dividend tax credit rules applicable to taxable dividends received from a taxable Canadian corporation, including the enhanced dividend tax credit in respect of "eligible dividends" designated by the Corporation to a purchaser, will apply to dividends received by a purchaser who is an individual. There may be limitations on the ability of the Corporation to designate dividends as eligible dividends.

In the case of a purchaser that is a corporation, the amount of any such taxable dividend that is included in its income for a taxation year will generally be deductible in computing its taxable income for that taxation year. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received by a purchaser that is a corporation as proceeds of disposition or a capital gain. Purchasers that are corporations should consult their own tax advisors having regard to their own particular circumstances.

A purchaser that is a "private corporation" or a "subject corporation", as defined in the Tax Act, will generally be liable to pay a refundable tax under Part IV of the Tax Act on dividends received or deemed to be received on the Flow-Through Shares to the extent such dividends are deductible in computing the purchaser's taxable income for the year.

Disposition of Flow-Through Shares

A disposition or deemed disposition of a Flow-Through Share (other than to the Corporation), will result in the realization of a capital gain (or capital loss) in the taxation year of the disposition equal to the amount by which the proceeds of disposition exceed (or are less than) the adjusted cost base of such share and reasonable expenses incurred by the purchaser for the purposes of making such disposition. One-half of any capital gain (a "taxable capital gain") must be included in computing the income of a purchaser for the year in which the disposition takes place, while one-half of any capital loss (an "allowable capital loss") will be required to be deducted against taxable capital gains realized by the purchaser in the same taxation year. Allowable capital losses not deducted in the year in which they arise may be deducted by a purchaser from taxable capital gains realized in any of the three preceding years, or any subsequent year, subject to the detailed provisions of the Tax Act in that regard.

Flow-Through Shares purchased hereunder will be deemed to have been acquired by the purchaser for an initial cost of nil regardless of the subscription price paid.

Generally, the cost of a common share (other than a "flow-through share" as defined in the Tax Act) for tax purposes will be the amount paid to acquire such shares and reasonable costs associated with the acquisition. The adjusted cost base to a purchaser of a Flow-Through Share will generally be the average tax cost of all Common Shares held by such purchaser as capital property at a particular time. Any tax consequences arising from a subsequent disposition of a Flow-Through Share will be measured by reference to the adjusted cost base of the Flow-Through Shares based on this averaging rule.

A purchaser that is throughout the relevant taxation year a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay an additional refundable tax on its "aggregate investment income" (as defined in the Tax Act) for the year, which is defined to include an amount in respect of taxable capital gains. A purchaser who disposes of Flow-Through Shares will retain the entitlement to the renunciation of CDE from the Corporation as described above as well as the ability to deduct any CCDE not previously deducted, and a subsequent purchaser of such shares will not be entitled to any renunciations of CDE.

Minimum Tax

Under the Tax Act, an alternative minimum tax is payable by an individual, other than certain trusts, equal to the amount by which the alternative minimum tax exceeds the tax otherwise payable. In calculating adjusted taxable income for the purpose of determining minimum tax, certain deductions and credits otherwise available, such as the deduction for CDE not used to reduce resource income, are disallowed and certain amounts not otherwise taxable are included in income, such as 80% of net capital gains. Whether and to what extent the tax liability of a particular purchaser will be increased by the minimum tax will depend upon the amount of such purchaser's income, the sources from which it is derived and the nature and amounts of any deductions that such purchaser claims. Any additional tax payable for a year from the application of the minimum tax provisions is recoverable in subsequent years to the extent that tax otherwise determined exceeds the minimum tax for any of the following seven taxation years. Purchasers should consult their own independent tax advisors with respect to the potential alternative minimum tax consequences to them having regard to their own particular tax circumstances.

Cumulative Net Investment Loss

One-half of the amount of the CDE renounced to and deducted by a purchaser will be added to the purchaser's cumulative net investment loss ("CNIL") account, as defined in the Tax Act. A purchaser's CNIL account may impact a purchaser's ability to access the lifetime capital gains exemption available on the disposition of certain qualified small business corporation shares and qualified farm property.

PRIOR SALES

Other than as described below, during the 12 month period before the date of this Prospectus, the Corporation has not issued any other Common Shares or securities that are convertible or exchangeable into Common Shares.

Date of Issuance	Number ofSecuritiesIssued	Type of SecuritiesIssued	Issue / ExercisePrice (C$)	Reason for Issuance
March 2, 2020	767,500	Options	1.44	Grant of Options
March 2, 2020	1,506,477	Restricted Share Unit	1.44	Grants of Restricted Share Units
March 2, 2020	959,268	Performance Share Unit	1.44	Grant of Performance Share Units
July 1, 2020	58,128,302	POA Shares	2.56	Issuance to Alio shareholders, and AlioDSU, RSU, and PSU holders(1)
July 1, 2020	3,121,352	Options	1.06 – 46.57	Options available for exercise for Aliooption holders(1)
July 1, 2020	1,544,892	Warrants	5.42	Warrants for Alio warrant holders(1)

Date of Issuance	Number ofSecuritiesIssued	Type of SecuritiesIssued	Issue / ExercisePrice (C$)	Reason for Issuance
July 2, 2020	357,883	Common Shares	2.56	Change of control payment shares(1)
July 14, 2020	270,268	Common Shares	1.06	Exercise of Options
July 15, 2020	42,500	Common Shares	1.06 – 1.49	Exercise of Options
July 16, 2020	79,600	Common Shares	1.49	Exercise of Options
July 20, 2020	36,800	Common Shares	1.49	Exercise of Options
July 21, 2020	224,541	Common Shares	1.298498	Exercise of Options
July 23, 2020	49,608,700	Common Shares	2.55	Public Offering
July 23, 2020	16,711	Common Shares	1.061287	Exercise of Options
July 29, 2020	200,000	Common Shares	1.16	Exercise of Options
July 30, 2020	216,871	Common Shares	1.091355	Exercise of Options
August 10, 2020	8,452	Common Shares	2.51	Exercise of Options
August 20, 2020	80,831	Common Shares	1.206213	Exercise of Options
August 24, 2020	881	Common Shares	1.06	Exercise of Options
September 4, 2020	30,000	Common Shares	1.275	Exercise of Options
September 10, 2020	60,000	Common Shares	1.275	Exercise of Options
September 14, 2020	9,500	Common Shares	1.49	Exercise of Options
September 16, 2020	7,265	Common Shares	1.49	Exercise of Options
September 18, 2020	13,235	Common Shares	1.49	Exercise of Options
September 21, 2020	92,542	Common Shares	1.228042	Exercise of Options
September 22, 2020	10,000	Common Shares	1.06	Exercise of Options
October 9, 2020	15,000	Common Shares	1.49	Exercise of Options
October 13, 2020	15,000	Common Shares	1.49	Exercise of Options
October 14, 2020	32,355	Common Shares	1.49	Exercise of Options
October 14, 2020	3,002,650	Common Shares	3.83	Issuance of Flow-Through Shares
October 16, 2020	30,000	Common Shares	1.06	Exercise of Options
October 22, 2020	14,000	Common Shares	1.06	Exercise of Options
October 30, 2020	57,500	Debentures	US$1,000	Issuance of Debentures
November 13, 2020	25,700	Common Shares	1.06	Exercise of Options
November 18, 2020	38,627	Common Shares	1.49	Exercise of Options
November 20, 2020	25,000	Common Shares	1.06	Exercise of Options
November 23, 2020	75,000	Common Shares	1.06	Exercise of Options
December 2, 2020	18,032	Common Shares	1.06	Exercise of Options
December 16, 2020	20,000	Common Shares	1.49	Exercise of Options
December 17, 2020	79,746	Common Shares	1.06	Exercise of Options
December 21, 2020	12,811	Common Shares	1.49	Exercise of Options
December 24, 2020	89,746	Common Shares	1.06	Exercise of Options
December 31, 2020	30,000	Common Shares	1.49	Exercise of Options
January 13, 2021	32,980	Common Shares	1.06	Exercise of Options

Notes:

(1) Issued in connection with the Alio Business Combination.

TRADING PRICE AND VOLUME

The Common Shares are listed and posted for trading on the TSX under the symbol "AR". The following table sets forth the reported high and low prices (including intra-day prices) and the total volume of trading of the Common Shares on the TSX for the periods indicated below.

	High(C$)	Low(C$)	Volume(#)
January 2020	2.25	1.62	14,391,807
February 2020	1.73	1.12	11,267,294
March 2020	1.51	0.76	29,280,205
April 2020	1.56	0.92	21,989,002
May 2020	1.99	1.43	21,229,059
June 2020	2.75	1.75	26,472,469
July, 2020	2.98	2.31	48,278,078
August 2020	3.42	2.55	32,756,772
September, 2020	3.12	2.51	26,454,539
October, 2020	2.825	2.4	20,846,102
November, 2020	2.7	2.19	33,983,961
December, 2020	2.87	2.385	23,040,949
January 1 – 28, 2021	2.25	2.92	19,449,274

On January 28, 2020, the last complete trading day prior to the filing of this Prospectus, the closing price of the Common Shares on the TSX was $2.32.

RISK FACTORS

An investment in the Common Shares, as well as the Corporation's prospects, are speculative due to the risky nature of its business and the present stage of its development. Investors may lose their entire investment.

Investors should carefully consider the risk factors described below and under the heading "Risk Factors" in the AIF and in the Information Circular. The risks described below, in the AIF and the Information Circular are not the only ones facing the Corporation. Additional risks not currently known to the Corporation, or that the Corporation currently deems immaterial, may also impair the Corporation's operations. There is no assurance that risk management steps taken will avoid future loss due to the occurrence of the risks described below or other unforeseen risks. If any of the risks described below, in the AIF or in the Information Circular actually occur, the Corporation's business, financial condition and operating results could be adversely affected. Investors should carefully consider the risks below, in the AIF, in the Information Circular and the other information elsewhere in this Prospectus and consult with their professional advisors to assess any investment in the Corporation.

Uncertainty during construction.

The Corporation is subject to all of the risks associated with constructing and expanding mining operations and business enterprises including: the timing and cost, which will be considerable, of the construction of additional mining and processing facilities; the availability and costs of skilled labour, power, water, transportation and mining equipment; the availability and cost of appropriate smelting and/or refining arrangements; the need to obtain necessary environmental and other governmental approvals and permits, and the timing of those approvals and permits; and the availability of funds to finance construction and development activities. The costs, timing and complexities of mine construction and development are increased by the remote location of some of the Corporation's mining properties. The timing and availability of skilled labour may be subject to further unpredictable delays and limitations as a result of COVID-19 and COVID-19 related mobility restrictions. It is not unusual in new mining operations to experience unexpected problems and delays during the construction and development of a mine. In addition, delays in the commencement or expansion of mineral production often occur and, once commenced or expanded, the production of a mine may not meet expectations or estimates set forth in feasibility or other studies. Accordingly, there are no assurances that the Corporation will successfully develop and expand mining operations or profitably produce precious metals at its properties.

A positive return in an investment in the Common Shares is not guaranteed.

There is no guarantee that an investment in the Common Shares, including the Flow-Through Shares, will earn any positive return in the short term or long term. An investment in the Common Shares involves a high degree of risk and should be undertaken only by investors whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. An investment in the Common Shares is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment.

The Corporation has broad discretion to use the net proceeds from this Offering.

The Corporation intends to use the net proceeds from the Offering to achieve its stated business objective as set forth under "Use of Proceeds". The Corporation maintains discretion to spend the proceeds in ways that it deems most efficient. The application of the proceeds to various items may not necessarily enhance the value of the Common Shares. The failure to apply the net proceeds as set forth under "Use of Proceeds", or the failure of the Corporation to achieve its stated business objectives set forth in such section, could adversely affect the Corporation's business and, consequently, could adversely affect the price of the Common Shares on the open market.

Market Price of Common Shares

There can be no assurance that an active market for the Common Shares, including the Flow-Through Shares, will be sustained after the Offering. Securities markets have a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. It may be anticipated that any market for the Common Shares will be subject to market trends generally and the value of the Common Shares on the TSX may be affected by such volatility in response to numerous factors. Factors unrelated to the financial performance or prospects of the Corporation include macroeconomic developments, and market perceptions of the attractiveness of particular industries. There can be no assurance that continued fluctuations in commodity prices will not occur. As a result of any of these factors, the market price of the securities of the Corporation at any given point in time may not accurately reflect the long term value of the Corporation. In addition, the market price of the Common Shares is also likely to be significantly affected by changes, from time to time, in the Corporation's operating results, financial condition, acquisition opportunities, liquidity and other internal factors.

Dilution

Additional financing needed to continue funding the development and operation of the properties of the Corporation may require the issuance of additional securities of the Corporation. The issuance of additional securities and the exercise of common share purchase warrants, stock options and other convertible securities will result in dilution of the equity interests of any persons who are or may become holders of Common Shares, and may have a negative impact on the market price of the Common Shares, including the Offered Shares.

Undisclosed Risks and Liabilities Relating to the Alio Business Combination

In connection with the Alio Business Combination, there may be liabilities that the Corporation failed to discover or was unable to quantify in its due diligence. The representations, warranties and indemnities contained in the acquisition agreement relating to the Alio Business Combination are limited and the Corporation's ability to seek remedies for breach of such provisions may be limited.

Acquisitions require geologic, metallurgic, engineering, title, environmental, economic, financial and other assessments that may be materially incorrect and may not produce as expected. Acquisitions of mining properties are based in large part on geologic, metallurgic, engineering, title, environmental, economic and financial assessments made by the acquirer and its personnel as well as independent consultants and advisors it may hire. These assessments include a series of assumptions regarding such factors as the ore bodies, grades, recoverability, regulatory and environmental restrictions, future prices of metals and operating costs, future capital expenditures and royalties and other government levies which will be imposed over the producing life of the mine. Many of these factors are subject to change and are beyond the Corporation's control. All such assessments involve a measure of geologic, metallurgic, engineering, environmental, regulatory, political, economic and financial uncertainty that could result in lower production or lower Mineral Reserves or Mineral Resources or higher operating or capital expenditures than anticipated or unanticipated difficulty in obtaining required permits or complying with regulatory or environmental requirements.

In addition, any opinions received by the Corporation on title, title and rights of access to the Florida Canyon Mine can never be guaranteed. Although select title and environmental reviews were conducted by the Corporation in connection with the Alio Business Combination, this review cannot guarantee that any unforeseen defects in the chain of title will not arise to defeat the Corporation's title to certain assets or that environmental defects, liabilities or deficiencies do not exist or are greater than anticipated.

Anticipated Benefits Not Realized

There can be no assurance that management of the Corporation will be able to fully realize the expected benefits of the Alio Business Combination, including from a production profile perspective. There is a risk that some or all of the expected benefits will fail to materialize, or may not occur within the time periods anticipated by management of the Corporation. The realization of such benefits may be affected by a number of factors, many of which are beyond the control of the Corporation.

Uncertainty of Additional Funding

The Corporation's activities do have scope for flexibility in terms of the amount and timing of expenditure, and expenditures may be adjusted accordingly. Further operations will require additional capital and will depend on the Corporation's ability to obtain financing through debt, equity, or other means. Following the completion of the Offering, along with cash on hand, the Corporation believes that it has sufficient funds to conduct the operations of the Corporation; however there may be factors that result in the Corporation's need to raise additional funds. The Corporation's ability to meet its obligations and maintain operations is contingent upon successful completion of additional financing arrangements. Although the Corporation has been successful in raising funds to date, there is no assurance that the Corporation will be successful in obtaining the required financing in the future or that such financing will be available on terms acceptable to the Corporation. In addition, any future financing may also be dilutive to existing shareholders of the Corporation.

Canadian Tax Treatment of Flow-Through Shares

The tax treatment applicable to mining activities and flow-through shares constitutes a major factor when considering an investment in Flow-Through Shares. Investors are cautioned that the taxation laws and regulations and the current administrative practices of both the federal and provincial tax authorities may be amended or construed in such a way that the tax considerations for a purchaser holding Flow-Through Shares will be altered and, moreover, there may be differences of opinion between the federal and provincial tax authorities with respect to the tax treatment of the Flow-Through Shares, the status of such Flow-Through Shares and the activities contemplated by the Corporation's development programs. See "Flow-Through Shares – Renunciation of CDE" and "Certain Canadian Federal Income Tax Considerations" above.

The Flow-Through Shares are designed for investors whose income is subject to high marginal tax rates. The right to deduct CDE accrues to the initial purchaser of the Flow-Through Shares and is not transferable. No guarantee can be given that Canadian tax laws will not be amended, that the amendments announced with respect to such laws will be adopted or that the current administrative practices of the tax authorities will not be modified. In addition, there is no guarantee that the CDE incurred (or deemed to be incurred) by the Corporation or the expected tax deductions will be accepted by the Canada Revenue Agency. Consequently, the tax considerations for purchasers acquiring, holding or selling Flow-Through Shares may be fundamentally altered. See "Flow-Through Shares – Renunciation of CDE" and "Certain Canadian Federal Income Tax Considerations" above.

There is no guarantee that an amount equal to the total proceeds of the sale of the Flow-Through Shares will be expended on or prior to December 31, 2021 as CDE resulting in the deductions described under "Flow-Through Shares – Renunciation of CDE" and "Certain Canadian Federal Income Tax Considerations" above. If the Corporation does not renounce to the purchaser, effective on or before December 31, 2021, CDE in an amount equal to the aggregate purchase price paid by such purchaser for the Flow-Through Shares, or if there is a reduction in such amount renounced pursuant to the provisions of the Tax Act, the Corporation shall indemnify the purchaser for an amount equal to the amount of any tax payable or that may become payable under the Tax Act (and under any corresponding provincial legislation) by the purchaser (or if the purchaser is a partnership, the partners thereof) as a consequence of such failure or reduction; however, there is no guarantee that the Corporation will have the financial resources required to satisfy such indemnity.

COVID-19 Public Health Crisis

The Corporation's business, operations and financial condition, and the market price of the Common Shares, including the Flow-Through Shares, could be materially and adversely affected by the outbreak of epidemics or pandemics or other health crises, including the recent outbreak of COVID-19. To date, there have been a large number of temporary business closures, quarantines and a general reduction in consumer activity in a number of countries, including Canada and Mexico. The outbreak has caused companies and various international jurisdictions to impose travel, gathering and other public health restrictions. While these effects are expected to be temporary, the duration of the various disruptions to businesses locally and internationally and the related financial impact cannot be reasonably estimated at this time. Similarly, the Corporation cannot estimate whether, or to what extent, this outbreak and the potential financial impact may extend to countries outside of those currently impacted. Such public health crises can result in volatility and disruptions in the supply and demand for gold and other metals and minerals, global supply chains and financial markets, as well as declining trade and market sentiment and reduced mobility of people, all of which could affect commodity prices, interest rates, credit ratings, credit risk, share prices and inflation.

The risks to the Corporation of such public health crises also include risks to employee health and safety, a slowdown or temporary suspension of operations in geographic locations impacted by an outbreak, increased labor and fuel costs, regulatory changes, political or economic instabilities or civil unrest. At this point, the extent to which COVID-19 will or may impact the Corporation is uncertain and these factors are beyond the Corporation's control; however, it is possible that COVID-19 and its related impacts may affect the Corporation's ability to service its debt obligations, and over a longer term may have a material adverse effect on the Corporation's business, results of operations and financial condition and the market price of the Common Shares.

As a direct result of the COVID-19 pandemic, the Corporation temporary suspended all mining, crushing and stacking activities in response to the Mexican Federal Government decree on April 1, 2020. Given that the Corporation operates heap leach mines in Mexico, the Corporation continued to process pregnant solution coming from the leach pads for the safety of the environment. Therefore, gold and silver production and sales have continued during the temporary suspension of mining activities. By June 1, 2020, the Corporation had resumed all operations in Mexico. The Corporation continues to monitor the situation closely, including any potential impact on its operations.

AUDITORS, TRANSFER AGENT AND REGISTRAR

The auditors of the Corporation are PricewaterhouseCoopers LLP, located at 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada, V6C 3S7. PricewaterhouseCoopers LLP has prepared an independent auditor's report dated February 21, 2020 in respect of the Annual Financial Statements. PricewaterhouseCoopers LLP has advised the Corporation that they are independent in accordance with the Chartered Professional Accountants of British Columbia Code of Professional Conduct, Canada.

The transfer agent and registrar for the Common Shares is Computershare Investor Services, which is located at 100 University Avenue, 8th Floor, Toronto, Ontario, Canada, M5J 2Y1, where transfers of Argonaut's securities may be recorded.

LEGAL MATTERS

Certain legal matters relating to the Offering and this Prospectus will be passed upon by Bennett Jones LLP, on behalf of the Corporation, and Cassels Brock and Blackwell LLP, on behalf of the Underwriters.

INTERESTS OF EXPERTS

Certain legal matters in connection with the Offering will be passed upon on behalf of the Corporation by Bennett Jones LLP, and on behalf of the Underwriters by Cassels Brock and Blackwell LLP. As of the date hereof, the "designated professionals" (as such term is defined in Form 51-102F2 – Annual Information Form) of each of Bennett Jones LLP and Cassels Brock and Blackwell LLP, as respective groups, beneficially own, directly and indirectly, less than one percent of the outstanding Common Shares of the Corporation.

The following persons and companies are named as having prepared or certificated a report, valuation, statement or opinion in this Prospectus, either directly or in a document incorporated by reference in this Prospectus, and whose profession or business gives authority to the report, valuation, statement or opinion made by the person or company:

1. John M. Marek;
1. James R. Arnold;
1. Michael Makarenko;
1. Dino Pilotto;
1. Michael Lechner;
1. Luiz Castro;
1. Sindy Cheng;
1. Dr. Ian Hutchison;
1. Carl Defilippi;
1. Thomas Dyer;
1. Todd Minard;
1. Neb Zurik;
1. John Tinucci;
1. Bret Swanson;
1. Eric Olin;
1. Jeff Osborn;
1. Mark Allan Willow; and
1. Brian Arkell.

To the knowledge of the Corporation, the persons or firms named above beneficially own, directly and indirectly, either none or less than one percent of the outstanding Common Shares of the Corporation. None of the aforementioned persons or firms, nor any directors, officers or employees of such firms, are currently, or are expected to be elected, appointed or employed as, a director, officer or employee of the Corporation or of any associate or affiliate of the Corporation, other than Brian Arkell, who is employed by Argonaut.

LEGAL PROCEEDINGS

There are no legal proceedings that the Corporation is or was party to, or that any of its property is or was subject of, during the last completed financial year, nor are there any such legal proceedings known to the Corporation to be contemplated that involve a claim for damages, exclusive of interest and costs, exceeding 10% of the current assets of the Corporation.

PURCHASERS' STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. In several of the provinces of Canada, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that such remedies for rescission, revision of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province for the particulars of these rights or consult with a legal adviser.

CERTIFICATE OF THE CORPORATION

Date: January 29, 2021.

This short form prospectus, together with the documents incorporated by reference, constitutes full, true and plain disclosure of all material facts relating to the securities offered by this short form prospectus as required by the securities legislation of each of the provinces of Canada, except Québec.

By: (signed) Peter Dougherty By: (signed) David Ponczoch

Peter Dougherty President, Chief Executive Officer and Director

David Ponczoch Chief Financial Officer

On Behalf of the Board of Directors:

Dale Peniuk Director

By: (signed) Dale Peniuk By: (signed) Ian Atkinson

Ian Atkinson Director

CERTIFICATE OF THE UNDERWRITERS

Date: January 29, 2021.

To the best of our knowledge, information and belief, this short form prospectus, together with the documents incorporated by reference, constitutes full, true and plain disclosure of all material facts relating to the securities offered by this short form prospectus as required by the securities legislation of each of the provinces of Canada, except Québec.

CORMARK SECURITIES INC.

By: (signed) Darren Wallace

Darren Wallace Managing Director, Investment Banking

CANACCORD GENUITY CORP.

By: (signed) Gunnar Eggertson By: (signed) Jason Yeung

Gunnar Eggertson Jason Yeung Managing Director, Global Mining Mergers & Acquisitions, Investment Banking

LAURENTIAN BANK SECURITIES INC.

PARTNERS INC.

ECHELON WEALTH

Managing Director, Investment Banking

PARADIGM CAPITAL INC.

By: (signed) Joseph Gallucci By: (signed) John Booth

Joseph Gallucci John Booth Managing Director, Investment Banking

Head of Investment Banking

BMO NESBITT BURNS INC.

SCOTIA CAPITAL INC.

STIFEL NICOLAUS CANADA INC.

By: (signed) Ilan Bahar By: (signed) Geoff Smith By: (signed) Michael Barman

Managing Director, Co-Head Global Metals & Mining

Managing Director, Investment Banking

Ilan Bahar Geoff Smith Michael Barman

Managing Director, Investment Banking

AI assistant

Argonaut Gold Inc. — Capital/Financing Update 2021

46087_rns_2021-01-29_feffd401-0499-46da-afe3-2224552f9f77.pdf

PRELIMINARY SHORT FORM PROSPECTUS

ARGONAUT GOLD INC.

$23,000,202

8,156,100 FLOW-THROUGH SHARES

Price: $2.82 per Flow-Through Share

Notes:

NOTICE TO INVESTORS

About this Short Form Prospectus

Information contained in this Prospectus should not be construed as legal, tax or financial advice and readers are urged to consult their own professional advisors in connection therewith.

Forward-Looking Information

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS OR COMPANIES

CURRENCY PRESENTATION AND FINANCIAL INFORMATION

NOTICE REGARDING NON-IFRS MEASURES

TECHNICAL INFORMATION

DOCUMENTS INCORPORATED BY REFERENCE

MARKETING MATERIALS

ELIGIBILITY FOR INVESTMENT

THE CORPORATION

Incorporation

Subsidiary Corporate Governance and Internal Controls

Control over Mexican Subsidiaries

Strategic Direction

Internal Control Over Financial Reporting

Disclosure Controls and Procedures

CEO and CFO Certifications

Regional Experience

SUMMARY DESCRIPTION OF THE BUSINESS

RECENT DEVELOPMENTS

CONSOLIDATED CAPITALIZATION

Notes:

USE OF PROCEEDS

Proceeds

Principal Purposes

Notes:

Prior Financing

July 2020 Offering

July 2020 Offering (All amounts are approximate, expressed in millions of

Notes:

October 2020 FTS Private Placement

Notes:

October 2020 Debenture Offering

October 2020 Debenture Offering

Notes:

PLAN OF DISTRIBUTION

Flow-Through Shares

DESCRIPTION OF SECURITIES BEING DISTRIBUTED

Common Shares

Dividends

Participation in case of Dissolution or Liquidation

Right to Vote

Flow-Through Shares – Renunciation of CDE

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

Canadian Development Expense

Dividends on Flow-Through Shares

Disposition of Flow-Through Shares

Flow-Through Shares purchased hereunder will be deemed to have been acquired by the purchaser for an initial cost of nil regardless of the subscription price paid.

Minimum Tax

Cumulative Net Investment Loss

PRIOR SALES

Notes:

TRADING PRICE AND VOLUME

RISK FACTORS

An investment in the Common Shares, as well as the Corporation's prospects, are speculative due to the risky nature of its business and the present stage of its development. Investors may lose their entire investment.

Uncertainty during construction.

A positive return in an investment in the Common Shares is not guaranteed.

The Corporation has broad discretion to use the net proceeds from this Offering.

Market Price of Common Shares

Dilution

Undisclosed Risks and Liabilities Relating to the Alio Business Combination

Anticipated Benefits Not Realized

Uncertainty of Additional Funding

Canadian Tax Treatment of Flow-Through Shares

COVID-19 Public Health Crisis

AUDITORS, TRANSFER AGENT AND REGISTRAR

LEGAL MATTERS

INTERESTS OF EXPERTS

LEGAL PROCEEDINGS

Argonaut Gold Inc. Capital/Financing Update 2021