Argonaut Gold and Prodigy Agree to Friendly Business Combination

TORONTO, ONTARIO and VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 15, 2012) - Argonaut Gold Inc. (TSX:AR) ("Argonaut Gold") and Prodigy Gold Incorporated (TSX VENTURE:PDG) ("Prodigy ") are pleased to announce that they have entered into an agreement (the "Arrangement Agreement") pursuant to which Argonaut Gold has agreed to acquire all of the issued and outstanding common shares of Prodigy by way of a Plan of Arrangement (the "Arrangement"). The combined entity will benefit from the strong operating experience and cash flow of Argonaut Gold and its ability to successfully advance Prodigy's Magino gold project, which has an indicated resource of more than 6 million ounces (223 million tonnes at 0.87 g/t using a cut-off grade of 0.35 g/t).

Pursuant to the terms of the Arrangement announced today, Prodigy shareholders will receive 0.1042 of an Argonaut Gold share and C$0.00001 in cash per Prodigy share, representing C$1.08 per share based on Argonaut Gold's 20-day volume-weighted average price ("VWAP") and a premium of 54% based on both companies' 20-day VWAPs as at October 12, 2012, the last trading day prior to this announcement. The transaction values Prodigy's equity at approximately C$341 million on a fully diluted in-the-money basis and implies an enterprise value of approximately C$277 million.

http://www.prodigygold.com/_resources/news/nr_2012_10_15.pdf

This values Prodigy's gold at a little over $45/oz. for a somewhat similar deposit to Probe's.

PRB remains severely undervalued at this time.