Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
ended September 30, 2023.
“With another strong quarterly performance, we
are on pace for a record year both operationally and financially.
Production of 135,400 ounces was above our quarterly guidance,
putting us on track to set a new record for annual production.
Given the strong year-to-date performance, we are raising our full
year production guidance by 5% to a range of 515,000 to 530,000
ounces. With total cash costs and all-in sustaining costs below the
mid-point of guidance in the quarter and year-to-date, we are also
on track to achieve full year cost guidance,” said John A.
McCluskey, President and Chief Executive Officer.
“This contributed to another solid quarter
financially with $37 million of free cash flow, bringing the
year-to-date total to $109 million. This represents a substantial
increase from 2022 while investing in our high-return growth
projects. At Island Gold, the Phase 3+ Expansion is progressing
well with the headframe up and shaft sinking on schedule to begin
later this year. The updated Feasibility Study on Lynn Lake
outlined another long-life, low-cost project in Canada, with
excellent exploration upside. The development plan for PDA is also
advancing as the deposit continues to grow through ongoing
exploration success. All three projects are key drivers of our
ongoing value creation and strong long-term outlook, supporting
growing production, declining costs, and increasing profitability,”
Mr. McCluskey added.
Third Quarter 2023
- Produced 135,400 ounces of gold, exceeding quarterly guidance
of 120,000 to 130,000 ounces, reflecting strong performances from
the Mulatos District and Island Gold
- The Company is raising its annual production guidance to a
range of 515,000 to 530,000 ounces, a 5% increase from original
guidance (based on the mid-point), driven by the strong
outperformance from the Mulatos District. With year-to-date
production of 399,800 ounces, the Company is on pace for record
annual production in 2023
- The Mulatos District produced 53,900 ounces in the third
quarter and 164,700 ounces year-to-date, nearly double the prior
year period reflecting another solid performance from La Yaqui
Grande. The higher margin ounces from La Yaqui Grande drove
mine-site free cash flow of $30.9 million, bringing the
year-to-date total to $114.7 million
- Island Gold produced 36,400 ounces, a 19% increase compared to
the second quarter of 2023, reflecting both higher grades and
throughput. The Phase 3+ Expansion is progressing well with
construction of the headframe largely complete and shaft sinking on
track to begin by year end
- Sold 132,633 ounces of gold at an average realized price of
$1,932 per ounce, for quarterly revenues of $256.2 million. The
average realized gold price was $4 per ounce above the London PM
fix
- Total cash costs1 of $835 per ounce were at the low end of
annual guidance and AISC1 of $1,121 per ounce were below the low
end of guidance, driven by La Yaqui Grande and Island Gold and
timing of sustaining capital expenditures. The Company remains on
track to achieve full year cost guidance with total cash costs and
AISC both below the mid-point of guidance year-to-date
- Realized adjusted net earnings1 of $54.5 million, or $0.14 per
share. Adjusted net earnings includes adjustments for net
unrealized foreign exchange losses recorded within both deferred
taxes and foreign exchange of $11.9 million, and other losses
totaling $3.2 million. Reported net earnings were $39.4 million, or
$0.10 per share
- Free cash flow1 of $37.3 million in the third quarter, and
$109.4 million year-to-date, a substantial increase from 2022
reflecting the strong operating performance and margin expansion.
The Company expects to continue generating significant ongoing free
cash flow over the next several years while funding the Phase 3+
Expansion at Island Gold
- Generated cash flow from operating activities of $112.5 million
($133.2 million, or $0.34 per share, before changes in working
capital1)
- Paid a quarterly dividend of $9.9 million, or $0.025 per share
(annualized rate of $0.10 per share)
- Cash and cash equivalents increased to $215.9 million, up 14%
from the end of the second quarter, and 66% from the start of the
year, reflecting strong free cash flow generation. The Company
remains debt free
- Completed an updated Feasibility Study on the Lynn Lake project
outlining a larger, longer-life, low-cost operation with attractive
economics and significant exploration upside. Lynn Lake is expected
to produce an average of 176,000 ounces of gold per year at
mine-site AISC of $699 per ounce over its initial 10 years
- Provided an exploration update at Mulatos, further expanding
high-grade mineralization beyond Mineral Reserves and Resources at
Puerto Del Aire ("PDA") and intersecting additional wide intervals
of significant gold mineralization at the Capulin regional target.
A development plan incorporating the growth in Mineral Reserves at
PDA is expected to be completed towards the end of 2023
(1) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.
Highlight Summary
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
2022 |
|
2023 |
2022 |
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$256.2 |
$213.6 |
|
$768.7 |
$589.3 |
|
Cost of sales (1) |
$158.0 |
$168.1 |
|
$471.0 |
$455.5 |
|
Earnings from operations |
$82.6 |
$29.9 |
|
$246.2 |
$49.9 |
|
Earnings before income taxes |
$78.2 |
$33.9 |
|
$242.5 |
$49.8 |
|
Net earnings (loss) |
$39.4 |
($1.4 |
) |
$162.9 |
($3.5 |
) |
Adjusted net earnings (2) |
$54.5 |
$26.9 |
|
$159.2 |
$74.2 |
|
Earnings before interest, taxes, depreciation and amortization
(2) |
$126.0 |
$96.4 |
|
$384.8 |
$251.3 |
|
Cash provided by operations before working capital and taxes paid
(2) |
$133.2 |
$96.1 |
|
$398.7 |
$252.3 |
|
Cash provided by operating activities |
$112.5 |
$74.0 |
|
$348.6 |
$196.2 |
|
Capital expenditures (sustaining) (2) |
$27.3 |
$26.0 |
|
$77.6 |
$68.7 |
|
Capital expenditures (growth) (2) (3) |
$41.9 |
$39.8 |
|
$143.7 |
$141.7 |
|
Capital expenditures (capitalized exploration) |
$6.0 |
$6.8 |
|
$17.9 |
$18.5 |
|
Free cash flow (2) |
$37.3 |
$1.4 |
|
$109.4 |
($32.7 |
) |
Operating Results |
|
|
|
|
Gold production (ounces) |
135,400 |
123,400 |
|
399,800 |
326,200 |
|
Gold sales (ounces) |
132,633 |
122,780 |
|
397,253 |
323,410 |
|
Per Ounce Data |
|
|
|
|
Average realized gold price |
$1,932 |
$1,740 |
|
$1,935 |
$1,822 |
|
Average spot gold price (London PM Fix) |
$1,928 |
$1,729 |
|
$1,931 |
$1,824 |
|
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,191 |
$1,369 |
|
$1,186 |
$1,408 |
|
Total cash costs per ounce of gold sold (2) |
$835 |
$868 |
|
$834 |
$914 |
|
All-in sustaining costs per ounce of gold sold (2) |
$1,121 |
$1,178 |
|
$1,136 |
$1,231 |
|
Share Data |
|
|
|
|
Earnings (loss) per share, basic and diluted |
$0.10 |
$0.00 |
|
$0.41 |
($0.01 |
) |
Adjusted earnings per share, basic (2) |
$0.14 |
$0.07 |
|
$0.40 |
$0.19 |
|
Weighted average common shares outstanding (basic) (000’s) |
396,117 |
391,794 |
|
395,149 |
391,882 |
|
Financial Position (in millions) |
|
|
|
|
Cash and cash equivalents (4) |
|
|
$215.9 |
$129.8 |
|
(1) |
Cost of sales includes mining and processing costs, royalties, and
amortization expense. |
(2) |
Refer to the “Non-GAAP Measures and Additional GAAP Measures”
disclosure at the end of this press release and associated MD&A
for a description and calculation of these measures. |
(3) |
Includes growth capital from operating sites. |
(4) |
Comparative cash and cash equivalents balance as at December 31,
2022. |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2023 |
2022 |
2023 |
2022 |
Gold production (ounces) |
|
|
|
|
Young-Davidson |
45,100 |
49,300 |
135,300 |
147,600 |
Island Gold |
36,400 |
31,400 |
99,800 |
93,200 |
Mulatos District (7) |
53,900 |
42,700 |
164,700 |
85,400 |
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
45,498 |
49,218 |
134,744 |
147,405 |
Island Gold |
35,255 |
31,342 |
97,165 |
91,507 |
Mulatos District |
51,880 |
42,220 |
165,344 |
84,498 |
Cost of sales (in millions)
(1) |
|
|
|
|
Young-Davidson |
$62.4 |
$63.9 |
$183.6 |
$188.3 |
Island Gold |
$31.3 |
$29.0 |
$89.8 |
$85.2 |
Mulatos District |
$64.3 |
$75.2 |
$197.6 |
$182.0 |
Cost of sales per ounce of gold sold (includes
amortization) (1) |
|
|
|
Young-Davidson |
$1,371 |
$1,298 |
$1,363 |
$1,277 |
Island Gold |
$888 |
$925 |
$924 |
$931 |
Mulatos District |
$1,239 |
$1,781 |
$1,195 |
$2,154 |
Total cash costs per ounce of gold sold
(2) |
|
|
|
Young-Davidson |
$939 |
$870 |
$945 |
$858 |
Island Gold |
$610 |
$651 |
$636 |
$650 |
Mulatos District |
$898 |
$1,028 |
$861 |
$1,298 |
Mine-site all-in sustaining costs per ounce of gold
sold (2),(3) |
|
|
|
Young-Davidson |
$1,178 |
$1,134 |
$1,207 |
$1,087 |
Island Gold |
$916 |
$944 |
$980 |
$941 |
Mulatos District |
$1,045 |
$1,137 |
$948 |
$1,426 |
Capital expenditures (sustaining, growth, and capitalized
exploration) (in millions)(2) |
|
Young-Davidson (4) |
$12.3 |
$15.1 |
$43.2 |
$50.9 |
Island Gold (5) |
$47.5 |
$40.7 |
$159.2 |
$103.4 |
Mulatos District (6) |
$9.8 |
$9.9 |
$22.0 |
$57.2 |
Other |
$5.6 |
$6.9 |
$14.8 |
$17.4 |
(1) |
Cost of sales includes mining and processing costs, royalties, and
amortization expense. |
(2) |
Refer to the “Non-GAAP Measures and Additional GAAP Measures”
disclosure at the end of this press release and associated MD&A
for a description and calculation of these measures. |
(3) |
For the purposes of calculating mine-site all-in sustaining costs,
the Company does not include an allocation of corporate and
administrative and share based compensation expenses. |
(4) |
Includes capitalized exploration at Young-Davidson of $1.2 million
and $3.8 million for the three and nine months ended September 30,
2023 ($1.2 million and $3.5 million for the three and nine months
ended September 30, 2022). |
(5) |
Includes capitalized exploration at Island Gold of $2.4 million and
$7.8 million for the three and nine months ended September 30, 2023
($4.7 million and $13.9 million for the three and nine months ended
September 30, 2022). |
(6) |
Includes capitalized exploration at Mulatos District of $2.4
million and $6.3 million for the three and nine months ended
September 30, 2023 ($0.9 million and $1.1 million for the three and
nine months ended September 30, 2022). |
(7) |
The Mulatos District includes both the Mulatos pit, as well as La
Yaqui Grande. |
|
|
Environment, Social and Governance
Summary Performance
Health and Safety
- Total recordable
injury frequency rate1 ("TRIFR") of 1.84 in the third quarter, an
increase from 1.23 in the second quarter of 2023
- Lost time injury
frequency rate1 ("LTIFR") of 0.09, consistent with the second
quarter of 2023
- Year-to-date
TRIFR of 1.40 and LTIFR of 0.06, a reduction of 19% and nil,
respectively, from 2022
During the third quarter of 2023, the TRIFR
increased with 21 recordable injuries, as compared to 13 in the
prior quarter. Unfortunately, a second lost time injury occurred at
the Mulatos operation involving the same exploration drilling
contractor as the prior quarter. Additional training has been
provided to the contractor.
Alamos strives to maintain a safe, healthy
working environment for all, with a strong safety culture where
everyone is continually reminded of the importance of keeping
themselves and their colleagues healthy and injury-free. The
Company’s overarching commitment is to have all employees and
contractors return Home Safe Every Day.
Environment
- Zero significant
environmental incidents and zero reportable spills in the third
quarter and year-to-date
- Completed site
visits at all three operating sites to assess compliance with
internal Environmental Standards. Positive improvements were noted
at all sites with action plans currently being implemented to meet
remaining requirements
The Company is committed to preserving the
long-term health and viability of the natural environment that
surrounds its operations and projects. This includes investing in
new initiatives to reduce our environmental footprint with the goal
of minimizing the environmental impacts of our activities and
offsetting any impacts that cannot be fully mitigated or
rehabilitated.
Community
Ongoing donations, medical support and
infrastructure investments were provided to local communities,
including:
- Construction of
a north access road in the Matarachi village, near the Mulatos
Mine, to improve vehicle and pedestrian access around the community
during the rainy season
- A shared
Company-community effort to introduce beekeeping, or apiculture, in
Matarachi as a rural development opportunity. This initiative
included the provision of training, hives, tools, and protective
equipment for all participants. In total 12 apiaries consisting of
60 hives were introduced and involved the participation of nine
families, one school and both the Mulatos and La Yaqui Grande
mines
- Visual health
clinics for Matarachi residents, the third campaign in the last
five years, benefiting nearly 300 people with prescription
eyewear
- Construction of
a columbarium for the township of Dubreuilville
- Supporting
various community events in the Algoma district such as the annual
Wawa Music Festival, annual Wawa Salmon Derby, the Lady Dunn Health
Center Foundation’s High Tea, and several charity golf
tournaments
- Contributions to
the Young Mining Professionals Scholarship Fund to support students
enrolled in mining-related programs at Canadian post-secondary
institutions
- Fundraising and
participation in the Great Cycle Challenge to support SickKids
Hospital by raising funds and awareness towards fighting kids’
cancer
The Company also participated in several local
job fairs across Northern Ontario including Kirkland Lake, Wawa,
and Thunder Bay to showcase the many employment opportunities
available at Island Gold and Young-Davidson. In Wawa, the Island
Gold mine organized a mining showcase for local students to
highlight the many different careers and jobs available in
mining.
The Company believes that excellence in
sustainability provides a net benefit to all stakeholders. The
Company continues to engage with local communities to understand
local challenges and priorities. Ongoing investments in local
infrastructure, health care, education, cultural and community
programs remain a focus of the Company.
Governance and Disclosure
- Completed the
Company’s annual response to the CDP (formerly Carbon Disclosure
Project) Climate Change Questionnaire
- Published the
fourth edition of the Company's annual Women in Mining Newsletter,
featuring interviews and stories from women across the Company that
have contributed to Alamos’ success
- Advanced
preparation of the Company’s 2022 Environmental, Social and
Governance (ESG) Report, to be published in Q4 2023
- Hosted Alamos’
second Sustainability Summit in Toronto for health & safety,
environmental and community leaders across all operations and
projects. The annual Summit is designed to facilitate
collaboration, share ideas, and make plans to improve the Company’s
Sustainability Performance Management Framework and adoption of the
Responsible Gold Mining Principles
The Company maintains the highest standards of
corporate governance to ensure that corporate decision-making
reflects its values, including the Company’s commitment to
sustainable development. During the quarter, the Company continued
to advance its implementation of the Responsible Gold Mining
Principles, developed by the World Gold Council as a framework that
sets clear expectations as to what constitutes responsible gold
mining.
(1) Frequency rate is calculated as incidents
per 200,000 hours worked.
Outlook and Strategy
2023 Guidance |
|
Young-Davidson |
Island Gold |
Mulatos |
Lynn Lake |
Total |
Gold production (000’s ounces) |
|
|
|
|
|
Revised guidance |
|
|
|
|
515 - 530 |
Original guidance |
185 - 200 |
120 - 135 |
175 - 185 |
|
480 - 520 |
Cost of sales, including amortization (in
millions)(3) |
|
|
|
|
$625 |
Cost of sales, including amortization ($ per
ounce)(3) |
|
|
|
|
$1,250 |
Total cash costs ($ per ounce)(1) |
$900 - $950 |
$600 - $650 |
$900 - $950 |
— |
$825- $875 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
|
$1,125 - $1,175 |
Mine-site all-in sustaining costs ($ per
ounce)(1)(2) |
$1,175 - $1,225 |
$950 - $1,000 |
$950 - $1,000 |
— |
|
Capital expenditures (in millions) |
|
|
|
|
|
Sustaining capital(1) |
$50 - $55 |
$45 - $50 |
$10 |
— |
$105 - $115 |
Growth capital(1) |
$5 - $10 |
$165 - $185 |
$5 - $10 |
$12 |
$187 - $217 |
Total Sustaining and Growth
Capital(1) |
$55 - $65 |
$210 - $235 |
$15 - $20 |
$12 |
$292 - $332 |
Capitalized exploration(1) |
$5 |
$11 |
$4 |
$5 |
$25 |
Total capital expenditures and capitalized
exploration(1) |
$60 - $70 |
$221 - $246 |
$19 - $24 |
$17 |
$317 - $357 |
(1) |
Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at
the end of this press release and associated MD&A for a
description of these measures. |
(2) |
For the purposes of calculating mine-site all-in sustaining costs
at individual mine sites, the Company does not include an
allocation of corporate and administrative and share based
compensation expenses to the mine sites. |
(3) |
Cost of sales includes mining and processing costs, royalties, and
amortization expense, and is calculated based on the mid-point of
total cash cost guidance. |
|
|
The Company’s objective is to operate a
sustainable business model that supports growing returns to all
stakeholders over the long-term, through growing production,
expanding margins, and increasing profitability. This includes a
balanced approach to capital allocation focused on generating
strong ongoing free cash flow while re-investing in high-return
internal growth opportunities and supporting higher returns to
shareholders.
With another strong quarterly performance, the
Company continues to successfully execute on this strategy on all
fronts. Production of 135,400 ounces exceeded third quarter
guidance, while costs remained near the low end of annual guidance.
This was driven by a solid quarter from Island Gold and another
exceptional quarter from La Yaqui Grande.
Given the strong year-to-date performance, full
year production guidance has been increased to a range of 515,000
to 530,000 ounces. This marks a 5% increase from original 2023
guidance (based on the mid-point) driven by the solid
outperformance from the Mulatos District. This also represents a
13% increase from 2022, with the Company on pace to establish a new
record for annual production. The Company also remains well
positioned to achieve full year cost guidance with total cash costs
and AISC both below the mid-point of annual guidance
year-to-date.
Fourth quarter production is expected to be
between 115,000 and 130,000 ounces with AISC expected to be
slightly above the top end of annual guidance, reflecting higher
sustaining capital and lower grades mined at La Yaqui Grande. Full
year costs and capital are expected to be in line with
guidance.
Financially, it was another solid quarter with
free cash flow of $37.3 million bringing the year-to-date total to
$109.4 million. As part of a balanced approach to growth, the
Company continues to generate solid free cash flow while advancing
its growth initiatives including the Phase 3+ Expansion at Island
Gold, and the Lynn Lake and PDA projects. These are key elements of
the Company's strong long-term outlook, which are expected to
support growing production, declining costs, and further free cash
flow growth in the years ahead.
The Phase 3+ Expansion at Island Gold is
progressing well with construction of the hoist house complete, and
the headframe nearing completion, putting the start of shaft
sinking on track to begin towards the end of this year. In August,
an updated Feasibility Study was released on the Lynn Lake project,
outlining a larger, longer-life, low-cost operation located in
Canada, with excellent exploration upside. This followed the
receipt of a positive Decision Statement for the Federal
Environmental Impact Statement (“EIS”) earlier this year, a
significant permitting milestone for the project.
At PDA, step-out drilling continues to extend
high-grade mineralization beyond Mineral Reserves and Resources
supporting the expected ongoing growth of the deposit. This growth
will be incorporated into a development plan which is expected to
be completed towards the end of this year and will outline a
significant mine life extension at the Mulatos District.
Young-Davidson continues to be a consistent
performer with mining rates in-line with target rates and the
operation generating $30.9 million of mine-site free cash flow in
the quarter and $82.6 million year-to-date. With higher grades
expected in the fourth quarter, the operation is on track to meet
full year production guidance and generate more than $100 million
of mine-site free cash flow for the third consecutive year.
Island Gold performed well in the third quarter
with higher mining rates and grades driving a 19% increase in
production from the second quarter. With year-to-date production of
99,800 ounces, the operation is well positioned to meet full year
production guidance. As outlined in the Phase 3+ Expansion study
released in June 2022, grades mined are expected to increase in
2024, driving production higher. A further increase in grades and
an increase in mining rates toward the latter part of 2025 is
expected to drive an additional increase in production and a
reduction in costs. As demonstrated through the year, Island Gold
continues to generate strong cash flow from operations allowing the
operation to fund the majority of capital spending on the Phase 3+
Expansion.
Combined gold production from the Mulatos
District totaled 53,900 ounces in the quarter reflecting another
strong performance from La Yaqui Grande. Year-to-date, the combined
operation produced 164,700 ounces, nearly double the prior year
period and putting it on pace to exceed full year guidance.
Reflecting the strong operational performance, Mulatos generated
$30.9 million of mine-site free cash flow in the quarter bringing
the year-to-date total to $114.7 million. As previously guided,
production is expected to decrease into the fourth quarter
reflecting the end of mining within the main Mulatos pit in July as
well as the return to guided grades at La Yaqui Grande.
Capital spending, including capitalized
exploration, totaled $75.2 million in the third quarter and $239.2
million year-to-date. Capital spending is expected to increase in
the fourth quarter, reflecting the continued ramp up in spending on
Phase 3+ Expansion, and higher sustaining capital. Full year
capital spending is expected to be consistent with guidance of $317
million to $357 million.
The global exploration budget for 2023 is
consistent with spending in 2022. The Mulatos District accounts for
the largest portion of the budget at $25 million, up from an
initial budget of $17 million reflecting ongoing exploration
success. This is followed by a $14 million budget at Island Gold,
$8 million at Young-Davidson and $5 million at Lynn Lake. The
exploration focus in 2023 continues to follow up on a successful
year in 2022, with Mineral Reserves increasing for the fourth
consecutive year to 10.7 million ounces of gold.
The Company's liquidity position continues to
strengthen with cash and cash equivalents increasing to $215.9
million at the end of the third quarter, up from $129.8 million at
the start of the year, while remaining debt free. Additionally, the
Company has a $500 million undrawn credit facility, providing total
liquidity of $715.9 million. As part of a balanced approach to
growth and capital allocation, the current focus of growth capital
is the Phase 3+ Expansion at Island Gold. With no significant
capital expected to be spent on developing Lynn Lake until the
Phase 3+ Expansion is well advanced, the Company remains well
positioned to fund this growth internally while generating strong
free cash flow over the next several years. The Company expects a
further increase in free cash flow in 2026 with the completion of
the Phase 3+ Expansion.
Third Quarter 2023 results
Young-Davidson Financial and Operational
Review
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Gold production (ounces) |
45,100 |
|
49,300 |
|
135,300 |
|
147,600 |
|
Gold
sales (ounces) |
45,498 |
|
49,218 |
|
134,744 |
|
147,405 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$87.9 |
|
$85.6 |
|
$260.5 |
|
$269.7 |
|
Cost of sales (1) |
$62.4 |
|
$63.9 |
|
$183.6 |
|
$188.3 |
|
Earnings from operations |
$24.5 |
|
$20.9 |
|
$74.4 |
|
$77.4 |
|
Cash provided by operating
activities |
$43.2 |
|
$38.4 |
|
$125.8 |
|
$128.2 |
|
Capital expenditures
(sustaining) (2) |
$10.8 |
|
$13.0 |
|
$35.1 |
|
$33.6 |
|
Capital expenditures (growth)
(2) |
$0.3 |
|
$0.9 |
|
$4.3 |
|
$13.8 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.2 |
|
$1.2 |
|
$3.8 |
|
$3.5 |
|
Mine-site free cash flow
(2) |
$30.9 |
|
$23.3 |
|
$82.6 |
|
$77.3 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,371 |
|
$1,298 |
|
$1,363 |
|
$1,277 |
|
Total cash costs per ounce of gold sold (2) |
$939 |
|
$870 |
|
$945 |
|
$858 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,178 |
|
$1,134 |
|
$1,207 |
|
$1,087 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
733,413 |
|
644,000 |
|
2,190,418 |
|
2,122,820 |
|
Tonnes of ore mined per day |
7,972 |
|
7,000 |
|
8,024 |
|
7,776 |
|
Average grade of gold (4) |
2.06 |
|
2.28 |
|
2.14 |
|
2.29 |
|
Metres developed |
2,108 |
|
2,589 |
|
7,041 |
|
8,933 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
754,705 |
|
719,050 |
|
2,153,377 |
|
2,161,792 |
|
Tonnes of ore processed per day |
8,203 |
|
7,816 |
|
7,888 |
|
7,919 |
|
Average grade of gold (4) |
2.08 |
|
2.31 |
|
2.14 |
|
2.31 |
|
Contained ounces milled |
50,393 |
|
53,290 |
|
148,380 |
|
160,734 |
|
Average recovery rate |
90 |
% |
92 |
% |
90 |
% |
91 |
% |
(1) |
Cost of sales includes mining and processing costs, royalties and
amortization. |
(2) |
Refer to the “Non-GAAP Measures and Additional GAAP Measures”
disclosure at the end of this press release and associated MD&A
for a description and calculation of these measures. |
(3) |
For the purposes of calculating mine-site all-in sustaining costs,
the Company does not include an allocation of corporate and
administrative and share based compensation expenses. |
(4) |
Grams per tonne of gold ("g/t Au"). |
|
|
Operational review
Young-Davidson produced 45,100 ounces of gold in
the third quarter, an 9% decrease compared to the prior year
period, due to 10% lower grades processed. Grades were impacted by
sequencing with higher grade stopes planned to be mined during the
quarter deferred into the fourth quarter. With grades mined
expected to increase in the fourth quarter, Young-Davidson remains
on track to meet full year production guidance.
Milling rates increased to average 8,203 tpd in
the third quarter, a new record for the operation. Milling rates
exceeded mining rates with surface stockpiles supplementing mill
feed. Grades processed averaged 2.08 g/t Au in the quarter and 2.14
g/t Au year-to-date, the latter consistent with the low end of
annual guidance. Mill recoveries averaged 90% in the quarter, in
line with guidance.
Financial Review
Third quarter revenues of $87.9 million were 3%
higher than the prior year period, resulting from a higher realized
gold price, partially offset by less ounces sold. Year-to-date
revenues of $260.5 million were 3% lower than the prior year,
primarily driven by less ounces sold.
Cost of sales of $62.4 million in the third
quarter were 2% lower than the prior year period with higher tonnes
processed being offset by lower unit operating costs. Underground
mining costs were CAD $46 per tonne in the quarter, an 8%
improvement from the prior year period due to economies of scale
driven by higher mining rates. Cost of sales of $183.6 million for
the first nine months of the year were in line with the comparable
period.
Total cash costs were $939 per ounce in the
third quarter and $945 per ounce for the first nine months of the
year. Mine-site AISC were $1,178 per ounce in the quarter and
$1,207 per ounce for the first nine months of the year. Total cash
costs and mine-site AISC were consistent with annual guidance in
the quarter and year-to-date; however, above the prior year periods
reflecting inflationary pressures as well as the lower grades
processed. Both total cash costs and AISC are expected to be in
line with guidance for the full year.
Capital expenditures in the quarter included
$10.8 million of sustaining capital and $0.3 million of growth
capital. Additionally, $1.2 million was invested in capitalized
exploration in the quarter. Capital expenditures, inclusive of
capitalized exploration, totaled $43.2 million for the first nine
months of 2023, a 15% decrease from the prior year. Sustaining
capital expenditures are expected to increase in the fourth quarter
bringing full year capital in line with annual guidance.
Young-Davidson continues to demonstrate strong
operational and financial consistency with mine-site free cash flow
of $30.9 million in the third quarter, and $82.6 million in the
first nine months of 2023. The operation is on track to surpass
$100 million in mine-site free cash flow for the third consecutive
year, and is well positioned to generate similar levels over the
long-term, given its 15 year Mineral Reserve life.
Island Gold Financial and Operational
Review
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Gold production (ounces) |
36,400 |
|
31,400 |
|
99,800 |
|
93,200 |
|
Gold
sales (ounces) |
35,255 |
|
31,342 |
|
97,165 |
|
91,507 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$68.1 |
|
$54.8 |
|
$187.8 |
|
$167.3 |
|
Cost of sales (1) |
$31.3 |
|
$29.0 |
|
$89.8 |
|
$85.2 |
|
Earnings from operations |
$35.6 |
|
$24.4 |
|
$95.2 |
|
$78.1 |
|
Cash provided by operating
activities |
$38.3 |
|
$32.1 |
|
$125.0 |
|
$109.0 |
|
Capital expenditures
(sustaining) (2) |
$10.6 |
|
$9.1 |
|
$33.0 |
|
$26.4 |
|
Capital expenditures (growth)
(2) |
$34.5 |
|
$26.9 |
|
$118.4 |
|
$63.1 |
|
Capital expenditures
(capitalized exploration) (2) |
$2.4 |
|
$4.7 |
|
$7.8 |
|
$13.9 |
|
Mine-site free cash flow (2) |
($9.2 |
) |
($8.6 |
) |
($34.2 |
) |
$5.6 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$888 |
|
$925 |
|
$924 |
|
$931 |
|
Total cash costs per ounce of gold sold (2) |
$610 |
|
$651 |
|
$636 |
|
$650 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$916 |
|
$944 |
|
$980 |
|
$941 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
113,682 |
|
104,565 |
|
322,646 |
|
319,757 |
|
Tonnes of ore mined per day ("tpd") |
1,236 |
|
1,137 |
|
1,182 |
|
1,171 |
|
Average grade of gold (4) |
9.94 |
|
9.67 |
|
9.59 |
|
9.37 |
|
Metres developed |
2,063 |
|
1,664 |
|
6,301 |
|
5,005 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
113,061 |
|
121,571 |
|
322,568 |
|
336,668 |
|
Tonnes of ore processed per day |
1,229 |
|
1,321 |
|
1,182 |
|
1,233 |
|
Average grade of gold (4) |
10.11 |
|
9.38 |
|
9.74 |
|
9.25 |
|
Contained ounces milled |
36,767 |
|
36,661 |
|
101,029 |
|
100,119 |
|
Average recovery rate |
97 |
% |
93 |
% |
97 |
% |
95 |
% |
(1) |
Cost of sales includes mining and processing costs, royalties, and
amortization. |
(2) |
Refer to the “Non-GAAP Measures
and Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures. |
(3) |
For the purposes of calculating
mine-site all-in sustaining costs, the Company does not include an
allocation of corporate and administrative and share based
compensation expenses. |
(4) |
Grams per tonne of gold ("g/t
Au"). |
|
|
Operational review
Island Gold produced 36,400 ounces in the third
quarter of 2023, a 16% increase from the prior year period,
reflecting higher grades mined and processed, partially offset by
lower tonnes milled. For the first nine months of 2023, Island Gold
produced 99,800 ounces, a 7% increase from the prior year period.
With the solid year-to-date performance, Island Gold remains on
track to achieve full year production guidance.
Underground mining rates averaged 1,236 tpd in
the third quarter, exceeding annual guidance and an increase of 12%
from the second quarter. Grades mined averaged 9.94 g/t Au in the
quarter, and 9.59 g/t Au through the first nine months of the year,
both consistent with annual guidance.
Mill throughput averaged 1,229 tpd for the
quarter. Milling throughput was lower than the prior year period,
as the third quarter of 2022 included processing of approximately
10,000 tonnes of Island Gold stockpiled ore at the Young-Davidson
mill. Mill recoveries averaged 97% in the quarter, consistent with
annual guidance, and a 4% increase compared to the prior year
period.
Financial Review
Revenues of $68.1 million in the third quarter
and $187.8 million for the first nine months of the year were 24%
and 12% higher than the prior year periods, respectively, due to
more ounces sold and a higher realized gold price.
Cost of sales of $31.3 million in the third
quarter and $89.8 million for the first nine months of the year
were 8% and 5% higher than the prior year period, respectively,
driven by the increased mining rates and inflationary pressures on
mining and processing costs.
Total cash costs of $610 per ounce in the third
quarter and $636 per ounce year-to-date were in line with annual
guidance. Mine-site AISC of $916 per ounce in the third quarter was
below annual guidance due to timing of sustaining capital
expenditures. Sustaining capital expenditures are expected to
increase in the fourth quarter, consistent with annual guidance.
With mine-site AISC of $980 per ounce through the first nine
months, the operation remains on track to meet full year cost
guidance.
Total capital expenditures were $47.5 million in
the third quarter, including $34.5 million of growth capital and
$2.4 million of capitalized exploration. Growth capital spending
remains focused on the shaft site infrastructure, including the
headframe, electrical substation and warehouse to support the Phase
3+ Expansion. The construction of the headframe is now
substantially complete and pre-commissioning tests on the e-house
electrical systems have commenced. Shaft sinking is on track to
commence by year end. Additionally, capital spending was focused on
lateral development and other surface infrastructure. For the first
nine months of 2023, capital spending totaled $159.2 million,
inclusive of capitalized exploration of $7.8 million, with the
majority related to construction activities on the Phase 3+
Expansion.
Mine-site free cash flow was negative $9.2
million in the third quarter and negative $34.2 million for the
first nine months of the year given the significant capital
investment related to the Phase 3+ Expansion. At current gold
prices, Island Gold is expected to fund the majority of the Phase
3+ Expansion capital over the next three years. The operation is
expected to generate significant free cash flow from 2026 onward
with the completion of the expansion.
Mulatos District Financial and
Operational Review
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Gold production (ounces) |
53,900 |
|
42,700 |
|
164,700 |
|
85,400 |
|
Gold
sales (ounces) |
51,880 |
|
42,220 |
|
165,344 |
|
84,498 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$100.2 |
|
$73.2 |
|
$320.4 |
|
$152.3 |
|
Cost of sales (1) |
$64.3 |
|
$75.2 |
|
$197.6 |
|
$182.0 |
|
Earnings (loss) from
operations |
$31.1 |
|
($4.1 |
) |
$113.4 |
|
($36.2 |
) |
Cash provided (used) by
operating activities |
$40.7 |
|
$11.7 |
|
$136.7 |
|
($8.4 |
) |
Capital expenditures
(sustaining) (2) |
$5.9 |
|
$3.9 |
|
$9.5 |
|
$8.7 |
|
Capital expenditures (growth)
(2) |
$1.5 |
|
$5.1 |
|
$6.2 |
|
$47.4 |
|
Capital expenditures
(capitalized exploration) (2) |
$2.4 |
|
$0.9 |
|
$6.3 |
|
$1.1 |
|
Mine-site free cash flow
(2) |
$30.9 |
|
$1.8 |
|
$114.7 |
|
($65.6 |
) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,239 |
|
$1,781 |
|
$1,195 |
|
$2,154 |
|
Total cash costs per ounce of gold sold (2) |
$898 |
|
$1,028 |
|
$861 |
|
$1,298 |
|
Mine site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,045 |
|
$1,137 |
|
$948 |
|
$1,426 |
|
La Yaqui Grande Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
918,053 |
|
739,594 |
|
2,947,113 |
|
1,236,413 |
|
Total waste mined - open pit (6) |
5,715,419 |
|
5,327,341 |
|
17,150,171 |
|
17,469,454 |
|
Total tonnes mined - open pit |
6,633,472 |
|
6,066,935 |
|
20,097,284 |
|
18,705,867 |
|
Waste-to-ore ratio (operating) |
5.00 |
|
5.00 |
|
5.00 |
|
5.00 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
948,451 |
|
794,127 |
|
2,982,018 |
|
1,127,108 |
|
Average grade of gold processed (5) |
1.50 |
|
1.23 |
|
1.52 |
|
1.33 |
|
Contained ounces stacked |
45,722 |
|
31,362 |
|
146,196 |
|
48,133 |
|
Average recovery rate |
84 |
% |
81 |
% |
82 |
% |
63 |
% |
Ore crushed per day (tonnes) |
10,300 |
|
8,700 |
|
10,900 |
|
6,159 |
|
Mulatos Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
80,868 |
|
795,339 |
|
2,250,380 |
|
2,600,777 |
|
Total waste mined - open pit (6) |
130,519 |
|
1,573,334 |
|
1,309,034 |
|
5,237,360 |
|
Total tonnes mined - open pit |
211,387 |
|
2,332,673 |
|
3,559,415 |
|
7,838,137 |
|
Waste-to-ore ratio (operating) |
1.61 |
|
2.07 |
|
0.58 |
|
1.63 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
1,083,017 |
|
1,274,662 |
|
3,729,738 |
|
4,542,916 |
|
Average grade of gold processed (5) |
1.55 |
|
0.75 |
|
1.17 |
|
0.72 |
|
Contained ounces stacked |
53,923 |
|
30,916 |
|
140,375 |
|
104,965 |
|
Average recovery rate |
29 |
% |
56 |
% |
32 |
% |
52 |
% |
Ore crushed per day (tonnes) |
11,800 |
|
14,000 |
|
13,700 |
|
16,600 |
|
(1) |
Cost of sales includes mining and processing costs, royalties, and
amortization expense. |
(2) |
Refer to the “Non-GAAP Measures
and Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures. |
(3) |
For the purposes of calculating
mine-site all-in sustaining costs, the Company does not include an
allocation of corporate and administrative and share based
compensation expenses. |
(4) |
Includes ore stockpiled during
the quarter. |
(5) |
Grams per tonne of gold ("g/t
Au"). |
(6) |
Total waste mined includes
operating waste and capitalized stripping. |
|
|
Mulatos District Operational Review
The Mulatos District produced 53,900 ounces in
the third quarter, 26% higher than the prior year period,
reflecting higher mining rates and grades from La Yaqui Grande. As
guided, production decreased from the second quarter with mining
and stacking rates at La Yaqui Grande returning to design rates of
approximately 10,000 tpd, as well as the end of mining within the
main Mulatos open pit in July. Production is expected to decrease
in the fourth quarter reflecting the depletion of the Mulatos pit
and a decrease in grades at La Yaqui Grande.
For the first nine months of 2023, the Mulatos
District produced 164,700 ounces. This included 119,700 ounces from
La Yaqui Grande with the operation exceeding expectations both in
terms of mining rates and grades. Given the year-to-date
outperformance, the Mulatos District is expected to exceed original
production guidance of 175,000 to 185,000 ounces.
La Yaqui Grande Operational Review
La Yaqui Grande produced 38,300 ounces in the
third quarter, up 51% from the prior year period reflecting higher
grades and stacking rates. As previously guided, stacking rates of
10,300 tpd decreased from the second quarter with the onset of the
rainy season. Stacking rates are expected to remain around design
rates of 10,000 tpd in the fourth quarter and beyond. Grades
stacked on the leach pad averaged 1.50 g/t Au, above annual
guidance of 1.15 to 1.45 g/t Au due to positive grade
reconciliations. The recovery rate was 84% in the quarter and 82%
through the first nine months of the year, both in line with annual
guidance.
Mulatos Operational Review
Mulatos produced 15,600 ounces in the third
quarter, 10% lower than the second quarter of 2023, reflecting
completion of mining from the El Salto portion of the pit in July.
Total crusher throughput averaged 11,800 tpd, with a total of
1,083,017 tonnes stacked, with grades averaging 1.55 g/t Au. The
majority of tonnes stacked in the quarter were from stockpiled ore
which will continue to be stacked at declining rates until the
stockpiles are depleted in the fourth quarter. The operation is
expected to benefit from ongoing gold production at decreasing
rates into 2024 through residual leaching of the leach pad.
Financial Review (Mulatos District)
Revenues of $100.2 million in the third quarter
were 37% higher than the prior year period reflecting more ounces
sold at La Yaqui Grande, and a higher realized gold price.
Similarly, revenues of $320.4 million for the first nine months of
2023, were higher than the prior year period as a result of more
ounces sold and a higher realized gold price.
Cost of sales of $64.3 million in the third
quarter were 14% lower than in the comparative period, due to lower
mining rates within the main Mulatos pit. In addition, the
comparative period included an adjustment related to the Mulatos
leach pad inventory. For the first nine months of 2023, cost of
sales of $197.6 million were 9% higher than the comparable period,
due to higher mining and stacking rates at the operation.
Total cash costs for the Mulatos District of
$898 per ounce in the third quarter and $861 per ounce year-to-date
were below annual guidance, driven by higher grades at La Yaqui
Grande and higher stacking rates through the first half of the
year. Mine-site AISC of $1,045 per ounce in the third quarter was
higher than annual guidance due to the timing of sustaining capital
expenditures. Costs are expected to be above the top end of annual
guidance in the fourth quarter reflecting lower production at La
Yaqui Grande and Mulatos. However, given the strong year-to-date
performance with mine-site AISC of $948 per ounce, costs are
expected to be in-line with guidance for the full year.
Capital expenditures totaled $9.8 million in the
third quarter, including sustaining capital of $5.9 million, and
$2.4 million of capitalized exploration focused on drilling at PDA.
For the first nine months of 2023, capital spending totaled $22.0
million, including $6.3 million of capitalized exploration. Full
year capital expenditures, excluding capitalized exploration, are
expected to be in line with annual guidance.
The Mulatos District generated mine-site free
cash flow of $30.9 million in the third quarter, and $114.7 million
through the first nine months of the year, driven by the low-cost,
high margin production from La Yaqui Grande. Mulatos paid $2.7
million of cash taxes in the third quarter, with a similar payment
expected in the fourth quarter. Given the strong profitability of
the operation in 2023, with $114.7 million in free cash flow
generated year to date, the Company expects to make significantly
higher cash tax payments in Mexico in 2024.
Third Quarter
2023 Development Activities
Island Gold (Ontario,
Canada)
Phase 3+ Expansion
On June 28, 2022, the Company reported results
of the Phase 3+ Expansion Study (“P3+ Expansion Study”) conducted
on its Island Gold mine, located in Ontario, Canada.
The Phase 3+ Expansion to 2,400 tpd from the
current rate of 1,200 tpd will involve various infrastructure
investments. These include the installation of a shaft, paste
plant, expansion of the mill as well as accelerated development to
support the higher mining rates. Following the completion of the
expansion in 2026, the operation will transition from trucking ore
and waste up the ramp to skipping ore and waste to surface through
the new shaft infrastructure, driving production higher and costs
significantly lower.
Construction continued through the third quarter
of 2023, with shaft site surface infrastructure nearing completion
in advance of shaft sinking, which is expected to commence by the
end of the year. Further details on progress to the end of the
third quarter are summarized below:
- Construction of the
shaft area substation substantially complete and connected to the
Island Gold substation
- Headframe
construction substantially complete
- Galloway outfitting
over 50% complete
- Pre-commissioning
tests on the e-house electrical systems commenced
- Earthworks for
propane storage facility completed
- Warehouse building
construction underway
- Paste plant
detailed engineering 70% complete and expected to be substantially
complete by year end; issuance of long lead time equipment
procurement packages is ongoing
- Mill expansion
basic engineering 77% complete and expected to be completed by year
end, with overall engineering being 30% complete; issuance of long
lead time equipment procurement packages is ongoing
- Lateral development
to support higher mining rates with the Phase 3+ Expansion
ongoing
During the third quarter of 2023, the Company
spent $34.5 million on the Phase 3+ Expansion and capital
development. As of September 30, 2023, 45% of the total initial
growth capital of $756 million has been spent and committed on the
project. This includes progress as follows:
(in US$M)Growth capital (including indirects and contingency) |
P3+ 2400
Study1 |
Spent to date2 |
Committed todate |
% of Spent &Committed |
|
Shaft & Shaft Surface
Complex |
229 |
118 |
83 |
88 |
% |
Mill Expansion |
76 |
3 |
1 |
5 |
% |
Paste Plant |
52 |
1 |
1 |
4 |
% |
Power Upgrade |
24 |
4 |
6 |
42 |
% |
Effluent Treatment Plant |
16 |
— |
— |
— |
|
General Indirect Costs |
64 |
27 |
6 |
52 |
% |
Contingency3 |
55 |
— |
|
|
Total Growth Capital |
$516 |
$153 |
$97 |
48 |
% |
|
|
|
|
|
Underground Equipment &
Infrastructure |
79 |
26 |
— |
33 |
% |
Accelerated Capital Development |
162 |
64 |
— |
40 |
% |
Total Growth Capital (including Accelerated Spend) |
$756 |
$243 |
$97 |
45 |
% |
1. |
Phase 3+ 2400 Study is as of January 2022. Phase 3+ capital
estimate based on USD/CAD exchange $0.78:1. Spent to date based on
average USD/CAD of $0.76:1 since the start of 2022. Committed to
date based on the spot USD/CAD rate as at September 30, 2023 of
$0.74:1. |
2. |
Amount spent to date accounted for on an accrual basis, including
working capital movements. |
3. |
Contingency has been allocated to the various areas. |
|
|
Growth capital spending at Island Gold on the
Phase 3+ Expansion is expected to be between $165 and $185 million
in 2023. Capital spending is expected to remain at similar levels
in 2024 and 2025 and then drop considerably in 2026 once the
expansion is complete.
Shaft site area - October
2023
Lynn Lake (Manitoba,
Canada)
In March 2023, the Company achieved a
significant permitting milestone for the Lynn Lake project with a
positive Decision Statement issued by the Ministry of Environment
and Climate Change Canada based on the completed Federal
Environmental Impact Statement ("EIS"), and Environment Act
Licenses issued by the Province of Manitoba. Additionally, during
the second quarter, the Company finalized an Impact Benefit
Agreement and participated in a signing ceremony with Marcel Colomb
First Nation, the most proximate First Nation to the project. As
previously disclosed, the Mathias Colomb Cree Nation has brought an
application for judicial review of the Decision Statement issued by
the Ministry of Environment and Climate Change and an internal
appeal of the Environment Act Licenses issued by the Province of
Manitoba. At this time, the application and appeal are not expected
to impact overall Lynn Lake project timelines. The Company
continues to actively engage with the Mathias Colomb Cree Nation
during this period.
On August 2, 2023, the Company reported the
results of an updated Feasibility Study ("2023 Study") conducted on
the project which replaces the previous Feasibility Study completed
in 2017 ("2017 Study"). The 2023 Study incorporates a 44% larger
Mineral Reserve and 14% increase in milling rates to 8,000 tpd
supporting a larger, longer-life, low-cost operation. The 2023
Study has been updated to reflect the current costing environment,
as well as a significant amount of additional engineering, on-site
geotechnical investigation work, and requirements outlined during
the permitting process with the EIS granted in March.
2023 Study Highlights:
Higher production: average annual gold
production of 207,000 ounces over the first five years and 176,000
ounces over the initial 10 years
- The 10-year average
represents a 23% increase over the annual average of 143,000 ounces
in the 2017 Study
Low-cost profile: average mine-site all-in
sustaining costs of $699 per ounce over the first 10-years and $814
per ounce over the life of mine
- Average mine-site
all-in sustaining costs decreased 6% from the 2017 Study over the
initial 10-years with economies of scale provided by the larger
operation, and higher average grades, more than offsetting cost
inflation
Larger, longer-life operation supported by 44%
larger Mineral Reserve with further upside potential
- 44% larger Mineral
Reserve totaling 2.3 million ounces grading 1.52 g/t Au (47.6
million tonnes ("mt"))
- 17-year mine life,
up from 10 years in the 2017 Study
- Life of mine
production of 2.2 million ounces, a 46% increase from 1.5 million
ounces reported in 2017
Modest increase in capital intensity with larger
operation and 46% increase in life of mine production partly
offsetting inflation
- Initial capital of
$632 million, and life of mine capital including sustaining capital
and reclamation of $832 million, increased from the 2017 Study
reflecting inflation and scope changes with the larger operation
and Mineral Reserve
- Total life of mine
capital of $381 per ounce increased 17% from $325 per ounce in the
2017 Study with the larger Mineral Reserve and economies of scale
partly offsetting the significant industry-wide capital inflation
experienced since 2017
Project de-risked given advanced level of
engineering, additional geotechnical work, and EIS approval
- Detailed
engineering 55% complete; basic engineering 100% complete as of
August 2023
- EIS approval and
Provincial licenses received in March 2023 with requirements
outlined through the permitting process incorporated into the 2023
Study
- Extensive
geotechnical drilling, test pits, and ground penetrating radar
employed across the project area including the mill, open pits and
tailings locations providing higher degree of confidence around
required earthworks, tailings design and mine plan
Attractive economics with significant long-term
exploration upside potential
- After-tax net
present value (“NPV”) (5%) of $428 million (base case gold price
assumption of $1,675 per ounce and USD/CAD foreign exchange rate of
$0.75:1)
- After-tax internal
rate of return (“IRR”) of 17%
- After-tax NPV (5%)
of $670 million, and an after-tax IRR of 22%, at current gold
prices of approximately $1,950 per ounce
- Payback of less
than four years at the base case gold price of $1,675 per ounce and
less than three years at a $1,950 per ounce gold prices
Significant near-mine and regional exploration
upside potential
- The Lynn Lake
project encompasses most of the east-trending, 125 km long, Lynn
Lake Greenstone Belt in northwestern Manitoba, with a total of
58,000 hectares of mineral tenure, representing significant
exploration potential, including:
- Gordon deposit:
higher-grade gold mineralization extended outside of Mineral
Reserves and Resources in the northeastern extent of the planned
Gordon pit, in an area modeled as waste in the 2023 Study
- Burnt Timber and
Linkwood: potential for smaller, higher-grade Mineral Resource that
could be trucked and processed at the planned MacLellan mill later
in the mine life
- Regional targets:
extensive pipeline of highly prospective exploration targets at
various stages of exploration across the Lynn Lake greenstone belt.
This includes the Maynard and Tulune targets where ongoing drilling
continues to intersect gold mineralization. Both targets are within
trucking distance of the MacLellan mill
Low Greenhouse Gas (“GHG”) emission
intensity
- 18% decrease in GHG
emissions per ounce from the 2017 Study reflecting the
incorporation of electric shovels and drills at MacLellan, and
productivity improvements with the larger operation
- 58% lower emissions
per ounce produced than the industry average. The project will be
connected to Manitoba’s electric grid, of which nearly all
electricity is produced from clean, renewable power, supporting the
company-wide target of a 30% reduction in absolute GHG emissions by
2030
Fully funded growth
- As outlined
previously, the Company does not anticipate spending any
significant capital on developing the Lynn Lake project until the
Phase 3+ Expansion at Island Gold is well advanced
- With $215.9 million
of cash as of September 30, 2023, no debt, strong ongoing free cash
flow generation, and significant free cash flow growth expected
from Island Gold in 2026 and beyond, the Company is well positioned
to fund development of Lynn Lake internally
Development spending (excluding exploration) was
$3.6 million in the third quarter of 2023 on engineering to
support the updated Feasibility Study. For the first nine months of
2023, development spending (excluding exploration) was $8.6
million.
Kirazlı (Çanakkale,
Türkiye)
On October 14, 2019, the Company suspended all
construction activities on its Kirazlı project following the
Turkish government's failure to grant a routine renewal of the
Company’s mining licenses, despite the Company having met all legal
and regulatory requirements for their renewal. In October 2020, the
Turkish government refused the renewal of the Company’s Forestry
Permit. The Company had been granted approval of all permits
required to construct Kirazlı including the Environmental Impact
Assessment approval, Forestry Permit, and GSM (Business Opening and
Operation) permit, and certain key permits for the nearby Ağı Dağı
and Çamyurt Gold Mines. These permits were granted by the Turkish
government after the project earned the support of the local
communities and passed an extensive multi-year environmental review
and community consultation process.
On April 20, 2021, the Company announced that
its Netherlands wholly-owned subsidiaries Alamos Gold Holdings
Coöperatief U.A, and Alamos Gold Holdings B.V. (the “Subsidiaries”)
would be filing an investment treaty claim against the Republic of
Türkiye for expropriation and unfair and inequitable treatment. The
claim was filed under the Netherlands-Türkiye Bilateral Investment
Treaty (the “Treaty”). Alamos Gold Holdings Coöperatief U.A. and
Alamos Gold Holdings B.V. had its claim against the Republic of
Türkiye registered on June 7, 2021 with the International Centre
for Settlement of Investment Disputes (World Bank Group).
Bilateral investment treaties are agreements
between countries to assist with the protection of investments. The
Treaty establishes legal protections for investment between Türkiye
and the Netherlands. The Subsidiaries directly own and control the
Company’s Turkish assets. The Subsidiaries invoking their rights
pursuant to the Treaty does not mean that they relinquish their
rights to the Turkish project, or otherwise cease the Turkish
operations. The Company will continue to work towards a
constructive resolution with the Republic of Türkiye.
The Company incurred $0.6 million in the third
quarter related to ongoing holding costs and legal costs to
progress the Treaty claim, which was expensed. For the first nine
months of 2023, the Company incurred $1.6 million.
Third Quarter 2023 Exploration Activities
Island Gold (Ontario,
Canada)
A total of $14 million has been budgeted at
Island Gold in 2023, primarily for underground exploration. For the
past several years, the exploration focus has been on adding
high-grade Mineral Resources at depth in advance of the Phase 3+
Expansion Study, primarily through surface directional drilling.
This exploration strategy has been successful in nearly tripling
the Mineral Reserve and Resource base since 2017 to over five
million ounces of gold. With an 18-year mine life, and with work on
the expansion ramping up, the focus has shifted to a more
cost-effective expanded underground drilling program that will
leverage existing underground infrastructure. This drilling program
is at a much lower cost on a per metre basis, is less technically
challenging, and requires significantly fewer metres per
exploration target.
The underground exploration drilling program was
expanded from 27,500 metres ("m") in 2022 to 45,000 m in 2023. The
program is focused on defining new Mineral Reserves and Resources
in proximity to existing production horizons and infrastructure
including along strike, and in the hanging-wall and footwall. These
potential high-grade Mineral Reserve and Resource additions would
be low cost to develop and could be incorporated into the mine plan
and mined within the next several years, further increasing the
value of the operation. To support the underground exploration
drilling program, 444 m of underground exploration drift
development is planned to extend drill platforms on the 490, 790,
945, and 980-levels. In addition to the exploration budget, 36,000
m of underground delineation drilling has been planned and included
in sustaining capital for Island Gold.
A regional exploration program including 7,500 m
of drilling is also budgeted in 2023. The focus of the program is
on evaluating and advancing exploration targets outside the Island
Gold Deposit on the 55,300 ha Island Gold property. A total of
4,802 m of surface regional drilling in 16 holes was completed in
the third quarter. Regional drilling has focused on the
Pine-Breccia and Cline Edwards Plowman targets. Regional surface
drilling completed year-to-date totaled 8,432 m in 42 holes.
A total of 6,323 m of underground exploration
drilling in 32 holes was also completed in the third quarter. The
objective of the underground drilling is to identify new Mineral
Resources close to existing Mineral Resource or Reserve blocks. In
addition to underground exploration drilling, a total of 14,328 m
of underground delineation drilling was completed in 76 holes,
focused on infill drilling to convert Mineral Resources to Mineral
Reserves. Year-to-date, 127 holes totaling 29,732 m have been
completed as part of the underground exploration program, and 121
holes totaling 22,155 m as part of the underground delineation
drilling program. A total of 99 m of underground exploration drift
development was also completed during the third quarter.
Total exploration expenditures during the third
quarter were $3.6 million, of which $2.4 million was
capitalized. In the first nine months of 2023, exploration
expenditures totaled $10.6 million, of which $7.8 million
was capitalized.
Young-Davidson (Ontario,
Canada)
A total of $8 million has been budgeted for
exploration at Young-Davidson in 2023, up from $5 million in 2022.
The 2023 program includes 21,600 m of underground exploration
drilling, and 400 m of underground exploration development to
extend drill platforms on the 9220, 9270, and 9590-levels.
The focus of the underground exploration
drilling program is to expand Mineral Reserves and Resources in
five target areas in proximity to existing underground
infrastructure. This includes targeting additional gold
mineralization within the syenite which hosts the majority of
Mineral Reserves and Resources, as well as within the hanging wall
and footwall of the deposit where higher grades have been
previously intersected.
During the third quarter of 2023, two
underground exploration drills completed 6,184 m in 17 holes from
the 9220 West exploration drift and the 9025 East Footwall.
Drilling is targeting syenite-hosted mineralization as well as
continuing to test mineralization in the footwall sediments and in
the hanging wall mafic-ultramafic stratigraphy. During the first
nine months of 2023, a total of 17,880 m was completed in 44
holes.
In addition, 5,000 m of surface drilling was
budgeted to test near-surface targets across the 5,720 ha
Young-Davidson property. A total of 4,366 m of surface drilling in
nine holes was completed in the third quarter. Year-to-date, 7,052
m has been completed in 21 holes focused on the MCM-target area,
immediately east and adjacent to the Young-Davidson deposit.
Total exploration expenditures during the third
quarter were $2.2 million of which $1.2 million was
capitalized. For the first nine months of 2023, exploration
spending totaled $6.3 million of which $3.8 million was
capitalized.
Mulatos District (Sonora,
Mexico)
During the third quarter of 2023, exploration
activities continued at PDA and the near-mine area with 3,271 m of
drilling completed in 42 holes. Additionally, an eight hole, 2,230
m geotechnical drilling program was completed to support
development of PDA. Exploration drilling at PDA has been successful
with Mineral Reserves increasing 70% in 2022 to 728,000 ounces
(4.7mt grading 4.84 g/t Au) with grades also increasing 4%. Ongoing
exploration success and results from the geotechnical drilling
program will be incorporated into an updated development plan which
is expected to be completed towards the end of 2023.
The regional program totaled 10,049 m of
drilling completed in 31 holes in the third quarter. This included
6,319 m completed in 17 holes at the Capulin target, and 3,840 m
completed in 13 drill holes at Cerro Pelon West.
As announced in the September 13, 2023 press
release, drilling continues to extend high-grade gold
mineralization outside of Mineral Reserves and Resources at PDA.
PDA is a higher-grade underground deposit adjacent to the Mulatos
pit. Additionally, step-out drilling at the Capulin regional target
continues to intersect wide intervals of significant gold
mineralization. Capulin is located four kilometres (“km”) east of
the Mulatos open pit. Previously reported highlights are as
follows:
PDA
- Additional
high-grade gold mineralization extended beyond Mineral Reserves and
Resources at PDA. This is expected to support further growth in the
size of the deposit following a 71% increase in combined Mineral
Reserves and Resources in 2022 to a total of 1.0 million ounces. An
expanded drill program is ongoing with the deposit open in multiple
directions. All reported composite widths are estimated true width
of the mineralized zones.
- 41.46 g/t Au (18.87
g/t cut) over 7.05 m (23MUL122)
- 18.32 g/t Au (15.13
g/t cut) over 9.50 m (23MUL120)
- 13.62 g/t Au (13.62
g/t cut) over 9.45 m (23MUL120)
- 85.80 g/t Au (40.00
g/t cut) over 1.20 m (23MUL165)
- 5.58 g/t Au (5.58
g/t cut) over 17.60 m (23MUL165); and
- 10.42 g/t Au (10.42
g/t cut) over 6.00 m (23MUL139)
Capulin Target
- Step-out drilling
continues to intersect wide, significant intervals of oxide and
sulphide gold mineralization within a breccia adjacent to the
Capulin Fault. This includes the best hole drilled to date at
Capulin (23REF022), a 25 m step out from the previously reported
initial hole drilled in this area 23REF012 (2.01 g/t Au over 82.45
m core length, including 4.81 g/t Au over 16.40 m and 5.38 g/t Au
over 12.35 m). Drilling continues to test the geometry of the
breccia unit and the extent of the gold mineralization, as well as
targets across the broader Capulin area.
- 2.73 g/t Au over
120.85 m core length, including 9.31 g/t Au over 29.05 m
(23REF022)
Note: Drillhole composite gold grades reported
as “cut” at PDA may include higher grade samples which have been
cut to 40 g/t Au. Drillhole composite gold grades reported at
Capulin as uncut.
During the third quarter, exploration spending
at Mulatos totaled $7.2 million of which $2.4 million was
capitalized. For the first nine months of 2023, exploration
spending totaled $15.7 million of which $6.3 million was
capitalized.
Lynn Lake (Manitoba,
Canada)
A total of $7.3 million has been budgeted for
exploration at the Lynn Lake project in 2023. This includes 8,000 m
of drilling focused on several advanced regional targets, and
expansion of Mineral Reserves and Resources in proximity to the
Gordon deposit. The key areas of focus for 2023 are the continued
evaluation and advancement of a pipeline of prospective exploration
targets within the 58,000 ha Lynn Lake property including the
Tulune greenfields discovery and Maynard, Wedge, McVeigh, Gemmell
and Jim.
The 2023 drilling campaign was completed by the
end of the second quarter comprising 7,979 m of drilling in 29
holes. Geological mapping, sampling and hand trenches with channel
sampling was conducted in the third quarter, focused on the Tulune,
Maynard, and Snake Lake projects.
On August 1, 2023, the Company provided an
exploration update on the Lynn Lake project including results from
several regional exploration targets and drilling completed at
Gordon over the past year and a half. These results have not been
incorporated into the updated Feasibility Study released on August
2, 2023, highlighting the significant exploration upside potential.
Previously reported highlights include the following:
- Gordon Gold
Deposit: gold mineralization extended outside of Mineral Reserves
and Resources in the northeastern extent of the planned Gordon pit,
in an area modeled as waste in the 2023 Study.
- 11.19 g/t Au over
10.40 metres (“m”) (5.87 m true width) (22GDX082)
- 2.51 g/t Au over
25.10 m (17.30 m true width) (22GDX081); and
- 2.86 g/t Au over
10.59 m (7.74 m true width), and 4.72 g/t Au over 5.35 m (3.55 m
true width) (22GDX080)
- Maynard Regional
Target: significant gold mineralization extended over a 700 m
strike length and to a depth of 280 m. Maynard is located in
proximity to the Burnt Timber and Linkwood deposits and 1 km from
an all-season road, representing a high-priority target as a
potential satellite deposit within trucking distance of the
MacLellan mill. To date, all 16 holes drilled within the Maynard
target have intersected gold mineralization1.
- 5.87 g/t Au over
11.88 m, including 13.81 g/t Au over 2.80 m, and 20.29 g/t Au over
1.22 m (23LLX066)
- 1.01 g/t Au over
56.90 m, including 6.09 g/t Au over 2.50 m (22LLX031)
- 2.63 g/t Au over
13.00 m, including 39.70 g/t Au over 0.73 m, and 0.80 g/t Au over
16.00 m, and 0.58 g/t Au over 23.15 m (22LLX027);
- 0.68 g/t Au over
40.13 m (22LLX028); and
- 1.09 g/t Au over
23.75 m, including 4.72 g/t over 4.01 m (22LLX030).
- Tulune Regional
Target: additional drilling has extended broad zones of near
surface gold mineralization over a 1.5 km strike length, including
a 350 m step out hole to the east. Tulune is a greenfields
discovery made in 2020, and is located between the Gordon and
MacLellan deposits. All 29 holes drilled within the felsic
intrusive at the Tulune target to date have intersected gold
mineralization1.
- 1.12 g/t Au over
23.00 m (22LLX059)
- 1.08 g/t Au over
16.10 m, including 34.30 g/t Au over 0.30 m (22LLX054); and
- 0.75 g/t Au over
21.90 m (22LLX060)
- Burnt Timber and
Linkwood Gold Deposits: an updated deposit-scale geological model
has been completed for both deposits, demonstrating excellent
potential for a smaller, higher-grade Mineral Resource that could
provide additional ore to the MacLellan mill. The deposits
contained Inferred Mineral Resources totaling 1.6 million ounces
grading 1.1 g/t Au (44.4 mt) as of December 31, 2022. The Burnt
Timber and Linkwood deposits are connected by an existing
all-season road to the planned MacLellan site and mill,
representing further upside potential to the upcoming 2023
Study.1Gold grades reported as uncut, composite intervals reported
as core length, true width is unknown at this time.
Exploration spending totaled $1.7 million
in the third quarter and $5.9 million for the first nine
months of 2023, all of which was capitalized.
Review of Third Quarter Financial Results
During the third quarter of 2023, the Company
sold 132,633 ounces of gold for operating revenues of $256.2
million. This represented a 20% increase from the prior year period
due to an 8% increase in ounces sold, driven by higher production
from the Mulatos District, and a higher realized gold price.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) were $158.0
million in the third quarter, 6% lower than the prior year period.
Cost of sales in the prior year period were impacted by a net
realizable value adjustment on the Mulatos heap leach inventory of
$11.6 million. Excluding the impact of the inventory adjustment,
key drivers of changes to cost of sales as compared to the prior
year period were as follows:
Mining and processing costs were $108.3 million,
4% higher than the prior year period. The increase primarily
reflects the impact of inflationary pressures on mining and
processing costs across the operations. Inflationary pressures and
operating costs have remained in line with expectations. The impact
of the stronger Mexican peso relative to the annual cost guidance
has been largely mitigated by the Company's hedge position on the
Mexican peso.
Total cash costs of $835 per ounce and AISC of
$1,121 per ounce were lower than the prior year period driven by
the low-cost production growth from La Yaqui Grande.
Royalty expense was $2.5 million in the quarter,
slightly higher than the prior year period of $2.4 million due to
the higher average realized gold price.
Amortization of $47.2 million, or $356 per ounce
in the quarter was lower than the prior year period due to the
higher contribution of production from La Yaqui Grande which has a
lower depletable cost base, resulting in lower amortization per
ounce.
The Company recognized earnings from operations
of $82.6 million in the third quarter, 176% higher than the prior
year period, as a result of the increase in ounces sold and margin
expansion, driven by low-cost production growth from La Yaqui
Grande. Earnings from operations in the prior year period were also
impacted by the non-cash net realizable value adjustment on the
Mulatos heap leach inventory.
The Company reported net earnings of $39.4
million in the quarter, compared to a net loss of $1.4 million in
the prior year period. Adjusted earnings (1) in the third quarter
were $54.5 million, or $0.14 per share, which included adjustments
for an unrealized foreign exchange loss recorded within deferred
taxes, and foreign exchange gains on net monetary assets and
liabilities, resulting from the weakening of the Canadian dollar
and Mexican peso.
(1) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.
Associated Documents
This press release should be read in conjunction
with the Company’s interim consolidated financial statements for
the three-month period ended September 30, 2023 and associated
Management’s Discussion and Analysis (“MD&A”), which are
available from the Company's website, www.alamosgold.com, in the
"Investors" section under "Reports and Financials", and on SEDAR+
(www.sedarplus.ca) and EDGAR (www.sec.gov).
Reminder of Third Quarter 2023 Results
Conference Call
The Company's senior management will host a
conference call on Thursday, October 26, 2023 at 10:00 am ET to
discuss the results. Participants may join the conference call via
webcast or through the following dial-in numbers:
Toronto and
International: |
(416)
340-2217 |
Toll free (Canada and the United States): |
(800) 898-3989 |
Participant passcode: |
3694467# |
Webcast: |
www.alamosgold.com |
A playback will be available until November 26,
2023 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The passcode is 3494502#. The webcast will be
archived at www.alamosgold.com.
Qualified Persons
Chris Bostwick, FAusIMM, Alamos’ Senior Vice
President, Technical Services, who is a qualified person within the
meaning of National Instrument 43-101 ("Qualified Person"), has
reviewed and approved the scientific and technical information
contained in this press release.
About Alamos
Alamos is a Canadian-based intermediate gold
producer with diversified production from three operating mines in
North America. This includes the Young-Davidson and Island Gold
mines in northern Ontario, Canada and the Mulatos mine in Sonora
State, Mexico. Additionally, the Company has a strong portfolio of
growth projects, including the Phase 3+ Expansion at Island Gold,
and the Lynn Lake project in Manitoba, Canada. Alamos employs more
than 1,900 people and is committed to the highest standards of
sustainable development. The Company’s shares are traded on the TSX
and NYSE under the symbol “AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K.
Parsons |
|
Senior Vice-President,
Investor Relations |
|
(416) 368-9932 x 5439 |
|
All amounts are in United States dollars, unless otherwise
stated.
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this
release.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains or incorporates by
reference “forward-looking statements” and “forward-looking
information” as defined under applicable Canadian and U.S.
securities legislation. All statements, other than statements of
historical fact, which address events, results, outcomes or
developments that the Company expects to occur are, or may be
deemed, to be, forward-looking statements. Forward-looking
statements are generally, but not always, identified by the use of
forward-looking terminology such as "expect", "believe",
"anticipate", "intend", "objective", "estimate", “potential”,
"forecast", "budget", “target”, "goal", “on track”, “on pace”,
“outlook”, “continue”, “ongoing”, “plan” or variations of such
words and phrases and similar expressions or statements that
certain actions, events or results “may”, “could”, “would”, “might”
or “will” be taken, occur or be achieved or the negative
connotation of such terms.
Such statements include, but may not be limited
to, guidance and expectations pertaining to: free cash flow,
mine-site free cash flow, gold production, total cash costs, all-in
sustaining costs, mine-site all-in sustaining costs, capital
expenditures, total sustaining and growth capital, capitalized
exploration; achieving 2023 annual guidance; increases to
production, value of operation and decreases to costs resulting
from intended completion of the Phase 3+ Expansion at Island Gold;
intended infrastructure investments in, method of funding for, and
timing of the completion of, the Phase 3+ Expansion; the
expectation that the Lynn Lake project will be an attractive,
low-cost long-life growth project in Canada with significant
exploration upside; expenditures on the development of the Lynn
Lake project; the effect of court and administrative proceedings in
Manitoba on project timelines for the Lynn Lake project;
exploration potential, budgets, focuses, programs, targets and
projected exploration results; returns to stakeholders; gold
prices; potential for further growth from PDA, a new development
plan for PDA and the expected timing of its completion; mine life,
including an anticipated mine life extension at Mulatos; Mineral
Reserve life; Mineral Reserve and Resource grades; reserve and
resource estimates; mining and milling rates; the Company’s
approach to reduction of its environmental footprint (including new
initiatives and target reduction in greenhouse gas emissions),
community relations and governance as well as other general
information as to strategy, plans or future financial or operating
performance, such as the Company’s expansion plans, project
timelines, production plans and expected sustainable productivity
increases, expected increases in mining activities and
corresponding cost efficiencies, forecasted cash shortfalls and the
Company’s ability to fund them, cost estimates, sufficiency of
working capital for future commitments and other statements that
express management’s expectations or estimates of future plans and
performance.
Alamos cautions that forward-looking statements
are necessarily based upon a number of factors and assumptions
that, while considered reasonable by the Company at the time of
making such statements, are inherently subject to significant
business, economic, technical, legal, political and competitive
uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking statements and undue reliance should not be
placed on such statements and information.
Risk factors that may affect Alamos’ ability to
achieve the expectations set forth in the forward-looking
statements in this press release include, but are not limited to:
changes to current estimates of mineral reserves and resources;
changes to production estimates (which assume accuracy of projected
ore grade, mining rates, recovery timing and recovery rate
estimates which may be impacted by unscheduled maintenance, weather
issues, labour and contractor availability and other operating or
technical difficulties); operations may be exposed to new diseases,
epidemics and pandemics, including any ongoing effects and
potential further effects of COVID-19; the impact of COVID-19 or
any other new illness, epidemic or pandemic on the broader market
and the trading price of the Company's shares; provincial and
federal orders or mandates (including with respect to mining
operations generally or auxiliary businesses or services required
for the Company’s operations) in Canada, Mexico, the United States
and Türkiye; the duration of any ongoing or new regulatory
responses to COVID-19 or any other new illness, epidemic or
pandemic; government and the Company’s attempts to reduce the
spread of any illness, epidemic or pandemic which may affect many
aspects of the Company's operations including the ability to
transport personnel to and from site, contractor and supply
availability and the ability to sell or deliver gold doré bars;
fluctuations in the price of gold or certain other commodities such
as, diesel fuel, natural gas, and electricity; changes in foreign
exchange rates (particularly the Canadian Dollar, Mexican peso,
U.S. dollar and Turkish lira); the impact of inflation; changes in
the Company's credit rating; any decision to declare a quarterly
dividend; employee and community relations; litigation and
administrative proceedings (including but not limited to the
investment treaty claim announced on April 20, 2021 against the
Republic of Türkiye by the Company’s wholly-owned Netherlands
subsidiaries, Alamos Gold Holdings Coöperatief U.A, and Alamos Gold
Holdings B.V., the application for judicial review of the positive
Decision Statement issued by the Ministry of Environment and
Climate Change Canada commenced by the Mathias Colomb Cree Nation
(MCCN) in respect of the Lynn Lake Gold Project and the MCCN’s
corresponding internal appeal of the Environment Act Licenses
issued by the Province of Manitoba for the project); disruptions
affecting operations; availability of and increased costs
associated with mining inputs and labour; delays with the Phase 3+
expansion project at the Island Gold mine; court or other
administrative decisions impacting the Company’s approved
Environmental Impact Study and/or issued project permits,
construction decisions and any development of the Lynn Lake
project; delays in the development or updating of mine plans;
changes with respect to the intended method of accessing and mining
the deposit at PDA and changes related to the intended method of
processing any ore from the deposit of PDA; the risk that the
Company’s mines may not perform as planned; uncertainty with the
Company’s ability to secure additional capital to execute its
business plans; the speculative nature of mineral exploration and
development, including the risks of obtaining and maintaining
necessary licenses and permits, including the necessary licenses,
permits, authorizations and/or approvals from the appropriate
regulatory authorities for the Company’s development stage and
operating assets; labour and contractor availability (and being
able to secure the same on favourable terms); contests over title
to properties; expropriation or nationalization of property;
inherent risks and hazards associated with mining and mineral
processing including environmental hazards, industrial hazards,
industrial accidents, unusual or unexpected formations, pressures
and cave-ins; changes in national and local government legislation,
controls or regulations in Canada, Mexico, Türkiye, the United
States and other jurisdictions in which the Company does or may
carry on business in the future; increased costs and risks related
to the potential impact of climate change; failure to comply with
environmental and health and safety laws and regulations;
disruptions in the maintenance or provision of required
infrastructure and information technology systems; risk of loss due
to sabotage, protests and other civil disturbances; the impact of
global liquidity and credit availability and the values of assets
and liabilities based on projected future cash flows; risks arising
from holding derivative instruments; and business opportunities
that may be pursued by the Company. The litigation against the
Republic of Türkiye, described above, results from the actions of
the Turkish government in respect of the Company’s projects in the
Republic of Türkiye. Such litigation is a mitigation effort and may
not be effective or successful. If unsuccessful, the Company’s
projects in Türkiye may be subject to resource nationalism and
further expropriation; the Company may lose any remaining value of
its assets and gold mining projects in Türkiye and its ability to
operate in Türkiye. Even if the litigation is successful, there is
no certainty as to the quantum of any damages award or recovery of
all, or any, legal costs. Any resumption of activities in Türkiye,
or even retaining control of its assets and gold mining projects in
Türkiye can only result from agreement with the Turkish government.
The investment treaty claim described in this press release may
have an impact on foreign direct investment in the Republic of
Türkiye which may result in changes to the Turkish economy,
including but not limited to high rates of inflation and
fluctuation of the Turkish Lira which may also affect the Company’s
relationship with the Turkish government, the Company’s ability to
effectively operate in Türkiye, and which may have a negative
effect on overall anticipated project values.
Additional risk factors and details with respect
to risk factors that may affect the Company’s ability to achieve
the expectations set forth in the forward-looking statements
contained in this press release are set out in the Company's latest
40-F/Annual Information Form and Management’s Discussion and
Analysis, each under the heading “Risk Factors”, which are
available on the SEDAR+ website at www.sedarplus.ca or on EDGAR at
www.sec.gov. The foregoing should be reviewed in conjunction with
the information, risk factors and assumptions found in this press
release.
The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Cautionary Note to U.S. Investors
Concerning Measured, Indicated and Inferred Resources
Measured, Indicated and Inferred
Resources: All resource and reserve estimates included in
this press release or documents referenced in this press release
have been prepared in accordance with Canadian National Instrument
43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101")
and the Canadian Institute of Mining, Metallurgy and Petroleum (the
"CIM") - CIM Definition Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council, as amended (the "CIM
Standards"). NI 43-101 is a rule developed by the Canadian
Securities Administrators, which established standards for all
public disclosure an issuer makes of scientific and technical
information concerning mineral projects. Mining disclosure in the
United States was previously required to comply with SEC Industry
Guide 7 (“SEC Industry Guide 7”) under the United States Securities
Exchange Act of 1934, as amended. The U.S. Securities and Exchange
Commission (the “SEC”) has adopted final rules, to replace SEC
Industry Guide 7 with new mining disclosure rules under sub-part
1300 of Regulation S-K of the U.S. Securities Act (“Regulation S-K
1300”) which became mandatory for U.S. reporting companies
beginning with the first fiscal year commencing on or after January
1, 2021. Under Regulation S-K 1300, the SEC now recognizes
estimates of “Measured Mineral Resources”, “Indicated Mineral
Resources” and “Inferred Mineral Resources”. In addition, the SEC
has amended its definitions of “Proven Mineral Reserves” and
“Probable Mineral Reserves” to be substantially similar to
international standards.
Investors are cautioned that while the above
terms are “substantially similar” to CIM Definitions, there are
differences in the definitions under Regulation S-K 1300 and the
CIM Standards. Accordingly, there is no assurance any mineral
reserves or mineral resources that the Company may report as
“proven mineral reserves”, “probable mineral reserves”, “measured
mineral resources”, “indicated mineral resources” and “inferred
mineral resources” under NI 43-101 would be the same had the
Company prepared the mineral reserve or mineral resource estimates
under the standards adopted under Regulation S-K 1300. U.S.
investors are also cautioned that while the SEC recognizes
“measured mineral resources”, “indicated mineral resources” and
“inferred mineral resources” under Regulation S-K 1300, investors
should not assume that any part or all of the mineralization in
these categories will ever be converted into a higher category of
mineral resources or into mineral reserves. Mineralization
described using these terms has a greater degree of uncertainty as
to its existence and feasibility than mineralization that has been
characterized as reserves. Accordingly, investors are cautioned not
to assume that any measured mineral resources, indicated mineral
resources, or inferred mineral resources that the Company reports
are or will be economically or legally mineable.
International Financial Reporting
Standards: The condensed interim consolidated financial
statements of the Company have been prepared by management in
accordance with International Financial Reporting Standard 34,
Interim Financial Reporting, as issued by the International
Accounting Standards Board. These accounting principles differ in
certain material respects from accounting principles generally
accepted in the United States of America. The Company’s reporting
currency is the United States dollar unless otherwise noted.
Non-GAAP Measures and Additional GAAP
Measures
The Company has included certain non-GAAP
financial measures to supplement its Consolidated Financial
Statements, which are presented in accordance with IFRS, including
the following:
- adjusted net earnings and adjusted
earnings per share;
- cash flow from operating activities
before changes in working capital and taxes received;
- company-wide free cash flow;
- total mine-site free cash flow;
- mine-site free cash flow;
- total cash cost per ounce of gold
sold;
- AISC per ounce of gold sold;
- mine-site all-in sustaining cost
("Mine-site AISC") per ounce of gold sold;
- sustaining and non-sustaining
capital expenditures; and
- earnings before interest, taxes,
depreciation, and amortization ("EBITDA")
The Company believes that these measures,
together with measures determined in accordance with IFRS, provide
investors with an improved ability to evaluate the underlying
performance of the Company. Non-GAAP financial measures do not have
any standardized meaning prescribed under IFRS, and therefore they
may not be comparable to similar measures employed by other
companies. The data 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.
Management's determination of the components of non-GAAP and
additional measures are evaluated on a periodic basis influenced by
new items and transactions, a review of investor uses and new
regulations as applicable. Any changes to the measures are dully
noted and retrospectively applied as applicable.
Adjusted Net Earnings and Adjusted
Earnings per Share
“Adjusted net earnings” and “adjusted earnings
per share” are non-GAAP financial measures with no standard meaning
under IFRS which exclude the following from net earnings
(loss):
- Foreign exchange
gain
- Items included
in other (loss) gain
- Certain
non-recurring items
- Foreign exchange
(loss) gain recorded in deferred tax expense
- The income and
mining tax impact of items included in other (loss) gain
Net earnings (loss) have been adjusted,
including the associated tax impact, for the group of costs in
“other (loss) gain” on the consolidated statement of comprehensive
income. Transactions within this grouping are: the fair value
changes on non-hedged derivatives; the renunciation of flow-through
exploration expenditures; loss on disposal of assets; and Turkish
Projects holding costs and arbitration costs. The adjusted entries
are also impacted for tax to the extent that the underlying entries
are impacted for tax in the unadjusted net earnings (loss).
The Company uses adjusted net earnings for its
own internal purposes. Management’s internal budgets and forecasts
and public guidance do not reflect the items which have been
excluded from the determination of adjusted net earnings.
Consequently, the presentation of adjusted net earnings enables
shareholders to better understand the underlying operating
performance of the core mining business through the eyes of
management. Management periodically evaluates the components of
adjusted net earnings based on an internal assessment of
performance measures that are useful for evaluating the operating
performance of our business and a review of the non-GAAP measures
used by mining industry analysts and other mining companies.
Adjusted net earnings is intended to provide
additional information only and does not have any standardized
meaning under IFRS and may not be comparable to similar measures
presented by other companies. It should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. The measure is not necessarily indicative
of operating profit or cash flows from operations as determined
under IFRS. The following table reconciles this non-GAAP measure to
the most directly comparable IFRS measure.
(in
millions) |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Net earnings (loss) |
$39.4 |
|
($1.4 |
) |
$162.9 |
|
($3.5 |
) |
Adjustments: |
|
|
|
|
Inventory net realizable value adjustment, net of taxes |
— |
|
7.7 |
|
— |
|
22.4 |
|
Impairment charge, net of taxes |
— |
|
— |
|
— |
|
26.7 |
|
Foreign exchange gain |
(0.5 |
) |
(1.5 |
) |
(1.6 |
) |
(1.9 |
) |
Other loss (gain) |
4.3 |
|
(3.5 |
) |
2.6 |
|
(1.5 |
) |
Unrealized foreign exchange loss (gain) recorded in deferred tax
expense |
12.4 |
|
24.5 |
|
(4.0 |
) |
31.6 |
|
Other income tax and mining tax adjustments |
(1.1 |
) |
1.1 |
|
(0.7 |
) |
0.4 |
|
Adjusted net earnings |
$54.5 |
|
$26.9 |
|
$159.2 |
|
$74.2 |
|
Adjusted earnings per share - basic |
$0.14 |
|
$0.07 |
|
$0.40 |
|
$0.19 |
|
Cash Flow from Operating Activities
before Changes in Working Capital and Cash Taxes
“Cash flow from operating activities before
changes in working capital and cash taxes” is a non-GAAP
performance measure that could provide an indication of the
Company’s ability to generate cash flows from operations, and is
calculated by adding back the change in working capital and taxes
received to “Cash provided by (used in) operating activities” as
presented on the Company’s consolidated statements of cash flows.
“Cash flow from operating activities before changes in working
capital” is a non-GAAP financial measure with no standard meaning
under IFRS.
The following table reconciles the non-GAAP
measure to the consolidated statements of cash flows.
(in millions) |
|
|
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2023 |
2022 |
2023 |
2022 |
Cash flow from operating activities |
$112.5 |
$74.0 |
$348.6 |
$196.2 |
Add: Changes in working
capital and taxes paid |
20.7 |
22.1 |
50.1 |
56.1 |
Cash flow from operating activities before changes in
working capital and taxes paid |
$133.2 |
$96.1 |
$398.7 |
$252.3 |
Company-wide Free Cash Flow
“Company-wide free cash flow" is a non-GAAP
performance measure calculated from the consolidated operating cash
flow, less consolidated mineral property, plant and equipment
expenditures. The Company believes this to be a useful indicator of
our ability to operate without reliance on additional borrowing or
usage of existing cash company-wide. Company-wide free cash flow is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other mining
companies. Company-wide free cash flow should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
(in
millions) |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Cash flow from operating activities |
$112.5 |
|
$74.0 |
|
$348.6 |
|
$196.2 |
|
Less: mineral property, plant
and equipment expenditures |
(75.2 |
) |
(72.6 |
) |
(239.2 |
) |
(228.9 |
) |
Company-wide free cash flow |
$37.3 |
|
$1.4 |
|
$109.4 |
|
($32.7 |
) |
Mine-site Free Cash Flow
"Mine-site free cash flow" is a non-GAAP
financial performance measure calculated as cash flow from
mine-site operating activities, less mineral property, plant and
equipment expenditures. The Company believes this to be a useful
indicator of our ability to operate without reliance on additional
borrowing or usage of existing cash. Mine-site free cash flow is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other mining
companies. Mine-site free cash flow should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
Consolidated Mine-Side Free Cash Flow |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$112.5 |
|
$74.0 |
|
$348.6 |
|
$196.2 |
|
Add:
operating cash flow used by non-mine site activity |
9.7 |
|
8.2 |
|
38.9 |
|
32.6 |
|
Cash flow from operating mine-sites |
$122.2 |
|
$82.2 |
|
$387.5 |
|
$228.8 |
|
|
|
|
|
|
Mineral property, plant and
equipment expenditure |
$75.2 |
|
$72.6 |
|
$239.2 |
|
$228.9 |
|
Less:
capital expenditures from development projects, and corporate |
(5.6 |
) |
($6.9 |
) |
(14.8 |
) |
(17.4 |
) |
|
|
|
|
|
Capital expenditure and capital advances from
mine-sites |
$69.6 |
|
$65.7 |
|
$224.4 |
|
$211.5 |
|
|
|
|
|
|
Total mine-site free cash flow |
$52.6 |
|
$16.5 |
|
$163.1 |
|
$17.3 |
|
Young-Davidson Mine-Site Free Cash Flow |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$43.2 |
|
$38.4 |
|
$125.8 |
|
$128.2 |
|
Mineral
property, plant and equipment expenditure |
(12.3 |
) |
(15.1 |
) |
(43.2 |
) |
(50.9 |
) |
Mine-site free cash flow |
$30.9 |
|
$23.3 |
|
$82.6 |
|
$77.3 |
|
Island Gold Mine-Site Free Cash Flow |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$38.3 |
|
$32.1 |
|
$125.0 |
|
$109.0 |
|
Mineral
property, plant and equipment expenditure |
(47.5 |
) |
(40.7 |
) |
(159.2 |
) |
(103.4 |
) |
Mine-site free cash flow |
($9.2 |
) |
($8.6 |
) |
($34.2 |
) |
$5.6 |
|
Mulatos District Free Cash Flow |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$40.7 |
|
$11.7 |
|
$136.7 |
|
($8.4 |
) |
Mineral property, plant and
equipment expenditure |
(9.8 |
) |
(9.9 |
) |
(22.0 |
) |
(57.2 |
) |
Mine-site free cash flow |
$30.9 |
|
$1.8 |
|
$114.7 |
|
($65.6 |
) |
Total Cash Costs per ounce
Total cash costs per ounce is a non-GAAP term
typically used by gold mining companies to assess the level of
gross margin available to the Company by subtracting these costs
from the unit price realized during the period. This non-GAAP term
is also used to assess the ability of a mining company to generate
cash flow from operations. Total cash costs per ounce includes
mining and processing costs plus applicable royalties, and net of
by-product revenue and net realizable value adjustments. Total cash
costs per ounce is exclusive of exploration costs.
Total cash costs per ounce is intended to
provide additional information only and does not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other mining companies. It should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. The measure is not
necessarily indicative of cash flow from operations under IFRS or
operating costs presented under IFRS.
All-in Sustaining Costs per ounce and
Mine-site All-in Sustaining Costs
The Company adopted an “all-in sustaining costs
per ounce” non-GAAP performance measure in accordance with the
World Gold Council published in June 2013. The Company believes the
measure more fully defines the total costs associated with
producing gold; however, this performance measure has no
standardized meaning. Accordingly, there may be some variation in
the method of computation of “all-in sustaining costs per ounce” as
determined by the Company compared with other mining companies. In
this context, “all-in sustaining costs per ounce” for the
consolidated Company reflects total mining and processing costs,
corporate and administrative costs, share-based compensation,
exploration costs, sustaining capital, and other operating
costs.
For the purposes of calculating "mine-site
all-in sustaining costs" at the individual mine-sites, the Company
does not include an allocation of corporate and administrative
costs and share-based compensation, as detailed in the
reconciliations below.
Sustaining capital expenditures are expenditures
that do not increase annual gold ounce production at a mine site
and excludes all expenditures at the Company’s development projects
as well as certain expenditures at the Company’s operating sites
that are deemed expansionary in nature. For each mine-site
reconciliation, corporate and administrative costs, and non-site
specific costs are not included in the all-in sustaining cost per
ounce calculation.
All-in
sustaining costs per gold ounce is
intended to provide additional information only and does not
have any standardized
meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.
Total Cash Costs and All-in Sustaining
Costs per Ounce Reconciliation Tables
The following tables reconciles these non-GAAP
measures to the most directly comparable IFRS measures on a
Company-wide and individual mine-site basis.
Total Cash
Costs and AISC Reconciliation - Company-wide |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2023 |
2022 |
2023 |
2022 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$108.3 |
$104.2 |
$323.9 |
$288.8 |
Royalties |
2.5 |
2.4 |
7.5 |
6.9 |
Total cash costs |
110.8 |
106.6 |
331.4 |
295.7 |
Gold
ounces sold |
132,633 |
122,780 |
397,253 |
323,410 |
Total cash costs per ounce |
$835 |
$868 |
$834 |
$914 |
|
|
|
|
|
Total cash costs |
$110.8 |
$106.6 |
$331.4 |
$295.7 |
Corporate and administrative
(1) |
6.3 |
6.4 |
20.0 |
18.7 |
Sustaining capital
expenditures (2) |
27.3 |
26.0 |
77.6 |
68.7 |
Share-based compensation |
1.8 |
4.5 |
15.4 |
11.2 |
Sustaining exploration |
0.7 |
0.5 |
1.9 |
1.8 |
Accretion of decommissioning
liabilities |
1.8 |
0.6 |
5.1 |
2.0 |
Total all-in sustaining costs |
$148.7 |
$144.6 |
$451.4 |
$398.1 |
Gold
ounces sold |
132,633 |
122,780 |
397,253 |
323,410 |
All-in sustaining costs per ounce |
$1,121 |
$1,178 |
$1,136 |
$1,231 |
(1) |
Corporate and administrative expenses exclude expenses incurred at
development properties. |
(2) |
Sustaining capital expenditures are defined as those expenditures
which do not increase annual gold ounce production at a mine site
and exclude all expenditures at growth projects and certain
expenditures at operating sites which are deemed expansionary in
nature. Total sustaining capital expenditures for the period are as
follows: |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(in millions) |
|
|
|
|
Capital expenditures per cash
flow statement |
$75.2 |
|
$72.6 |
|
$239.2 |
|
$228.9 |
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
Young-Davidson |
(1.5 |
) |
(2.1 |
) |
(8.1 |
) |
(17.3 |
) |
Island Gold |
(36.9 |
) |
(31.6 |
) |
(126.2 |
) |
(77.0 |
) |
Mulatos District |
(3.9 |
) |
(6.0 |
) |
(12.5 |
) |
(48.5 |
) |
Corporate and other |
(5.6 |
) |
(6.9 |
) |
(14.8 |
) |
(17.4 |
) |
Sustaining capital expenditures |
$27.3 |
|
$26.0 |
|
$77.6 |
|
$68.7 |
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2023 |
2022 |
2023 |
2022 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$41.4 |
$41.5 |
$123.4 |
$122.3 |
Royalties |
1.3 |
1.3 |
3.9 |
4.2 |
Total cash costs |
$42.7 |
$42.8 |
$127.3 |
$126.5 |
Gold
ounces sold |
45,498 |
49,218 |
134,744 |
147,405 |
Total cash costs per ounce |
$939 |
$870 |
$945 |
$858 |
|
|
|
|
|
Total cash costs |
$42.7 |
$42.8 |
$127.3 |
$126.5 |
Sustaining capital
expenditures |
10.8 |
13.0 |
35.1 |
33.6 |
Accretion of decommissioning liabilities |
0.1 |
— |
0.3 |
0.2 |
Total all-in sustaining costs |
$53.6 |
$55.8 |
$162.7 |
$160.3 |
Gold
ounces sold |
45,498 |
49,218 |
134,744 |
147,405 |
Mine-site all-in sustaining costs per ounce |
$1,178 |
$1,134 |
$1,207 |
$1,087 |
Island
Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2023 |
2022 |
2023 |
2022 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$20.8 |
$19.7 |
$59.9 |
$57.6 |
Royalties |
0.7 |
0.7 |
1.9 |
1.9 |
Total cash costs |
$21.5 |
$20.4 |
$61.8 |
$59.5 |
Gold
ounces sold |
35,255 |
31,342 |
97,165 |
91,507 |
Total cash costs per ounce |
$610 |
$651 |
$636 |
$650 |
|
|
|
|
|
Total cash costs |
$21.5 |
$20.4 |
$61.8 |
$59.5 |
Sustaining capital
expenditures |
10.6 |
9.1 |
33.0 |
26.4 |
Accretion of decommissioning liabilities |
0.2 |
0.1 |
0.4 |
0.2 |
Total all-in sustaining costs |
$32.3 |
$29.6 |
$95.2 |
$86.1 |
Gold
ounces sold |
35,255 |
31,342 |
97,165 |
91,507 |
Mine-site all-in sustaining costs per ounce |
$916 |
$944 |
$980 |
$941 |
Mulatos
District Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2023 |
2022 |
2023 |
2022 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$46.1 |
$43.0 |
$140.6 |
$108.9 |
Royalties |
0.5 |
0.4 |
1.7 |
0.8 |
Total cash costs |
$46.6 |
$43.4 |
$142.3 |
$109.7 |
Gold
ounces sold |
51,880 |
42,220 |
165,344 |
84,498 |
Total cash costs per ounce |
$898 |
$1,028 |
$861 |
$1,298 |
|
|
|
|
|
Total cash costs |
$46.6 |
$43.4 |
$142.3 |
$109.7 |
Sustaining capital
expenditures |
5.9 |
3.9 |
9.5 |
8.7 |
Sustaining exploration |
0.2 |
0.1 |
0.5 |
0.5 |
Accretion of decommissioning liabilities |
1.5 |
0.6 |
4.4 |
1.6 |
Total all-in sustaining costs |
$54.2 |
$48.0 |
$156.7 |
$120.5 |
Gold
ounces sold |
51,880 |
42,220 |
165,344 |
84,498 |
Mine-site all-in sustaining costs per ounce |
$1,045 |
$1,137 |
$948 |
$1,426 |
Earnings Before Interest, Taxes, Depreciation, and
Amortization (“EBITDA”)
EBITDA represents net earnings before interest,
taxes, depreciation, and amortization. EBITDA is an indicator of
the Company’s ability to generate liquidity by producing operating
cash flow to fund working capital needs, service debt obligations,
and fund capital expenditures.
EBITDA does not have any standardized meaning
under IFRS and may not be comparable to similar measures presented
by other mining companies. It should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with IFRS.
The following is a reconciliation of EBITDA to
the consolidated financial
statements:
(in
millions) |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
2022 |
|
2023 |
2022 |
|
Net earnings (loss) |
$39.4 |
($1.4 |
) |
$162.9 |
($3.5 |
) |
Add back: |
|
|
|
|
Inventory net realizable value adjustment |
— |
11.6 |
|
— |
33.9 |
|
Impairment expense |
— |
— |
|
— |
38.2 |
|
Finance expense |
0.6 |
1.0 |
|
2.7 |
3.5 |
|
Amortization |
47.2 |
49.9 |
|
139.6 |
125.9 |
|
Deferred income tax expense |
23.8 |
34.9 |
|
26.4 |
51.9 |
|
Current income tax expense |
15.0 |
0.4 |
|
53.2 |
1.4 |
|
EBITDA |
$126.0 |
$96.4 |
|
$384.8 |
$251.3 |
|
Additional GAAP Measures
Additional GAAP measures are presented on the
face of the Company’s consolidated statements of comprehensive
income (loss) and are not meant to be a substitute for other
subtotals or totals presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measures. The
following additional GAAP measures are used and are intended to
provide an indication of the Company’s mine and operating
performance:
- Earnings from
operations - represents the amount of earnings before net finance
income/expense, foreign exchange gain/loss, other income/loss, loss
on redemption of senior secured notes and income tax expense
Unaudited Consolidated Statements of
Financial Position, ComprehensiveIncome, and Cash
Flow
ALAMOS GOLD
INC.Consolidated Statements of Financial
Position(Unaudited - stated in millions of United States
dollars)
|
September 30, 2023 |
|
|
December 31, 2022 |
|
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$215.9 |
|
|
$129.8 |
|
Equity securities |
14.0 |
|
|
18.6 |
|
Amounts receivable |
45.9 |
|
|
37.2 |
|
Inventory |
269.9 |
|
|
234.2 |
|
Other current assets |
13.7 |
|
|
16.2 |
|
Assets held for sale |
— |
|
|
5.0 |
|
Total Current
Assets |
559.4 |
|
|
441.0 |
|
|
|
|
|
Non-Current
Assets |
|
|
|
Mineral property, plant and
equipment |
3,293.6 |
|
|
3,173.8 |
|
Other non-current assets |
57.2 |
|
|
59.4 |
|
Total Assets |
$3,910.2 |
|
|
$3,674.2 |
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$178.8 |
|
|
$181.2 |
|
Income taxes payable |
49.0 |
|
|
0.7 |
|
Total Current
Liabilities |
227.8 |
|
|
181.9 |
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
688.7 |
|
|
660.9 |
|
Decommissioning
liabilities |
114.9 |
|
|
108.1 |
|
Other non-current
liabilities |
2.3 |
|
|
2.2 |
|
Total Liabilities |
1,033.7 |
|
|
953.1 |
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,731.7 |
|
|
$3,703.8 |
|
Contributed surplus |
88.4 |
|
|
90.7 |
|
Accumulated other
comprehensive loss |
(29.5 |
) |
|
(24.8 |
) |
Deficit |
(914.1 |
) |
|
(1,048.6 |
) |
Total Equity |
2,876.5 |
|
|
2,721.1 |
|
Total Liabilities and Equity |
$3,910.2 |
|
|
$3,674.2 |
|
ALAMOS GOLD
INC.Consolidated Statements of Comprehensive
Income (Loss)(Unaudited - stated in millions of United
States dollars, except share and per share amounts)
|
For three months ended |
|
For nine months ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
OPERATING REVENUES |
$256.2 |
|
|
$213.6 |
|
|
$768.7 |
|
|
$589.3 |
|
|
|
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
|
|
|
Mining and processing |
108.3 |
|
|
104.2 |
|
|
323.9 |
|
|
288.8 |
|
Inventory net realizable value
adjustment |
— |
|
|
11.6 |
|
|
— |
|
|
33.9 |
|
Royalties |
2.5 |
|
|
2.4 |
|
|
7.5 |
|
|
6.9 |
|
Amortization |
47.2 |
|
|
49.9 |
|
|
139.6 |
|
|
125.9 |
|
|
158.0 |
|
|
168.1 |
|
|
471.0 |
|
|
455.5 |
|
EXPENSES |
|
|
|
|
|
|
|
Exploration |
7.5 |
|
|
4.7 |
|
|
16.1 |
|
|
15.8 |
|
Corporate and
administrative |
6.3 |
|
|
6.4 |
|
|
20.0 |
|
|
18.7 |
|
Share-based compensation |
1.8 |
|
|
4.5 |
|
|
15.4 |
|
|
11.2 |
|
Impairment charge |
— |
|
|
— |
|
|
— |
|
|
38.2 |
|
|
173.6 |
|
|
183.7 |
|
|
522.5 |
|
|
539.4 |
|
EARNINGS BEFORE INCOME
TAXES |
82.6 |
|
|
29.9 |
|
|
246.2 |
|
|
49.9 |
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
|
|
|
Finance expense |
(0.6 |
) |
|
(1.0 |
) |
|
(2.7 |
) |
|
(3.5 |
) |
Foreign exchange gain |
0.5 |
|
|
1.5 |
|
|
1.6 |
|
|
1.9 |
|
Other (loss) gain |
(4.3 |
) |
|
3.5 |
|
|
(2.6 |
) |
|
1.5 |
|
EARNINGS FROM
OPERATIONS |
$78.2 |
|
|
$33.9 |
|
|
$242.5 |
|
|
$49.8 |
|
|
|
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
|
|
|
Current income tax
expense |
(15.0 |
) |
|
(0.4 |
) |
|
(53.2 |
) |
|
(1.4 |
) |
Deferred income tax
expense |
(23.8 |
) |
|
(34.9 |
) |
|
(26.4 |
) |
|
(51.9 |
) |
NET EARNINGS
(LOSS) |
$39.4 |
|
|
($1.4 |
) |
|
$162.9 |
|
|
($3.5 |
) |
|
|
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
(3.8 |
) |
|
(14.8 |
) |
|
4.0 |
|
|
(15.9 |
) |
Net change in fair value of fuel hedging instruments, net of
taxes |
0.2 |
|
|
(0.9 |
) |
|
— |
|
|
0.1 |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized gain (loss) on equity securities, net of taxes |
(6.1 |
) |
|
(6.1 |
) |
|
(9.0 |
) |
|
(19.1 |
) |
Total other
comprehensive loss |
($9.7 |
) |
|
($21.8 |
) |
|
($5.0 |
) |
|
($34.9 |
) |
COMPREHENSIVE INCOME
(LOSS) |
$29.7 |
|
|
($23.2 |
) |
|
$157.9 |
|
|
($38.4 |
) |
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE |
|
|
|
|
|
|
|
– basic |
$0.10 |
|
|
$0.00 |
|
|
$0.41 |
|
|
($0.01 |
) |
–
diluted |
$0.10 |
|
|
$0.00 |
|
|
$0.41 |
|
|
($0.01 |
) |
ALAMOS GOLD
INC.Consolidated Statements of Cash
Flows(Unaudited - stated in millions of United States
dollars)
|
For three months ended |
|
For nine months ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
CASH PROVIDED BY (USED
IN): |
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net earnings (loss) for the period |
$39.4 |
|
|
($1.4 |
) |
|
$162.9 |
|
|
($3.5 |
) |
Adjustments for items not
involving cash: |
|
|
|
|
|
|
|
Amortization |
47.2 |
|
|
49.9 |
|
|
139.6 |
|
|
125.9 |
|
Impairment charge |
— |
|
|
— |
|
|
— |
|
|
38.2 |
|
Inventory net realizable value adjustment |
— |
|
|
11.6 |
|
|
— |
|
|
33.9 |
|
Foreign exchange gain |
(0.5 |
) |
|
(1.5 |
) |
|
(1.6 |
) |
|
(1.9 |
) |
Current income tax expense |
15.0 |
|
|
0.4 |
|
|
53.2 |
|
|
1.4 |
|
Deferred income tax expense |
23.8 |
|
|
34.9 |
|
|
26.4 |
|
|
51.9 |
|
Share-based compensation |
1.8 |
|
|
4.5 |
|
|
15.4 |
|
|
11.2 |
|
Finance expense |
0.6 |
|
|
1.0 |
|
|
2.7 |
|
|
3.5 |
|
Other items |
5.9 |
|
|
(3.3 |
) |
|
0.1 |
|
|
(8.3 |
) |
Changes in working capital and
taxes paid |
(20.7 |
) |
|
(22.1 |
) |
|
(50.1 |
) |
|
(56.1 |
) |
|
112.5 |
|
|
74.0 |
|
|
348.6 |
|
|
196.2 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Mineral property, plant and
equipment |
(75.2 |
) |
|
(72.6 |
) |
|
(239.2 |
) |
|
(228.9 |
) |
Proceeds from sale of
Esperanza |
— |
|
|
— |
|
|
— |
|
|
5.0 |
|
Proceeds from disposition of
equity securities |
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
Investment in equity
securities |
(1.1 |
) |
|
(1.2 |
) |
|
(2.7 |
) |
|
(3.9 |
) |
Manitou transaction costs |
— |
|
|
— |
|
|
(0.2 |
) |
|
— |
|
|
(76.3 |
) |
|
(73.8 |
) |
|
(242.0 |
) |
|
(227.8 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Dividends paid |
(8.7 |
) |
|
(8.7 |
) |
|
(26.7 |
) |
|
(26.3 |
) |
Repurchase and cancellation of
common shares |
— |
|
|
— |
|
|
— |
|
|
(8.2 |
) |
Proceeds from issuance of
flow-through shares |
— |
|
|
4.6 |
|
|
— |
|
|
10.4 |
|
Proceeds from the exercise of
options and warrants |
0.6 |
|
|
— |
|
|
6.3 |
|
|
0.7 |
|
|
(8.1 |
) |
|
(4.1 |
) |
|
(20.4 |
) |
|
(23.4 |
) |
Effect of exchange rates on
cash and cash equivalents |
(0.8 |
) |
|
(0.9 |
) |
|
(0.1 |
) |
|
(0.8 |
) |
Net increase (decrease) in
cash and cash equivalents |
27.3 |
|
|
(4.8 |
) |
|
86.1 |
|
|
(55.8 |
) |
Cash and cash equivalents -
beginning of period |
188.6 |
|
|
121.5 |
|
|
129.8 |
|
|
172.5 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$215.9 |
|
|
$116.7 |
|
|
$215.9 |
|
|
$116.7 |
|
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/92a29fc1-c8e0-445d-9bd2-170c68d73711
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