Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
ended September 30, 2022.
“We had a solid third quarter overall, including our highest
production in nearly two years. Our operations performed well with
production near the top end of quarterly guidance and representing
a 19% increase from the second quarter. Our costs were also down
significantly from the first half of the year, coming in below full
year guidance. With the strong year-to-date performance and even
stronger results expected in the fourth quarter, we remain on track
to achieve full year production and cost guidance,” said John A.
McCluskey, President and Chief Executive Officer.
“La Yaqui Grande was the key driver of our operational and
financial performance with an excellent first full quarter of
operations. Its low-cost production growth more than offset the
lower gold price to drive stronger cash flow from operations. This
is a trend we expect to continue with La Yaqui Grande contributing
higher production and lower costs over the next few years and
Island Gold continuing that trend over the longer term through the
Phase 3+ Expansion. Given our growing cash flow from operations, we
can fund this growth internally while generating strong free cash
flow and supporting solid ongoing returns to shareholders,” Mr.
McCluskey added.
Third Quarter 2022
- Produced 123,400 ounces of gold, a
19% increase from the second quarter and near the top end of the
range for quarterly guidance. This represented the highest
quarterly production in nearly two years driven by a solid first
full quarter of production from La Yaqui Grande in Mexico
- With year-to-date production of
326,200 ounces of gold and a further increase in production
expected in the fourth quarter, the Company remains on track to
achieve full year guidance of 440,000 to 480,000 ounces
- Mulatos District production totaled
42,700 ounces, more than double the second quarter at substantially
lower costs driven by low-cost production growth from La Yaqui
Grande
- Young-Davidson continued its strong
operational performance, producing 49,300 ounces and generating
mine-site free cash flow1 of $23.3 million. Year-to-date,
Young-Davidson generated $77.3 million of mine-site free cash flow
and is on track to generate $100 million for the second consecutive
year
- Construction activities on the
Phase 3+ Expansion ramped up at Island Gold, including the start of
the pre-sink of the shaft in August
- Sold 122,780 ounces of gold at an
average realized price of $1,740 per ounce, for revenues of $213.6
million. The average realized gold price was $11 per ounce above
the London PM fix
- Total cash costs1 of $868 per
ounce, and AISC1 of $1,178 per ounce per ounce decreased 8% and 7%,
respectively, from the first half of the year and were both lower
than annual guidance, reflecting low-cost production growth at La
Yaqui Grande, and the weaker Canadian dollar. The Company remains
on track to meet full year cost guidance
- Realized adjusted net earnings1 for
the quarter of $26.9 million, or $0.07 per share1. Adjusted net
earnings includes adjustments for a non-cash, after tax inventory
net realizable value adjustment at Mulatos of $7.7 million and
unrealized foreign exchange losses recorded within both deferred
taxes and foreign exchange of $23.0 million, partially offset by
other gains totaling $2.4 million
- Reported a net loss of $1.4
million
- Generated cash flow from operating
activities of $74.0 million ($96.1 million, or $0.25 per share,
before changes in working capital1)
- Free cash flow1 was $1.4 million in
the quarter; despite the lower gold price in the quarter, the
Company continues to fund its growth initiatives, including the
Phase 3+ Expansion, through cash flow from existing operations
- Paid a quarterly dividend of $9.8 million, or $0.025 per share
(annualized rate of $0.10). On a year-to-date basis, $37.5 million
has been returned to shareholders through dividends and share buy
backs. This includes the repurchase of 1.1 million shares at a cost
of $8.2 million ($7.41 per share) under the Company's Normal Course
Issuer Bid ("NCIB")
- Ended the quarter with cash and
cash equivalents of $116.7 million, equity securities of $15.3
million, and no debt
- Released its 2021 Environmental,
Social, and Corporate Governance ("ESG") Report, which outlines the
Company’s progress on its ESG performance and initiatives
- Zero lost time injuries recorded
across the Company's operations in the quarter
- Announced the appointment of Luc
Guimond as Chief Operating Officer effective September 1, 2022
(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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$213.6 |
|
$198.0 |
|
$589.3 |
|
$620.5 |
|
Cost of sales(1) |
$168.1 |
|
$129.5 |
|
$455.5 |
|
$395.7 |
|
Earnings (loss) from operations |
$29.9 |
|
$57.3 |
|
$49.9 |
|
($34.9 |
) |
Earnings (loss) before income taxes |
$33.9 |
|
$56.3 |
|
$49.8 |
|
($41.3 |
) |
Net (loss) earnings |
($1.4 |
) |
$25.1 |
|
($3.5 |
) |
($96.2 |
) |
Adjusted net earnings(2) |
$26.9 |
|
$37.6 |
|
$74.2 |
|
$125.4 |
|
Earnings before interest, depreciation and amortization(2) |
$96.4 |
|
$100.0 |
|
$251.3 |
|
$314.0 |
|
Cash provided by operations before working capital and cash
taxes(2) |
$96.1 |
|
$102.3 |
|
$252.3 |
|
$319.1 |
|
Cash provided by operating activities |
$74.0 |
|
$82.4 |
|
$196.2 |
|
$268.4 |
|
Capital expenditures (sustaining)(2) |
$26.0 |
|
$30.9 |
|
$68.7 |
|
$81.2 |
|
Capital expenditures (growth)(2) (3) (5) |
$39.8 |
|
$52.7 |
|
$141.7 |
|
$166.8 |
|
Capital expenditures (capitalized exploration)(4) |
$6.8 |
|
$6.9 |
|
$18.5 |
|
$18.8 |
|
Free cash flow(2) |
$1.4 |
|
($8.1 |
) |
($32.7 |
) |
$1.6 |
|
Operating Results |
|
|
|
|
Gold production (ounces) |
|
123,400 |
|
|
104,700 |
|
|
326,200 |
|
|
344,700 |
|
Gold sales (ounces) |
|
122,780 |
|
|
110,488 |
|
|
323,410 |
|
|
344,551 |
|
Per Ounce Data |
|
|
|
|
Average realized gold price |
$1,740 |
|
$1,792 |
|
$1,822 |
|
$1,801 |
|
Average spot gold price (London PM Fix) |
$1,729 |
|
$1,790 |
|
$1,824 |
|
$1,800 |
|
Cost of sales per ounce of gold sold (includes
amortization)(1) |
$1,369 |
|
$1,172 |
|
$1,408 |
|
$1,148 |
|
Total cash costs per ounce of gold sold(2) |
$868 |
|
$788 |
|
$914 |
|
$778 |
|
All-in sustaining costs per ounce of gold sold(2) |
$1,178 |
|
$1,152 |
|
$1,231 |
|
$1,102 |
|
Share Data |
|
|
|
|
Earnings (loss) earnings per share, basic and diluted |
$0.00 |
|
$0.06 |
|
($0.01 |
) |
($0.24 |
) |
Adjusted earnings per share, basic and diluted(2) |
$0.07 |
|
$0.10 |
|
$0.19 |
|
$0.32 |
|
Weighted average common shares outstanding (basic) (000’s) |
|
391,794 |
|
|
392,742 |
|
|
391,882 |
|
|
392,755 |
|
Financial Position (in millions) |
|
|
|
|
Cash and cash equivalents(6) |
|
|
$116.7 |
|
$172.5 |
|
(1) Cost of sales includes mining and
processing costs, royalties, and amortization expense. For the
three and nine months ended September 30, 2022, cost of sales
includes a $11.6 million and $33.9 million non-cash
inventory net realizable value adjustment, respectively, at Mulatos
District.(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) Includes capitalized exploration at
Island Gold, Young-Davidson and Mulatos
District.(5) Includes capital advances of nil for the
three and nine months ended September 30, 2022 ($1.3 million and
$21.5 million for the three and nine months ended September 30,
2021).(6) Comparative cash and cash equivalents balance
as at December 31, 2021
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Gold production (ounces) |
|
|
|
|
Young-Davidson |
|
49,300 |
|
50,000 |
|
147,600 |
|
143,100 |
Island Gold |
|
31,400 |
|
28,000 |
|
93,200 |
|
103,400 |
Mulatos District(7) |
|
42,700 |
|
26,700 |
|
85,400 |
|
98,200 |
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
|
49,218 |
|
48,625 |
|
147,405 |
|
141,931 |
Island Gold |
|
31,342 |
|
28,331 |
|
91,507 |
|
101,845 |
Mulatos District |
|
42,220 |
|
33,532 |
|
84,498 |
|
100,775 |
Cost of sales (in
millions)(1) |
|
|
|
|
Young-Davidson |
$63.9 |
$58.5 |
$188.3 |
$181.8 |
Island Gold |
$29.0 |
$24.5 |
$85.2 |
$79.2 |
Mulatos District |
$75.2 |
$46.5 |
$182.0 |
$134.7 |
Cost of sales per ounce of gold sold (includes
amortization) |
|
|
|
Young-Davidson |
$1,298 |
$1,203 |
$1,277 |
$1,281 |
Island Gold |
$925 |
$865 |
$931 |
$778 |
Mulatos District(1) |
$1,781 |
$1,387 |
$2,154 |
$1,337 |
Total cash costs per ounce of gold
sold(2) |
|
|
|
|
Young-Davidson |
$870 |
$810 |
$858 |
$873 |
Island Gold |
$651 |
$586 |
$650 |
$512 |
Mulatos District |
$1,028 |
$927 |
$1,298 |
$913 |
Mine-site all-in sustaining costs per ounce of gold
sold(2),(3) |
|
|
Young-Davidson |
$1,134 |
$1,051 |
$1,087 |
$1,093 |
Island Gold |
$944 |
$1,077 |
$941 |
$860 |
Mulatos District |
$1,137 |
$1,124 |
$1,426 |
$1,097 |
Capital
expenditures (sustaining, growth, capitalized exploration and
capital advances) (in millions)(2) |
|
Young-Davidson(4) |
$15.1 |
$22.3 |
$50.9 |
$63.8 |
Island Gold(5) |
$40.7 |
$33.8 |
$103.4 |
$92.5 |
Mulatos District(6) |
$9.9 |
$29.1 |
$57.2 |
$94.2 |
Other |
$6.9 |
$5.3 |
$17.4 |
$16.3 |
(1) Cost of sales includes mining and
processing costs, royalties, and amortization. For the three and
nine months ended September 30, 2022, cost of sales includes
$11.6 million and $33.9 million non-cash inventory net
realizable value adjustment, respectively, at Mulatos
District.(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 $3.5 million for
the three and nine months ended September 30, 2022 ($1.3 million
and $3.8 million for the three and nine months ended September 30,
2021).(5) Includes capitalized exploration at Island
Gold of $4.7 million and $13.9 million for the three and nine
months ended September 30, 2022 ($5.2 million and $13.6 million for
the three and nine months ended September 30,
2021).(6) Includes capitalized exploration at Mulatos
District of $0.9 million and $1.1 million for the three and nine
months ended September 30, 2022 ($0.4 and $1.4 million for the
three and nine months ended September 30, 2021).(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 rate1,2 ("TRIFR") of 2.08, a 39% increase from the
second quarter of 2022
- Lost time injury
frequency rate1 ("LTIFR") of zero
- Year-to-date
TRIFR of 1.74 and LTIFR of 0.06, a decline of 15% and 71%,
respectively from 2021
During the third quarter of 2022, the TRIFR increased with 25
recordable injuries, seven more than the prior quarter. Zero lost
time injuries were recorded in the quarter. On a year-to-date
basis, the Company has significantly improved its TRIFR and LTIFR
compared to 2021.
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 in the third quarter of 2022 and
year-to-date
- Information
sessions held on the Company’s cyanide management practices with
the communities of Yécora, El Trigo and Matarachi in Mexico, within
the framework of the International Cyanide Management Code
- Island Gold
received additional construction permits for the shaft site haul
road and site powerline
- Continued to
advance federal and provincial permitting of the Lynn Lake
project
- Completed the
transition from propane to compressed natural gas at
Young-Davidson, which will reduce greenhouse gas emissions at the
site by an estimated 15% for mine underground heating
One reportable spill occurred during the third
quarter at Island Gold when 200 litres of thickener slurry leaked
due to a pinhole in a pipeline. The spill was identified and all
material collected and moved back into the containment area. The
area was cleaned and remediated with no anticipated long-term
effects. The Company is committed to preserving the long-term
health and viability of the natural environment that surround 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 and medical support being
provided to local communities, including:
- Donation of an
ambulance to the Sahuaripa municipality,
- Establishment of
an online high school for Matarachi residents through an agreement
with Tec de Monterrey,
- Commissioning of
two freshwater pumping stations in Matarachi
- New scholarship
committees established in Matarachi, Sahuaripa and Yécora as part
of the Company’s continued support for local students
Alamos 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 have continued through the COVID-19 pandemic, with
appropriate health and safety protocols.
Governance and Disclosure
- Published
Alamos’ 2021 ESG Report and 2021 ESG Summary Tables, outlining the
Company’s progress on its ESG performance across its operations,
projects and offices
- Recipient of
the Ethics and Values Award by the National Confederation of
Industrial Chambers (CONCAMIN) for the third consecutive year at
Mulatos
Alamos 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.(2) The classification of medical
treatment injuries was updated retroactive to 1 January 2020 to
align with OSHA standards, resulting in changes to previously
reported recordable injury rates.
Outlook and Strategy
2022 Guidance |
|
Young-Davidson |
Island Gold |
Mulatos |
Other(2) |
Total |
Gold production(000’s ounces) |
185 - 200 |
125 - 135 |
130 - 145 |
|
440 - 480 |
Cost of sales, including amortization(in
millions)(4) |
|
|
|
|
$610 |
Cost of sales, including amortization($ per
ounce)(4) |
|
|
|
|
$1,325 |
Total cash costs($ per ounce)(1) |
$850 - $900 |
$550 - $600 |
$1,225 - $1,275 |
— |
$875- $925 |
All-in sustaining costs($ per ounce)(1) |
|
|
|
|
$1,190 - $1,240 |
Mine-site all-in sustaining costs($ per
ounce)(1)(3) |
$1,125 - $1,175 |
$850 - $900 |
$1,325 - $1,375 |
— |
|
Capital expenditures(in millions) |
|
|
|
|
|
Sustaining capital(1) |
$50 - $55 |
$35 - $40 |
$5 - $10 |
— |
$90 - $105 |
Growth capital(1) |
$5 - $10 |
$145 - $160 |
$50 - $55 |
$15 |
$215 - $240 |
Total Sustaining and Growth
Capital(1) |
$55 - $65 |
$180 - $200 |
$55 - $65 |
$15 |
$305 - $345 |
Capitalized exploration(1) |
$4 |
$20 |
— |
$3 |
$27 |
Total capital expenditures and capitalized
exploration(1) |
$59 - $69 |
$200 - $220 |
$55 - $65 |
$18 |
$332 - $372 |
(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) Includes growth capital and capitalized
exploration at the Company's development
projects.(3) 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. (4) 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 can support 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.
The Company delivered on two key long-term
objectives this year which have solidified its strong outlook. This
included achieving initial low-cost production at La Yaqui Grande
and announcing the Phase 3+ Expansion of Island Gold, which will
create a larger, more profitable and valuable operation.
La Yaqui Grande performed well during its first
full quarter of operation, driving a 19% increase in consolidated
production from the second quarter, at significantly lower costs
compared to the first half of the year. The Company expects this
strong performance to continue in the fourth quarter with
consolidated production increasing to between 125,000 and 135,000
ounces, driven by further low-cost production growth at La Yaqui
Grande. Despite industry-wide inflationary pressures, total cash
costs are expected to decrease in the fourth quarter to the lowest
level of the year with the ramp up of low-cost production at La
Yaqui Grande, higher grades at Island Gold, and the weaker Canadian
dollar.
With production through the first nine months of
326,200 ounces and higher production and lower costs expected in
the fourth quarter, the Company is well positioned to achieve full
year production and cost guidance.
Young-Davidson continues to perform well,
generating $23.3 million of mine-site free cash flow in the
quarter, bringing year-to-date mine-site free cash flow to $77.3
million. With production of 147,600 ounces through the first
nine-months, Young-Davidson is on track to meet full year
production and cost guidance, and is expected to generate $100
million of mine-site free cash flow for the second straight
year.
Island Gold produced 93,200 ounces through the
first nine months of the year, and with higher grades expected in
the fourth quarter, the operation is well positioned to achieve
full year production guidance. Construction activities on the Phase
3+ Expansion are ramping up with pre-sinking of the shaft having
started in August. Capital spending rates are expected to continue
to increase with the ramp up of activities on the Phase 3+
Expansion; however, full year spending is expected to be lower than
guidance with capital deferred to subsequent years.
The Phase 3+ Expansion of Island Gold will
result in a step change in production, with mining rates increasing
to 2,400 tpd from the current rate of 1,200 tpd. This is expected
to more than double gold production to average 287,000 ounces per
year at industry low mine-site all-in sustaining costs of $576 per
ounce starting in 2026 upon completion of the shaft. Given strong
ongoing cash flow from operations, the majority of the Phase 3+
Expansion capital over the life of the project is expected to be
self-funded by Island Gold.
Combined production from the Mulatos District
totaled 85,400 ounces through the first nine-months of 2022. This
included 42,700 ounces in the third quarter, at significantly lower
costs than the first half of the year driven by the ramp up of low
cost production from La Yaqui Grande. Total production from the
Mulatos District is expected to increase further in the fourth
quarter at lower costs, and is on track to meet full year
production and cost guidance.
At Lynn Lake, the Company continues to focus on
environmental work in support of permitting, detailed engineering
and other site access upgrades. Spending in 2022 has been focused
on both development and exploration activities, with $17 million
spent through the first nine-months of the year. The approval of
the Environmental Impact Statement (“EIS”) for the project is
expected by the end of 2022 or early 2023, following which the
Company expects to release an updated feasibility study.
The Company's liquidity position remains strong,
ending the quarter with $116.7 million of cash and cash
equivalents, $15.3 million in equity securities, and no debt.
Additionally, the Company has a $500 million undrawn credit
facility, providing total liquidity of $616.7 million.
As part of the Company's 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 underway, the Company remains well
positioned to fund this growth internally while generating strong
free cash flow over the next several years. The Company expects
significant free cash flow growth starting in 2025 as production
rates ramp up at Island Gold.
Third Quarter 2022 results
Young-Davidson Financial and Operational
Review
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
49,300 |
|
|
50,000 |
|
|
147,600 |
|
|
143,100 |
|
Gold
sales (ounces) |
|
49,218 |
|
|
48,625 |
|
|
147,405 |
|
|
141,931 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$85.6 |
|
$87.1 |
|
$269.7 |
|
$255.3 |
|
Cost of sales(1) |
$63.9 |
|
$58.5 |
|
$188.3 |
|
$181.8 |
|
Earnings from operations |
$20.9 |
|
$28.6 |
|
$77.4 |
|
$73.5 |
|
Cash provided by operating
activities |
$38.4 |
|
$51.2 |
|
$128.2 |
|
$133.7 |
|
Capital expenditures
(sustaining)(2) |
$13.0 |
|
$11.7 |
|
$33.6 |
|
$31.0 |
|
Capital expenditures
(growth)(2) |
$0.9 |
|
$9.3 |
|
$13.8 |
|
$29.0 |
|
Capital expenditures
(capitalized exploration)(2) |
$1.2 |
|
$1.3 |
|
$3.5 |
|
$3.8 |
|
Mine-site free cash
flow(2) |
$23.3 |
|
$28.9 |
|
$77.3 |
|
$69.9 |
|
Cost of sales, including amortization per ounce of gold
sold(1) |
$1,298 |
|
$1,203 |
|
$1,277 |
|
$1,281 |
|
Total cash costs per ounce of gold sold(2) |
$870 |
|
$810 |
|
$858 |
|
$873 |
|
Mine-site all-in sustaining costs per ounce of gold
sold(2),(3) |
$1,134 |
|
$1,051 |
|
$1,087 |
|
$1,093 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
644,000 |
|
|
737,554 |
|
|
2,122,820 |
|
|
2,121,573 |
|
Tonnes of ore mined per day |
|
7,000 |
|
|
8,017 |
|
|
7,776 |
|
|
7,771 |
|
Average grade of gold(4) |
|
2.28 |
|
|
2.30 |
|
|
2.29 |
|
|
2.26 |
|
Metres developed |
|
2,589 |
|
|
3,031 |
|
|
8,933 |
|
|
9,251 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
719,050 |
|
|
738,646 |
|
|
2,161,792 |
|
|
2,159,994 |
|
Tonnes of ore processed per day |
|
7,816 |
|
|
8,029 |
|
|
7,919 |
|
|
7,912 |
|
Average grade of gold(4) |
|
2.31 |
|
|
2.30 |
|
|
2.31 |
|
|
2.25 |
|
Contained ounces milled |
|
53,290 |
|
|
54,640 |
|
|
160,734 |
|
|
156,310 |
|
Average recovery rate |
|
92 |
% |
|
92 |
% |
|
91 |
% |
|
92 |
% |
(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").
Young-Davidson produced 49,300 ounces of gold in
the third quarter of 2022, consistent with the prior year period
reflecting similar tonnes and grades processed. With production of
147,600 ounces for the first nine-months of 2022, the operation is
on track to meet full year production guidance.
Underground mining rates were lower than the
prior year period, averaging 7,000 tpd in the third quarter. Mining
rates were impacted by downtime to replace the head ropes within
the Northgate Shaft, a scheduled replacement of an underground
conveyor belt, and an increased frequency of energy reductions
during periods of peak provincial electricity demand in the summer
months. Underground mining rates are expected to increase in the
fourth quarter and average 8,000 tpd. Grades mined averaged 2.28
g/t Au, within the annual guidance of between 2.15 and 2.35 g/t
Au.
Mill throughput averaged 7,816 tpd in the third
quarter at an average grade of 2.31 g/t Au. Milling rates were
consistent with the first half of 2022, though slightly lower than
the prior year period and guidance, reflecting the above noted
energy reduction program. Milling rates exceeded mining rates
during the quarter with underground ore mined and stockpiled in
previous quarters supplementing mill feed. Mill recoveries averaged
92% in the quarter, in line with guidance and the prior year
period.
Financial Review
Third quarter revenues of $85.6 million were 2%
lower than the prior year period reflecting a lower realized gold
price. Year-to date revenues of $269.7 million were 6% higher than
the prior year period, primarily driven by more ounces sold.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $63.9
million in the third quarter were higher than the prior year
period, due to higher unit mining costs, partially offset by the
weaker Canadian dollar. Underground unit mining costs were CAD $50
per tonne in the quarter, higher than the prior year and previous
quarters, primarily due to the lower mining rates, as well as
inflationary cost pressures. Cost of sales of $188.3 million in the
first nine months of 2022 were higher than the comparable period
given higher input costs and more ounces sold.
Total cash costs of $870 per ounce in the third
quarter were 7% higher than the prior year period driven by the
higher unit mining costs in the quarter, partially offset by the
weaker Canadian dollar. Mine-site AISC of $1,134 per ounce in the
third quarter were 8% higher than the prior year period, consistent
with the increase in total cash costs. Total cash costs and
mine-site AISC for the first nine months were both lower than the
comparable period as a result of higher production. Given the
strong operational performance to-date, Young-Davidson remains well
positioned to meet full year total cash cost and mine-site AISC
guidance.
Capital expenditures in the quarter included
$13.0 million of sustaining capital and $0.9 million of growth
capital. In addition, $1.2 million was invested in capitalized
exploration in the quarter. Capital expenditures totaled $50.9
million in the first nine-months of 2022, a 20% decrease from the
prior year and in line with annual guidance.
Young-Davidson has consistently generated strong
free cash flow since transitioning to the lower mine infrastructure
in mid-2020, which has driven production higher and unit mining
costs lower. This included mine-site free cash flow of $23.3
million in the third quarter of 2022 and $77.3 million for the
first nine months of 2022, putting the operation on track to
generate $100 million of mine-site free cash flow for the second
consecutive year.
Island Gold Financial and Operational
Review
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
31,400 |
|
|
28,000 |
|
|
93,200 |
|
|
103,400 |
|
Gold
sales (ounces) |
|
31,342 |
|
|
28,331 |
|
|
91,507 |
|
|
101,845 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$54.8 |
|
$50.8 |
|
$167.3 |
|
$183.4 |
|
Cost of sales(1) |
$29.0 |
|
$24.5 |
|
$85.2 |
|
$79.2 |
|
Earnings from operations |
$24.4 |
|
$25.5 |
|
$78.1 |
|
$101.0 |
|
Cash provided by operating
activities |
$32.1 |
|
$31.5 |
|
$109.0 |
|
$129.9 |
|
Capital expenditures
(sustaining)(2) |
$9.1 |
|
$13.9 |
|
$26.4 |
|
$35.5 |
|
Capital expenditures
(growth)(2) (5) |
$26.9 |
|
$14.7 |
|
$63.1 |
|
$43.4 |
|
Capital expenditures
(capitalized exploration)(2) |
$4.7 |
|
$5.2 |
|
$13.9 |
|
$13.6 |
|
Mine-site free cash flow(2) |
($8.6 |
) |
($2.3 |
) |
$5.6 |
|
$37.4 |
|
Cost of sales, including amortization per ounce of gold
sold(1) |
$925 |
|
$865 |
|
$931 |
|
$778 |
|
Total cash costs per ounce of gold sold(2) |
$651 |
|
$586 |
|
$650 |
|
$512 |
|
Mine-site all-in sustaining costs per ounce of gold
sold(2),(3) |
$944 |
|
$1,077 |
|
$941 |
|
$860 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
104,565 |
|
|
108,241 |
|
|
319,757 |
|
|
329,190 |
|
Tonnes of ore mined per day ("tpd") |
|
1,137 |
|
|
1,177 |
|
|
1,171 |
|
|
1,206 |
|
Average grade of gold(4) |
|
9.67 |
|
|
8.59 |
|
|
9.37 |
|
|
10.04 |
|
Metres developed |
|
1,664 |
|
|
1,708 |
|
|
5,005 |
|
|
5,566 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
121,571 |
|
|
99,425 |
|
|
336,668 |
|
|
320,608 |
|
Tonnes of ore processed per day |
|
1,321 |
|
|
1,081 |
|
|
1,233 |
|
|
1,174 |
|
Average grade of gold(4) |
|
9.38 |
|
|
8.90 |
|
|
9.25 |
|
|
10.29 |
|
Contained ounces milled |
|
36,661 |
|
|
28,443 |
|
|
100,119 |
|
|
106,062 |
|
Average recovery rate |
|
93 |
% |
|
95 |
% |
|
95 |
% |
|
96 |
% |
(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").(5) Includes capital advances of nil and $1.4
million for the three and nine months ended September 30, 2022
($0.6 million and $3.4 million for the three and nine months ended
September 30, 2021).Island Gold produced 31,400 ounces in the third
quarter of 2022, a 12% improvement from the prior year period
reflecting higher grades mined and higher tonnes processed. Through
the first nine months of 2022, Island Gold produced 93,200 ounces
and remains on track to meet full year production guidance.
Underground mining rates averaged 1,137 tpd in
the third quarter, with grades averaging 9.67 g/t Au. Mining rates
were slightly below guidance as a result of production drilling
availability, but have improved in the fourth quarter. Mining rates
and grades mined through the first nine-months of the year were in
line with guidance.
Mill throughput averaged 1,321 tpd, 10% above
annual guidance of 1,200 tpd, reflecting the processing of
approximately 10,000 tonnes of Island Gold stockpiled ore at the
Young-Davidson mill. Given current permit limits at Island Gold,
excess stockpiles were trucked to Young-Davidson during the second
and third quarters and processed as capacity was available at the
Young-Davidson mill, boosting production and cash flow.
Mill recoveries averaged 93% in the quarter,
below annual guidance and the prior year period due to calibration
issues with a newly installed automated lime application system.
This issue was identified and rectified with recoveries returning
to budgeted levels before the end of the quarter and into October.
The new system is performing well with recoveries expected to be at
budgeted levels in the fourth quarter.
Financial Review
Island Gold generated revenues of $54.8 million
in the third quarter, an 8% increase compared to the prior year
period, driven by 11% more ounces sold, partially offset by a lower
realized gold price. For the first nine months of the year,
revenues were $167.3 million, lower than the prior year period as a
result of less ounces sold, partially offset by a higher realized
gold price.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $29.0 million in the
third quarter were 18% higher than the prior year period,
reflecting both higher tonnes processed and unit mining costs,
partially offset by a weaker Canadian dollar. Cost of sales of
$85.2 million in the first nine-months of 2022 were higher than the
comparable period given similar reasons.
Total cash costs of $651 per ounce in the third
quarter were higher than the prior year period, due to higher
mining and processing costs, partially offset by higher grades
processed. Mine-site AISC of $944 per ounce in the third quarter
were lower than the prior year period due to the timing of
sustaining capital expenditures. Total cash costs and mine-site
AISC for the first nine months were both higher than the comparable
period as a result of lower grades processed and higher mining and
processing costs.
Total capital expenditures were $40.7 million in
the third quarter, including $4.7 million of capitalized
exploration. Spending ramped up significantly on the Phase 3+
Expansion during the third quarter, including shaft site
preparation and clearing, and the start of pre-sinking of the
shaft. In addition, capital spending was focused on lateral
development and other surface infrastructure. For the first
nine-months of 2022, capital spending was $103.4 million, inclusive
of capitalized exploration of $13.9 million, higher than the prior
year period given the ramp up of construction activities on the
Phase 3+ Expansion.
Island Gold generated negative mine-site free
cash flow of $8.6 million in the third quarter given higher capital
commitments related to the Phase 3+ Expansion, but had positive
mine-site free cash flow of $5.6 million for the first nine-months
of 2022. At current gold prices, Island Gold is expected to largely
self-finance the Phase 3+ Expansion capital spending in 2022 and
beyond.
Mulatos Financial and Operational Review
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
42,700 |
|
|
26,700 |
|
|
85,400 |
|
|
98,200 |
|
Gold
sales (ounces) |
|
42,220 |
|
|
33,532 |
|
|
84,498 |
|
|
100,775 |
|
Financial Review(in millions) |
|
|
|
|
Operating Revenues |
$73.2 |
|
$60.1 |
|
$152.3 |
|
$181.8 |
|
Cost of sales(1) |
$75.2 |
|
$46.5 |
|
$182.0 |
|
$134.7 |
|
(Loss) earnings from
operations |
($4.1 |
) |
$11.2 |
|
($36.2 |
) |
$41.4 |
|
Cash (used) provided by
operating activities |
$11.7 |
|
$9.2 |
|
($8.4 |
) |
$38.4 |
|
Capital expenditures
(sustaining)(2) |
$3.9 |
|
$5.3 |
|
$8.7 |
|
$14.7 |
|
Capital expenditures
(growth)(2) (7) |
$5.1 |
|
$23.4 |
|
$47.4 |
|
$78.1 |
|
Capital expenditures
(capitalized exploration)(2) |
$0.9 |
|
$0.4 |
|
$1.1 |
|
$1.4 |
|
Mine-site free cash
flow(2) |
$1.8 |
|
($19.9 |
) |
($65.6 |
) |
($55.8 |
) |
Cost of sales, including amortization per ounce of gold
sold(1) |
$1,781 |
|
$1,387 |
|
$2,154 |
|
$1,337 |
|
Total cash costs per ounce of gold sold(2) |
$1,028 |
|
$927 |
|
$1,298 |
|
$913 |
|
Mine site all-in sustaining costs per ounce of gold
sold(2),(3) |
$1,137 |
|
$1,124 |
|
$1,426 |
|
$1,097 |
|
Mulatos Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit(4) |
|
759,339 |
|
|
744,827 |
|
|
2,600,777 |
|
|
2,455,916 |
|
Total waste mined - open pit(6) |
|
1,573,334 |
|
|
1,675,335 |
|
|
5,237,360 |
|
|
6,563,305 |
|
Total tonnes mined - open pit |
|
2,332,673 |
|
|
2,420,162 |
|
|
7,838,137 |
|
|
9,019,222 |
|
Waste-to-ore ratio (operating) |
|
2.07 |
|
|
1.15 |
|
|
1.63 |
|
|
1.41 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,274,662 |
|
|
1,580,707 |
|
|
4,542,916 |
|
|
5,313,831 |
|
Average grade of gold processed(5) |
|
0.75 |
|
|
1.08 |
|
|
0.72 |
|
|
1.04 |
|
Contained ounces stacked |
|
30,916 |
|
|
54,999 |
|
|
104,965 |
|
|
177,418 |
|
Average recovery rate |
|
56 |
% |
|
49 |
% |
|
52 |
% |
|
55 |
% |
Ore crushed per day (tonnes) |
|
14,000 |
|
|
17,200 |
|
|
16,600 |
|
|
19,500 |
|
La Yaqui Grande Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit(4) |
|
739,594 |
|
|
— |
|
|
1,236,413 |
|
|
— |
|
Total waste mined - open pit(6) |
|
5,327,341 |
|
|
— |
|
|
17,469,454 |
|
|
— |
|
Total tonnes mined - open pit |
|
6,066,935 |
|
|
— |
|
|
18,705,867 |
|
|
— |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
794,127 |
|
|
— |
|
|
1,127,108 |
|
|
— |
|
Average grade of gold processed(5) |
|
1.23 |
|
|
— |
|
|
1.33 |
|
|
— |
|
Contained ounces stacked |
|
31,362 |
|
|
— |
|
|
48,133 |
|
|
— |
|
Average recovery rate |
|
81 |
% |
|
— |
|
|
63 |
% |
|
— |
|
Ore crushed per day (tonnes) |
|
8,700 |
|
|
— |
|
|
6,159 |
|
|
— |
|
(1) Cost of sales includes mining and
processing costs, royalties, and amortization. Cost of sales per
ounce for the three and nine months ended September 30, 2022
includes the inventory net realizable value adjustment of
$11.6 million and $33.9 million.(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. (7) Includes a drawdown of
capital advances of $1.4 million for the nine months ended
September 30, 2022 ($0.7 million and $18.1 million of advances for
the three and nine months ended September 30, 2021).The Mulatos
District produced 42,700 ounces in the third quarter from the
Mulatos and La Yaqui Grande operations, representing a significant
increase from the prior year period given the start of production
at La Yaqui Grande in June 2022. The Mulatos District remains on
track to achieve full year guidance with the ongoing ramp up in
mining and stacking rates at La Yaqui Grande expected to drive a
further increase in production in the fourth quarter at lower
costs.
Mulatos Operational Review
Mulatos produced 17,400 ounces in the third
quarter, representing a 14% increase from the second quarter.
Approximately 60% of the ore stacked in the third quarter was from
the El Salto portion of the pit, with the remainder from surface
stockpiles. In the fourth quarter, El Salto ore is expected to
comprise the majority of tonnes stacked on the Mulatos leach
pad.
Total crusher throughput in the third quarter
averaged 14,000 tpd, for a total of 1,274,662 tonnes stacked at a
grade of 0.75 g/t Au, including surface stockpiles. Mining rates
and tonnes stacked in the quarter were impacted by heavy rains,
which limited the supply of consumables to site, including lime and
diesel. With the rainy season concluded, the regular transport and
supply of consumables to site has resumed and Mulatos expects to
ramp up stacking rates to guided levels in the fourth quarter.
Recovery rates remained consistent with previous
quarters at 56%, and continue to be impacted by the longer leach
cycles associated with stacking of stockpiled ore.
La Yaqui Grande Operational Review
La Yaqui Grande is an open pit mine with an
independent leach pad located approximately seven kilometres from
the existing Mulatos operation. Construction was completed ahead of
schedule in the second quarter with the operation achieving initial
production in June 2022. La Yaqui Grande performed well in its
first full quarter of operation, producing 25,300 ounces of
gold.
During the third quarter, 739,594 tonnes of ore
were mined. Mining and stacking rates continued to ramp up through
the third quarter with the latter increasing to average 8,700 tpd,
slightly below the design level of 10,000 tpd. As with Mulatos,
mining and stacking rates in the quarter were impacted by heavy
rains which temporarily limited the transport of consumables to
site. Grades stacked on the leach pad in the quarter averaged 1.23
g/t Au, in line with the Mineral Reserve grade.
Financial Review (Mulatos District)
Revenues of $73.2 million in the third quarter
were higher than the prior year period due to the start of
production at La Yaqui Grande in June, 2022, which contributed
24,600 ounces sold in the quarter, offset by a lower realized gold
price. For the first nine months of 2022, revenues of $152.3
million were lower than the prior year period driven by fewer
ounces sold, partially offset by a higher realized gold price.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $75.2 million in the
third quarter were higher than in the comparative period, driven by
higher processing costs and a net realizable value adjustment to
the Mulatos leach pad inventory balance. During the third quarter,
the Company reviewed the carrying value of the Mulatos leach pad
inventory to assess its recoverability. Given a decline in the gold
price at period end and higher future processing costs, the Company
recorded an adjustment to reduce the carrying value of Mulatos
leach pad inventory, resulting in a non-cash net realizable value
adjustment of $11.6 million ($7.7 million after tax). For the first
nine months of 2022, cost of sales of $182.0 million were higher
than the prior year period, primarily due to Mulatos leach pad
inventory adjustments of $33.9 million ($22.4 million after
tax).
Total cash costs for the Mulatos District of
$1,028 per ounce were higher than the prior year period as a result
of lower tonnes and grades stacked and higher processing costs,
partially offset by low-cost production growth from La Yaqui
Grande. The higher processing costs include inflationary pressures
on key inputs, such as cyanide, as well as increased reagent
consumption to process the surface stockpiles. Total cash costs for
the Mulatos District includes production from La Yaqui Grande,
which had significantly lower total cash costs in the period of
$561 per ounce. Mine-site AISC for the Mulatos District of $1,137
per ounce (including $699 per ounce at La Yaqui Grande) in the
quarter were consistent with the prior year period. For the first
nine months, total cash costs and mine-site AISC were higher than
the prior year, given heavier reliance on higher cost surface
stockpiles in the first half of the year. With production
increasing at La Yaqui Grande, both total cash costs and mine-site
AISC are expected to decrease moving forward.
Capital spending totaled $9.9 million in the
third quarter, down significantly from the first half of the year
reflecting completion of construction of La Yaqui Grande in June.
This included sustaining capital expenditures of $3.9 million,
primarily relating to stripping costs at La Yaqui Grande, and
capitalized exploration of $0.9 million. During the first
nine-months of 2022, capital spending totaled $57.2 million.
The Mulatos District generated mine-site free
cash flow of $1.8 million in the quarter driven by improving
operating margins. Mine site free cash flow was impacted by working
capital changes in the quarter, including an increase in VAT
receivables and inventory.
Third Quarter 2022 Development
Activities
Island Gold (Ontario,
Canada)
Phase 3+ Expansion Study
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 P3+
Expansion Study was an update to the Phase 3 Study ("P3 2000
Study") released on July 14, 2020.
The P3+ Expansion Study was updated to reflect
the current costing environment, as well as incorporate the
significant growth in high-grade Mineral Reserves and Resources
into an optimized mine plan. The P3+ Expansion Study outlines a
larger, more profitable, and valuable operation than what was
included in the P3 2000 Study released in 2020.
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, and an expansion of the mill. This infrastructure was all
incorporated into the P3 2000 Study with several scope changes to
accommodate the 20% increase in production rates to 2,400 tpd
including a larger mill expansion and paste plant, as well as
accelerated development to support the higher mining rates. The
Phase 3+ Expansion also includes 30% more development over the mine
life to accommodate the 43% larger mineable resource.
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.
Phase 3+ Expansion Study Highlights
- Higher production: average annual
gold production of 287,000 ounces starting in 2026 upon completion
of the shaft
- This represents a 22% increase from
the P3 2000 Study and a 121% increase from the mid-point of 2022
production guidance of 130,000 ounces
- Industry low costs: consistent cost
structure with the P3 2000 Study, with productivity gains and
economies of scale offsetting inflation
- Average total cash costs of $432 per
ounce (average $425 per ounce from 2026), consistent with the P3
2000 Study and 25% lower than the mid-point of 2022 guidance of
$575 per ounce
- Average mine-site all-in sustaining
costs of $610 per ounce (average $576 per ounce from 2026), a 30%
decrease from the mid-point of 2022 guidance of $875 per ounce
- Larger, longer-life operation
supported by significantly increased Mineral Reserve and Resources
- 43% increase in mineable resource to
4.6 million ounces of gold grading 10.59 g/t Au
- 18 year mine life to 2039, a four
year increase from the P3 2000 Study, while operating at 20% higher
production rates of 2,400 tpd
- Lower capital intensity: lower total
capital per ounce over the life of mine
- Growth capital of $756 million and
sustaining capital of $777 million, both up from the P3 2000 Study
reflecting the expansion, a larger mineable resource, and
industry-wide inflation
- Total capital intensity decreased 4%
to $344 per ounce reflecting the larger mineable resource with
increased ounces per vertical metre driving the lower capital
intensity and contributing to the stronger economics
- $100 million of the increase in
growth capital compared to the P3 2000 Study reflects sustaining
capital that has been brought forward to the expansion period for
accelerated underground development and infrastructure to support
the higher mining rate
- Expansion significantly de-risked
given increased detailed engineering, capital committed, and
projects completed to date, including the majority of
earthworks
- Stronger economics with expansion
and larger mineable resource more than offsetting inflation to
create a more valuable operation
- After-tax net present value (“NPV”)
(5%) of $1.6 billion, a 25% increase from the P3 2000 Study (base
case gold price assumption of $1,650 per ounce and USD/CAD foreign
exchange rate of $0.78:1)
- After-tax internal rate of return
(“IRR”) of 23%, up from 20% in P3 2000 Study
- After-tax NPV (5%) of $2.0 billion,
a 31% increase from the P3 2000 Study, and an after-tax IRR of 25%,
at gold prices of $1,850 per ounce
- Industry low Greenhouse Gas (“GHG”)
emission intensity
- 35% reduction in life of mine GHG
emissions relative to the current operation, supporting the
company-wide target of a 30% reduction in GHG emissions by
2030
- 31% additional reduction in
emissions per ounce of gold produced from already industry low
levels
- Fully funded, balanced approach to
growth: growing free cash flow expected starting in the second half
of 2022
- With no significant capital expected
to be spent on Lynn Lake until the P3+ Expansion is well underway;
the Company is well positioned to fund the expansion internally
while generating strong free cash flow over the next several
years
- The Company expects significant free
cash flow growth in 2025 and beyond as production rates ramp up at
Island Gold
Construction activities continued to ramp up
during the third quarter, with major activities including site
clearing and preparation of the shaft area, pre-sinking of the
shaft, and pouring the concrete foundation for shaft surface
infrastructure. Further details on progress made as of the end of
the quarter are noted below:
- Shaft site earthworks, access road
to the shaft area and buried services excavation were more than 80%
complete
- Shaft pre-sink commenced in August
and is approximately 90% complete to date. The pre-sink is expected
to be completed down to a 42 metre depth in November
- Commenced concrete foundation work
on shaft surface infrastructure, including the hoist and hoist
house
- Paste plant detailed engineering
commenced in September
- Lateral development to support
higher mining rates with the Phase 3+ Expansion remains
ongoing
During the third quarter of 2022, the Company
spent $26.9 million, exclusive of accounts payable and accruals, on
growth capital related to the Phase 3+ expansion and capital
development to support the expansion. Spending is expected to
increase in the fourth quarter and into 2023 as construction
activities ramp up.
Shaft site area - October
2022
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/8183fed6-f04b-4aad-9b94-4d206e170b36
Lynn Lake (Manitoba,
Canada)
The Company released a positive Feasibility
Study on the Lynn Lake project in December 2017 outlining average
annual production of 143,000 ounces over a 10 year mine life at
average mine-site AISC of $745 per ounce.
The project economics based on the 2017
Feasibility Study at a $1,500 per ounce gold price include an
after-tax internal rate of return ("IRR") of 21.5% and an after-tax
NPV of $290 million (12.5% IRR at a $1,250 per ounce gold price).
The Company filed the Environmental Impact Statement ("EIS") with
the federal government in 2020. Approval of the EIS is expected
towards the end of 2022 or early 2023, following which the Company
expects to release an updated feasibility study on the project.
As part of the Company's balanced approach to
growth and capital allocation, no significant capital is expected
to be spent on the development of Lynn Lake until the Phase 3+
Expansion at Island Gold is well underway.
Development spending (excluding exploration) was
$2.0 million in the third quarter of 2022 and
$8.0 million in the first nine months to support the ongoing
permitting process and engineering.
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,
among other things, with respect to the Kirazlı, Ağı Dağı and
Çamyurt gold development projects in Türkiye. 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 $2.2 million in the
third quarter related to ongoing holding costs and legal costs to
progress the Treaty claim, which was expensed.
Third Quarter 2022 Exploration
Activities
Island Gold (Ontario,
Canada)
Total exploration spending through the first
nine months was $17.9 million, in line with the annual
budgeted amount of $22 million for surface and underground
exploration at Island Gold in 2022. Exploration remains focused on
defining additional near mine Mineral Resources across the Island
Gold Main Zone (Island Main, West, and East), as well as advancing
and evaluating several regional targets.
A regional exploration program is also included
in 2022 spending, with the focus on evaluating and advancing
exploration targets outside the Island Gold Deposit on the
15,524-hectare Island Gold property.
During the third quarter, six diamond drill rigs
were focused on the surface directional exploration program, as
well as one drill rig focused on underground exploration
drilling.
Surface exploration drilling
A total of 8,116 m of surface directional
drilling was completed in 13 holes during the third quarter.
Surface directional drilling targeted areas peripheral to Inferred
Mineral Resource blocks in the Island West, Main, and East areas
between 1,400 m and 1,800 m below surface with drill hole spacing
ranging from 75 m to 200 m. In addition, a total of 4,077 m of
surface regional diamond drilling was completed in eight holes
during the third quarter in four target areas.
Underground exploration drilling
During the third quarter of 2022, a total of
5,817 m of standard underground exploration drilling was completed
in 36 holes. The objective of the underground drilling is to
identify new Mineral Resources close to existing Mineral Resource
or Reserve blocks. A total of 80 m of underground exploration drift
development was also completed during the third quarter.
Total exploration expenditures during the third
quarter were $6.1 million, of which $4.7 million was
capitalized. In the first nine months of 2022, the Company incurred
exploration expenditures of $17.9 million, of which
$13.9 million was capitalized.
Young-Davidson (Ontario,
Canada)
The focus for the 2022 drill program is
following up on the success in the 2020 and 2021 programs which
extended gold mineralization below existing Mineral Reserves and
Resources and intersected higher grades in the hanging wall and
footwall of the deposit.
The 2022 program includes 21,600 m of
underground exploration drilling, and 500 m of underground
exploration drift development to extend drill platforms on the
9220, 9095, and 9025-levels. The focus of the underground
exploration drilling program is to expand Mineral Resources in six
target areas that have been identified within proximity to existing
underground infrastructure. In addition, 10,000 m of surface
drilling is planned to test near-surface targets across the 5,720
hectare Young-Davidson Property.
During the third quarter, underground
exploration drilling was focused on two targets with 2,682 m
completed in four holes. The first target included one hole drilled
from the 8960-level exploration drill bay established in the lower
mine infrastructure tested to the west and down-plunge of existing
Mineral Reserves and Resources. 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. A second underground drill completed
three holes from the 9220 West exploration drift testing
down-plunge of the existing Mineral Reserves and Resources.
A total of 876 m of surface exploration drilling
was completed in one hole during the quarter, continuing to test
several targets as part of the 2022 regional exploration
program.
Exploration spending totaled $2.0 million
of which $1.2 million was capitalized in the third quarter
2022. For the first nine months of 2022, exploration spending
totaled $7.5 million of which $3.5 million was
capitalized.
Mulatos District (Sonora,
Mexico)
The Company has a large exploration package
covering 28,972 hectares with the majority of past exploration
efforts focused around the Mulatos mine. Exploration continues to
follow up on near-mine sulphide opportunities at Puerto del Aire,
as well as several earlier stage prospects throughout the wider
district.
During the third quarter of 2022, exploration
activities continued at Puerto del Aire and the near-mine areas
with 7,060 m of drilling completed in 25 holes. Drilling at Puerto
del Aire in 2021 was successful in establishing a new underground
Mineral Reserve at Mulatos, consisting of 0.4 million ounces of
gold (2.8 mt grading 4.67 g/t Au) as at December 31, 2021. The
focus in 2022 is on evaluating sulphide opportunities to expand
this Mineral Reserve. The higher-grade ore from Puerto del Aire is
expected to be processed through the existing mill at Mulatos.
Ongoing exploration results will be incorporated into an updated
development plan which is expected to be finalized in 2023.
Regional drilling was also completed at the
Bajios and Halcon West targets. This included three drill holes
totaling 730 m at Bajios and seven drill holes totaling 2,222 m at
Halcon West.
During the third quarter, the Company incurred
$3.0 million of exploration spending of which
$0.9 million was capitalized. For the first nine months of
2022, the Company incurred $7.6 million of exploration
spending of which $1.1 million was
capitalized.
Lynn Lake (Manitoba,
Canada)
During the third quarter of 2022, fifteen holes
were drilled at the Tulune target, and two holes were completed at
another regional target, totaling 5,818 m of drilling in the
period. The 2022 drilling program was completed at the end of
August, with a total of 57 holes, or 18,235 m completed in the
year.
A summer field program progressed through the
third quarter, consisting of geological mapping, prospecting and
soil sampling that was designed to help advance a pipeline of
prospective regional exploration targets to drill-ready stage.
Interpretation of 2022 drilling and field program results and
development of a 2023 program are currently in progress.
Exploration spending totaled $4.4 million
in the third quarter and $8.9 million year-to-date, all of
which was capitalized.
Review of Third Quarter Financial
Results
During the third quarter of 2022, the Company
sold 122,780 ounces of gold for revenues of $213.6 million, an 8%
increase from the prior year period driven by more ounces sold,
partially offset by a lower realized gold price.
The average realized gold price in the third
quarter was $1,740 per ounce, a 3% decrease compared to $1,792 per
ounce in the prior year period. The average realized gold price in
the quarter was $11 per ounce above the London PM Fix price due to
gains realized on settlement of gold collar contracts.
Cost of sales (which includes mining and processing costs,
inventory net realizable value adjustment, royalties, and
amortization expense) were $168.1 million in the third quarter, 30%
higher than the prior year period.
Mining and processing costs were $104.2 million,
23% higher than the prior year period. The increase primarily
reflects higher processing costs at Mulatos related to stockpiled
ore, as well as higher mining and processing costs at both
Young-Davidson and Island Gold, partially offset by a weaker
Canadian dollar. These factors contributed to higher consolidated
total cash costs in the quarter compared to the prior year
period.
The Company assesses the net realizable value of
inventory at each reporting period. Given the decrease in the gold
price at the end of the third quarter, and higher processing costs
at Mulatos, the Company recorded an $11.6 million ($7.7 million
after tax) reduction in the net realizable value of the heap leach
inventory. This included $9.6 million related to mining and
processing costs and $2.0 million related to amortization.
Royalty expense was $2.4 million in the quarter,
consistent with the prior year period of $2.6 million.
Amortization of $49.9 million in the quarter was
higher than the prior year period due to the start of production at
La Yaqui Grande, which commenced in June 2022. Amortization of $406
per ounce was lower than guidance, but 6% higher than the prior
year period.
The Company recognized earnings from operations
of $29.9 million in the quarter, lower than the prior year period
as a result of lower realized gold prices, higher operating costs,
and the net realizable value adjustment recorded in 2022.
The Company reported a net loss of $1.4 million
in the quarter, compared to net earnings of $25.1 million in the
prior year period. On an adjusted basis, earnings in the third
quarter of 2022 were $26.9 million, or $0.07 per share, reflecting
adjustments for the inventory net realizable value charge, as well
as significant unrealized foreign exchange losses recorded within
deferred taxes given the impact of the weakening Canadian dollar on
Canadian dollar denominated tax pools.
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, 2022 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.sedar.com) and EDGAR (www.sec.gov).
Reminder of Third Quarter 2022 Results
Conference Call
The Company's senior management will host a
conference call on Thursday, October 27, 2022 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: |
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(416) 340-2217 |
Toll free (Canada and the United States): |
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(800) 806-5484 |
Participant passcode: |
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2437684# |
Webcast: |
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www.alamosgold.com |
A playback will be available until November 27,
2022 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The pass code is 4259298#. 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
and a strong portfolio of growth projects. This includes the
Young-Davidson and Island Gold mines in northern Ontario, Canada
and the Mulatos mine in Sonora State, Mexico. 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. ParsonsVice-President, Investor
Relations(416) 368-9932 x 5439
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", “assume”, “schedule”,
"believe", "anticipate", "intend", "objective", "estimate",
“potential”, "forecast", "budget", “target”, “on track”, “outlook”,
“continue”, “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, expectations pertaining to: remaining on track to achieve full
year production and cost guidance; returns to shareholders; ramp up
of mining and stacking rates at La Yaqui Grande and corresponding
increases to production and decreases to costs; reductions in GHG
emissions; increases to production and decreases to costs,
including mine-site all-in sustaining 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; approval of
the Environmental Impact Study for the Lynn Lake Gold Project and
the intended release of an updated feasibility study and timing
related thereto; 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,
expected drilling targets and future exploration, expected
sustaining costs, expected improvements in cash flows and margins,
expectations of changes in capital expenditures, forecasted cash
shortfalls and the Company’s ability to fund them, cost estimates,
projected exploration results, reserve and resource estimates,
expected mine life, expected production rates and use of the
stockpile inventory, expected recoveries, 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.
Such factors and assumptions underlying the
forward-looking statements in this document 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 the continued and
potential future effects of COVID-19; the impact of COVID-19 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 regulatory responses to
the COVID-19 pandemic; government and the Company’s attempts to
reduce the spread of COVID-19 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.);
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; delays in
permitting, construction decisions and any development of the Lynn
Lake project; 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 (including tax and
employment 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 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 affecting 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 under the heading
“Risk Factors”, which is available on the SEDAR website at
www.sedar.com 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;
- net cash;
- total cash cost per ounce of gold
sold;
- all-in sustaining cost ("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
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:
- Foreign exchange
gain (loss)
- Items included
in other gain (loss)
- Certain
non-reoccurring items
- Foreign exchange
gain (loss) recorded in deferred tax expense
- The income and
mining tax impact of items included in other gain (loss)
Net earnings have been adjusted, including the
associated tax impact, for the group of costs in “other loss” 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; severance costs related
to Turkish Projects; 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.
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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net earnings (loss) |
($1.4 |
) |
$25.1 |
|
($3.5 |
) |
($96.2 |
) |
Adjustments: |
|
|
|
|
Inventory net realizable value adjustment, net of taxes |
|
7.7 |
|
|
— |
|
|
22.4 |
|
|
— |
|
Impairment charge, net of taxes |
|
— |
|
|
— |
|
|
26.7 |
|
|
213.8 |
|
Foreign exchange gain |
|
(1.5 |
) |
|
0.1 |
|
|
(1.9 |
) |
|
(0.2 |
) |
Other (gain) loss |
|
(3.5 |
) |
|
(0.4 |
) |
|
(1.5 |
) |
|
3.3 |
|
Unrealized foreign exchange loss recorded in deferred tax
expense |
|
24.5 |
|
|
12.7 |
|
|
31.6 |
|
|
4.7 |
|
Other income tax and mining tax adjustments |
|
1.1 |
|
|
0.1 |
|
|
0.4 |
|
|
— |
|
Adjusted net earnings |
$26.9 |
|
$37.6 |
|
$74.2 |
|
$125.4 |
|
Adjusted earnings per share - basic and diluted |
$0.07 |
|
$0.10 |
|
$0.19 |
|
$0.32 |
|
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, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Cash flow from operating activities |
$74.0 |
$82.4 |
$196.2 |
$268.4 |
Add: Changes in working
capital and cash taxes |
|
22.1 |
|
19.9 |
|
56.1 |
|
50.7 |
Cash flow from operating activities before changes in
working capital and cash taxes |
$96.1 |
$102.3 |
$252.3 |
$319.1 |
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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Cash flow from operating activities |
$74.0 |
|
$82.4 |
|
$196.2 |
|
$268.4 |
|
Less: mineral property, plant
and equipment expenditures(1) |
|
(72.6 |
) |
|
(89.2 |
) |
|
(228.9 |
) |
|
(245.3 |
) |
Less:
capital advances |
|
— |
|
|
(1.3 |
) |
|
— |
|
|
(21.5 |
) |
Company-wide free cash flow |
$1.4 |
|
($8.1 |
) |
($32.7 |
) |
$1.6 |
|
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.
Total Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$74.0 |
|
$82.4 |
|
$196.2 |
|
$268.4 |
|
Add:
operating cash flow used by non-mine site activity |
|
8.2 |
|
|
9.5 |
|
|
32.6 |
|
|
33.6 |
|
Cash flow from operating mine-sites |
$82.2 |
|
$91.9 |
|
$228.8 |
|
$302.0 |
|
|
|
|
|
|
Mineral property, plant and
equipment expenditure |
$72.6 |
|
$89.2 |
|
$228.9 |
|
$245.3 |
|
Capital advances |
|
— |
|
|
1.3 |
|
|
— |
|
|
21.5 |
|
Less:
capital expenditures from development projects, and corporate |
|
(6.9 |
) |
($5.3 |
) |
|
(17.4 |
) |
|
(16.3 |
) |
|
|
|
|
|
Capital expenditure and capital advances from
mine-sites |
$65.7 |
|
$85.2 |
|
$211.5 |
|
$250.5 |
|
|
|
|
|
|
Total mine-site free cash flow |
$16.5 |
|
$6.7 |
|
$17.3 |
|
$51.5 |
|
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$38.4 |
|
$51.2 |
|
$128.2 |
|
$133.7 |
|
Mineral
property, plant and equipment expenditure |
|
(15.1 |
) |
|
(22.3 |
) |
|
(50.9 |
) |
|
(63.8 |
) |
Mine-site free cash flow |
$23.3 |
|
$28.9 |
|
$77.3 |
|
$69.9 |
|
Island Gold Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$32.1 |
|
$31.5 |
|
$109.0 |
|
$129.9 |
|
Mineral property, plant and
equipment expenditure(1) |
|
(40.7 |
) |
|
(33.8 |
) |
|
(103.4 |
) |
|
(92.5 |
) |
Mine-site free cash flow |
($8.6 |
) |
($2.3 |
) |
$5.6 |
|
$37.4 |
|
(1) Includes capital advances of nil
and $1.4 million for the three and nine months ended September 30,
2022 ($0.6 million and $3.4 million for the three and nine months
ended September 30, 2021).
Mulatos District Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$11.7 |
|
$9.2 |
|
($8.4 |
) |
$38.4 |
|
Mineral property, plant and
equipment expenditure(1) |
|
(9.9 |
) |
|
(29.1 |
) |
|
(57.2 |
) |
|
(94.2 |
) |
Mine-site free cash flow |
$1.8 |
|
($19.9 |
) |
($65.6 |
) |
($55.8 |
) |
(1) Includes a drawdown of capital
advances of $1.4 million for the three and nine months ended
September 30, 2022 ($0.7 million and $18.1 million of advances for
the three and nine months ended September 30, 2021).
Net Cash
The Company defines net cash as cash and cash equivalents less
long-term debt.
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. This
metric excludes COVID-19 costs incurred in the period. 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, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$104.2 |
$84.5 |
$288.8 |
$259.3 |
Royalties |
|
2.4 |
|
2.6 |
|
6.9 |
|
8.7 |
Total cash costs |
|
106.6 |
|
87.1 |
|
295.7 |
|
268.0 |
Gold
ounces sold |
|
122,780 |
|
110,488 |
|
323,410 |
|
344,551 |
Total cash costs per ounce |
$868 |
$788 |
$914 |
$778 |
|
|
|
|
|
Total cash costs |
$106.6 |
$87.1 |
$295.7 |
$268.0 |
Corporate and
administrative(1) |
|
6.4 |
|
5.4 |
|
18.7 |
|
17.8 |
Sustaining capital
expenditures(2) |
|
26.0 |
|
30.9 |
|
68.7 |
|
81.2 |
Share-based compensation |
|
4.5 |
|
2.1 |
|
11.2 |
|
7.2 |
Sustaining exploration |
|
0.5 |
|
1.3 |
|
1.8 |
|
3.8 |
Accretion of decommissioning
liabilities |
|
0.6 |
|
0.5 |
|
2.0 |
|
1.8 |
Total all-in sustaining costs |
$144.6 |
$127.3 |
$398.1 |
$379.8 |
Gold
ounces sold |
|
122,780 |
|
110,488 |
|
323,410 |
|
344,551 |
All-in sustaining costs per ounce |
$1,178 |
$1,152 |
$1,231 |
$1,102 |
(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 for the
period is as follows:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Capital expenditures per cash
flow statement |
$72.6 |
|
$89.2 |
|
$228.9 |
|
$245.3 |
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
Young-Davidson |
|
(2.1 |
) |
|
(10.6 |
) |
|
(17.3 |
) |
|
(32.8 |
) |
Island Gold |
|
(31.6 |
) |
|
(19.3 |
) |
|
(77.0 |
) |
|
(53.6 |
) |
Mulatos District |
|
(6.0 |
) |
|
(23.1 |
) |
|
(48.5 |
) |
|
(61.4 |
) |
Corporate and other |
|
(6.9 |
) |
|
(5.3 |
) |
|
(17.4 |
) |
|
(16.3 |
) |
Sustaining capital expenditures |
$26.0 |
|
$30.9 |
|
$68.7 |
|
$81.2 |
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$41.5 |
$38.2 |
$122.3 |
$119.9 |
Royalties |
|
1.3 |
|
1.2 |
|
4.2 |
|
4.0 |
Total cash costs |
$42.8 |
$39.4 |
$126.5 |
$123.9 |
Gold
ounces sold |
|
49,218 |
|
48,625 |
|
147,405 |
|
141,931 |
Total cash costs per ounce |
$870 |
$810 |
$858 |
$873 |
|
|
|
|
|
Total cash costs |
$42.8 |
$39.4 |
$126.5 |
$123.9 |
Sustaining capital
expenditures |
|
13.0 |
|
11.7 |
|
33.6 |
|
31.0 |
Accretion of decommissioning liabilities |
|
— |
|
— |
|
0.2 |
|
0.2 |
Total all-in sustaining costs |
$55.8 |
$51.1 |
$160.3 |
$155.1 |
Gold
ounces sold |
|
49,218 |
|
48,625 |
|
147,405 |
|
141,931 |
Mine-site all-in sustaining costs per ounce |
$1,134 |
$1,051 |
$1,087 |
$1,093 |
Island
Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$19.7 |
$15.5 |
$57.6 |
$48.3 |
Royalties |
|
0.7 |
|
1.1 |
|
1.9 |
|
3.8 |
Total cash costs |
$20.4 |
$16.6 |
$59.5 |
$52.1 |
Gold
ounces sold |
|
31,342 |
|
28,331 |
|
91,507 |
|
101,845 |
Total cash costs per ounce |
$651 |
$586 |
$650 |
$512 |
|
|
|
|
|
Total cash costs |
$20.4 |
$16.6 |
$59.5 |
$52.1 |
Sustaining capital
expenditures |
|
9.1 |
|
13.9 |
|
26.4 |
|
35.5 |
Accretion of decommissioning liabilities |
|
0.1 |
|
— |
|
0.2 |
|
— |
Total all-in sustaining costs |
$29.6 |
$30.5 |
$86.1 |
$87.6 |
Gold
ounces sold |
|
31,342 |
|
28,331 |
|
91,507 |
|
101,845 |
Mine-site all-in sustaining costs per ounce |
$944 |
$1,077 |
$941 |
$860 |
Mulatos
District Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$43.0 |
$30.8 |
$108.9 |
$91.1 |
Royalties |
|
0.4 |
|
0.3 |
|
0.8 |
|
0.9 |
Total cash costs |
$43.4 |
$31.1 |
$109.7 |
$92.0 |
Gold
ounces sold |
|
42,220 |
|
33,532 |
|
84,498 |
|
100,775 |
Total cash costs per ounce |
$1,028 |
$927 |
$1,298 |
$913 |
|
|
|
|
|
Total cash costs |
$43.4 |
$31.1 |
$109.7 |
$92.0 |
Sustaining capital
expenditures |
|
3.9 |
|
5.3 |
|
8.7 |
|
14.7 |
Sustaining exploration |
|
0.1 |
|
0.8 |
|
0.5 |
|
2.3 |
Accretion of decommissioning liabilities |
|
0.6 |
|
0.5 |
|
1.6 |
|
1.6 |
Total all-in sustaining costs |
$48.0 |
$37.7 |
$120.5 |
$110.6 |
Gold
ounces sold |
|
42,220 |
|
33,532 |
|
84,498 |
|
100,775 |
Mine-site all-in sustaining costs per ounce |
$1,137 |
$1,124 |
$1,426 |
$1,097 |
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, |
|
|
2022 |
|
|
2021 |
|
2022 |
|
|
2021 |
|
Net (loss) earnings |
($1.4 |
) |
$25.1 |
($3.5 |
) |
($96.2 |
) |
Add back: |
|
|
|
|
Inventory net realizable value adjustment |
|
11.6 |
|
|
— |
|
33.9 |
|
|
— |
|
Impairment charge |
|
— |
|
|
— |
|
38.2 |
|
|
224.3 |
|
Finance expense |
|
1.0 |
|
|
1.3 |
|
3.5 |
|
|
3.3 |
|
Amortization |
|
49.9 |
|
|
42.4 |
|
125.9 |
|
|
127.7 |
|
Deferred income tax expense |
|
34.9 |
|
|
29.0 |
|
51.9 |
|
|
44.1 |
|
Current income tax expense |
|
0.4 |
|
|
2.2 |
|
1.4 |
|
|
10.8 |
|
EBITDA |
$96.4 |
|
$100.0 |
$251.3 |
|
$314.0 |
|
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, 2022 |
|
|
December 31, 2021 |
|
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$116.7 |
|
|
$172.5 |
|
Equity securities |
|
15.3 |
|
|
|
23.9 |
|
Amounts receivable |
|
36.7 |
|
|
|
31.1 |
|
Income taxes receivable |
|
9.2 |
|
|
|
8.7 |
|
Inventory |
|
210.6 |
|
|
|
199.0 |
|
Other current assets |
|
16.0 |
|
|
|
24.2 |
|
Total Current
Assets |
|
404.5 |
|
|
|
459.4 |
|
|
|
|
|
Non-Current
Assets |
|
|
|
Long-term inventory |
|
6.4 |
|
|
|
10.6 |
|
Mineral property, plant and
equipment |
|
3,125.0 |
|
|
|
3,108.5 |
|
Other non-current assets |
|
63.4 |
|
|
|
43.0 |
|
Total Assets |
$3,599.3 |
|
|
$3,621.5 |
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$168.6 |
|
|
$157.4 |
|
Total Current
Liabilities |
|
168.6 |
|
|
|
157.4 |
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
652.4 |
|
|
|
623.2 |
|
Decommissioning
liabilities |
|
101.7 |
|
|
|
102.8 |
|
Other non-current
liabilities |
|
2.5 |
|
|
|
2.5 |
|
Total Liabilities |
|
925.2 |
|
|
|
885.9 |
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,694.8 |
|
|
$3,692.9 |
|
Contributed surplus |
|
91.6 |
|
|
|
89.5 |
|
Accumulated other
comprehensive (loss) income |
|
(33.0 |
) |
|
|
1.9 |
|
Deficit |
|
(1,079.3 |
) |
|
|
(1,048.7 |
) |
Total Equity |
|
2,674.1 |
|
|
|
2,735.6 |
|
Total Liabilities and Equity |
$3,599.3 |
|
|
$3,621.5 |
|
ALAMOS GOLD
INC.Consolidated Statements of Comprehensive
(Loss) Income(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, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
OPERATING
REVENUES |
$213.6 |
|
|
$198.0 |
|
|
$589.3 |
|
|
$620.5 |
|
|
|
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
|
|
|
Mining and processing |
|
104.2 |
|
|
|
84.5 |
|
|
|
288.8 |
|
|
|
259.3 |
|
Inventory net realizable value
adjustment |
|
11.6 |
|
|
|
— |
|
|
|
33.9 |
|
|
|
— |
|
Royalties |
|
2.4 |
|
|
|
2.6 |
|
|
|
6.9 |
|
|
|
8.7 |
|
Amortization |
|
49.9 |
|
|
|
42.4 |
|
|
|
125.9 |
|
|
|
127.7 |
|
|
|
168.1 |
|
|
|
129.5 |
|
|
|
455.5 |
|
|
|
395.7 |
|
EXPENSES |
|
|
|
|
|
|
|
Exploration |
|
4.7 |
|
|
|
3.7 |
|
|
|
15.8 |
|
|
|
10.4 |
|
Corporate and
administrative |
|
6.4 |
|
|
|
5.4 |
|
|
|
18.7 |
|
|
|
17.8 |
|
Share-based compensation |
|
4.5 |
|
|
|
2.1 |
|
|
|
11.2 |
|
|
|
7.2 |
|
Impairment charge |
|
— |
|
|
|
— |
|
|
|
38.2 |
|
|
|
224.3 |
|
|
|
183.7 |
|
|
|
140.7 |
|
|
|
539.4 |
|
|
|
655.4 |
|
EARNINGS (LOSS) BEFORE
INCOME TAXES |
|
29.9 |
|
|
|
57.3 |
|
|
|
49.9 |
|
|
|
(34.9 |
) |
|
|
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
|
|
|
Finance expense |
|
(1.0 |
) |
|
|
(1.3 |
) |
|
|
(3.5 |
) |
|
|
(3.3 |
) |
Foreign exchange gain
(loss) |
|
1.5 |
|
|
|
(0.1 |
) |
|
|
1.9 |
|
|
|
0.2 |
|
Other gain (loss) |
|
3.5 |
|
|
|
0.4 |
|
|
|
1.5 |
|
|
|
(3.3 |
) |
EARNINGS (LOSS) FROM
OPERATIONS |
$33.9 |
|
|
$56.3 |
|
|
$49.8 |
|
|
($41.3 |
) |
|
|
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
|
|
|
Current income tax
expense |
|
(0.4 |
) |
|
|
(2.2 |
) |
|
|
(1.4 |
) |
|
|
(10.8 |
) |
Deferred income tax
expense |
|
(34.9 |
) |
|
|
(29.0 |
) |
|
|
(51.9 |
) |
|
|
(44.1 |
) |
NET (LOSS)
EARNINGS |
($1.4 |
) |
|
$25.1 |
|
|
($3.5 |
) |
|
($96.2 |
) |
|
|
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
|
(14.8 |
) |
|
|
(2.1 |
) |
|
|
(15.9 |
) |
|
|
(3.8 |
) |
Net change in fair value of fuel hedging instruments, net of
taxes |
|
(0.9 |
) |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.3 |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized loss on equity securities, net of taxes |
|
(6.1 |
) |
|
|
(0.1 |
) |
|
|
(19.1 |
) |
|
|
(0.6 |
) |
Total other
comprehensive loss |
($21.8 |
) |
|
($2.0 |
) |
|
($34.9 |
) |
|
($4.1 |
) |
COMPREHENSIVE (LOSS)
INCOME |
($23.2 |
) |
|
$23.1 |
|
|
($38.4 |
) |
|
($100.3 |
) |
|
|
|
|
|
|
|
|
(LOSS) EARNINGS PER
SHARE |
|
|
|
|
|
|
|
– basic |
$0.00 |
|
|
$0.06 |
|
|
($0.01 |
) |
|
($0.24 |
) |
–
diluted |
$0.00 |
|
|
$0.06 |
|
|
($0.01 |
) |
|
($0.24 |
) |
Weighted average number of
common shares outstanding (000's) |
|
|
|
|
|
|
|
– basic |
|
391,794 |
|
|
|
392,742 |
|
|
|
391,882 |
|
|
|
392,755 |
|
– diluted |
|
391,794 |
|
|
|
395,850 |
|
|
|
391,882 |
|
|
|
392,755 |
|
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, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
CASH PROVIDED BY (USED
IN): |
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net earnings (loss) for the
period |
($1.4 |
) |
|
$25.1 |
|
|
($3.5 |
) |
|
($96.2 |
) |
Adjustments for items not
involving cash: |
|
|
|
|
|
|
|
Amortization |
|
49.9 |
|
|
|
42.4 |
|
|
|
125.9 |
|
|
|
127.7 |
|
Impairment charge |
|
— |
|
|
|
— |
|
|
|
38.2 |
|
|
|
224.3 |
|
Inventory net realizable value adjustment |
|
11.6 |
|
|
|
— |
|
|
|
33.9 |
|
|
|
— |
|
Foreign exchange (gain) loss |
|
(1.5 |
) |
|
|
0.1 |
|
|
|
(1.9 |
) |
|
|
(0.2 |
) |
Current income tax expense |
|
0.4 |
|
|
|
2.2 |
|
|
|
1.4 |
|
|
|
10.8 |
|
Deferred income tax expense (recovery) |
|
34.9 |
|
|
|
29.0 |
|
|
|
51.9 |
|
|
|
44.1 |
|
Share-based compensation |
|
4.5 |
|
|
|
2.1 |
|
|
|
11.2 |
|
|
|
7.2 |
|
Finance expense |
|
1.0 |
|
|
|
1.3 |
|
|
|
3.5 |
|
|
|
3.3 |
|
Other items |
|
(3.3 |
) |
|
|
0.1 |
|
|
|
(8.3 |
) |
|
|
(1.9 |
) |
Changes in working capital and
taxes paid |
|
(22.1 |
) |
|
|
(19.9 |
) |
|
|
(56.1 |
) |
|
|
(50.7 |
) |
|
|
74.0 |
|
|
|
82.4 |
|
|
|
196.2 |
|
|
|
268.4 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Mineral property, plant and
equipment |
|
(72.6 |
) |
|
|
(89.2 |
) |
|
|
(228.9 |
) |
|
|
(245.3 |
) |
Capital advances |
|
— |
|
|
|
(1.3 |
) |
|
|
— |
|
|
|
(21.5 |
) |
Proceeds from sale of
Esperanza |
|
— |
|
|
|
— |
|
|
|
5.0 |
|
|
|
— |
|
Proceeds from disposition of
equity securities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25.8 |
|
Investment in equity
securities |
|
(1.2 |
) |
|
|
(0.5 |
) |
|
|
(3.9 |
) |
|
|
(4.8 |
) |
|
|
(73.8 |
) |
|
|
(91.0 |
) |
|
|
(227.8 |
) |
|
|
(245.8 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Dividends paid |
|
(8.7 |
) |
|
|
(8.7 |
) |
|
|
(26.3 |
) |
|
|
(25.9 |
) |
Repurchase and cancellation of
common shares |
|
— |
|
|
|
(4.5 |
) |
|
|
(8.2 |
) |
|
|
(6.0 |
) |
Proceeds from issuance of
flow-through shares |
|
4.6 |
|
|
|
— |
|
|
|
10.4 |
|
|
|
— |
|
Proceeds from the exercise of
options |
|
— |
|
|
|
— |
|
|
|
0.7 |
|
|
|
0.2 |
|
Repayment of equipment
financing obligations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
(4.1 |
) |
|
|
(13.2 |
) |
|
|
(23.4 |
) |
|
|
(31.8 |
) |
Effect of exchange rates on
cash and cash equivalents |
|
(0.9 |
) |
|
|
(0.7 |
) |
|
|
(0.8 |
) |
|
|
0.1 |
|
Net decrease in cash and cash
equivalents |
|
(4.8 |
) |
|
|
(22.5 |
) |
|
|
(55.8 |
) |
|
|
(9.1 |
) |
Cash and cash equivalents -
beginning of period |
|
121.5 |
|
|
|
233.9 |
|
|
|
172.5 |
|
|
|
220.5 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$116.7 |
|
|
$211.4 |
|
|
$116.7 |
|
|
$211.4 |
|
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