Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
ended June 30, 2021.
“Our overall performance through the first half
of 2021 has been solid, led by another strong quarter at
Young-Davidson which continues to meet or exceed expectations
operating from the new lower mine infrastructure. We expect mining
rates at Young-Davidson to increase to design capacity in the third
quarter driving our consolidated production and free cash flow
higher in the second half of the year. Combined with a stronger
performance from Mulatos, we remain well positioned to achieve full
year guidance,” said John A. McCluskey, President and Chief
Executive Officer.
“We had a successful quarter on the exploration
front at Young-Davidson and Island Gold with results from both
operations highlighting the significant upside potential, in
particular at Island Gold where we reported the best hole ever. Our
other internal growth initiatives continue to advance, including
work on the Phase III expansion at Island Gold, construction of La
Yaqui Grande, and permitting at Lynn Lake. All support our strong
long term outlook with production potential of approximately
750,000 ounces per year at substantially lower costs by 2025,” Mr.
McCluskey added.
Second Quarter 2021
- Production of 114,200 ounces of
gold, a 46% increase from the second quarter of 2020, primarily
reflecting temporary downtime related to COVID-19 during the prior
year period
- Young-Davidson produced 45,100
ounces of gold and generated mine-site free cash flow1 of $18.7
million. Mining rates of 7,504 tonnes per day ("tpd") were in-line
with the targeted mining rate of 7,500 tpd, and are expected to
increase to the long-term run rate of 8,000 tpd in the third
quarter
- Island Gold produced 33,200 ounces
of gold and generated mine-site free cash flow1 of $13.7 million,
net of growth capital expenditures and capitalized exploration
totaling $28.5 million
- Sold 107,581 ounces of gold at an
average realized price of $1,814 per ounce for revenues of $195.1
million, a 55% increase compared to the second quarter of 2020.
Ounces sold were lower than production due to the timing of
shipments, with deferred ounces being sold in July
- Generated cash flow from operating
activities of $86.7 million ($97.2 million, or $0.25 per share,
before changes in working capital1), a 75% increase from the prior
year period
- Free cash flow1 neutral in the
quarter, net of $6.2 million in cash taxes paid in Mexico, higher
capital spending mainly related to La Yaqui Grande, and the above
noted deferred gold sales. The Company expects stronger free cash
flow in the second half of 2021 reflecting higher gold production
and sales
- Consolidated total cash costs1 of
$791 per ounce, all-in sustaining costs ("AISC")1 of $1,136 per
ounce and cost of sales of $1,180 per ounce were higher than annual
guidance primarily due to the impact of the stronger than budgeted
Canadian dollar, with USD/CAD foreign exchange rate averaging
$0.81:1 relative to the budgeted rate of $0.75:1
- Filed an investment treaty claim
against the Republic of Turkey for expropriation and unfair and
inequitable treatment, among other things, with respect to its
Turkish projects. As a result, the Company recorded a non-cash,
after-tax impairment charge of $213.8 million in the period,
representing the entire carrying value of the Turkish assets
- Realized adjusted net earnings1 of
$38.7 million, or $0.10 per share1, which includes adjustments for
the non-cash, after-tax impairment charge of the Turkish projects
of $213.8 million, unrealized foreign exchange gains of $6.0
million recorded within deferred taxes and foreign exchange, and
other losses of $3.4 million
- Recorded a net loss of $172.5
million, or $0.44 per share, inclusive of the after-tax impairment
charge of $213.8 million
- Ended the quarter with cash and
cash equivalents of $233.9 million and equity securities of $22.4
million. During the quarter, the Company generated $5.1 million in
cash on the liquidation of certain equity securities and realized
an after-tax gain of $2.7 million (recorded within equity)
- Paid a quarterly dividend of $9.8
million, or US$0.025 per share (annualized rate of US$0.10 per
share), bringing total dividends distributed through the first half
of 2021 to $19.6 million
- Announced the best hole drilled
to-date at Island Gold, extending high-grade mineralization
down-plunge from existing Mineral Resources
- Subsequent to quarter-end, provided
an exploration update at Young-Davidson extending gold
mineralization below existing Mineral Reserves and Resources and
intersecting higher grades in the hanging wall and footwall of the
deposit
- Development activities continued to
ramp up at La Yaqui Grande, with pre-stripping reaching budgeted
rates of over 55,000 tpd. La Yaqui Grande remains on track to
achieve commercial production in the third quarter of 2022
- Published the Company’s 2020
Environmental, Social and Corporate Governance (ESG) Report
.(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 June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
|
|
2020 |
|
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$195.1 |
|
|
$126.2 |
|
|
$422.5 |
|
|
$303.1 |
|
|
Cost of sales (1) |
$126.9 |
|
|
$103.3 |
|
|
$266.2 |
|
|
$223.6 |
|
|
(Loss) Earnings from operations |
($168.5 |
) |
|
$12.1 |
|
|
($92.2 |
) |
|
$58.3 |
|
|
(Loss) Earnings before income taxes |
($172.7 |
) |
|
$6.0 |
|
|
($97.6 |
) |
|
$46.5 |
|
|
Net (loss) earnings |
($172.5 |
) |
|
$11.7 |
|
|
($121.3 |
) |
|
($0.6 |
) |
|
Adjusted net earnings (2) |
$38.7 |
|
|
$9.8 |
|
|
$87.8 |
|
|
$39.2 |
|
|
Earnings before interest, depreciation and amortization (2) |
$94.4 |
|
|
$40.9 |
|
|
$214.0 |
|
|
$117.6 |
|
|
Cash provided by operations before working capital and cash
taxes(2) |
$97.2 |
|
|
$44.7 |
|
|
$216.8 |
|
|
$126.4 |
|
|
Cash provided by operating activities |
$86.7 |
|
|
$49.6 |
|
|
$186.0 |
|
|
$106.2 |
|
|
Capital expenditures (sustaining) (2) |
$26.7 |
|
|
$14.4 |
|
|
$50.3 |
|
|
$31.9 |
|
|
Capital expenditures (growth) (2) (3) |
$50.4 |
|
|
$38.8 |
|
|
$93.9 |
|
|
$80.1 |
|
|
Capital expenditures (capitalized exploration) (4) |
$6.4 |
|
|
$1.4 |
|
|
$11.9 |
|
|
$5.9 |
|
|
Free cash flow (2) |
($0.2 |
) |
|
($5.0 |
) |
|
$9.7 |
|
|
($11.7 |
) |
|
Operating Results |
|
|
|
|
Gold production (ounces) |
|
114,200 |
|
|
|
78,400 |
|
|
|
240,000 |
|
|
|
189,300 |
|
|
Gold sales (ounces) |
|
107,581 |
|
|
|
74,605 |
|
|
|
234,063 |
|
|
|
186,459 |
|
|
Per Ounce Data |
|
|
|
|
Average realized gold price |
$1,814 |
|
|
$1,692 |
|
|
$1,805 |
|
|
$1,626 |
|
|
Average spot gold price (London PM Fix) |
$1,816 |
|
|
$1,711 |
|
|
$1,805 |
|
|
$1,647 |
|
|
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,180 |
|
|
$1,385 |
|
|
$1,137 |
|
|
$1,199 |
|
|
Total cash costs per ounce of gold sold (2) |
$791 |
|
|
$933 |
|
|
$773 |
|
|
$829 |
|
|
All-in sustaining costs per ounce of gold sold (2) |
$1,136 |
|
|
$1,276 |
|
|
$1,079 |
|
|
$1,117 |
|
|
Share Data |
|
|
|
|
(Loss) Earnings per share, basic and diluted |
($0.44 |
) |
|
$0.03 |
|
|
($0.31 |
) |
|
|
$0.00 |
|
|
Adjusted earnings per share, basic and diluted(2) |
$0.10 |
|
|
$0.03 |
|
|
$0.22 |
|
|
|
$0.10 |
|
|
Weighted average common shares outstanding (basic) (000’s) |
|
392,759 |
|
|
|
391,076 |
|
|
|
392,762 |
|
|
|
391,208 |
|
|
Financial Position (in millions) |
|
|
|
|
Cash and cash equivalents(5) |
|
|
$233.9 |
|
|
$220.5 |
|
|
(1) Cost of sales includes mining and
processing costs, royalties, COVID-19 costs and amortization
expense. (2) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.(3) Includes growth capital from
operating sites. 2020 growth capital excludes the Island Gold
royalty repurchase completed in March 2020 for $54.8
million.(4) Includes capitalized exploration at Island
Gold, Young-Davidson and Mulatos.(5) Comparative cash
and cash equivalents balance as at December 31, 2020.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Gold production (ounces) (1) |
|
|
|
|
Young-Davidson |
|
45,100 |
|
|
23,100 |
|
|
93,100 |
|
|
51,800 |
|
Island Gold |
|
33,200 |
|
|
19,400 |
|
|
75,400 |
|
|
58,200 |
|
Mulatos |
|
35,900 |
|
|
35,900 |
|
|
71,500 |
|
|
78,500 |
|
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
|
45,284 |
|
|
22,440 |
|
|
93,306 |
|
|
51,345 |
|
Island Gold |
|
33,632 |
|
|
18,560 |
|
|
73,514 |
|
|
57,687 |
|
Mulatos |
|
28,665 |
|
|
33,605 |
|
|
67,243 |
|
|
77,427 |
|
Cost of sales (in
millions)(2) |
|
|
|
|
Young-Davidson |
$61.3 |
|
$46.2 |
|
$123.3 |
|
$90.0 |
|
Island Gold |
$25.6 |
|
$19.6 |
|
$54.7 |
|
$50.1 |
|
Mulatos |
$40.0 |
|
$37.5 |
|
$88.2 |
|
$83.5 |
|
Cost of sales per ounce of gold sold (includes
amortization) |
|
|
|
Young-Davidson |
$1,354 |
|
$2,059 |
|
$1,321 |
|
$1,753 |
|
Island Gold |
$761 |
|
$1,056 |
|
$744 |
|
$868 |
|
Mulatos |
$1,395 |
|
$1,116 |
|
$1,312 |
|
$1,078 |
|
Total cash costs per ounce of gold sold
(3) |
|
|
|
|
Young-Davidson |
$941 |
|
$1,564 |
|
$906 |
|
$1,299 |
|
Island Gold |
$502 |
|
$501 |
|
$483 |
|
$468 |
|
Mulatos |
$893 |
|
$750 |
|
$906 |
|
$785 |
|
Mine-site
all-in sustaining costs per ounce of gold sold
(3),(4) |
|
|
Young-Davidson |
$1,157 |
|
$1,809 |
|
$1,115 |
|
$1,490 |
|
Island Gold |
$830 |
|
$781 |
|
$777 |
|
$706 |
|
Mulatos |
$1,144 |
|
$890 |
|
$1,084 |
|
$929 |
|
Capital
expenditures (sustaining, growth and capitalized exploration) (in
millions)(3) |
|
|
Young-Davidson(5) |
$19.6 |
|
$29.6 |
|
$41.5 |
|
$56.6 |
|
Island Gold (6) |
$28.5 |
|
$15.9 |
|
$55.9 |
|
$38.0 |
|
Mulatos(7) |
$28.9 |
|
$5.1 |
|
$47.7 |
|
$12.5 |
|
Other |
$6.5 |
|
$4.0 |
|
$11.0 |
|
$10.8 |
|
(1) Production for the three and six
months ended June 30, 2020 included nil and 800 ounces,
respectively, from El Chanate which transitioned to the reclamation
phase of the mine life in 2019. There was no production from El
Chanate for the three and six months ended June 30, 2021.
(2) Cost of sales includes mining and processing costs,
royalties, COVID-19 costs, and amortization. (3) 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.(4) 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.(5) Includes capitalized exploration at
Young-Davidson of $1.5 million and $2.5 million for the three and
six months ended June 30, 2021 ($nil for the three and six months
ended June 30, 2020).(6) Includes capitalized
exploration at Island Gold of $3.9 million and $8.4 million for the
three and six months ended June 30, 2021 ($1.2 million and $5.2
million for the three and six months ended June 30, 2020); Capital
expenditures exclude the Island Gold royalty repurchase for $54.8
million for the six months ended June 30,
2020.(7) Includes capitalized exploration at Mulatos of
$1.0 million for the three and six months ended June 30, 2021 ($0.2
million and $0.7 million for the three and six months ended June
30, 2020).
Environment, Social and Governance
Summary Performance
Health and Safety
- Recordable
injury frequency rate1 of 2.80 in the quarter and 2.38
year-to-date, a 6% increase from 2.25 in the first half of
2020
- Lost time injury
frequency rate1 of 0.08 in the quarter and 0.17 year-to-date, a 21%
increase from 0.14 in the first half of 2020
- Performed over
50,000 COVID-19 tests to-date on employees, contractors and
visitors as part of an enhanced screening program
During the second quarter of 2021, the recordable injury
frequency rate increased with 35 recordable injuries reported up
from 21 in the first quarter of 2021. One lost time injury was
reported in the quarter, down from three in the first quarter of
2021, resulting in an overall improvement to the Company’s lost
time injury frequency rate. 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. Throughout
the quarter, the Company continued to advance implementation of its
Sustainability Performance Management Framework, which includes
standards specific to safety leadership and managing higher-risk
activities. The Company’s overarching commitment is to have all
employees and contractors return Home Safe Every Day.
The World Health Organization declared COVID-19
a pandemic on March 11, 2020. The Company responded rapidly and
proactively and implemented several initiatives to help protect the
health and safety of our employees, their families and the
communities in which we operate.
Specifically, each mine site activated
established crisis management plans and developed site-specific
plans that have enabled them to meet and respond to changing
conditions associated with COVID-19. The Company has adopted the
advice of public health authorities and is adhering to government
regulations with respect to COVID-19 in the jurisdictions in which
it operates.
The following measures have been instituted at
sites to prevent the potential spread of the virus:
- Medical
screening for all personnel prior to entry to site for symptoms of
COVID-19
- Testing of
personnel at all operating sites prior to starting their work
rotation
- Vaccinations
offered at Island Gold for employees
- Training on
proper hand hygiene and social distancing
- Remote work
options have been implemented for eligible employees
- Social
distancing practices have been implemented for all meetings,
huddles and transportation
- Mandatory use of
personal protective equipment for employees where social distancing
is not practicable
- Rigid camp and
site hygiene protocols have been instituted and are being
followed
- Elimination of
all non-essential business travel
- In addition,
since the COVID-19 pandemic began the Company’s teams in Canada,
Mexico, and Turkey have donated their time, medical supplies, and
funds to help combat the effects and spread of the virus
COVID 19 - Impact on Operations
Given the significant precautionary measures
taken by the Company, and thanks to the dedication of its
employees, contractors and stakeholders, operations remain
relatively unaffected by COVID-19. All the Company's operations
continue to incur additional costs related to testing of personnel,
lodging and transportation, which have been included in mining and
processing costs. These incremental costs have increased total cash
costs globally by approximately $25 per ounce and are expected to
be incurred throughout 2021.
Environment
- Zero significant
environmental incidents in the second quarter and year-to-date
- Advanced
permitting of the Lynn Lake Project and the Phase III expansion of
Island Gold – a project that will significantly increase automation
and reduce fleet diesel usage resulting in 35% lower life-of-mine
greenhouse gas ("GHG") emissions
- Nearing the
completion of the power line which will connect the Mulatos Mine to
grid power and eliminate the need for site diesel power generation,
reducing GHG emissions by 12% annually
Six minor hydrocarbon spills occurred during the
second quarter, including one at each of Young-Davidson and Island
Gold and four at Mulatos. All spills were immediately 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
- Donated time,
medical supplies, food supplies and funds across select operations
and projects to help combat the effects and spread of COVID-19 in
local communities
- Organized
several community health initiatives during the second quarter in
collaboration with the Matarachi community, located near the
Mulatos mine. These included a COVID-19 vaccination clinic,
nutrition program, visual health program, first aid training, and a
cancer screening campaign
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, and to offer support during the
COVID-19 pandemic. Ongoing investments in local infrastructure,
health care, education, cultural and community programs has
continued through the COVID-19 pandemic, with appropriate health
and safety protocols.
Governance and Disclosure
- Published the
Company’s 2020 Environmental, Social and Corporate Governance (ESG)
Report which is available on the Company's website:
www.alamosgold.com
- Issued the
Company’s 2020 Extractive Sector Transparency Measures Act (ESTMA)
Report, outlining payments made to governments in Canada and
abroad
- Published the
Company’s 2020 ESG Summary Tables in July 2021
- Compiled data
for the Carbon Disclosure Project’s 2021 Climate Change
Questionnaire, which will be submitted in the third quarter of
2021
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.
Outlook and Strategy
2021 Guidance |
|
Young-Davidson |
Island Gold |
Mulatos |
Other (2) |
Total |
Gold
production (000’s ounces) |
190 - 205 |
130 - 145 |
150 - 160 |
|
470 - 510 |
Cost of sales, including amortization (in
millions)(4) |
$255 |
$108 |
$177 |
|
— |
$540 |
Cost of sales, including amortization ($ per
ounce)(4) |
$1,290 |
$785 |
$1,145 |
|
— |
$1,105 |
Total cash costs ($ per ounce)(1) |
$790 - $840 |
$430 - $480 |
$840 - $890 |
|
— |
$710 - $760 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
|
$1,025 - $1,075 |
Mine-site all-in sustaining costs ($ per
ounce)(1)(3) |
$1,000 - $1,050 |
$750 - $800 |
$1,060 - $1,110 |
|
— |
|
Amortization costs ($ per ounce)(1) |
$475 |
$330 |
$280 |
|
— |
$370 |
Capital expenditures (in millions) |
|
|
|
|
|
Sustaining capital(1) |
$40 - $45 |
$40 - $45 |
$30 - $35 |
|
— |
$110 - $125 |
Growth capital(1) |
$25 - $30 |
$80 - $85 |
$95 - $100 |
$ |
10 |
$210 - $225 |
Total Sustaining and Growth
Capital(1) |
$65 - $75 |
$120 - $130 |
$125 - $135 |
$ |
10 |
$320 - $350 |
Capitalized exploration(1) |
$7 |
$20 |
|
— |
$ |
7 |
$34 |
Total capital expenditures and capitalized
exploration(1) |
$72 - $82 |
$140 - $150 |
$125 - $135 |
$ |
17 |
$354 - $384 |
(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 (Turkey, Lynn
Lake, Esperanza and Quartz Mountain).(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 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 continues to deliver on its key
objectives and remains well positioned to meet full year guidance
with production totaling 240,000 ounces of gold through the first
half of 2021. The strong performance was led by Young-Davidson with
underground mining rates continuing to meet or exceed expectations.
Total cash costs and all-in sustaining costs (“AISC”) in the second
quarter and first half of the year were above annual guidance
reflecting the impact of the stronger than budgeted Canadian
dollar. Full year cost guidance was based on a USD/CAD foreign
exchange rate of $0.75:1 compared to actual USD/CAD rate of $0.81:1
in the second quarter. For the first half of 2021, the stronger
Canadian dollar increased company-wide total cash costs by $30 per
ounce, and AISC by $45 per ounce relative to budget. Assuming the
Canadian dollar remains at $0.80:1 for the remainder of the year,
the Company expects total cash costs and AISC to be impacted by
similar amounts.
Additionally, the Company continues to advance
its high-return organic growth initiatives. Construction of the
higher grade La Yaqui Grande project remains on track for
commercial production in the third quarter of 2022, while
development activities on the Phase III expansion at Island Gold
continue to ramp up. In parallel, larger exploration programs at
Island Gold and Young-Davidson are successfully extending gold
mineralization, highlighting the strong potential for Mineral
Reserve and Resource growth at both operations. This included the
best hole ever drilled at Island Gold with high-grade
mineralization extended down-plunge from existing Mineral Resources
in Island East over significantly greater widths. The Company
expects to continue to generate solid free cash flow while
reinvesting in these high return growth initiatives and supporting
its higher dividend, which has increased nearly 70% over the past
year.
Gold production in the third quarter is expected
to increase to between 115,000 and 125,000 ounces, driven by higher
mining rates and grades at Young-Davidson, and increased production
at Mulatos. Total cash costs and AISC are expected to remain at
similar levels to the second quarter, before decreasing in the
fourth quarter.
Production at Young-Davidson is expected to
increase by 45% in 2021 (based on the mid-point of guidance),
driven by significantly higher mining rates following the
completion of the lower mine expansion in July 2020. The new lower
mine infrastructure continues to perform well with underground
mining rates averaging 7,647 tpd for the first half of 2021,
exceeding guidance of 7,500 tpd. Mining rates are expected to
increase to the long-term rate of 8,000 tpd in the third quarter.
With first half production of 93,100 ounces, and higher mining
rates and grades expected to drive production higher and costs
lower in the second half of 2021, Young-Davidson remains on track
to meet full year guidance. Combined with lower capital spending,
this is expected to drive record mine-site free cash flow in
2021.
Island Gold remains well positioned to achieve
full year guidance with first half production of 75,400 ounces. As
previously guided, grades decreased in the second quarter, and are
expected to remain at similar levels in the third quarter. Full
year grades are expected to be approximately 10 g/t Au. A total of
$25 million has been budgeted for exploration at Island Gold in
2021, a significant increase from $12.9 million spent in 2020.
Ongoing exploration success continues to demonstrate the
significant potential for further growth in Mineral Reserves and
Resources. This included the best hole drilled to date at Island
Gold as released in the second quarter with 71.21 g/t Au (39.24 g/t
cut) over 21.33 m (MH25-08), further extending high-grade gold
mineralization down-plunge from Mineral Resources in Island
East.
The Mulatos District produced 71,500 ounces in
the first half of the year. With stronger production expected in
the second half of 2021, the operation remains on track to meet
full year guidance of between 150,000 to 160,000 ounces. Cerro
Pelon, the Mulatos pits, and surface stockpiles will supply all
production in 2021. In parallel, the Company continues to advance
construction of the high grade La Yaqui Grande project, which
remains on track for commercial production in third quarter of
2022. La Yaqui Grande is expected to keep production in the Mulatos
District at approximately 150,000 ounces per year at significantly
lower costs.
The Company continues to advance permitting of
the Lynn Lake project, with approval of its Environmental Impact
Statement ("EIS") expected mid-2022. The 2021 capital budget for
Lynn Lake is $13 million, including $6 million for development
activities to support the permitting process and $7 million for
exploration. The Company expects to make a construction decision
following the conclusion of the EIS permitting process.
In April, the Company announced that its
Netherlands wholly-owned subsidiaries would proceed with an
investment treaty claim against the Republic of Turkey for
expropriation and unfair and inequitable treatment, among other
things, with respect to the Kirazlı, Ağı Dağı and Çamyurt gold
development projects in Turkey. The claim was registered with the
International Centre for Settlement of Investment Disputes (World
Bank Group) under the Netherlands-Turkey Bilateral Investment
Treaty on June 7, 2021, and is expected to exceed $1 billion. In
its effort to secure the renewal of its mining licenses, the
Company has attempted to work cooperatively with the Turkish
government, has raised with the Turkish government its obligations
under the Treaty, has sought to resolve the dispute by good faith
negotiations, and has made considerable effort to build support
among stakeholders and host communities. The Turkish government has
failed to provide the Company with a reason for the non-renewal or
a timeline for renewal of its licenses. As a result, Alamos and the
Subsidiaries incurred an after-tax impairment charge of $213.8
million in the second quarter of 2021. The non-cash impairment
charge reflects the Company’s net carrying value of the Turkish
Projects.
The Company's liquidity position remains strong,
ending the second quarter with $233.9 million of cash and cash
equivalents, $22.4 million in equity securities, and no debt.
Additionally, the Company has a $500.0 million undrawn credit
facility, providing $756.3 million of liquidity. The Company
expects to generate ongoing free cash flow in 2021 while continuing
to fund its high-return internal growth initiatives.
Second Quarter 2021 Results
Young-Davidson Financial and Operational
Review
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
|
2020 |
|
|
Gold production (ounces) |
|
45,100 |
|
|
23,100 |
|
|
|
93,100 |
|
|
51,800 |
|
|
Gold
sales (ounces) |
|
45,284 |
|
|
22,440 |
|
|
|
93,306 |
|
|
51,345 |
|
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$82.1 |
|
$37.7 |
|
|
$168.2 |
|
$83.4 |
|
|
Cost of sales (1) |
$61.3 |
|
$46.2 |
|
|
$123.3 |
|
$90.0 |
|
|
Earnings (loss) from
operations |
$20.8 |
|
($8.5 |
) |
|
$44.9 |
|
($6.6 |
) |
|
Cash provided by operating
activities |
$38.3 |
|
$6.5 |
|
|
$82.5 |
|
$14.6 |
|
|
Capital expenditures
(sustaining) (2) |
$9.8 |
|
$5.5 |
|
|
$19.3 |
|
$9.7 |
|
|
Capital expenditures (growth)
(2) |
$8.3 |
|
$24.1 |
|
|
$19.7 |
|
$46.9 |
|
|
Capital expenditures
(capitalized exploration) (2) |
$1.5 |
|
|
$— |
|
|
$2.5 |
|
|
$— |
|
|
Mine-site free cash flow
(2) |
$18.7 |
|
($23.1 |
) |
|
$41.0 |
|
($42.0 |
) |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,354 |
|
$2,059 |
|
|
$1,321 |
|
$1,753 |
|
|
Total cash costs per ounce of gold sold (2) |
$941 |
|
$1,564 |
|
|
$906 |
|
$1,299 |
|
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,157 |
|
$1,809 |
|
|
$1,115 |
|
$1,490 |
|
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
682,857 |
|
|
244,382 |
|
|
|
1,384,019 |
|
|
634,749 |
|
|
Tonnes of ore mined per day |
|
7,504 |
|
|
2,686 |
|
|
|
7,647 |
|
|
3,488 |
|
|
Average grade of gold (4) |
|
2.22 |
|
|
2.50 |
|
|
|
2.23 |
|
|
2.30 |
|
|
Metres developed |
|
2,868 |
|
|
2,894 |
|
|
|
6,220 |
|
|
6,095 |
|
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
688,127 |
|
|
395,289 |
|
|
|
1,421,348 |
|
|
860,033 |
|
|
Tonnes of ore processed per day |
|
7,562 |
|
|
4,344 |
|
|
|
7,853 |
|
|
4,725 |
|
|
Average grade of gold (4) |
|
2.22 |
|
|
1.85 |
|
|
|
2.22 |
|
|
1.89 |
|
|
Contained ounces milled |
|
49,134 |
|
|
23,511 |
|
|
|
101,670 |
|
|
52,361 |
|
|
Average recovery rate |
|
92 |
% |
|
93 |
% |
|
|
92 |
% |
|
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 45,100 ounces of gold in
the second quarter of 2021, a significant increase from the prior
year period due to the shutdown of the Northgate shaft to complete
the lower mine expansion in the second quarter of 2020. First half
production of 93,100 ounces was also significantly higher than the
comparable period in the prior year for similar reasons.
Underground mining rates have met or exceeded
targeted rates since the completion of the lower mine expansion in
July 2020. Mining rates averaged 7,504 tpd in the second quarter
and 7,647 tpd for the first half of 2021, meeting and exceeding the
first half target of 7,500 tpd, respectively. With an additional
mining horizon being added, underground mining rates are expected
to increase to the long-term rate of 8,000 tpd during the third
quarter.
Average mined grades of 2.22 g/t Au in the
quarter were at the lower end of the range for full year guidance
due to mine sequencing. Grades mined are expected to increase
through the remainder of the year with the highest grades being in
the fourth quarter. Full year grades are expected to average close
to Young-Davidson's Mineral Reserve grade. Mill throughput averaged
7,562 tpd in the second quarter, consistent with tonnes mined. Mill
recoveries averaged 92% in the quarter, in line with guidance.
Young-Davidson remains well positioned to
achieve full year guidance with higher mining rates and grades
expected to drive production higher and costs lower in the second
half of 2021. This is expected to contribute stronger mine-site
free cash flow for the remainder of 2021 assuming an $1,800 per
ounce gold price.
Financial Review
Second quarter revenues of $82.1 million were
consistent with the first quarter of 2021, and 118% higher than the
prior year period, reflecting the temporary shutdown of the
Northgate shaft to complete the lower mine expansion in 2020. This
also drove higher revenues for the first half of 2021 compared to
2020.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $61.3
million in the second quarter were consistent with the first
quarter, though higher than the prior year period, due to lower
mining rates during the temporary shutdown of the Northgate shaft
in the prior year. Similarly, cost of sales for the first half of
2021 were higher than the prior year given lower mining rates
during the shutdown period. Underground unit mining costs were CAD
$49 per tonne in the quarter, consistent with the first quarter of
2021 but significantly lower than the comparative period of 2020,
driven by productivity improvements following the transition to the
lower mine infrastructure in July 2020. Underground mining costs
are expected to trend lower in the second half of the year towards
a longer term rate of approximately CAD $45 per tonne as mining
rates increase to 8,000 tpd.
Total cash costs of $941 per ounce and mine-site
AISC of $1,157 per ounce in the second quarter were 40% and 36%
lower, respectively, than the comparative period in 2020, driven by
higher throughput, lower mining and processing costs per tonne, and
higher grades processed. Total cash costs in the quarter were above
annual guidance reflecting the impact of the stronger Canadian
dollar compared with budget, as well as the sequencing of grades
mined which were planned to be lower in the first half of 2021.
Total cash costs and mine-site AISC are expected to decrease in the
second half of the year due to higher mining rates and grades
mined.
Capital expenditures in the quarter included
$9.8 million of sustaining capital and $8.3 million of growth
capital. In addition, $1.5 million was invested in capitalized
exploration as part of the first significant exploration program at
the operation since 2011. Capital expenditures totaled $41.5
million in the first half of 2021, a 27% decrease from the prior
year reflecting the completion of the lower mine expansion.
Young-Davidson has consistently met or exceeded
expectations since transitioning to the new lower mine
infrastructure, driving strong free cash flow growth. This included
mine-site free cash flow of $18.7 million in the second quarter of
2021, and $41.0 million in the first half of 2021. Higher mining
rates and grades mined are expected to drive production higher and
costs lower in the second half of the year, supporting strong
ongoing free cash flow generation for the remainder of 2021 and
beyond.
Island Gold Financial and Operational
Review
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Gold production (ounces) |
|
33,200 |
|
|
19,400 |
|
|
75,400 |
|
|
58,200 |
|
Gold sales (ounces) |
|
33,632 |
|
|
18,560 |
|
|
73,514 |
|
|
57,687 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$61.1 |
|
$31.4 |
|
$132.6 |
|
$93.3 |
|
Cost of sales (1) |
$25.6 |
|
$19.6 |
|
$54.7 |
|
$50.1 |
|
Earnings from operations |
$33.7 |
|
$11.6 |
|
$75.5 |
|
$42.8 |
|
Cash provided by operating
activities |
$42.9 |
|
$25.1 |
|
$98.4 |
|
$66.8 |
|
Capital expenditures
(sustaining) (2) |
$11.0 |
|
$5.2 |
|
$21.6 |
|
$13.7 |
|
Capital expenditures (growth)
(2) |
$13.6 |
|
$9.5 |
|
$25.9 |
|
$19.1 |
|
Capital expenditures
(capitalized exploration) (2) |
$3.9 |
|
$1.2 |
|
$8.4 |
|
$5.2 |
|
Capital advances |
$0.7 |
|
|
$— |
|
$2.8 |
|
|
$— |
|
Mine-site free cash flow (2) |
$13.7 |
|
$9.2 |
|
$39.7 |
|
$28.8 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$761 |
|
$1,056 |
|
$744 |
|
$868 |
|
Total cash costs per ounce of gold sold (2) |
$502 |
|
$501 |
|
$483 |
|
$468 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$830 |
|
$781 |
|
$777 |
|
$706 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
117,673 |
|
|
74,485 |
|
|
220,950 |
|
|
187,366 |
|
Tonnes of ore mined per day ("tpd") |
|
1,293 |
|
|
819 |
|
|
1,221 |
|
|
1,029 |
|
Average grade of gold (4) |
|
8.52 |
|
|
7.28 |
|
|
10.75 |
|
|
9.93 |
|
Metres developed |
|
1,907 |
|
|
931 |
|
|
3,858 |
|
|
2,883 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
111,898 |
|
|
73,708 |
|
|
221,183 |
|
|
179,635 |
|
Tonnes of ore processed per day |
|
1,230 |
|
|
810 |
|
|
1,222 |
|
|
987 |
|
Average grade of gold (4) |
|
8.85 |
|
|
8.32 |
|
|
10.91 |
|
|
10.33 |
|
Contained ounces milled |
|
31,835 |
|
|
19,714 |
|
|
77,619 |
|
|
59,659 |
|
Average recovery rate |
|
97 |
% |
|
96 |
% |
|
97 |
% |
|
97 |
% |
(1) Cost of sales includes mining and
processing costs, royalties, COVID-19 costs 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").
Island Gold produced 33,200 ounces in the second
quarter of 2021, a 71% increase from the comparative period, with
operations temporarily shutdown during the second quarter of 2020
due to COVID-19. Through the first half of 2021, Island Gold
produced 75,400 ounces, and remains well positioned to meet full
year production guidance.
Underground mining rates averaged a record 1,293
tpd in the second quarter, a 58% increase from the prior year
period and a 13% increase from the first quarter of 2021. Mining
rates through the first half of the year averaged 1,221 tpd,
consistent with the 1,200 tpd average expected in the second half
of 2021. As previously guided, underground grades decreased in the
second quarter and averaged 8.52 g/t Au. Grades mined are expected
to remain at similar levels in the third quarter, before increasing
slightly in the fourth quarter. Full year grades are expected to
average approximately 10 g/t Au, consistent with Island Gold's
Mineral Reserve grade.
Mill throughput averaged a record 1,230 tpd in
the second quarter, and 1,222 tpd during first half of the year,
both in line with full year guidance and current permitted levels.
Excess ore mined during the period was stockpiled for future
processing. Mill recoveries averaged 97% in the quarter, in line
with annual guidance and the prior year period.
Financial Review
Island Gold generated revenues of $61.1 million
in the second quarter, a 95% increase compared to the prior year
period, reflecting the temporary suspension of operations due to
COVID-19 in 2020. For the first half of the year, revenues were
$132.6 million, a 42% increase from prior year, primarily due to
the higher realized gold price and more ounces sold in the current
year.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $25.6 million in the
second quarter and $54.7 million during the first half of 2021 were
higher than the prior year comparative periods due to the temporary
COVID-19 related suspension of operations in 2020. Cost of sales in
the second quarter were lower than the first quarter of 2021 due to
less ounces sold in the period.
Total cash costs of $502 per ounce in the second
quarter were consistent with the prior year period, though higher
than the first quarter of 2021, due to lower grades mined and the
impact of the stronger Canadian dollar on mining and milling costs.
Mine-site AISC of $830 per ounce were 6% higher than in the prior
year given higher sustaining capital spending. On a year to date
basis, total cash costs and mine-site AISC are in line with 2021
guidance, despite the impact of the stronger than budgeted Canadian
dollar on costs.
Total capital expenditures were $28.5 million in
the second quarter, including $3.9 million of capitalized
exploration. Spending was focused on lateral development,
engineering for the Phase III project, and surface infrastructure
including completion of the tailings facility expansion. For the
first half of the year, capital spending was $55.9 million
inclusive of capitalized exploration of $8.4 million, an increase
from prior year. In addition, Island Gold advanced $2.8 million for
long lead time items supporting the Phase III expansion in the
first half of 2021. Capital spending is expected to increase in the
second half of the year as spending on the Phase III expansion
ramps up.
Island Gold generated mine-site free cash flow
of $13.7 million in the second quarter and $39.7 million in the
first half of 2021, driven by strong ongoing operating margins.
With capital spending expected to ramp up in the second half of the
year, mine-site free cash flow is expected to be neutral for the
remainder of the year.
Mulatos Financial and Operational
Review
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
|
|
2020 |
|
Gold production (ounces) |
|
35,900 |
|
|
|
35,900 |
|
|
71,500 |
|
|
|
78,500 |
|
Gold
sales (ounces) |
|
28,665 |
|
|
|
33,605 |
|
|
67,243 |
|
|
|
77,427 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$51.9 |
|
|
$57.1 |
|
$121.7 |
|
|
$126.4 |
|
Cost of sales (1) |
$40.0 |
|
|
$37.5 |
|
$88.2 |
|
|
$83.5 |
|
Earnings from operations |
$10.4 |
|
|
$19.2 |
|
$30.2 |
|
|
$41.2 |
|
Cash provided by operating
activities |
$19.3 |
|
|
$24.4 |
|
$29.2 |
|
|
$45.9 |
|
Capital expenditures
(sustaining) (2) |
$5.9 |
|
|
$3.7 |
|
$9.4 |
|
|
$8.5 |
|
Capital expenditures (growth)
(2) |
$22.0 |
|
|
$1.2 |
|
$37.3 |
|
|
$3.3 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.0 |
|
|
$0.2 |
|
$1.0 |
|
|
$0.7 |
|
Capital advances |
$2.7 |
|
|
|
$— |
|
$17.4 |
|
|
|
$— |
|
Mine-site free cash flow
(2) |
($12.3 |
) |
|
$19.3 |
|
($35.9 |
) |
|
$33.4 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,395 |
|
|
$1,116 |
|
$1,312 |
|
|
$1,078 |
|
Total cash costs per ounce of gold sold (2) |
$893 |
|
|
$750 |
|
$906 |
|
|
$785 |
|
Mine site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,144 |
|
|
$890 |
|
$1,084 |
|
|
$929 |
|
Open Pit Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
800,137 |
|
|
|
1,132,423 |
|
|
1,711,090 |
|
|
|
3,050,887 |
|
Total waste mined - open pit (6) |
|
2,426,047 |
|
|
|
1,151,851 |
|
|
4,887,970 |
|
|
|
3,490,768 |
|
Total tonnes mined - open pit |
|
3,226,184 |
|
|
|
2,284,275 |
|
|
6,599,060 |
|
|
|
6,541,655 |
|
Waste-to-ore ratio (operating) |
|
2.03 |
|
|
|
0.81 |
|
|
1.53 |
|
|
|
0.67 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,899,338 |
|
|
|
1,410,888 |
|
|
3,733,124 |
|
|
|
3,444,000 |
|
Average grade of gold processed (5) |
|
1.11 |
|
|
|
1.41 |
|
|
1.02 |
|
|
|
1.32 |
|
Contained ounces stacked |
|
67,697 |
|
|
|
64,111 |
|
|
122,420 |
|
|
|
146,044 |
|
Average recovery rate |
|
53 |
% |
|
|
56 |
% |
|
58 |
% |
|
|
54 |
% |
Ore crushed per day (tonnes) - combined |
|
20,900 |
|
|
|
15,500 |
|
|
20,600 |
|
|
|
18,923 |
|
(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) Includes ore stockpiled during the
quarter.(5) Grams per tonne of gold ("g/t
Au").(6) Total waste mined includes operating waste and
capitalized stripping.
Mulatos produced 35,900 ounces in the second
quarter, in line with the prior year quarter, reflecting higher
tonnes stacked on the leach pad, offset by lower grades mined and
stacked. For the first half of 2021, Mulatos produced 71,500
ounces, a 9% decrease driven by lower grades mined primarily from
Cerro Pelon. With stronger production expected in the second half
of 2021, Mulatos is on track to meet annual production
guidance.
Tonnes of ore mined in the second quarter
decreased compared to the prior year period, with mining activities
within the main Mulatos pit focused on pre-stripping the El Salto
portion of the pit and increased mining rates within the Cerro
Pelon pit. Total tonnes mined is exclusive of pre-stripping
activities at La Yaqui Grande, where an additional 5.1 million
tonnes of waste was mined in the quarter.
Total crusher throughput in the second quarter
averaged 20,900 tpd for a total of 1,899,338 tonnes stacked at a
grade of 1.11 g/t Au, both consistent with annual guidance. Tonnes
stacked in the quarter exceeded tonnes mined due to the processing
of lower recovery surface stockpiles, which were mined in previous
years. Grades stacked were 21% lower than in the prior year period
which had benefited from higher grade ore from the Cerro Pelon pit.
The recovery rate of 53% in the quarter reflected the higher
proportion of surface stockpiles processed in the period. The
average recovery rate through the first half of 2021 was 58%,
consistent with annual guidance.
Financial Review
Revenues of $51.9 million in the second quarter
were lower than the prior year period driven by fewer ounces sold.
The number of ounces sold were lower than production due to the
timing of shipments. These ounces were sold subsequent to quarter
end and will be realized in the third quarter. For the first six
months, revenues of $121.7 million were consistent with the prior
year, as fewer ounces sold were offset by a higher realized gold
price.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $40.0 million in the
second quarter were higher than in the comparative period,
primarily due to higher processing costs related to surface
stockpiles and higher amortization charges in the period.
Amortization per ounce was higher in the quarter given the
proportion of ore coming from Cerro Pelon which carries a higher
amortization charge, as well as the impact of straight line
depreciation on lower sales in the quarter. Total cash costs of
$893 per ounce were higher than in the prior year period as a
result of lower grades stacked, and an increasing proportion of
surface stockpiles processed which carry a higher cost per ounce.
The surface stockpiles include historical inventory costs of
approximately $150 per ounce, which were incurred in previous years
as these tonnes were mined. Mine-site AISC of $1,144 per ounce in
the quarter was higher than in the prior year period, consistent
with the increase in total cash costs.
Capital spending totaled $28.9 million in the
second quarter, of which $5.9 million was sustaining capital
primarily related to capitalized stripping at El Salto. Growth
capital of $22.0 million was primarily related to pre-stripping and
construction activities at La Yaqui Grande. An additional $2.7
million of capital advances were made to vendors for equipment.
During the first half of 2021, Mulatos incurred $47.7 million of
capital spending primarily on capitalized stripping at El Salto and
project advancement of La Yaqui Grande.
Mulatos generated mine-site free cash flow of
$12.4 million, before spending of $24.7 million of growth capital
and capital advances related to La Yaqui Grande. Including all
capital spending, mine-site free cash flow was negative $12.3
million reflecting the ramp up of construction activities and the
timing of cash tax payments. Mulatos paid $6.2 million in taxes in
the quarter related to 2021 installment payments, and $24.4 million
in the first half of the year related to 2020 year end income and
mining taxes and 2021 installment payments. The Company does not
anticipate additional cash taxes in the second half of 2021.
Second Quarter 2021 Development Activities
Island Gold (Ontario,
Canada)
Phase III Expansion Study
On July 14, 2020 the Company reported results of
the positive Phase III expansion study conducted on its Island Gold
mine. Based on the results of the study, the Company is proceeding
with an expansion of the operation to 2,000 tpd. This follows a
detailed evaluation of several scenarios which demonstrated the
shaft expansion as the best option, having the strongest economics,
being the most efficient and productive, and the best positioned to
capitalize on further growth in Mineral Reserves and Resources. The
Phase III expansion is expected to drive average annual gold
production to 236,000 ounces per year starting in 2025 upon
completion of the shaft, representing a 70% increase from 2020
production. This will also reduce total cash costs to an average of
$403 per ounce and mine-site all-in sustaining costs to $534 per
ounce to starting in 2025.
The Phase III expansion study was based on
Mineral Reserves and Resources at Island Gold as of December 31,
2019 and does not include the significant growth over the past year
as outlined in the 2020 year end Mineral Reserve and Resource
statement. Incorporating this growth is expected to improve already
attractive economics. This growth included an 8% increase in
Mineral Reserves to 1.3 million ounces of gold (4.2 mt grading 9.71
g/t Au) and a 0.9 million ounce, or 40%, increase in Inferred
Mineral Resources to 3.2 million ounces with grades also increasing
9% to 14.43 g/t Au (6.9 mt).
The Company is currently focused on permitting
and detailed engineering of the shaft and associated
infrastructure, including the hoisting plant and surface civil
works. Project tendering and contract awarding remains ongoing,
with procurement of long lead time items underway. Phase III
permitting is anticipated to be completed in 2022 with the pre-sink
for the shaft expected to begin in mid-2022.
During the second quarter of 2021, the Company
spent $13.6 million on surface infrastructure, including completing
an expansion of the tailings facility, as well as advancing
capitalized development, and detailed engineering and permitting
activities. Growth capital spending through the first half of the
year totaled $25.9 million. Capital spending is expected to
increase through the remainder of the year, consistent with full
year growth capital guidance of between $80 to $85 million.
Mulatos District (Sonora,
Mexico)
La Yaqui Grande
On July 28, 2020, the Company reported results
of an internal study completed on its fully permitted La Yaqui
Grande project located in the Mulatos District in Sonora, Mexico.
La Yaqui Grande is located approximately 7 kilometres (straight
line) from the existing Mulatos operation and adjacent to the past
producing La Yaqui Phase I operation. As with La Yaqui Phase I, La
Yaqui Grande is being developed with an independent heap leach pad
and crushing circuit.
La Yaqui Grande is expected to produce an average of 123,000
ounces of gold per year starting in the third quarter of 2022 at
mine-site all-in sustaining costs of $578 per ounce, significantly
reducing the Mulatos District all-in sustaining costs from the
mid-point of 2021 guidance of $1,085 per ounce. This will replace
higher cost production from the main Mulatos pit, keeping combined
production at approximately 150,000 ounces per year. Initial
capital is expected to be $137 million to be spent over a two year
period.
Construction activities continued to ramp up in
the second quarter of 2021 with the project on track to achieve
commercial production in the third quarter of 2022. Capital
spending increased to $21.0 million in the quarter bringing total
capital spent since the start of construction to $48.0 million. In
addition, the Company advanced $17.4 million in the first half of
2021 to contractors.
Second quarter highlights at La Yaqui Grande
included:
- Safely advanced
construction activities with approximately 800 employees and
contractors on rotation and more than 1,000,000 hours worked in the
first half of 2021 with no lost time injuries
- Over five
million tonnes of waste mined with mining rates increasing to
average over 56,000 tpd in the quarter. Mining rates are expected
to increase to over 60,000 tpd in the second half of 2021
- Crusher area
concrete poured and all major crushing equipment has been received
at site
- Leach pad
construction over 60% complete, access road from the pit to the
leach pad area complete facilitating waste to be used in
construction of the pad
- Installation of
liners in the pregnant and barren solution ponds underway
- Initiated
procurement on long lead items for the water treatment plant
La Yaqui Grande Heap Leach Facility
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/336d9431-5ee1-47d5-916d-fbc652d05553
La Yaqui Grande – Open Pit Pre-stripping
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/8f5a63b0-01ce-423c-8211-60e3fcac76da
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 all-in sustaining costs 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 IRR of 21.5% and an after-tax NPV of $290 million (12.5%
IRR at a $1,250 per ounce gold price). During the second quarter of
2020, the Company filed the Environmental Impact Statement ("EIS")
with the federal government. The federal and provincial permitting
process is expected to take approximately two years, with a
construction decision planned for 2022.
Development spending (excluding exploration) was
$0.8 million in the second quarter of 2021 to support the ongoing
permitting process and engineering.
Kirazlı (Çanakkale, Turkey)
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
Turkey for expropriation and unfair and inequitable treatment,
among other things, with respect to the Kirazlı, Ağı Dağı and
Çamyurt gold development projects in Turkey. The claim was filed
under the Netherlands-Turkey Bilateral Investment Treaty (the
“Treaty”). Alamos Gold Holdings Coöperatief U.A. and Alamos Gold
Holdings B.V. had its claim against the Republic of Turkey
registered on June 7, 2021 with the International Centre for
Settlement of Investment Disputes (World Bank Group).
In its effort to secure the renewal of its
mining licenses, the Company has attempted to work cooperatively
with the Turkish government, has raised with the Turkish government
its obligations under the Treaty, has sought to resolve the dispute
by good faith negotiations, and has made considerable effort to
build support among stakeholders and host communities. The Turkish
government has failed to provide the Company with a reason for the
non-renewal or a timeline for renewal of its licenses.
Alamos has had an active presence in Turkey
since 2010. Over that time frame, the Company’s Turkish operations
have met all legal and regulatory requirements, complied with best
practices relating to sustainable development including meeting the
highest environmental and social management standards, created
hundreds of jobs, and developed trusting relationships with the
local communities. Alamos and the Subsidiaries have invested over
$250 million in Turkey, unlocked over a billion dollars worth of
project value, and contributed over $20 million in royalties, taxes
and forestry fees to the Turkish government. Over the life of the
project, government revenues alone are expected to total $551
million. Additionally, Alamos and the Subsidiaries have invested
$25 million to date towards various community and social
initiatives.
Bilateral investment treaties are agreements
between countries to assist with the protection of investments. The
Treaty establishes legal protections for investment between Turkey
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 Turkey.
Alamos and the Subsidiaries are being
represented by the leading Canadian law firm Torys LLP, with a team
that includes John Terry and former Canadian Supreme Court Justice,
the Hon. Frank Iacobucci. The Company is also being supported by
its strategic advisor John Baird, former Canadian Minister of
Foreign Affairs and Senior Advisor to Bennett Jones LLP.
As a result, the Company incurred an after-tax
impairment charge of $213.8 million for the three and six months
ended June 30, 2021. The non-cash impairment charge reflects the
Company’s entire net carrying value of the Turkish mineral
property, plant and equipment and certain other current assets.
In addition, the Company incurred approximately
$1.4 million in the period for severances, legal costs, and ongoing
holding costs which have been expensed. Going forward, the Company
expects holding costs will be approximately $1.0 to $2.0 million
per year during the Treaty claim process.
Second Quarter 2021 Exploration Activities
Island Gold (Ontario,
Canada)
The 2021 exploration drilling program is focused
on expanding high-grade mineralization in the down-plunge and
lateral extensions of the Island Gold deposit with the objective of
adding new near-mine Mineral Resources across the two kilometre
long Island Gold deposit. The Company continued its strong track
record of exploration success and Mineral Reserve and Resource
growth in 2020, with an 8% increase in Mineral Reserves to 1.3
million ounces of gold (4.2 mt grading 9.71 g/t Au) and a 0.9
million ounce, or 40% increase in Inferred Mineral Resources to 3.2
million ounces with grades also increasing 9% to 14.43 g/t Au (6.9
mt).
Surface diamond drilling programs continued with
four drill rigs operating in the second quarter. This included
three surface directional rigs focused on mine exploration, and one
focused on testing regional exploration targets. One underground
exploration diamond drill operated at the beginning of the quarter
and two additional drill rigs were added in May to focus on
underground directional drilling. A total of 4,654 m of surface
directional drilling, 4,132 m of surface regular drilling, 2,656 m
of underground directional drilling and 2,610 m of standard
underground exploration drilling was completed in the second
quarter of 2021.
Surface exploration drilling
A total of 4,654 m of surface directional
drilling was completed in seven holes during the second quarter as
part of the surface directional drilling program. Directional
drilling targeted areas peripheral to the Inferred Mineral Resource
blocks below the 1,000 m level, with drill hole spacing ranging
from 75 m to 100 m. The area that was targeted by the surface
directional drill program extends approximately 2,000 m in strike
length between the 1,000 m and 1,500 m elevation below surface. A
total of 4,132 m of regional diamond drilling program was completed
in seven holes within the quarter. The drill rig was transferred to
the surface directional program in June. Drilling for the regional
program will resume in the third quarter.
Previously reported (June 15, 2021) highlights
from the second quarter surface exploration drilling program in
Island East (E1E-Zone) include:
- 71.21 g/t Au
(39.24 g/t cut) over 21.33 m (MH25-08); and
- 34.87 g/t Au
(34.87 g/t cut) over 5.98 m (MH25-07).
Drillhole MH25-08 (71.21 g/t Au (39.24 g/t cut)
over 21.33 m) intersected significantly wider, high-grade
mineralization 45 m and 80 m from previously reported drillholes
MH25-04 (28.97 g/t Au (27.96 g/t cut) over 21.76 m) and MH25-05
(54.18 g/t Au (33.12 g/t cut) over 6.54 m), respectively.
In addition, drillhole MH25-08 extended
high-grade mineralization 20 m east of the existing Inferred
Mineral Resource block which contained 1,309,700 ounces, grading
18.26 g/t Au (2.23 million tonnes) as of December 31, 2020. Using
the cut weighted gold grade for metal factor calculation, drillhole
MH25-08 (71.21 g/t Au (39.24 g/t cut) over 21.33 m) is the best
hole drilled to date at Island Gold in terms of gold content for a
drill hole intersect. Drillhole MH25-07 (34.87 g/t Au (34.87 g/t
cut) over 5.98 m) also further extended high-grade mineralization
at Island East, intersecting high-grade mineralization 60 m above
MH25-04, and 40 m from the nearest Inferred Mineral Resource
block.
Underground exploration drilling
During the second quarter of 2021, 2,656 m of
underground directional drilling was completed in six holes from
the 620 and 740 levels. A total of 2,610 m of standard underground
exploration drilling was completed in 15 holes from the 620, 740
and 840 levels. The objective of the underground drilling is to
identify new Mineral Resources close to existing Mineral Resource
or Reserve blocks. A total of 103 m of underground exploration
drift development was completed on the 400, 490 and 790 levels
during the second quarter of 2021.
Previously reported (June 15, 2021) highlights
from the second quarter underground exploration drilling program in
Island East and West (E1E-Zone) include:
Island East:
- 8.88 g/t Au (8.88 g/t cut) over 8.45
m (840-584-03); and
- 16.75 g/t Au (16.75 g/t cut) over
2.64 m (840-590-10).
Island West:
- 31.58 g/t Au
(28.74 g/t cut) over 2.43 m (740-471-41).
Total exploration expenditures during the second
quarter were $5.7 million, of which $3.9 million was capitalized.
For the first half of 2021, $10.8 million of exploration
expenditures were incurred, with $8.4 million capitalized.
Young-Davidson (Ontario,
Canada)
A total of $7.0 million has been budgeted for
Young-Davidson for 2021, representing the first significant
exploration program since 2011, with the focus of the last several
years being on the completion of the lower mine expansion.
Underground exploration drilling during the second quarter was
focused on two targets with 3,816 m completed in eight holes.
Drilling from the 8960-level exploration drill bay established in
the lower mine infrastructure is continuing to target to the west
and down-plunge of existing Mineral Reserves and Resources.
Drilling is targeting syenite-hosted mineralization and is also
continuing to test mineralization in the footwall sediments and in
the hanging wall mafic-ultramafic stratigraphy. A second
underground drill is also testing exploration targets in the
eastern extent of the mine from the 9590-level drill bay.
Since commencing underground exploration
drilling in 2020, the program has been successful in extending
syenite-hosted gold mineralization 220 m below the previous Mineral
Resource (year-end 2019), contributing to an increase in Inferred
Mineral Resources to 0.2 million ounces in the year-end 2020
Mineral Reserve and Resource update. Exploration drilling in 2021
has further extended syenite-hosted gold mineralization another 150
m below existing Mineral Resources and Reserves
(YMEX21-8960-021).
High-grade gold mineralization was also
intersected in structures both within the hanging wall
ultramafic-mafic stratigraphy, and within the footwall sediments.
Further drilling will be completed to evaluate the geometry and
continuity of the mineralized structures. These initial exploration
results outside of the Young-Davidson syenite highlight the
significant near-mine exploration potential at Young-Davidson.
Previously reported (July 12, 2021) highlights
from the 2020 and 2021 underground exploration drilling program at
Young-Davidson include:
- 5.32 g/t Au
(3.35 g/t cut) over 39.20 m (34.57 m true width) including 21.96
g/t Au (9.78 g/t cut) over 6.20 m (5.47 m true width)
(YMEX20-8960-008)1;
- 5.42 g/t Au over
12.75 m (11.25 m true width) including 32.30 g/t Au over 0.65 m
(0.57 m true width) (YMEX21-8960-016);
- 4.36 g/t Au over
9.00 m (YMEX21-8960-021);
- 5.79 g/t Au over
13.70 m including 24.14 g/t Au over 1.85m (YMEX20-8960-014);
and
- 8.32 g/t Au over
6.30 m (3.84 m true width) including 22.50 g/t Au over 1.20 m (0.73
m true width) (YMEX20-8960-011)1.
1 Drillhole completed in 2020 and included in
year-end 2020 Mineral Reserves and Mineral Resources for
Young-Davidson.
Drillhole YMEX20-8960-008 intersected 5.32 g/t
Au (3.35 g/t cut) over 39.20 m (34.57 m true width) including 21.96
g/t Au (9.78 g/t cut) over 6.20 m (5.47 m true width) within
syenite. The syenite remains open to the northwest and southeast,
as well as down-dip, and within the 90 m gap above this
intersection and below the Mineral Reserve and Mineral Resource
above.
Drillhole YMEX20-8960-014 intersected a
high-grade structure 200 m south of hanging wall contact of the
syenite within ultramafic-mafic lithologies beyond the limits of
any previous drilling. This structure returned 5.79 g/t over 13.70
m including 24.14 g/t Au over 1.85m.
Drillhole YMEX21-8960-016 intersected 5.42 g/t
Au over 12.75 m (11.25 m true width) including 32.30 g/t Au over
0.65m (0.57 m true width) within syenite. Mineralization within the
syenite remains open in this area to the southeast and
down-dip.
Drillhole YMEX20-8960-011 intersected 8.32 g/t
Au over 6.30 m (3.84 m true width), including 22.5 g/t over 1.20 m
(0.73 m true width) in a shear zone developed within the footwall
sediments, 100 m from the contact with the syenite.
Exploration spending totaled $1.5 million in the
second quarter and $2.5 million in the first half of 2021, all of
which 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 has moved
beyond the main Mulatos pit area and is focused on earlier stage
prospects throughout the wider district.
During the second quarter of 2021, exploration
activities were focused on the near-mine, Puerto del Aire trend
with 2,640 m of drilling completed in eleven drill holes. Regional
targets at Carricito and Los Ciegos were also tested with nine
holes completed totaling 2,428 m. Exploration activities continued
on the Los Venados property, pursuant to an option agreement with
Aloro Mining, with sixteen drill holes completed in the quarter for
a total of 1,822 m, and surface mapping and sampling is ongoing. A
restart of drilling in the El Halcon area completed six drillholes
for 966 m. During the second quarter, the Company incurred $2.5
million of exploration spending, of which $1.0 million was
capitalized. For the first half of 2021, $4.3 million was incurred,
with $1.0 million capitalized.
Lynn Lake (Manitoba,
Canada)
In the second quarter of 2021, 9,396 m of
drilling was completed in forty-four holes at MacLellan, Gordon,
Burnt Timber, and on two regional targets. The 2021 summer field
season also commenced, with the focus on continuing to advance a
pipeline of prospective regional exploration targets. Exploration
spending totaled $3.0 million in the second quarter, and $4.2
million year-to-date which was capitalized.
Review of Second Quarter Financial Results
During the second quarter of 2021, the Company
sold 107,581 ounces of gold for revenue of $195.1 million, a 55%
increase from the prior year period driven by higher realized gold
prices and more ounces sold. Ounces sold were lower than production
in the current period due to timing of shipments at the Mulatos
mine, which were sold in the third quarter. Sales were lower in the
second quarter of 2020 due to the temporary shutdown of the
Northgate shaft at Young-Davidson to facilitate the tie in of the
lower mine infrastructure, as well as temporary suspensions of both
Island Gold and Mulatos due to the COVID-19 pandemic.
The average realized gold price in the second
quarter was $1,814 per ounce, a 7% increase compared to $1,692 per
ounce realized in the prior year period. The average realized gold
price was in line with the average London PM Fix price of $1,816
per ounce.
Cost of sales were $126.9 million in the second
quarter, 23% higher than the prior year period.
Mining and processing costs were $82.1 million,
21% higher than the comparative period. The increase in mining
costs was the result of reduced mining activity at Island Gold and
Mulatos in the prior year quarter due to the impact of COVID-19,
and at Young Davidson due to the shutdown of the Northgate shaft to
complete the lower mine construction. Further, additional costs
have been incurred in 2021 related to COVID-19 preventative
measures, and the impact of a stronger Canadian dollar on reported
costs. This has been partially offset by lower mining and
processing costs per tonne at Young-Davidson and Island Gold as a
result of operational efficiencies.
Consolidated total cash costs of $791 per ounce
and AISC of $1,136 per ounce in the quarter were both substantial
decreases compared to the prior year period as prior year costs
were impacted negatively by the temporary suspension of operations.
This has been partially offset by the impact of the stronger
Canadian dollar on reported total cash costs and AISC in 2021.
Royalty expense was $3.0 million in the quarter,
higher than the prior year period of $1.7 million due to higher
ounces sold in the period.
Amortization of $41.8 million in the quarter was
higher than the prior year period due to higher amortization
charges at all three operations given the increase in production in
the quarter. Amortization of $389 per ounce was 7% higher than the
prior year reflecting higher amortization per ounce at Mulatos,
driven by Cerro Pelon production which carries a higher
amortization charge per ounce. In addition, amortization increased
following the completion of the lower-mine tie-in at Young-Davidson
in mid 2020, which resulted in commencing amortization of the new
lower-mine infrastructure.
Impairment charge
In accordance with the Company’s accounting
policy, assets are tested for impairment when events or changes in
circumstances suggest that the carrying amount may not be
recoverable. The continued failure by the Republic of Turkey to
renew the mining licenses since their expiry, and the continued
failure of discussions with the Republic of Turkey to date to
resolve the situation, has resulted in the decision to proceed with
a bilateral investment treaty claim. The Company has concluded that
an impairment trigger for accounting purposes existed in the second
quarter.
The recoverable amount relating to mineral
properties has been determined as nil, based on both the Fair Value
Less Cost of Disposal (“FVLCD”) and Value in Use (“VIU”) methods.
The FVLCD is considered to be nil on the basis that no other market
participant would likely be able to progress the Project in the
face of the Treaty claim and the current state of the Company’s
mining licenses. A market approach was used in estimating the FVLCD
as an income approach would not be considered to provide a reliable
estimate of fair value. The VIU of the Project is also considered
to be nil due to the current probability of resolving the dispute
with the Republic of Turkey, and therefore the likelihood of the
Project being developed, being now considered to be remote, and
therefore no future positive cash flows can be expected to be
generated.
As a result, the Company incurred an impairment
charge of $224.3 million ($213.8 million after tax) for the three
and six months ended June 30, 2021. The non-cash impairment charge
reflects the Company’s entire net carrying value of the Turkish
mineral property, plant and equipment and certain other current
assets. Refer to note 9 of the Company's unaudited condensed
interim consolidated financial statements for the three and six
months ended June 30, 2021 for further details.
The Company recognized a loss from operations of
$168.5 million in the quarter, a significant increase from the
prior year driven by the impairment of the Turkish Projects.
The Company reported a net loss of $172.5
million in the quarter, compared to net earnings of $11.7 million
in the comparative period. The decrease in net earnings from the
prior year quarter is due to the non-cash impairment charge of
$224.3 million related to the Turkish Projects, partially offset by
higher operating revenue and margins realized. On an adjusted
basis, earnings of $38.7 million, or $0.10 per share, were higher
compared to the prior year quarter primarily driven by improved
operating margins. Adjusted earnings reflect adjustments for the
Turkey impairment charge and other one-time gains and losses, as
well as foreign exchange movements.
Associated Documents
This press release should be read in conjunction
with the Company’s interim consolidated financial statements for
the three-month period ended June 30, 2021 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 Second Quarter 2021 Results Conference
Call
The Company's senior management will host a
conference call on Thursday, July 29, 2021 at 10:00 am ET to
discuss the second quarter 2021 results. Participants may join the
conference call via webcast or through the following dial-in
numbers:
Toronto and International: |
|
(416) 340-2217 |
Toll free (Canada and the United States): |
|
(800) 806-5484 |
Participant passcode: |
|
3079443# |
Webcast: |
|
www.alamosgold.com |
A playback will be available until August 29,
2021 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The pass code is 7317600#. The webcast will be
archived at www.alamosgold.com.
Qualified Persons
Chris Bostwick, FAusIMM, Alamos’ Vice President, Technical
Services, who is a qualified person within the meaning of National
Instrument 43-101 ("Qualified Person"), has reviewed and approved
the scientific and technical information contained in this press
release.
About Alamos
Alamos is a Canadian-based intermediate gold
producer with diversified production from three operating mines in
North America. This includes the Young-Davidson and Island Gold
mines in northern Ontario, Canada and the Mulatos mine in Sonora
State, Mexico. Additionally, the Company has a significant
portfolio of development stage projects in Canada, Mexico, Turkey,
and the United States. Alamos employs more than 1,700 people and is
committed to the highest standards of sustainable development. The
Company’s shares are traded on the TSX and NYSE under the symbol
“AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K.
Parsons |
|
Vice-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", "believe",
"anticipate", "intend", "estimate", "forecast", "budget", “target”,
“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 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, 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 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, 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.
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;
labour and contractor availability and other operating or technical
difficulties); operations may be exposed to new diseases, epidemics
and pandemics, including the effects and potential effects of the
global COVID-19 widespread pandemic; the impact of the COVID-19
pandemic on the broader market and the trading price of the
Company's shares; provincial and federal orders or mandates
(including with respect to mining operations generally or auxiliary
businesses or services required for our operations) in Canada,
Mexico, the United States and Turkey; the duration of regulatory
responses to the COVID-19 pandemic; governments 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 dore 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 Turkey 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;
expansion delays with the Phase III Expansion Project at the Island
Gold mine; construction delays at La Yaqui Grande project; inherent
risks associated with mining and mineral processing; 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 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,
Turkey, 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 Turkey, described above, results from the
actions of the Turkish government in respect of the Company’s
projects in the Republic of Turkey. Such litigation is a mitigation
effort and may not be effective or successful. If unsuccessful, the
Company’s projects in Turkey may be subject to resource nationalism
and further expropriation; the Company may lose any remaining value
of its assets and gold mining projects in Turkey and its ability to
operate in Turkey. 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 Turkey, including renewal of
the requisite operating licenses or permits, or even retaining
control of its assets and gold mining projects in Turkey can only
result from agreement with the Turkish government. The litigation
described in this press release may have an impact on foreign
direct investment in the Republic of Turkey 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 Turkey, and which
may have a negative effect on overall anticipated project
values.
Additional risk factors and details with respect
to risk factors affecting 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 40-F/Annual
Information Form for the year ended December 31, 2020 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 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
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. The terms "Mineral
Reserve", "Proven Mineral Reserve" and "Probable Mineral Reserve"
are Canadian mining terms as defined in accordance with NI 43-101
and the CIM Standards. Investors are cautioned not to assume that
all or any part of mineral deposits in these categories will ever
be converted into reserves. "Inferred Mineral Resources" have a
great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot
be assumed that all or any part of an Inferred Mineral Resource
will ever be upgraded to a higher category. Under Canadian rules,
estimates of Inferred Mineral Resources may not form the basis of
feasibility or pre-feasibility studies, except in very limited
circumstances. Investors are cautioned not to assume that all or
any part of an Inferred Mineral Resource exists or is economically
or legally mineable. Disclosure of "contained ounces" in a resource
is permitted disclosure under Canadian regulations.
International Financial Reporting
Standards: The condensed 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
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 June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net (loss) earnings |
($172.5 |
) |
|
$11.7 |
|
|
($121.3 |
) |
|
($0.6 |
) |
|
Adjustments: |
|
|
|
|
Impairment charge, net of taxes |
|
213.8 |
|
|
|
— |
|
|
|
213.8 |
|
|
|
— |
|
|
COVID-19 costs |
|
— |
|
|
|
6.5 |
|
|
|
— |
|
|
|
6.5 |
|
|
Foreign exchange (gain) loss |
|
(0.5 |
) |
|
|
(0.2 |
) |
|
|
(0.3 |
) |
|
|
4.9 |
|
|
Other loss |
|
3.7 |
|
|
|
5.1 |
|
|
|
3.7 |
|
|
|
4.9 |
|
|
Unrealized foreign exchange (gain) loss recorded in deferred tax
expense |
|
(5.5 |
) |
|
|
(10.1 |
) |
|
|
(8.0 |
) |
|
|
26.7 |
|
|
Other income tax and mining tax adjustments |
|
(0.3 |
) |
|
|
(3.2 |
) |
|
|
(0.1 |
) |
|
|
(3.2 |
) |
|
Adjusted net earnings |
$38.7 |
|
|
$9.8 |
|
|
$87.8 |
|
|
$39.2 |
|
|
Adjusted earnings per share - basic and diluted |
$0.10 |
|
|
$0.03 |
|
|
$0.22 |
|
|
$0.10 |
|
|
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 June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Cash flow from operating activities |
|
$86.7 |
|
|
$49.6 |
|
|
|
$186.0 |
|
|
$106.2 |
|
Add: Changes in working
capital and cash taxes |
|
10.5 |
|
|
(4.9 |
) |
|
|
30.8 |
|
|
20.2 |
|
Cash flow from operating activities before changes in
working capital and cash taxes |
|
$97.2 |
|
|
$44.7 |
|
|
|
$216.8 |
|
|
$126.4 |
|
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 June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Cash flow from operating activities |
|
$86.7 |
|
|
|
$49.6 |
|
|
|
$186.0 |
|
|
|
$106.2 |
|
|
Less: mineral property, plant
and equipment expenditures (1) |
|
(83.5 |
) |
|
|
(54.6 |
) |
|
|
(156.1 |
) |
|
|
(117.9 |
) |
|
Less:
capital advances |
|
(3.4 |
) |
|
|
— |
|
|
|
(20.2 |
) |
|
|
— |
|
|
Company-wide free cash flow |
|
($0.2 |
) |
|
|
($5.0 |
) |
|
|
($9.7 |
|
|
|
($11.7 |
) |
|
(1) Mineral property, plant and equipment expenditures exclude
the Island Gold royalty repurchase of $54.8 million in the first
quarter of 2020.
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 June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$86.7 |
|
|
$49.6 |
|
|
$186.0 |
|
|
$106.2 |
|
|
Add: operating cash flow used by non-mine site activity |
|
13.8 |
|
|
|
6.4 |
|
|
|
24.1 |
|
|
|
21.1 |
|
|
Cash flow from operating mine-sites |
$100.5 |
|
|
$56.0 |
|
|
$210.1 |
|
|
$127.3 |
|
|
|
|
|
|
|
Mineral property, plant and
equipment expenditure 1 |
$83.5 |
|
|
$54.6 |
|
|
$156.1 |
|
|
$117.9 |
|
|
Capital advances |
|
3.4 |
|
|
|
— |
|
|
|
20.2 |
|
|
|
— |
|
|
Less: capital expenditures
from development projects, and corporate |
|
(6.5 |
) |
|
|
(4.0 |
) |
|
|
(11.0 |
) |
|
|
(10.8 |
) |
|
Capital expenditure and capital advances from
mine-sites |
$80.4 |
|
|
$50.6 |
|
|
$165.3 |
|
|
$107.1 |
|
|
|
|
|
|
|
Total mine-site free cash flow |
$20.1 |
|
|
$5.4 |
|
|
$44.8 |
|
|
$20.2 |
|
|
(1) Excludes a royalty repurchase of
$54.8 million at Island Gold in the first quarter of 2020
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
|
$38.3 |
|
|
|
$6.5 |
|
|
|
$82.5 |
|
|
|
$14.6 |
|
|
Mineral
property, plant and equipment expenditure |
|
(19.6 |
) |
|
|
(29.6 |
) |
|
|
(41.5 |
) |
|
|
(56.6 |
) |
|
Mine-site free cash flow |
|
$18.7 |
|
|
|
($23.1 |
) |
|
|
$41.0 |
|
|
|
($42.0 |
) |
|
Island Gold Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
|
$42.9 |
|
|
|
$25.1 |
|
|
|
$98.4 |
|
|
|
$66.8 |
|
|
Mineral property, plant and
equipment expenditure 1 |
|
(28.5 |
) |
|
|
(15.9 |
) |
|
|
(55.9 |
) |
|
|
(38.0 |
) |
|
Capital
advances |
|
(0.7 |
) |
|
|
— |
|
|
|
(2.8 |
) |
|
|
— |
|
|
Mine-site free cash flow |
|
$13.7 |
|
|
|
$9.2 |
|
|
|
$39.7 |
|
|
|
$28.8 |
|
|
(1) Excludes a royalty repurchase of
$54.8 million at Island Gold in the first quarter of 2020
Mulatos Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
|
$19.3 |
|
|
|
$24.4 |
|
|
|
$29.2 |
|
|
|
$45.9 |
|
|
Mineral property, plant and
equipment expenditure |
|
(28.9 |
) |
|
|
(5.1 |
) |
|
|
(47.7 |
) |
|
|
(12.5 |
) |
|
Capital advances |
|
(2.7 |
) |
|
|
— |
|
|
|
(17.4 |
) |
|
|
— |
|
|
Mine-site free cash flow |
|
($12.3 |
) |
|
|
$19.3 |
|
|
|
($35.9 |
) |
|
|
$33.4 |
|
|
Net CashThe 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 June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions, except ounces
and per ounce figures) |
|
|
|
|
Mining and processing |
$82.1 |
|
$67.9 |
|
$174.8 |
|
$150.4 |
|
Royalties |
|
3.0 |
|
|
1.7 |
|
|
6.1 |
|
|
4.1 |
|
Total cash costs |
|
85.1 |
|
|
69.6 |
|
|
180.9 |
|
|
154.5 |
|
Gold
ounces sold |
|
107,581 |
|
|
74,605 |
|
|
234,063 |
|
|
186,459 |
|
Total cash costs per ounce |
$791 |
|
$933 |
|
$773 |
|
$829 |
|
|
|
|
|
|
Total cash costs |
$85.1 |
|
$69.6 |
|
$180.9 |
|
$154.5 |
|
Corporate and
administrative(1) |
|
6.3 |
|
|
4.1 |
|
|
12.4 |
|
|
10.3 |
|
Sustaining capital
expenditures(2) |
|
26.7 |
|
|
14.4 |
|
|
50.3 |
|
|
31.9 |
|
Share-based compensation |
|
2.3 |
|
|
5.6 |
|
|
5.1 |
|
|
7.8 |
|
Sustaining exploration |
|
1.2 |
|
|
1.0 |
|
|
2.5 |
|
|
2.5 |
|
Accretion of decommissioning
liabilities |
|
0.6 |
|
|
0.5 |
|
|
1.3 |
|
|
1.2 |
|
Total all-in sustaining costs |
$122.2 |
|
$95.2 |
|
$252.5 |
|
$208.2 |
|
Gold
ounces sold |
|
107,581 |
|
|
74,605 |
|
|
234,063 |
|
|
186,459 |
|
All-in sustaining costs per ounce |
$1,136 |
|
$1,276 |
|
$1,079 |
|
$1,117 |
|
(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 June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions) |
|
|
|
|
Capital expenditures per cash flow statement |
|
$83.5 |
|
|
|
$54.6 |
|
|
|
$156.1 |
|
|
|
$117.9 |
|
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
Young-Davidson |
|
(9.8 |
) |
|
|
(24.1 |
) |
|
|
(22.2 |
) |
|
|
(46.9 |
) |
|
Island Gold |
|
(17.5 |
) |
|
|
(10.7 |
) |
|
|
(34.3 |
) |
|
|
(24.3 |
) |
|
Mulatos |
|
(23.0 |
) |
|
|
(1.4 |
) |
|
|
(38.3 |
) |
|
|
(4.0 |
) |
|
Corporate and other |
|
(6.5 |
) |
|
|
(4.0 |
) |
|
|
(11.0 |
) |
|
|
(10.8 |
) |
|
Sustaining capital expenditures |
|
$26.7 |
|
|
|
$14.4 |
|
|
|
$50.3 |
|
|
|
$31.9 |
|
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions, except ounces
and per ounce figures) |
|
|
|
|
Mining and processing |
$41.1 |
|
$34.4 |
|
$81.7 |
|
$65.2 |
|
Royalties |
|
1.5 |
|
|
0.7 |
|
|
2.8 |
|
|
1.5 |
|
Total cash costs |
$42.6 |
|
$35.1 |
|
$84.5 |
|
$66.7 |
|
Gold
ounces sold |
|
45,284 |
|
|
22,440 |
|
|
93,306 |
|
|
51,345 |
|
Total cash costs per ounce |
$941 |
|
$1,564 |
|
$906 |
|
$1,299 |
|
|
|
|
|
|
Total cash costs |
$42.6 |
|
$35.1 |
|
$84.5 |
|
$66.7 |
|
Sustaining capital
expenditures |
|
9.8 |
|
|
5.5 |
|
|
19.3 |
|
|
9.7 |
|
Accretion of decommissioning liabilities |
|
— |
|
|
— |
|
|
0.2 |
|
|
0.1 |
|
Total all-in sustaining costs |
$52.4 |
|
$40.6 |
|
$104.0 |
|
$76.5 |
|
Gold
ounces sold |
|
45,284 |
|
|
22,440 |
|
|
93,306 |
|
|
51,345 |
|
Mine-site all-in sustaining costs per ounce |
$1,157 |
|
$1,809 |
|
$1,115 |
|
$1,490 |
|
Island Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions, except ounces
and per ounce figures) |
|
|
|
|
Mining and processing |
$15.6 |
|
$8.6 |
|
$32.8 |
|
$25.0 |
|
Royalties |
|
1.3 |
|
|
0.7 |
|
|
2.7 |
|
|
2.0 |
|
Total cash costs |
$16.9 |
|
$9.3 |
|
$35.5 |
|
$27.0 |
|
Gold
ounces sold |
|
33,632 |
|
|
18,560 |
|
|
73,514 |
|
|
57,687 |
|
Total cash costs per ounce |
$502 |
|
$501 |
|
$483 |
|
$468 |
|
|
|
|
|
|
Total cash costs |
$16.9 |
|
$9.3 |
|
$35.5 |
|
$27.0 |
|
Sustaining capital
expenditures |
|
11.0 |
|
|
5.2 |
|
|
21.6 |
|
|
13.7 |
|
Total all-in sustaining costs |
$27.9 |
|
$14.5 |
|
$57.1 |
|
$40.7 |
|
Gold
ounces sold |
|
33,632 |
|
|
18,560 |
|
|
73,514 |
|
|
57,687 |
|
Mine-site all-in sustaining costs per ounce |
$830 |
|
$781 |
|
$777 |
|
$706 |
|
Mulatos
Total Cash Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
(in millions, except ounces
and per ounce figures) |
|
|
|
|
Mining and processing |
$25.4 |
|
$24.9 |
|
$60.3 |
|
$60.2 |
|
Royalties |
|
0.2 |
|
|
0.3 |
|
|
0.6 |
|
|
0.6 |
|
Total cash costs |
$25.6 |
|
$25.2 |
|
$60.9 |
|
$60.8 |
|
Gold
ounces sold |
|
28,665 |
|
|
33,605 |
|
|
67,243 |
|
|
77,427 |
|
Total cash costs per ounce |
$893 |
|
$750 |
|
$906 |
|
$785 |
|
|
|
|
|
|
Total cash costs |
$25.6 |
|
$25.2 |
|
$60.9 |
|
$60.8 |
|
Sustaining capital
expenditures |
|
5.9 |
|
|
3.7 |
|
|
9.4 |
|
|
8.5 |
|
Sustaining exploration |
|
0.7 |
|
|
0.5 |
|
|
1.5 |
|
|
1.5 |
|
Accretion of decommissioning liabilities |
|
0.6 |
|
|
0.5 |
|
|
1.1 |
|
|
1.1 |
|
Total all-in sustaining costs |
$32.8 |
|
$29.9 |
|
$72.9 |
|
$71.9 |
|
Gold
ounces sold |
|
28,665 |
|
|
33,605 |
|
|
67,243 |
|
|
77,427 |
|
Mine-site all-in sustaining costs per ounce |
$1,144 |
|
$890 |
|
$1,084 |
|
$929 |
|
Earnings Before Interest, Taxes, Depreciation, and
Amortization (“EBITDA”)
EBITDA represents net earnings before impairment
charges, 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 June 30, |
Six Months Ended June 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net (loss) earnings |
|
($172.5 |
) |
|
|
$11.7 |
|
|
|
($121.3 |
) |
|
|
($0.6 |
) |
|
Add back: |
|
|
|
|
Impairment charge |
|
224.3 |
|
|
|
— |
|
|
|
224.3 |
|
|
|
— |
|
|
COVID-19 costs |
|
— |
|
|
|
6.5 |
|
|
|
— |
|
|
|
6.5 |
|
|
Finance expense |
|
1.0 |
|
|
|
1.2 |
|
|
|
2.0 |
|
|
|
2.0 |
|
|
Amortization |
|
41.8 |
|
|
|
27.2 |
|
|
|
85.3 |
|
|
|
62.6 |
|
|
Deferred income tax (recovery) expense |
|
(2.9 |
) |
|
|
(14.8 |
) |
|
|
15.1 |
|
|
|
38.3 |
|
|
Current income tax expense |
|
2.7 |
|
|
|
9.1 |
|
|
|
8.6 |
|
|
|
8.8 |
|
|
EBITDA |
|
$94.4 |
|
|
|
$40.9 |
|
|
|
$214.0 |
|
|
|
$117.6 |
|
|
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)
|
June 30, 2021 |
|
December 31, 2020 |
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$233.9 |
|
|
|
$220.5 |
|
|
Equity securities |
|
22.4 |
|
|
|
|
43.7 |
|
|
Amounts receivable |
|
31.9 |
|
|
|
|
34.7 |
|
|
Inventory |
|
173.4 |
|
|
|
|
148.5 |
|
|
Other current assets |
|
32.4 |
|
|
|
|
26.0 |
|
|
Total Current
Assets |
|
494.0 |
|
|
|
|
473.4 |
|
|
|
|
|
|
Non-Current
Assets |
|
|
|
Long-term inventory |
|
14.1 |
|
|
|
|
17.9 |
|
|
Mineral property, plant and
equipment |
|
2,961.6 |
|
|
|
|
3,101.3 |
|
|
Other non-current assets |
|
44.2 |
|
|
|
|
43.9 |
|
|
Total Assets |
$3,513.9 |
|
|
|
$3,636.5 |
|
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$149.8 |
|
|
|
$131.4 |
|
|
Income taxes payable |
|
— |
|
|
|
|
15.5 |
|
|
Total Current
Liabilities |
|
149.8 |
|
|
|
|
146.9 |
|
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
574.6 |
|
|
|
|
559.9 |
|
|
Decommissioning
liabilities |
|
75.4 |
|
|
|
|
75.2 |
|
|
Other non-current
liabilities |
|
3.1 |
|
|
|
|
3.0 |
|
|
Total Liabilities |
|
802.9 |
|
|
|
|
785.0 |
|
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,703.7 |
|
|
|
$3,702.9 |
|
|
Contributed surplus |
|
89.5 |
|
|
|
|
88.5 |
|
|
Accumulated other
comprehensive income |
|
4.4 |
|
|
|
|
18.2 |
|
|
Deficit |
|
(1,086.6 |
) |
|
|
|
(958.1 |
) |
|
Total Equity |
|
2,711.0 |
|
|
|
|
2,851.5 |
|
|
Total Liabilities and Equity |
$3,513.9 |
|
|
|
$3,636.5 |
|
|
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 six months ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
OPERATING
REVENUES |
$195.1 |
|
|
|
$126.2 |
|
|
|
$422.5 |
|
|
|
$303.1 |
|
|
|
|
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
|
|
|
Mining and processing |
|
82.1 |
|
|
|
|
67.9 |
|
|
|
|
174.8 |
|
|
|
|
150.4 |
|
|
Royalties |
|
3.0 |
|
|
|
|
1.7 |
|
|
|
|
6.1 |
|
|
|
|
4.1 |
|
|
COVID-19 costs |
|
— |
|
|
|
|
6.5 |
|
|
|
|
— |
|
|
|
|
6.5 |
|
|
Amortization |
|
41.8 |
|
|
|
|
27.2 |
|
|
|
|
85.3 |
|
|
|
|
62.6 |
|
|
|
|
126.9 |
|
|
|
|
103.3 |
|
|
|
|
266.2 |
|
|
|
|
223.6 |
|
|
EXPENSES |
|
|
|
|
|
|
|
Exploration |
|
3.8 |
|
|
|
|
1.1 |
|
|
|
|
6.7 |
|
|
|
|
3.1 |
|
|
Corporate and
administrative |
|
6.3 |
|
|
|
|
4.1 |
|
|
|
|
12.4 |
|
|
|
|
10.3 |
|
|
Share-based compensation |
|
2.3 |
|
|
|
|
5.6 |
|
|
|
|
5.1 |
|
|
|
|
7.8 |
|
|
Impairment charge |
|
224.3 |
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
363.6 |
|
|
|
|
114.1 |
|
|
|
|
514.7 |
|
|
|
|
244.8 |
|
|
EARNINGS FROM
OPERATIONS |
|
(168.5 |
) |
|
|
|
12.1 |
|
|
|
|
(92.2 |
) |
|
|
|
58.3 |
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
|
|
|
Finance expense |
|
(1.0 |
) |
|
|
|
(1.2 |
) |
|
|
|
(2.0 |
) |
|
|
|
(2.0 |
) |
|
Foreign exchange gain
(loss) |
|
0.5 |
|
|
|
|
0.2 |
|
|
|
|
0.3 |
|
|
|
|
(4.9 |
) |
|
Other loss |
|
(3.7 |
) |
|
|
|
(5.1 |
) |
|
|
|
(3.7 |
) |
|
|
|
(4.9 |
) |
|
(LOSS) EARNINGS FROM
OPERATIONS |
($172.7 |
) |
|
|
$6.0 |
|
|
|
($97.6 |
) |
|
|
$46.5 |
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
|
|
|
Current income tax
expense |
|
(2.7 |
) |
|
|
|
(9.1 |
) |
|
|
|
(8.6 |
) |
|
|
|
(8.8 |
) |
|
Deferred income tax recovery
(expense) |
|
2.9 |
|
|
|
|
14.8 |
|
|
|
|
(15.1 |
) |
|
|
|
(38.3 |
) |
|
NET (LOSS)
EARNINGS |
($172.5 |
) |
|
|
$11.7 |
|
|
|
($121.3 |
) |
|
|
($0.6 |
) |
|
|
|
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
|
(0.6 |
) |
|
|
|
6.3 |
|
|
|
|
(1.7 |
) |
|
|
|
(5.1 |
) |
|
Net change in fair value of fuel hedging instruments, net of
taxes |
|
0.2 |
|
|
|
|
0.3 |
|
|
|
|
0.4 |
|
|
|
|
(0.5 |
) |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized (loss) gain on equity securities, net of taxes |
|
(0.7 |
) |
|
|
|
12.2 |
|
|
|
|
(0.5 |
) |
|
|
|
6.2 |
|
|
Total other
comprehensive (loss) income |
($1.1 |
) |
|
|
$18.8 |
|
|
|
($1.8 |
) |
|
|
$0.6 |
|
|
COMPREHENSIVE (LOSS)
INCOME |
($173.6 |
) |
|
|
$30.5 |
|
|
|
($123.1 |
) |
|
|
$0.0 |
|
|
|
|
|
|
|
|
|
|
(LOSS) EARNINGS PER
SHARE |
|
|
|
|
|
|
|
– basic |
($0.44 |
) |
|
|
$0.03 |
|
|
|
($0.31 |
) |
|
|
$0.00 |
|
|
–
diluted |
($0.44 |
) |
|
|
$0.03 |
|
|
|
($0.31 |
) |
|
|
$0.00 |
|
|
Weighted average number of
common shares outstanding (000's) |
|
|
|
|
|
|
|
– basic |
|
392,759 |
|
|
|
|
391,076 |
|
|
|
|
392,762 |
|
|
|
|
391,208 |
|
|
– diluted |
|
392,759 |
|
|
|
|
394,897 |
|
|
|
|
392,762 |
|
|
|
|
391,208 |
|
|
ALAMOS GOLD
INC.Consolidated Statements of Cash
Flows(Unaudited - stated in millions of United States
dollars)
|
For three months ended |
|
For six months ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
CASH PROVIDED BY (USED
IN): |
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net (loss) earnings for the
period |
($172.5 |
) |
|
|
$11.7 |
|
|
|
($121.3 |
) |
|
|
($ |
0.6 |
) |
|
Adjustments for items not
involving cash: |
|
|
|
|
|
|
|
Amortization |
|
41.8 |
|
|
|
|
28.3 |
|
|
|
|
85.3 |
|
|
|
|
63.7 |
|
|
Impairment charge |
|
224.3 |
|
|
|
|
— |
|
|
|
|
224.3 |
|
|
|
|
— |
|
|
Foreign exchange (gain) loss |
|
(0.5 |
) |
|
|
|
(0.2 |
) |
|
|
|
(0.3 |
) |
|
|
|
4.9 |
|
|
Current income tax expense |
|
2.7 |
|
|
|
|
9.1 |
|
|
|
|
8.6 |
|
|
|
|
8.8 |
|
|
Deferred income tax (recovery) expense |
|
(2.9 |
) |
|
|
|
(14.8 |
) |
|
|
|
15.1 |
|
|
|
|
38.3 |
|
|
Share-based compensation |
|
2.3 |
|
|
|
|
5.6 |
|
|
|
|
5.1 |
|
|
|
|
7.8 |
|
|
Finance expense |
|
1.0 |
|
|
|
|
1.2 |
|
|
|
|
2.0 |
|
|
|
|
2.0 |
|
|
Other items |
|
1.0 |
|
|
|
|
3.8 |
|
|
|
|
(2.0 |
) |
|
|
|
1.5 |
|
|
Changes in working capital and
taxes paid |
|
(10.5 |
) |
|
|
|
4.9 |
|
|
|
|
(30.8 |
) |
|
|
|
(20.2 |
) |
|
|
|
86.7 |
|
|
|
|
49.6 |
|
|
|
|
186.0 |
|
|
|
|
106.2 |
|
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Mineral property, plant and
equipment |
|
(83.5 |
) |
|
|
|
(54.6 |
) |
|
|
|
(156.1 |
) |
|
|
|
(117.9 |
) |
|
Capital advances |
|
(3.4 |
) |
|
|
|
— |
|
|
|
|
(20.2 |
) |
|
|
|
— |
|
|
Repurchase of Island Gold
royalty |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(54.8 |
) |
|
Proceeds from disposition of
equity securities |
|
5.1 |
|
|
|
|
— |
|
|
|
|
25.8 |
|
|
|
|
— |
|
|
Investment in equity
securities |
|
(1.2 |
) |
|
|
|
(2.3 |
) |
|
|
|
(4.3 |
) |
|
|
|
(2.3 |
) |
|
|
|
(83.0 |
) |
|
|
|
(56.9 |
) |
|
|
|
(154.8 |
) |
|
|
|
(175.0 |
) |
|
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Proceeds from draw down of
credit facility |
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
100.0 |
|
|
Repayment of equipment
financing obligations |
|
(0.1 |
) |
|
|
|
(0.1 |
) |
|
|
|
(0.1 |
) |
|
|
|
(0.3 |
) |
|
Interest paid |
|
— |
|
|
|
|
(0.8 |
) |
|
|
|
— |
|
|
|
|
(0.8 |
) |
|
Repurchase and cancellation of
common shares |
|
— |
|
|
|
|
(2.6 |
) |
|
|
|
(1.5 |
) |
|
|
|
(5.5 |
) |
|
Proceeds from the exercise of
options |
|
0.2 |
|
|
|
|
2.4 |
|
|
|
|
0.2 |
|
|
|
|
6.3 |
|
|
Dividends paid |
|
(8.6 |
) |
|
|
|
(5.5 |
) |
|
|
|
(17.2 |
) |
|
|
|
(11.1 |
) |
|
|
|
(8.5 |
) |
|
|
|
(6.6 |
) |
|
|
|
(18.6 |
) |
|
|
|
88.6 |
|
|
Effect of exchange rates on
cash and cash equivalents |
|
0.5 |
|
|
|
|
0.5 |
|
|
|
|
0.8 |
|
|
|
|
(1.3 |
) |
|
Net (decrease) increase in
cash and cash equivalents |
|
(4.3 |
) |
|
|
|
(13.4 |
) |
|
|
|
13.4 |
|
|
|
|
18.5 |
|
|
Cash and cash equivalents -
beginning of period |
|
238.2 |
|
|
|
|
214.7 |
|
|
|
|
220.5 |
|
|
|
|
182.8 |
|
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$233.9 |
|
|
|
$201.3 |
|
|
|
$233.9 |
|
|
|
$201.3 |
|
|
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