Alamos Achieves 2013 Production Guidance and Outlines 2014 Plans
TORONTO, ONTARIO--(Marketwired - Jan 16, 2014) -
All amounts are in United States dollars, unless otherwise
stated.
Alamos Gold Inc. (TSX:AGI)(NYSE:AGI) ("Alamos" or the "Company")
today reported fourth quarter and annual 2013 production, achieving
both its production and cost guidance for the year. The Company
also provided 2014 production and operating guidance along with its
global exploration and development budgets.
Fourth Quarter and Full Year 2013 Operating Results
Gold Production
"We had yet another strong year at Mulatos, achieving the
mid-range of our production guidance, with costs expected to come
in at the low end of our guidance. We produced 190,000 ounces of
gold in 2014 and sold a record 198,200 ounces at a total cash cost
per ounce of approximately $500. Despite realizing lower than
expected grades from the Escondida high-grade deposit as production
from that zone winds down, our open pit heap leach production, the
driver of our Mulatos mine, continued to perform extremely well.
2013 was a challenging year with the sharp decrease in the gold
price, yet with our low cost structure we continued to generate
strong cash flow. With approximately $410 million in cash, no debt,
and a peer leading, fully funded growth profile, we remain
exceptionally well positioned in the industry," said John A.
McCluskey, President and Chief Executive Officer.
In the fourth quarter of 2013, the Mulatos mine ("Mulatos")
produced 39,000 ounces of gold, bringing full year production to
190,000 ounces, the midpoint of the Company's guidance. Total cash
costs for the full 2013 year have not been finalized, but are
expected to be at the low end of guidance at approximately $500 per
ounce of gold sold.
Total crusher throughput in the fourth quarter of 2013 averaged
near record levels of 17,900 tpd, above the annual budgeted rate of
17,500 tpd. For 2013, crusher throughput averaged 17,900 tpd, up
12% from 16,000 tpd in 2012. During the fourth quarter of 2013,
mill throughput exceeded budgeted levels at 550 tpd.
The grade of the crushed ore stacked on the leach pad in the
fourth quarter of 2013 was 0.96 grams per tonne of gold ("g/t Au").
For the full year 2013, the grade of crushed ore stacked on the
leach pad was 1.07 g/t Au, above the full year budgeted grade of
0.98 g/t Au. The grade of the Escondida high-grade zone mined and
milled in the fourth quarter of 2013 was 3.46 g/t Au, below the
Company's full year budgeted average grade of 11 g/t Au. For the
2013 year, the grade mined and milled from the Escondida high-grade
zone was approximately 6.84 g/t Au.
The Company expects to have depleted the Escondida high-grade
zone by the end of the first quarter of 2014, at which point the
Escondida Deep zone is expected to provide additional feed to
continue mill production to the end of the second quarter of 2014.
The Company intends to transition to processing high grade from the
San Carlos zone once the Escondida Deep zone has been depleted.
The recovery ratio in the fourth quarter was 71% and averaged
73% for 2013. This was slightly below the Company's annual budget
of 75% though was an improvement from 70% achieved in 2012.
Key operational metrics and production statistics for the fourth
quarter and full year 2013 compared to the corresponding periods of
2012 are presented in Table 1 at the end of this press release.
Gold Sales
Alamos sold 42,200 ounces of gold in the fourth quarter of 2013
for quarterly revenues of $53.8 million, a 50% decrease from
revenues of $106.9 million in the same period of 2012 reflecting a
lower realized gold price and fewer ounces sold. For 2013, the
Company sold a record 198,200 ounces of gold at a realized price of
$1,424 per ounce, beating the average London PM Fix price by $13
per ounce. Annual revenues of $282.2 million were 14% lower than
revenues of $329.4 million in 2012 reflecting the decrease in the
gold price during 2013. Gold sales were higher than production in
2013 reflecting a drawdown of in-process inventory prior to the
Mexican tax reform becoming effective on January 1, 2014.
2014 Guidance
The Company anticipates producing between 150,000 and 170,000
ounces of gold in 2014 at cash operating costs of $630 to $670 per
ounce of gold sold, excluding royalties. Including royalties (5% +
0.5%2), and assuming a $1,250 gold price, total cash costs are
expected to be between $700 and $740 per ounce of gold sold. All-in
sustaining costs are expected to be between $960 and $1,000 per
ounce of gold sold.
The following table outlines Alamos' 2014 production forecast
and operating cost estimates:
|
2014 Guidance |
|
|
Gold
Production (ounces) |
150,000 - 170,000 |
Cash
operating cost per ounce1 |
$630 - $670 |
Total
cash cost per ounce1,2 |
$700 - $740 |
All-in sustaining cost per ounce1,2 |
$960 - $1,000 |
|
|
- Refer to the "Cautionary non-GAAP Measures and Additional GAAP
Measures" disclosure at the end of this press release for a
description of these measures.
- With the Mexican tax reform effective January 1, 2014, the 0.5%
extraordinary mining royalty calculated based on revenues is now
incorporated into total cash cost and all-in sustaining cost per
ounce guidance. This is in addition to the existing 5% third party
royalty at Mulatos. The 7.5% special mining tax that became
effective January 1, 2014 is calculated based on earnings before
interest, taxes, depreciation and amortization and will be
classified as an income tax and is therefore not included in the
metrics referenced above.
The 2014 production forecast and operating cost estimates are
based on the following assumptions:
- Combined gold recovery of 75% (heap leach ore, 73% recovery;
mill ore, 80% ultimate
- recovery)
- Throughput: 17,700 tpd (includes an average 700 tpd from the
gravity mill ramped up through the year)
- Average grade: heap leach ore 0.85 g/t Au; mill ore 5.3 g/t
Au
- Waste-to-ore ratio of 0.84:1
- Mexican peso:United States dollar foreign exchange rate of
13:1
The Company expects these parameters to fluctuate during 2014.
Accordingly, they should be treated as full-year average estimates
that will not necessarily reflect quarterly operating results.
The lower gold production planned for 2014 relative to 2013 is
primarily attributable to the lower budgeted grade for the mill
feed of 5.3 g/t Au in 2014 due to the transition to Escondida Deep
and San Carlos in 2014, as well as a lower budgeted grade stacked
on the leach pad of 0.85 g/t Au in 2014 compared to 1.07 g/t Au in
2013. The Company expects to transition to underground mining at
Escondida Deep in the second quarter and then to San Carlos in the
second half of 2014. With the transition to San Carlos, the Company
expects to increase mill throughput rates to an average of 700 tpd
in 2014 to help offset the decrease in grade. Underground
throughput rates at San Carlos are expected to gradually ramp up to
the expanded mill capacity through the second half of 2014.
The higher cash operating cost guidance for 2014 compared to
2013 is attributable to four factors: the transition to higher cost
underground mining to supply high grade ore to the mill; a lower
budgeted grade for the mill feed of 5.3 g/t Au in 2014; a higher
waste-to-ore ratio; and the transition to contractor mining at
Mulatos.
The Company has made the decision to transition to contract
mining effective the start of 2014 and was successful in
negotiating unit mining rates competitive with its owner mining
rates. This, combined with the tax savings associated with the
Mexican tax reform becoming effective January 1, 2014, supported
the decision to transition to contract mining. Contract mining will
shift sustaining capital spending required to maintain an owner
operated mining fleet into operating expenses, lowering the amount
of tax payable under the new 7.5% special mining tax calculated
based on earnings before interest, taxes, depreciation and
amortization. This reduction in sustaining capital spending will
also allow the Company's all-in sustaining costs to remain among
the lowest in the industry.
The Company has a standing relationship with the mining
contractor selected, with the contractor having been on site since
2010. The contractor completed the waste removal activities of the
Escondida open pit from 2010 to early 2012, and remained on-site
for incremental support, mining approximately 20% of open pit
material in 2012 and 2013. As a result, the Company expects a
seamless transition to contract mining, and expects to maintain its
high productivity standards.
Looking beyond 2014, the Company expects development of the
Cerro Pelon and La Yaqui satellite deposits will bring on
additional low cost production which will help drive annual
production and operating costs closer to the levels achieved over
the past two years. Both deposits are higher grade than Mulatos and
are expected to be developed with independent heap leach pads to
ensure production is not displaced from the main Mulatos heap leach
pad.
"We have demonstrated numerous productivity improvements over
the years at Mulatos including achieving record crusher throughput
in 2013. Our dedication to optimizing every aspect of our operation
will continue as we transition underground at Escondida and San
Carlos. With the recent additions to our team we have significantly
strengthened our underground expertise and look forward to
accessing additional high grade targets that could not be fully
drill defined from surface. Our focus in the second half of 2014
will be on ramping up underground throughput rates while continuing
to operate in accordance with our sustainable development
commitments including those relating to health and safety," said
Manley Guarducci, Vice President and Chief Operating Officer.
2014 Mexico Operating and Development Budget
The 2014 Mulatos and Esperanza capital and development budget is
$54.8 million and includes the following key items:
Mexico |
2014 Budget (millions) |
|
|
San
Carlos open pit and underground development |
$18.3 |
Escondida Deep underground development |
$3.1 |
Underground definition drilling |
$4.8 |
Other
development |
$4.1 |
Esperanza development |
$11.3 |
Total
Development |
$41.6 |
|
|
Component changes |
$3.8 |
Leach
pad expansion |
$3.7 |
Other
sustaining capital |
$5.7 |
Total
Operating |
$13.2 |
|
|
Total Operating and Development Capital |
$54.8 |
Mulatos
Development spending at Mulatos in 2014 will be focused on
underground development of the San Carlos and Escondida Deep areas,
in order to access high grade ore to provide gravity mill feed.
This includes an $18.3 million budget at San Carlos comprised of
$9.0 million in underground development, $5.8 million to complete
the pre-strip of the open pit portion of the deposit, and $3.5
million for construction of the bridge across the San Carlos river.
In addition, approximately $3.1 million will be invested to
complete underground development of Escondida Deep.
Operating capital in 2013 includes $3.8 million for component
changes and $3.7 million for leach pad expansion costs. Total
operating capital of $13.2 million is a decrease from 2013, mainly
driven by the change to contract mining.
Esperanza
Development spending at Esperanza in 2014 of approximately $11.3
million (which includes $2.8 million of exploration spending) will
be focused on baseline work required for the resubmission of an EIA
report and an internal feasibility study to further support
development of the project.
2014 Mexico Exploration Budget
Mulatos
Exploration spending at Mulatos in 2014 is expected to be $8.5
million, of which approximately 33% will be expensed.
A minimum of 56,100 metres ("m") of reverse-circulation ("RC"),
directional drilling, core, and underground core drilling is
planned at Mulatos in 2014, focusing on the following targets:
- San Carlos Northeast - 16,100 m
- East Estrella - 5,000 m
- El Realito - 5,000 m
- Mulatos Mine area (open pit) - 15,000 m
- Mulatos Mine area (underground) - 15,000 m
Esperanza
Exploration spending at Esperanza in 2014 is expected to be $2.8
million which will be largely capitalized.
Exploration activities will be focused on required work for
resubmission of the Environmental Impact Assessment for the
project, which includes 7,000 m of confirmatory and condemnation
drilling around the Esperanza deposit.
2014 Agi Dagi, Kirazli and Camyurt (Turkey) Exploration and
Development Budget
In Turkey, the 2014 budget is $4.8 million which includes
spending associated with permitting, community and government
relations and general administration only. The Company continues to
await receipt of the forestry and operating permits for
construction of its Kirazli project. The Turkish government has not
provided specific guidance as to when these might be granted.
Having already received EIA approval for Kirazli, the Company
remains confident the forestry and operating permits will be
granted. However, recent political developments in Turkey have
added to the ongoing lack of clarity with respect to the timing for
receipt of such approvals. Accordingly, the Company has deferred
providing the full development budget for Kirazli and Agi Dagi
until the permits have been granted. The capital budget for both
projects is not expected to differ materially from the June 2012
preliminary feasibility study. The Company expects first gold
production from Kirazli within 18 months of receipt of the
outstanding permits.
The Company expects to capitalize most costs associated with the
development of its Turkish assets during 2014.
2014 Quartz Mountain (United States) Exploration Budget
The Company's 2014 exploration budget for its Quartz Mountain
Property in Oregon is $7.4 million which will be expensed.
Exploration activities will be largely focused on infill,
confirmatory drilling of the existing mineral resource in addition
to a small regional reconnaissance program on the relatively
unexplored land package around the Quartz Mountain deposit and
adjacent properties.
In 2014, the Company plans to complete a minimum of 16,000 m of
drilling in the United States with a focus on two targets:
- Quartz Butte infill and expansion - 8,000 m
- Crone Hill infill and expansion - 8,000 m
Qualified Person
The Company's exploration programs are being reviewed by Vice
President Exploration, Jason Dunning, M.Sc., P.Geo., who is a
Qualified Persons within the meaning of National Instrument ("NI")
43-101 of the Canadian Securities Regulators, and he has reviewed
the contents of this news release. All field work in Mexico is
supervised and directed by Ken Balleweg, B.Sc., M.Sc., P.Geo.,
Alamos' Exploration Manager (Mexico), a Qualified Person as defined
by NI 43-101 of the Canadian Securities Administrators. Work
programs in Turkey are supervised by Jason Dunning, M.Sc., P.Geo.,
and directed in the field by Alamos' Exploration Manager (Turkey),
Ms. Mehtap Ozcan. In the USA, work programs are supervised and
directed by Bruno Barde, M.Sc., P.Geo., Alamos' Regional Chief
Geologist (USA), a Qualified Person as defined by NI 43-101 of the
Canadian Securities Administrators.
About Alamos
Alamos is an established Canadian-based gold producer that owns
and operates the Mulatos Mine in Mexico, and has exploration and
development activities in Mexico, Turkey and the United States. The
Company employs more than 600 people and is committed to the
highest standards of sustainable development. Alamos has
approximately $410 million in cash and cash equivalents, is
debt-free, and unhedged to the price of gold. As of January 15,
2014, Alamos had 127,708,988 common shares outstanding (139,578,054
shares fully diluted), which are traded on the TSX and NYSE under
the symbol "AGI".
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this
release.
Cautionary Note
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein. This News Release includes certain "forward-looking
statements". All statements other than statements of historical
fact included in this release, including without limitation
statements regarding forecast gold production, gold grades,
recoveries, waste-to-ore ratios, total cash costs, potential
mineralization and reserves, exploration results, and future plans
and objectives of Alamos, are forward-looking statements that
involve various risks and uncertainties. These forward-looking
statements include, but are not limited to, statements with respect
to mining and processing of mined ore, achieving projected recovery
rates, anticipated production rates and mine life, operating
efficiencies, costs and expenditures, changes in mineral resources
and conversion of mineral resources to proven and probable
reserves, and other information that is based on forecasts of
future operational or financial results, estimates of amounts not
yet determinable and assumptions of management.
Exploration results that include geophysics, sampling, and drill
results on wide spacings may not be indicative of the occurrence of
a mineral deposit. Such results do not provide assurance that
further work will establish sufficient grade, continuity,
metallurgical characteristics and economic potential to be classed
as a category of mineral resource. A mineral resource that is
classified as "inferred" or "indicated" has a great amount of
uncertainty as to its existence and economic and legal feasibility.
It cannot be assumed that any or part of an "indicated mineral
resource" or "inferred mineral resource" will ever be upgraded to a
higher category of resource. Investors are cautioned not to assume
that all or any part of mineral deposits in these categories will
ever be converted into proven and probable reserves.
Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as "expects" or "does not
expect", "is expected", "anticipates" or "does not anticipate",
"plans", "estimates" or "intends", or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved) are not statements of historical fact
and may be "forward-looking statements." Forward-looking statements
are subject to a variety of risks and uncertainties that could
cause actual events or results to differ from those reflected in
the forward-looking statements.
There can be no assurance that forward-looking statements will
prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from Alamos' expectations include, among others, risks
related to international operations, the actual results of current
exploration activities, conclusions of economic evaluations and
changes in project parameters as plans continue to be refined as
well as future prices of gold and silver, as well as those factors
discussed in the section entitled "Risk Factors" in Alamos' Annual
Information Form. Although Alamos has attempted to identify
important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such statements will prove to be accurate as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements.
Note to U.S. Investors
Alamos prepares its disclosure in accordance with the
requirements of securities laws in effect in Canada, which differ
from the requirements of U.S. securities laws. Terms relating to
mineral resources in this presentation are defined in accordance
with National Instrument 43-101 - Standards of Disclosure for
Mineral Projects under the guidelines set out in the Canadian
Institute of Mining, Metallurgy, and Petroleum Standards on Mineral
Resources and Mineral Reserves. The United States Securities and
Exchange Commission (the "SEC") permits mining companies, in their
filings with the SEC, to disclose only those mineral deposits that
a company can economically and legally extract or produce. Alamos
may use certain terms, such as "measured mineral resources",
"indicated mineral resources", "inferred mineral resources" and
"probable mineral reserves" that the SEC does not recognize (these
terms may be used in this presentation and are included in the
public filings of Alamos, which have been filed with the SEC and
the securities commissions or similar authorities in Canada).
Cautionary non-GAAP Measures and Additional GAAP Measures
Note that for purposes of this section, GAAP refers to IFRS. The
Company believes that investors use certain non-GAAP and additional
GAAP measures as indicators to assess gold mining companies. They
are intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared with GAAP. Non-GAAP and additional GAAP
measures do not have a standardized meaning prescribed under IFRS
and therefore may not be comparable to similar measures presented
by other companies.
"Cash operating costs per ounce" and "total cash costs per
ounce" as used in this analysis are non-GAAP terms 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. These non-GAAP terms are also
used to assess the ability of a mining company to generate cash
flow from operations. There may be some variation in the method of
computation of "cash operating costs per ounce" as determined by
the Company compared with other mining companies. In this context,
"cash operating costs per ounce" reflects the cash operating costs
allocated from in-process and dore inventory associated with ounces
of gold sold in the period. "Cash operating costs per ounce" may
vary from one period to another due to operating efficiencies,
waste-to-ore ratios, grade of ore processed and gold recovery rates
in the period. "Total cash costs per ounce" includes "cash
operating costs per ounce" plus applicable royalties. Cash
operating costs per ounce and total cash costs per ounce are
exclusive of exploration costs.
In conjunction with a non-GAAP initiative being undertaken by
the gold mining industry, the Company adopted an "all-in sustaining
cost per ounce" non-GAAP performance measure in 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 cost per ounce" as
determined by the Company compared with other mining companies. In
this context, "all-in sustaining cost per ounce" reflects total
mining and processing costs, corporate and administrative costs,
exploration costs, sustaining capital, and other operating costs.
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.
Table 1: Production Summary & Statistics(1)
Production summary |
Q4 2013 |
Q4 2012 |
2013 |
2012 |
|
|
|
|
|
Ounces produced(1) |
39,000 |
67,800 |
190,000 |
200,000 |
|
|
|
|
|
Crushed ore stacked on leach pad (tonnes)(2) |
1,598,600 |
1,590,000 |
6,329,000 |
5,646,000 |
Grade
(g/t Au) |
0.96 |
1.20 |
1.07 |
1.19 |
Contained ounces stacked |
49,300 |
61,200 |
218,500 |
216,000 |
|
|
|
|
|
Crushed ore milled (tonnes) |
50,800 |
57,800 |
189,300 |
176,500 |
Grade
(g/t Au) |
3.46 |
14.12 |
6.84 |
12.49 |
Contained ounces milled |
5,700 |
26,200 |
41,600 |
70,900 |
|
|
|
|
|
Recovery ratio (ratio of total ounces produced to contained ounces
stacked and milled) |
71% |
78% |
73% |
70% |
|
|
|
|
|
Total
ore mined (tonnes) |
1,843,000 |
1,619,000 |
7,029,000 |
5,786,000 |
Waste
mined (tonnes) |
784,000 |
822,000 |
3,385,000 |
3,360,000 |
Total
mined (tonnes) |
2,627,000 |
2,441,000 |
10,414,000 |
9,146,000 |
|
|
|
|
|
Waste-to-ore ratio |
0.43 |
0.51 |
0.48 |
0.58 |
|
|
|
|
|
Ore
crushed per day (tonnes) - combined |
17,900 |
17,900 |
17,900 |
16,000 |
- Reported gold production for Q4 2012 and YTD 2012 has been
adjusted to reflect final refinery settlement. Reported gold
production for Q4 2013 and YTD 2013 is subject to final refinery
settlement and may be adjusted.
- Excludes mill tailings stacked on the heap leach pad during the
period, which are included within the number of tonnes of crushed
ore milled.
Alamos Gold Inc.Scott K. ParsonsDirector, Investor
Relations(416) 368-9932 x 439 or 1 (866) 788-8801
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