Alamos Gold Inc. (
TSX:AGI;
NYSE:AGI) (“Alamos” or the “Company”) today reported its
financial results for the quarter ended June 30, 2019.
“Our operations performed well across the board
in the second quarter. Gold production was in line with guidance
while total cash costs were down 16% year-over-year, driving
stronger margins and record cash flow from operations. This was
highlighted by another record quarter of production from Island
Gold where we continue to see excellent exploration results.
With solid first half performance, we are well positioned to meet
full year production and cost guidance,” said John A. McCluskey,
President and Chief Executive Officer.
“The lower mine expansion at Young-Davidson is
progressing well and construction activities at our Cerro Pelon and
Kirazlı projects continue. Each remain on track and we are now less
than a year away from starting to see the benefit from these
projects through strong free cash flow growth,” Mr. McCluskey
added.
Second Quarter 2019
- Produced 125,200 ounces of gold, in-line with guidance and the
second quarter of 2018
- Record gold production of 39,500 ounces at Island Gold. This
marks the third consecutive quarter of record production, driving
mine-site free cash flow of $11.7 million at Island Gold. Through
the first half of 2019, Island Gold produced 75,100 ounces and
generated $28.3 million of mine-site free cash flow1
- Achieved underground mining rates of 6,700 tonnes per day
("tpd") at Young-Davidson, and produced 45,000 ounces of gold,
consistent with annual guidance
- Record cash flow from operating activities of $72.3 million
($69.7 million, or $0.18 per share, before changes in working
capital1), reflecting higher operating margins driven by lower
costs, and higher gold sales
- Consolidated total cash costs1 of $699 per ounce were below the
low end of guidance, and $133 per ounce, or 16% lower than the
second quarter of 2018, driven by low cost production at Island
Gold and lower than budgeted costs at Mulatos
- All-in sustaining costs ("AISC")1 of $926 per ounce, and cost
of sales of $1,021 per ounce were both at the low end of annual
guidance, and down 7% and 12%, respectively, from the second
quarter of 2018
- Sold 128,457 ounces of gold at an average realized price of
$1,309 per ounce, in-line with the average London PM Fix, for
revenues of $168.1 million
- Reported adjusted net earnings1 of $17.7 million, or $0.05 per
share1, which includes adjustments for unrealized foreign exchange
gains recorded within both deferred taxes and foreign exchange of
$7.1 million, partially offset by other one-time losses totaling
$1.2 million
- Realized net earnings of $23.6 million, or $0.06 per share
- Ended the quarter with cash and cash equivalents of $183.2
million and no debt
- Repurchased 0.2 million shares in the quarter, for a total of
2.7 million shares repurchased and canceled during the first half
of 2019 at a cost of $11.4 million, or $4.17 per share.
- Received permit approval for the Phase II expansion of Island
Gold to 1,200 tpd
- Advanced construction activities at both the Kirazlı project in
Turkey and the Cerro Pelon project in Mexico
- Received approval of the environmental impact assessment for La
Yaqui Grande project in Mexico during the second quarter and the
Change in Land Use permit in July 2019
- Continued to demonstrate exploration success at Island Gold
with results from surface exploration drilling further extending
high-grade gold mineralization between the Eastern and Main
extensions
(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, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$168.1 |
|
$168.9 |
|
$324.2 |
|
$342.0 |
|
Cost of sales (1) |
$131.1 |
|
$150.0 |
|
$258.1 |
|
$294.7 |
|
Earnings from operations |
$28.2 |
|
$9.6 |
|
$46.9 |
|
$28.1 |
|
Net earnings (loss) |
$23.6 |
|
($8.9 |
) |
$40.4 |
|
($8.3 |
) |
Adjusted net earnings (2) |
$17.7 |
|
$4.9 |
|
$28.0 |
|
$17.2 |
|
Cash provided by operations before working capital and cash
taxes(2) |
$69.7 |
|
$54.7 |
|
$131.4 |
|
$117.3 |
|
Cash provided by operating activities |
$72.3 |
|
$62.5 |
|
$114.7 |
|
$121.3 |
|
Capital expenditures (sustaining) (2) |
$19.6 |
|
$12.1 |
|
$35.7 |
|
$22.8 |
|
Capital expenditures (growth) (2) |
$47.2 |
|
$35.7 |
|
$81.3 |
|
$72.3 |
|
Capital expenditures (capitalized exploration) (3) |
$4.3 |
|
$5.6 |
|
$7.4 |
|
$9.8 |
|
Operating
Results |
|
|
|
|
Gold production (ounces) |
|
125,200 |
|
|
126,500 |
|
|
250,500 |
|
|
255,400 |
|
Gold
sales (ounces) |
|
128,457 |
|
|
129,272 |
|
|
248,162 |
|
|
259,317 |
|
Per Ounce
Data |
|
|
|
|
Average realized gold price |
$1,309 |
|
$1,307 |
|
$1,306 |
|
$1,319 |
|
Average spot gold price (London PM Fix) |
$1,309 |
|
$1,306 |
|
$1,307 |
|
$1,318 |
|
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,021 |
|
$1,160 |
|
$1,040 |
|
$1,136 |
|
Total cash costs per ounce of gold sold (2) |
$699 |
|
$832 |
|
$715 |
|
$811 |
|
All-in sustaining costs per ounce of gold sold (2) |
$926 |
|
$996 |
|
$941 |
|
$966 |
|
Share Data |
|
|
|
|
Earnings (loss) per
share, basic and diluted |
$0.06 |
|
($0.02 |
) |
$0.10 |
|
($0.02 |
) |
Adjusted earnings per
share, basic and diluted (2) |
$0.05 |
|
$0.01 |
|
$0.07 |
|
$0.04 |
|
Weighted average
common shares outstanding (basic) (000’s) |
|
389,218 |
|
|
389,602 |
|
|
389,475 |
|
|
389,429 |
|
Financial Position (in millions) |
|
|
|
|
Cash and cash
equivalents (4) |
|
|
$183.2 |
|
$235.1 |
|
(1) Cost of sales includes mining and processing
costs, royalties, and amortization expense.(2) Refer to
the “Non-GAAP Measures and Additional GAAP Measures” disclosure at
the end of this press release and associated MD&A for a
description and calculation of these
measures.(3) Includes capitalized exploration at Mulatos
and Island Gold.(4) Comparative cash and cash
equivalents balance as at December 31, 2018.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Gold production (ounces) |
|
|
|
|
Young-Davidson |
|
45,000 |
|
|
39,100 |
|
|
90,000 |
|
|
80,100 |
|
Mulatos |
|
36,300 |
|
|
50,600 |
|
|
75,200 |
|
|
96,600 |
|
Island Gold |
|
39,500 |
|
|
26,700 |
|
|
75,100 |
|
|
54,800 |
|
El Chanate (1) |
|
4,400 |
|
|
10,100 |
|
|
10,200 |
|
|
23,900 |
|
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
|
44,665 |
|
|
42,006 |
|
|
88,661 |
|
|
86,796 |
|
Mulatos |
|
40,116 |
|
|
49,326 |
|
|
76,205 |
|
|
93,985 |
|
Island Gold |
|
39,300 |
|
|
27,257 |
|
|
72,885 |
|
|
54,760 |
|
El Chanate (1) |
|
4,376 |
|
|
10,683 |
|
|
10,411 |
|
|
23,776 |
|
Cost of sales (in millions)(2) |
|
|
|
|
Young-Davidson |
$57.1 |
|
$56.7 |
|
$114.0 |
|
$113.7 |
|
Mulatos |
$35.8 |
|
$49.2 |
|
$69.6 |
|
$92.8 |
|
Island Gold |
$32.4 |
|
$28.0 |
|
$61.0 |
|
$55.5 |
|
El Chanate |
$5.8 |
|
$16.1 |
|
$13.5 |
|
$32.7 |
|
Cost of
sales per ounce of gold sold (includes amortization) |
|
|
|
Young-Davidson |
$1,278 |
|
$1,350 |
|
$1,286 |
|
$1,310 |
|
Mulatos |
$892 |
|
$997 |
|
$913 |
|
$987 |
|
Island Gold |
$824 |
|
$1,027 |
|
$837 |
|
$1,014 |
|
El Chanate |
$1,325 |
|
$1,507 |
|
$1,297 |
|
$1,375 |
|
Total cash costs per ounce of gold sold (3) |
|
|
|
|
Young-Davidson |
$822 |
|
$890 |
|
$830 |
|
$856 |
|
Mulatos |
$725 |
|
$795 |
|
$734 |
|
$791 |
|
Island Gold |
$473 |
|
$587 |
|
$484 |
|
$570 |
|
El Chanate |
$1,234 |
|
$1,404 |
|
$1,210 |
|
$1,279 |
|
Mine-site
all-in sustaining costs per ounce of gold sold
(3),(4) |
|
|
|
Young-Davidson |
$1,077 |
|
$1,083 |
|
$1,073 |
|
$1,037 |
|
Mulatos |
$815 |
|
$854 |
|
$812 |
|
$848 |
|
Island Gold |
$631 |
|
$668 |
|
$639 |
|
$650 |
|
El Chanate |
$1,257 |
|
$1,442 |
|
$1,220 |
|
$1,304 |
|
Capital
expenditures (sustaining, growth and capitalized exploration) (in
millions)(3) |
|
|
Young-Davidson |
$26.7 |
|
$18.5 |
|
$49.0 |
|
$41.4 |
|
Mulatos(5) |
$19.2 |
|
$9.5 |
|
$31.8 |
|
$16.7 |
|
Island Gold (6) |
$18.0 |
|
$17.6 |
|
$30.4 |
|
$31.5 |
|
El Chanate |
$— |
|
$0.2 |
|
$— |
|
$0.3 |
|
Other |
$7.2 |
|
$7.6 |
|
$13.2 |
|
$15.0 |
|
(1) El Chanate ceased mining activities in October
2018 and transitioned to residual leaching.(2) Cost of
sales includes mining and processing costs, royalties 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 Mulatos of $nil for the three and six months ended
June 30, 2019 ($0.9 and $2.0 million for the three and six months
ended June 30, 2018).(6) Includes capitalized
exploration at Island Gold of $4.3 million and $7.4 million for the
three and six months ended June 30, 2019 ($4.7 million and $7.8
million for the three and six months ended June 30, 2018).
Outlook and Strategy
2019
Guidance |
|
Young-Davidson |
Mulatos |
Island Gold |
El Chanate |
Turkey |
Other (2) |
Total |
Gold
production (000’s ounces) |
180-190 |
150-160 |
135-145 |
15-25 |
|
|
480-520 |
Cost of sales, including
amortization (in millions)(4) |
$226 |
$165 |
$120 |
$26 |
|
— |
|
— |
$537 |
Cost of sales, including amortization
($ per ounce)(4) |
$1,220 |
$1,065 |
$855 |
$1,300 |
|
— |
|
— |
$1,075 |
Total cash
costs ($ per ounce)(1) |
$750-790 |
$820-860 |
$460-500 |
$1,200 |
|
— |
|
— |
$710-750 |
All-in sustaining costs ($ per
ounce)(1) |
|
|
|
|
|
— |
|
— |
$920-960 |
Mine-site all-in sustaining costs ($
per ounce)(1),(3) |
$940-980 |
$860-900 |
$730-770 |
$1,200 |
|
— |
|
— |
|
— |
Amortization costs ($ per ounce)(1) |
$450 |
$225 |
$375(6) |
$100 |
|
— |
|
— |
$345 |
Capital
expenditures (in millions) |
|
|
|
|
|
|
|
Sustaining capital(1) |
$35-40 |
$5 |
$35-40 |
|
— |
|
— |
|
— |
$75-85 |
Growth capital(1) |
$45-50 |
$45-50 (5) |
$15-20 |
|
— |
$75 |
$35 (2) |
$215-230 |
Total capital expenditures(1) |
$80-90 |
$50-55 |
$50-60 |
|
— |
$75 |
$35 |
$290-315 |
(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 capitalized exploration at all
operating sites and development projects (excluding Turkey which is
separately disclosed).(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.(5) Includes capital
spending at Cerro Pelon and La Yaqui Grande of approximately $33
million(6) Amortization per ounce was updated for Island
Gold, reflecting the 2018 Mineral Reserves and Resource Statement
released in February 2019.
In the second quarter of 2019, the Company
delivered on its strategic objectives through expanding margins and
profitability from its existing operations, while advancing its
portfolio of low cost development projects. Consolidated production
of 125,200 ounces was in line with guidance while total cash costs
of $699 per ounce were below the low end of annual guidance and a
substantial improvement from the second quarter of 2018. The
decrease in total cash costs in the quarter was driven by low cost
production growth at Island Gold and higher grades mined at
Mulatos. With year-to-date production of 250,500 ounces at total
cash costs of $715 per ounce, the Company is well positioned to
meet its full year production and cost guidance.
Looking forward, the Company expects third
quarter production to be in a similar range as the second quarter.
Total cash costs are expected to increase to within the range of
annual guidance and all-in sustaining costs are expected to
increase to the higher-end of the annual guidance range reflecting
higher sustaining capital at Island Gold.
The near-term focus at Young-Davidson remains on
maximizing efficiency from the upper mine infrastructure, while
completing development and construction of the lower mine. Gold
production in the second quarter of 45,000 ounces was consistent
with guidance, while underground mining rates increased to over
6,700 tpd, above guidance of 6,500 tpd and the highest level since
2017. With production of 90,000 ounces through the first half of
the year, Young-Davidson is on track to meet full year production
guidance of 180,000 to 190,000 ounces.
As the lower mine expansion nears completion,
approximately three months of downtime of the Northgate shaft is
required to facilitate the tie-in of the upper and lower mines.
Accordingly, and as previously guided, gold production from
Young-Davidson is expected to be lower in the first half of 2020.
Following completion of the tie-in in the first half of 2020,
underground mining rates are expected to ramp up above 7,500 tpd in
the second half of 2020. This is expected to drive annual gold
production above 200,000 ounces per year in 2021 and beyond. This
production increase, combined with declining costs and capital
spending, is expected to result in strong free cash flow growth
from Young-Davidson starting in the second half of 2020.
Island Gold produced a record 39,500 ounces of
gold in the second quarter for its third consecutive quarter of
record production. Year-to-date, Island Gold has produced
75,100 ounces, putting it on track to meet or exceed full year
production guidance of 135,000 to 145,000 ounces. Additionally,
Island Gold generated $11.7 million of mine-site free cash flow in
the second quarter, bringing the first half total to $28.3 million,
net of all capital and exploration spending. Island Gold's
sustaining capital spending and mine-site AISC are expected to
increase in the second half of 2019, bringing mine-site AISC
in-line with annual guidance.
The Phase I expansion at Island Gold was
completed in 2018, expanding the mill to a design capacity of
approximately 1,200 tpd. During the second quarter, the Company was
granted amendments to its existing operating permits allowing for
an increase in throughput rates from 1,100 tpd to 1,200 tpd.
Underground mining rates are expected to increase to 1,200 tpd in
2020. In parallel, the Company is continuing with a large ongoing
exploration program at Island Gold which has been successful in
driving significant growth in Mineral Reserves and Resources over
the last several years. This growth and ongoing exploration success
is being incorporated into a Phase III expansion study of the
operation beyond 1,200 tpd.
Production from the Mulatos District totaled
36,300 ounces in the second quarter, bringing the first half total
to 75,200 ounces. The operation remains on track to meet annual
guidance of 150,000 to 160,000 ounces. Total cash costs and
mine-site AISC in the first half of the year have outperformed
annual guidance, benefiting from higher grades mined and low-cost
concentrate sales. Both costs are expected to return to guided
levels in the second half of the year as mining at La Yaqui Phase I
winds down.
Construction of the higher grade, high return
Cerro Pelon project is advancing on schedule. Development
activities during the quarter were focused on construction of the
haulage roads, crusher installation, and initial pre-stripping
activities. Initial low cost production remains on track for early
2020.
Mining activities ceased at El Chanate in the
fourth quarter of 2018 and the operation has transitioned to
residual leaching which is anticipated to result in a declining
rate of production throughout 2019. El Chanate has generated $2.2
million in free cash flow year-to-date.
Construction at the Kirazlı project in Turkey
ramped up during the second quarter. This included advancing
construction on the water reservoir and power line, completing
clearing and grubbing of the project site and initiating
earthworks, with the civil works contractor having mobilized to
site in June. Spending at Kirazlı represents the majority of the
Company's development capital budget in 2019. The remaining
development capital spending will be comprised of capitalized
exploration at Island Gold and exploration, permitting and
development activities at Lynn Lake.
The 2019 global exploration budget is $33
million, with $19 million allocated for exploration at Island Gold.
Mulatos and Lynn Lake remain the other two areas of focus with $6
million budgeted for each. The Company has spent $12.8 million on
exploration activities to date in 2019 and expects to ramp up
drilling activities in the second half of the year.
The Company’s long-term strategic objective is
to generate increasing free cash flow through low-cost production
growth from its existing operations and portfolio of development
projects. With $183 million of cash and cash equivalents, no debt,
and growing cash flow from its operations, the Company is well
positioned to fund its internal growth initiatives.
Second Quarter 2019 Results
Young-Davidson Financial and Operational
Review
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Gold production (ounces) |
|
45,000 |
|
|
39,100 |
|
|
90,000 |
|
|
80,100 |
|
Gold sales
(ounces) |
|
44,665 |
|
|
42,006 |
|
|
88,661 |
|
|
86,796 |
|
Financial Review (in
millions) |
|
|
|
|
Operating Revenues |
$58.6 |
|
$55.1 |
|
$116.0 |
|
$114.6 |
|
Cost of sales (1) |
$57.1 |
|
$56.7 |
|
$114.0 |
|
$113.7 |
|
Earnings from operations |
$1.5 |
|
($1.6 |
) |
$2.0 |
|
$0.9 |
|
Cash provided by operating activities |
$23.6 |
|
$22.5 |
|
$46.5 |
|
$49.9 |
|
Capital expenditures (sustaining) (2) |
$11.2 |
|
$7.9 |
|
$21.2 |
|
$15.5 |
|
Capital expenditures (growth) (2) |
$15.5 |
|
$10.6 |
|
$27.8 |
|
$25.9 |
|
Mine-site free cash flow (2) |
($3.1 |
) |
$4.0 |
|
($2.5 |
) |
$8.5 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,278 |
|
$1,350 |
|
$1,286 |
|
$1,310 |
|
Total cash costs per
ounce of gold sold (2) |
$822 |
|
$890 |
|
$830 |
|
$856 |
|
Mine-site all-in
sustaining costs per ounce of gold sold (2),(3) |
$1,077 |
|
$1,083 |
|
$1,073 |
|
$1,037 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
612,213 |
|
|
553,883 |
|
|
1,200,847 |
|
|
1,138,943 |
|
Tonnes of ore mined per day ("tpd") |
|
6,728 |
|
|
6,087 |
|
|
6,635 |
|
|
6,293 |
|
Average grade of gold (4) |
|
2.42 |
|
|
2.35 |
|
|
2.48 |
|
|
2.36 |
|
Metres developed |
|
2,877 |
|
|
3,079 |
|
|
5,777 |
|
|
6,223 |
|
Mill
Operations |
|
|
|
|
Tonnes of ore processed |
|
683,946 |
|
|
598,196 |
|
|
1,293,873 |
|
|
1,267,483 |
|
Tonnes of ore processed per day |
|
7,516 |
|
|
6,574 |
|
|
7,148 |
|
|
7,003 |
|
Average grade of gold (4) |
|
2.26 |
|
|
2.17 |
|
|
2.36 |
|
|
2.20 |
|
Contained ounces milled |
|
49,661 |
|
|
41,798 |
|
|
98,176 |
|
|
87,992 |
|
Average recovery rate |
|
91 |
% |
|
92 |
% |
|
91 |
% |
|
91 |
% |
(1) Cost of sales includes mining and processing
costs, royalties and amortization.(2) Refer to the
“Non-GAAP Measures and Additional GAAP Measures” disclosure at the
end of this press release and associated MD&A for a description
and calculation of these measures.(3) For the purposes
of calculating mine-site all-in sustaining costs, the Company does
not include an allocation of corporate and administrative and share
based compensation expenses.(4) Grams per tonne of gold
("g/t Au").
Young-Davidson produced 45,000 ounces of gold in
the second quarter of 2019, 15% higher than the comparative quarter
of 2018, reflecting higher tonnes and grades mined. The operation
remains on track to achieve 2019 guidance with production of 90,000
ounces in the first half of the year.
Underground mining rates of 6,728 tpd were above
2019 guidance, and an 11% improvement from the second quarter of
2018. Mining rates are expected to remain at guided levels of
6,500 tpd until the lower-mine tie-in is completed in the first
half of 2020. Underground grades mined of 2.42 g/t Au were lower
than annual guidance due to mine sequencing, but improved 3%
relative to the second quarter of 2018. Grades mined are expected
to increase in the second half of the year, in line with annual
guidance.
Mill throughput of 7,516 tpd was higher
than the second quarter of 2018, with the prior year impacted
by unplanned maintenance which resulted in mill downtime.
Milling rates also increased from the first quarter as the
operation resumed supplementing underground throughput with
low-grade surface stockpiles. Mill throughput in the third quarter
will continue to benefit from surface stockpiles until the end of
the quarter when the stockpiles are expected to be depleted. Mill
throughput will then decline to match underground mining rates.
Mill recoveries of 91% in the quarter were in line with
guidance.
Financial Review
Second quarter revenues of $58.6 million were 6%
above the prior year quarter, reflecting a 6% increase in ounces
sold. For the first half of 2019, revenues of $116.0 million were
$1.4 million higher than the prior year, attributable to more
ounces sold.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $57.1
million were consistent with the comparative quarter of 2018, as
were underground mining costs of approximately CAD$53 per
tonne. Amortization of $457 per ounce was also consistent
with the prior year period and annual guidance. Cost of sales for
the first half of 2019 were $114.0 million and consistent with the
prior year period.
Total cash costs of $822 per ounce in the second
quarter were 7% below the comparative period, but slightly above
annual guidance as a result of lower grades mined in the quarter
and higher maintenance costs. For the first half of 2019, total
cash costs of $830 per ounce were 3% lower than the prior year
period. Total cash costs are expected to decrease in the second
half of the year reflecting higher underground grades mined.
Mine-site AISC of $1,077 per ounce were in
line with the second quarter of 2018 and above 2019 guidance,
reflecting the timing of sustaining capital expenditures on the new
tailings facility and equipment rebuilds. In the first half of
2019, sustaining capital totaled $21.2 million, or 60% of the full
year budget. Mine-site AISC for the six-month period were $1,073
per ounce, or 4% higher than the prior year period due to similar
factors. Full year total cash costs and mine-site AISC are both
expected to be within 2019 guidance as underground grades mined
increase and sustaining capital spending decreases in the second
half of the year.
Capital expenditures were $26.7 million in the
second quarter. This included $11.2 million of sustaining capital
and $15.5 million of growth capital. For the six-month period,
capital expenditures of $49.0 million were focused on lower mine
construction, lateral development in the upper and lower mines, and
construction of the new tailings facility.
Mine-site free cash flow at Young-Davidson was
negative $3.1 million in the second quarter, lower than the same
period of 2018 due to higher capital spending. On a year-to-date
basis mine-site free cash flow was negative $2.5 million. Since
2016, Young-Davidson has generated sufficient cash flow from
operations to finance all of its capital spending, including the
lower mine expansion. The lower mine expansion remains on track for
completion in the first half of 2020.
Island Gold Financial and Operational
Review
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Gold production (ounces) |
|
39,500 |
|
|
26,700 |
|
|
75,100 |
|
|
54,800 |
|
Gold sales (ounces) |
|
39,300 |
|
|
27,257 |
|
|
72,885 |
|
|
54,760 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$51.3 |
|
$35.7 |
|
$95.1 |
|
$72.3 |
|
Cost of sales (1) |
$32.4 |
|
$28.0 |
|
$61.0 |
|
$55.5 |
|
Earnings from operations |
$18.7 |
|
$7.7 |
|
$33.7 |
|
$16.7 |
|
Cash provided by operating activities |
$29.7 |
|
$22.0 |
|
$58.7 |
|
$45.7 |
|
Capital expenditures (sustaining) (2) |
$6.2 |
|
$2.2 |
|
$11.3 |
|
$4.4 |
|
Capital expenditures (growth) (2) |
$7.5 |
|
$10.7 |
|
$11.7 |
|
$19.3 |
|
Capital expenditures (capitalized exploration) (2) |
$4.3 |
|
$4.7 |
|
$7.4 |
|
$7.8 |
|
Mine-site free cash flow (2) |
$11.7 |
|
$4.4 |
|
$28.3 |
|
$14.2 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$824 |
|
$1,027 |
|
$837 |
|
$1,014 |
|
Total cash costs per
ounce of gold sold (2) |
$473 |
|
$587 |
|
$484 |
|
$570 |
|
Mine-site all-in
sustaining costs per ounce of gold sold (2),(3) |
$631 |
|
$668 |
|
$639 |
|
$650 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
90,141 |
|
|
82,097 |
|
|
187,653 |
|
|
166,752 |
|
Tonnes of ore mined per day ("tpd") |
|
991 |
|
|
902 |
|
|
1,037 |
|
|
921 |
|
Average grade of gold (4) |
|
14.53 |
|
|
7.34 |
|
|
12.90 |
|
|
9.23 |
|
Metres developed |
|
1,568 |
|
|
1,771 |
|
|
2,989 |
|
|
3,327 |
|
Mill
Operations |
|
|
|
|
Tonnes of ore processed |
|
102,803 |
|
|
88,776 |
|
|
204,800 |
|
|
170,881 |
|
Tonnes of ore processed per day |
|
1,130 |
|
|
976 |
|
|
1,131 |
|
|
944 |
|
Average grade of gold (4) |
|
12.23 |
|
|
8.71 |
|
|
11.68 |
|
|
9.84 |
|
Contained ounces milled |
|
40,438 |
|
|
24,861 |
|
|
76,884 |
|
|
54,085 |
|
Average recovery rate |
|
97 |
% |
|
97 |
% |
|
97 |
% |
|
96 |
% |
(1) Cost of sales includes mining and processing
costs, royalties and amortization.(2) Refer to the
“Non-GAAP Measures and Additional GAAP Measures” disclosure at the
end of this press release and associated MD&A for a description
and calculation of these measures.(3) For the purposes
of calculating mine-site all-in sustaining costs, the Company does
not include an allocation of corporate and administrative and share
based compensation expenses.(4) Grams per tonne of gold
("g/t Au").
Island Gold produced a record 39,500 ounces in
the second quarter, the third consecutive quarter of record
production. This marked a 48% increase from the second quarter of
2018 driven by higher mining and milling rates and grades mined.
The operation realized another strong quarter of mine-site free
cash flow, generating $11.7 million in the quarter and bringing the
year-to-date total to $28.3 million.
Underground mining rates were 991 tpd in the
second quarter, a 10% improvement from the second quarter of 2018.
Underground mining rates averaged 1,037 tpd for the first half of
the year, and are expected to increase in the second half,
consistent with full year guidance of 1,100 tpd. Underground grades
mined averaged 14.53 g/t Au in the second quarter, above annual
guidance reflecting sequencing as mining was active in the high
grade transverse stopes, which performed well.
Mill throughput increased to 1,130 tpd in the
second quarter, a 16% increase compared to the prior year quarter,
reflecting the completion of the Phase I expansion of the mill in
2018. Milling rates exceeded mining rates, as tonnes mined in the
quarter were supplemented with existing surface stockpiles. Mill
recoveries were 97% in the second quarter, in line with the prior
year and guidance.
Financial Review
Island Gold generated revenues of $51.3 million
in the second quarter, increasing 44% compared to the prior year
period reflecting record ounces sold. For the first half of 2019,
revenues of $95.1 million were $22.8 million higher than the prior
year, primarily attributable to more ounces sold.
Cost of sales (includes mining and processing
costs, royalties, and amortization expense) of $32.4 million, were
16% higher than the comparative period, reflecting more ounces
sold. Cost of sales decreased 20% on a per ounce basis, driven by
higher grades mined and lower amortization. Cost of sales for the
first half of 2019 of $61.0 million increased 10% from the prior
year period due to higher gold sales.
Total cash costs were $473 per ounce in the
second quarter, a 19% improvement from the comparative quarter,
driven by higher grades mined. Unit mining costs were CAD$158 per
tonne, consistent with the prior year. Total cash costs were
consistent with guidance in the quarter. For the first half of
2019, total cash costs of $484 per ounce were 15% lower than the
prior year period due to higher mining rates and grade mined.
Mine-site AISC of $631 per ounce in the second
quarter were below the full year guidance range of $730 to $770 per
ounce, reflecting lower sustaining capital spending. Mine-site AISC
for the first half of 2019 of $639 per ounce were 2% lower than the
prior year period. Year-to-date, the Company has incurred $11.3
million of sustaining capital, or 30% of full year guidance (based
on the mid-point). Sustaining capital will increase in subsequent
quarters of 2019, which is expected to result in higher mine-site
AISC in the second half of the year.
Total capital expenditures were $18.0 million in
the second quarter, with spending focused on lateral development,
mining equipment, and capitalized exploration. This included $6.2
million of sustaining capital and $11.8 million of growth capital
(inclusive of capitalized exploration). For the six-month period,
capital expenditures of $30.4 million were consistent with the
prior year period.
Island Gold generated mine-site free cash flow
of $11.7 million during the second quarter driven by record gold
production, strong operating margins, and lower capital spending.
Through the first half of 2019, Island Gold has generated $28.3
million of mine-site free cash flow. This strong performance is net
of a significant ongoing investment in exploration focused on
further expanding Mineral Reserves and Resources with $19 million
budgeted for 2019.
Mulatos Financial and Operational
Review
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Gold production
(ounces) |
|
36,300 |
|
|
50,600 |
|
|
75,200 |
|
|
96,600 |
|
Gold sales
(ounces) |
|
40,116 |
|
|
49,326 |
|
|
76,205 |
|
|
93,985 |
|
Financial
Review (in millions) |
|
|
|
|
Operating Revenues |
$52.5 |
|
$64.1 |
|
$99.6 |
|
$123.7 |
|
Cost of sales (1) |
$35.8 |
|
$49.2 |
|
$69.6 |
|
$92.8 |
|
Earnings from operations |
$15.9 |
|
$13.2 |
|
$28.3 |
|
$25.9 |
|
Cash provided by operating activities |
$23.2 |
|
$24.1 |
|
$23.8 |
|
$40.2 |
|
Capital expenditures (sustaining) (2) |
$2.2 |
|
$1.8 |
|
$3.2 |
|
$2.6 |
|
Capital expenditures (growth) (2) |
$17.0 |
|
$6.8 |
|
$28.6 |
|
$12.1 |
|
Capital expenditures
(capitalized exploration) (2) |
$— |
|
$0.9 |
|
$— |
|
$2.0 |
|
Mine-site free cash flow,
before changes in working capital |
$4.0 |
|
$14.6 |
|
($8.0 |
) |
$23.5 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$892 |
|
$997 |
|
$913 |
|
$987 |
|
Total
cash costs per ounce of gold sold (2) |
$725 |
|
$795 |
|
$734 |
|
$791 |
|
Mine
site all-in sustaining costs per ounce of gold sold (2),(3) |
$815 |
|
$854 |
|
$812 |
|
$848 |
|
Open Pit &
Underground Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
2,107,590 |
|
|
2,266,642 |
|
|
3,943,323 |
|
|
4,456,376 |
|
Total waste mined - open pit |
|
1,697,419 |
|
|
1,851,050 |
|
|
3,675,258 |
|
|
3,849,656 |
|
Total tonnes mined - open pit |
|
3,805,009 |
|
|
4,640,240 |
|
|
7,618,581 |
|
|
9,510,622 |
|
Waste-to-ore ratio (operating) |
|
0.81 |
|
|
0.82 |
|
|
0.67 |
|
|
0.86 |
|
Tonnes of ore mined -
underground |
|
— |
|
|
21,284 |
|
|
— |
|
|
38,907 |
|
Crushing and Heap
Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,962,436 |
|
|
1,802,109 |
|
|
3,837,992 |
|
|
3,552,580 |
|
Average grade of gold processed (5) |
|
0.94 |
|
|
0.88 |
|
|
0.96 |
|
|
0.86 |
|
Contained ounces stacked |
|
59,609 |
|
|
50,909 |
|
|
118,783 |
|
|
98,267 |
|
Mill Operations |
|
|
|
|
Tonnes of high grade ore milled |
|
— |
|
|
31,485 |
|
|
— |
|
|
61,874 |
|
Average grade of gold processed (5) |
|
— |
|
|
5.94 |
|
|
— |
|
|
7.00 |
|
Contained ounces milled |
|
— |
|
|
6,012 |
|
|
— |
|
|
13,929 |
|
Total contained ounces stacked and milled |
|
59,609 |
|
|
56,921 |
|
|
118,783 |
|
|
112,196 |
|
Average recovery
rate |
|
61 |
% |
|
89 |
% |
|
63 |
% |
|
86 |
% |
Ore crushed per day
(tonnes) - combined |
|
21,600 |
|
|
20,100 |
|
|
21,200 |
|
|
20,000 |
|
(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").
Mulatos produced 36,300 ounces in the second
quarter of 2019, bringing year-to-date production to 75,200 ounces,
consistent with annual guidance. Second quarter production was down
from the prior year period with mining from the San Carlos
underground deposit having ceased in the third quarter of 2018.
The Company is currently mining from the
Mulatos, Victor, La Yaqui Phase I and San Carlos open pits, having
completed pre-stripping of the San Carlos pit at the end of the
first quarter. Total ore tonnes mined and the waste-to-ore ratio in
the second quarter were consistent with the prior year quarter. In
the second half of the year, mining activities at La Yaqui Phase I
will wind down. Offsetting this, the Company expects to begin
stacking ore from Cerro Pelon later this year.
Total crusher throughput averaged 21,600 tpd for
a total of 1,962,436 tonnes stacked in the second quarter at a
grade of 0.94 g/t Au. Grades stacked were near the upper end of
guidance as the Company resequenced mining activities, with an
increased contribution from the San Carlos open pit in the second
quarter.
The recovery ratio of ounces produced to
contained ounces stacked was 61% in the quarter, lower than
guidance, due to stacking higher grade ore at the end of the second
quarter.
Financial Review
Second quarter revenues of $52.5 million were
$11.6 million lower than the prior year quarter, primarily due to
lower concentrate ounces sold with the completion of mining at the
San Carlos underground deposit in September 2018. For the first
half of 2019, revenues of $99.6 million were $24.1 million lower
than the prior year.
Cost of sales (includes mining and processing
costs, royalties, and amortization expense) were $35.8 million in
the second quarter, lower than the prior year period due to a lower
number of tonnes mined and ounces sold. Amortization expense of
$167 per ounce was below the prior year period. Cost of sales for
the first half of 2019 of $69.6 million were 25% lower due to lower
tonnes mined and ounces sold.
Total cash costs of $725 per ounce in the second
quarter were lower than the prior year quarter, as the 5% royalty
payable to a third party ended in the first quarter of 2019 after
Mulatos produced its two millionth ounce of gold. This reduced
costs by $65 per ounce compared to the prior year period. In
addition, total cash costs were below guided levels, driven by
higher grades stacked in the quarter and the final settlement of
low-cost ounces sold from concentrate. For the first half of 2019,
total cash costs of $734 per ounce were 7% lower than the prior
year period. The Company expects second half total cash costs to
normalize to guided levels as low cost production from La Yaqui
Phase I winds down.
Mine-site AISC of $815 per ounce in the second
quarter were lower than the prior year quarter, consistent with the
improvement in total cash costs. Mine-site AISC for the first half
of 2019 of $812 per ounce were 4% lower than the prior year period
due to similar factors. The Company expects second half mine-site
AISC to be in line with full year guidance.
Capital spending in the quarter was focused on
expansion projects at Mulatos, including Cerro Pelon and the leach
pad expansion. Total capital spending for the quarter was $19.2
million, of which $2.2 million was sustaining capital. For the
six-month period, capital expenditures of $31.8 million were $15.1
million higher than the prior year period due primarily to the
construction of the Cerro Pelon mine.
Mulatos reported positive mine-site free
cash-flow of $4.0 million in the second quarter, as stronger
operating margins were partially offset by higher growth capital
spending. Mine-site free-cash flow is expected to be neutral for
the remainder of the year as construction of Cerro Pelon is
completed.
El Chanate Financial and Operational Review
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Gold production
(ounces) |
|
4,400 |
|
|
10,100 |
|
|
10,200 |
|
|
23,900 |
|
Gold sales
(ounces) |
|
4,376 |
|
|
10,683 |
|
|
10,411 |
|
|
23,776 |
|
Financial
Review (in millions) |
|
|
|
|
Operating Revenues |
$5.7 |
|
$14.0 |
|
$13.5 |
|
$31.4 |
|
Cost of sales (1) |
$5.8 |
|
$16.1 |
|
$13.5 |
|
$32.7 |
|
Loss from operations |
($0.1 |
) |
($2.1 |
) |
$— |
|
($1.3 |
) |
Cash provided by (used in) operating activities |
$1.0 |
|
($0.4 |
) |
$2.2 |
|
$0.8 |
|
Capital expenditures |
$— |
|
$0.2 |
|
$— |
|
$0.3 |
|
Mine-site free cash flow (2) |
$1.0 |
|
($0.6 |
) |
$2.2 |
|
$0.5 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,325 |
|
$1,507 |
|
$1,297 |
|
$1,375 |
|
Total cash costs per
ounce of gold sold (2) |
$1,234 |
|
$1,404 |
|
$1,210 |
|
$1,279 |
|
Mine site all-in
sustaining costs per ounce of gold sold (2),(3) |
$1,257 |
|
$1,442 |
|
$1,220 |
|
$1,304 |
|
(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.
El Chanate produced 4,400 ounces of gold in the
second quarter through residual leaching, in line with budget. The
Company expects to recover between 15,000 and 25,000 ounces in
2019, and will continue to leach until such time as the gold
becomes uneconomic to recover.
Financial Review
Second quarter revenues of $5.7 million were
lower than the prior year quarter due to fewer ounces sold, as
mining and stacking ceased in 2018. Total cash costs, and mine-site
AISC were $1,234 and $1,257 per ounce, respectively, for the second
quarter, down significantly from the prior year period.
El Chanate generated $1.0 million of mine-site
free cash flow in the quarter and $2.2 million year to date. The
Company expects mine-site free cash flow to remain positive in 2019
before transitioning to reclamation activities.
Second Quarter 2019 Development Activities
Kirazlı (Çanakkale, Turkey)
The Company was granted the Operating Permit
from the Turkish Department of Energy and Natural Resources in the
first quarter of 2019 and has obtained all the major permits
required for the start of construction at Kirazlı.
The Company continued to advance the project
during the second quarter with development activities as
follows:
- the mining services and earthworks contractor mobilized to site
and commenced civil works
- integrated the construction management contractor, including
oversight of project and contract management, implementation of
heath and safety protocols, and project control
- completed site clearing and grubbing activities, and commenced
tree clearing of the Kirazli open pit area
- advanced construction of the water reservoir and power line to
site with both expected to be completed by the fourth quarter of
2019
- continued procurement of major purchase order packages,
including the agglomerator, ADR, crushing circuit, and water
treatment plant
- increased workforce to over 200 people on site, including over
80 direct employees with more than 70% coming from the local
communities
- received the Regional Investment Incentive Certificate, which
provides for various tax incentives, including VAT and customs
duties exemptions during construction, and an 80% reduction in the
statutory tax rate (until 40% of the initial capital has been
recovered), thereby significantly reducing the effective tax rate
over the mine life. The Company is in the process of applying for
the Strategic Investment Incentive Certificate, which would further
reduce the effective tax rate
During the second quarter of 2019, the Company
spent $4.2 million at Kirazlı, bringing year-to-date spending to
$7.1 million. The Company has budgeted up to $75 million in 2019.
The remaining capital spending on the project is expected to occur
in 2020, with initial production expected by the end of 2020.
As outlined in the 2017 Feasibility Study,
Kirazlı has an expected 44% after-tax internal rate of return and
is expected to produce over 100,000 ounces of gold during its first
full year of production at mine-site all-in sustaining costs of
less than $400 per ounce.
Mulatos District (Sonora,
Mexico)
Cerro Pelon
The environmental impact assessment (“MIA”) and
Change in Land Use permits for Cerro Pelon were received in the
fourth quarter of 2018, with construction commencing shortly
thereafter. Given its proximity to Mulatos’ infrastructure, ore
from the Cerro Pelon open pit will be trucked to the existing heap
leach circuit for crushing and processing. An independent crushing
circuit will be dedicated to processing Cerro Pelon ore, thereby
providing additional capacity at the Mulatos Complex. Cerro Pelon
is a higher grade, high return project, and is expected to start
contributing low cost production in 2020.
During the second quarter, construction
activities ramped up and included the following key activities:
- ongoing construction of the haulage road from the Cerro Pelon
open pit to the main Mulatos deposit, which was 90% complete by the
end of June
- development of the haulage roads within the project pit area,
which were 75% complete by the end of June
- completed civil works in advance of the crusher
installation
- demobilized and transferred the crushing circuit from El
Chanate, and commenced installation of the circuit at the Mulatos
complex.
The crushing circuit, agglomorators, and
overland conveyors are expected to be completed and commissioned by
the end of the third quarter of 2019. Early stage stripping
activities have commenced on the north-west pit, with mining rates
expected to ramp up in the second half of the year.
The Company spent $7.9 million at Cerro Pelon in
the second quarter, bringing year-to-date spending to $10.7
million. The Company has budgeted $25 million in 2019 for
development of the project, with commercial production expected
early in 2020.
La Yaqui Grande
The Company received approval of the
environmental impact assessment ("MIA") for La Yaqui Grande during
the second quarter and the Change in Land Use permit in July 2019.
The Company is in the process of completing detailed engineering to
support the project design and economics. During the second quarter
the Company spent $1.0 million on La Yaqui Grande, bringing
year-to-date spending to $1.9 million.
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 Company continues to evaluate value
engineering initiatives to enhance the project’s economics as
detailed in the 2017 Feasibility Study (12.5% IRR at a $1,250 per
ounce gold price; 18% IRR at a $1,400 per ounce gold price). Since
the release of the 2017 Feasibility Study, the Company has
undertaken a number of initiatives designed to improve the project
economics. These include a detailed review of construction capital,
the evaluation of various production scenarios and the inclusion of
the results of more detailed engineering. The Company is in the
process of incorporating results from the ongoing exploration
program into an updated Feasibility Study.
Development spending in the second quarter of
$0.7 million and year-to-date of $1.4 million was related to
project optimization activities. The 2019 capital budget for Lynn
Lake is $11.0 million, including $5.0 million for development
activities and $6.0 million for exploration. Development spending
will be focused on completing the updated Feasibility Study and
baseline work in support of the Environmental Impact Study (“EIS”)
for the project that will be submitted to satisfy Federal and
Provincial environmental assessment requirements. The permitting
process is expected to take approximately two years followed by two
years of construction.
Second Quarter 2019 Exploration Activities
Island Gold (Ontario, Canada)
The 2019 exploration program continues to target
three main areas within the Island Gold Deposit which extends over
two-kilometres along strike. During the first half of 2019, the
surface and underground exploration drilling programs focused on
expanding the down-plunge and lateral extensions of the deposit
with the objective of adding new near-mine Mineral Resources. Drill
holes in the Main, Western, and Eastern Extension areas were
testing high-grade, east-plunging shoots outside of existing
Mineral Reserves and Resources.
The 2019 exploration budget includes 48,000
metres ("m") of surface directional exploration drilling, 30,000 m
of underground exploration drilling and 900 m of exploration drift
development.
Surface exploration drilling
A total of 14 holes (10,413 m) were completed in
the second quarter as part of the directional exploration 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.
Underground exploration drilling
During the second quarter of 2019, a total of
7,262 m of underground exploration diamond drilling was completed
in 45 holes from the 340, 450, 620 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 272 m of
underground exploration drift development was completed on the 620
and 840 level during the second quarter of 2019.
Total exploration expenditures were $4.5 million
of which $4.3 million was capitalized during the second quarter of
2019. Year-to-date, $7.8 million was spent of which $7.4 million
was capitalized.
Mulatos District (Sonora,
Mexico)
The Company has a large exploration package
covering 28,972 hectares with the majority of past exploration
efforts focused around the Mulatos mine. Over the last three years,
exploration has moved beyond the main Mulatos pit area and focused
on earlier stage prospects throughout the wider district.
In the second quarter of 2019, the Company
invested $0.8 million in exploration activities within the Mulatos
District. Spending in the quarter primarily related to mapping and
re-logging, and administrative costs. Exploration efforts are
expected to ramp up in the third quarter with near mine exploration
and target generation.
Lynn Lake (Manitoba,
Canada)
Surface exploration drilling continued at Lynn
Lake during the second quarter of 2019, with a total of 1,972 m
drilled in 7 holes. Drill holes were designed to test targets
at the MacLellan and Gordon deposits with the objective of
expanding Mineral Resources.
Regional exploration commenced during the second
quarter of 2019 which included mapping, prospecting, till sampling,
and soil sampling programs focused on a series of prospective
targets across the Lynn Lake Greenstone Belt.
Spending in the second quarter totaled $1.4
million, bringing the year-to-date spend to $2.3 million. A total
of $6.0 million comprised of 19,000 m of drilling is budgeted for
the Lynn Lake project in 2019.
Review of Second Quarter Financial Results
During the second quarter of 2019, the Company
sold 128,457 ounces of gold for total revenue of $168.1 million,
consistent with the prior year period of $168.9 million as both the
ounces sold and average realized price were in line with the prior
year period. The Company's realized gold price of $1,309 per ounce
was consistent with the average London PM fix for the quarter.
Cost of sales were $131.1 million in the second
quarter of 2019, a decrease of 13% compared to the prior-year
period, driven by lower mining and processing costs, and lower
royalties.
Mining and processing costs were $86.4 million
compared to $101.3 million in the prior-year period. This was due
to lower operating costs at Mulatos which drove down total cash
costs for the quarter, and the completion of mining activities at
El Chanate in the fourth quarter of 2018.
Consolidated total cash costs for the quarter
were $699 per ounce compared to $832 per ounce in the prior year
period. This 16% decline reflected low cost production growth at
Island Gold, lower costs at Mulatos and declining higher-cost
production at El Chanate. Total cash costs at Mulatos were
significantly lower than guidance as the operation benefited from
higher grades mined and unbudgeted sales of concentrate.
AISC were $926 per ounce in the quarter, a 7%
decrease from the prior year period, primarily driven by lower
total cash costs.
Royalty expense was $3.4 million in the quarter,
lower than the prior year period of $6.3 million, as the 5% Mulatos
royalty commitment ceased in the first quarter of 2019.
Amortization of $41.3 million in the quarter was
lower than the prior year period expense of $42.4 million due to
less ounces sold. On a per-ounce basis, amortization of $321 was
consistent with the prior year period of $328, and consistent with
guidance. The Company expects amortization to average $345 per
ounce in 2019.
The Company recognized earnings from operations
of $28.2 million in the quarter, higher than the prior year period
due to lower mining and processing and royalty expense which drove
stronger margins.
The Company reported net earnings of $23.6
million in the quarter, compared to a loss of $8.9 million in the
same period of 2018, mainly driven by improved margins and the
impact of foreign exchange on tax expense. On an adjusted basis,
earnings of $17.7 million or $0.05 per share reflect adjustments
for other gains and losses, as well as foreign exchange movements
related to the Canadian dollar and Mexican Peso, which generated
foreign exchange gains of $7.1 million recorded within both foreign
exchange gain and deferred income taxes.
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, 2019 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 2019 Results Conference
Call
The Company's senior management will host a
conference call on Thursday, August 1, 2019 at 11:00 am ET to
discuss the second quarter 2019 results.
Participants may join the conference call by
dialling (416) 340-2216 or (800) 273-9672 for calls within Canada
and the United States, or via webcast
at www.alamosgold.com.
A playback will be available until September 1,
2019 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The pass code is 2634152#. 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 four operating mines in North America.
This includes the Young-Davidson and Island Gold mines in northern
Ontario, Canada and the Mulatos and El Chanate mines 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 |
|
All amounts are in United States dollars, unless otherwise
stated.
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this
release.
Cautionary Note
This press release contains statements which
are, or may be deemed to be, forward-looking information as defined
under applicable Canadian and U.S. securities laws
("forward-looking statement(s)"). All statements in this
press release, 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", “contemplate”, “continue”, “plan”, “on track”
or variations of such words and phrases and similar expressions or
statements that certain actions, events or results “may",
"could", "would", “should”, "might" or "will" be taken, occur or be
achieved.
Forward-looking 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 performance.
Alamos cautions that forward-looking statements
are necessarily based upon several 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 press release include, but are
not limited to: changes to current estimates of mineral reserves
and resources; changes to production estimates (which assume
accuracy of projected ore grade, mining rates, recovery timing and
recovery rate estimates and may be impacted by unscheduled
maintenance, labour and contractor availability and other operating
or technical difficulties); fluctuations in the price of gold;
changes in foreign exchange rates (particularly the U.S. dollar,
Canadian dollar, Mexican peso andTurkish Lira ); the impact of
inflation; employee and community relations; litigation and
administrative proceedings; disruptions affecting operations;
availability of and increased costs associated with mining inputs
and labour; development delays at the Young-Davidson mine; 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, permits and authorizations
for the Company’s development and operating assets;
contests over title to properties; expropriation or nationalization
of property; inherent risks and hazards associated with mining and
mineral processing including environmental hazards, industrial
accidents, unusual or unexpected formations, pressures and
cave-ins; changes in national and local government legislation
(including tax 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; risk of
loss due to sabotage and 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.
Additional risk factors and details with respect
to risk factors affecting the Company are set out in the Company’s
latest Annual Information Form and MD&A, each under the heading
“Risk Factors”, 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
The Company is required to prepare its resource
estimates in accordance with standards of the Canadian
Institute of Mining, Metallurgy and Petroleum referred to in
Canadian National Instrument 43-101. These standards are materially
different from the standards generally permitted in reports filed
with the United States Securities and Exchange Commission.
When describing resources we use the terms "measured", "indicated"
or "inferred” resources which are not recognized by the United
States Securities and Exchange Commission. The estimation of
measured resources and indicated resources involve greater
uncertainty as to their existence and economic feasibility than the
estimation of proven and probable reserves. U.S. investors are
cautioned not to assume that any part of measured or indicated
resources will ever be converted into economically or legally
mineable proven or probable reserves. The estimation of inferred
resources may not form the basis of a feasibility or other economic
studies and involves far greater uncertainty as to their existence
and economic viability than the estimation of other categories of
resources.
Non-GAAP Measures and Additional GAAP
Measures
The Company has included certain non-GAAP
financial measures to supplement its Consolidated Financial
Statements, which are presented in accordance with IFRS, including
the following:
- adjusted net earnings and adjusted earnings per share;
- cash flow from operating activities before changes in working
capital and taxes received;
- Company-wide free cash flow;
- total mine-site free cash flow;
- mine-site free cash flow;
- total cash cost per ounce of gold sold;
- 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 in 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; and loss on disposal of assets. 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, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net Earnings (loss) |
$23.6 |
|
($8.9 |
) |
$40.4 |
|
($8.3 |
) |
Adjustments: |
|
|
|
|
Foreign exchange (gain) loss |
|
(0.1 |
) |
|
2.1 |
|
|
(0.3 |
) |
|
3.4 |
|
Other loss (gain) |
|
0.5 |
|
|
(2.0 |
) |
|
(1.7 |
) |
|
(1.3 |
) |
Unrealized foreign exchange (gain) loss recorded in deferred tax
expense |
|
(7.0 |
) |
|
13.2 |
|
|
(11.1 |
) |
|
22.7 |
|
Other income and mining tax adjustments |
|
0.7 |
|
|
0.5 |
|
|
0.7 |
|
|
0.7 |
|
Adjusted net earnings |
$17.7 |
|
$4.9 |
|
$28.0 |
|
$17.2 |
|
Adjusted earnings per
share - basic and diluted |
$0.05 |
|
$0.01 |
|
$0.07 |
|
$0.04 |
|
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, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Cash flow from operating
activities |
$72.3 |
|
$62.5 |
|
$114.7 |
|
$121.3 |
|
Add back: Changes in working capital and cash taxes |
|
(2.6 |
) |
|
(7.8 |
) |
|
16.7 |
|
|
(4.0 |
) |
Cash flow from operating activities before changes in
working capital and cash taxes |
$69.7 |
|
$54.7 |
|
$131.4 |
|
$117.3 |
|
Company-wide Free Cash Flow
“Company-wide free cash flow" is a non-GAAP
performance measure calculated from the consolidated operating cash
flow, less consolidated mineral property, plant and equipment
expenditures. The Company believes this to be a useful indicator of
our ability to operate without reliance on additional borrowing or
usage of existing cash company-wide. Company-wide free cash flow is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other mining
companies. Company-wide free cash flow should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
(in millions) |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Cash flow from operating
activities |
$72.3 |
|
$62.5 |
|
$114.7 |
|
$121.3 |
|
Less: mineral property, plant and equipment expenditures |
|
(71.1 |
) |
|
(53.4 |
) |
|
(124.4 |
) |
|
(104.9 |
) |
Company-wide free cash flow |
$1.2 |
|
$9.1 |
|
($9.7 |
) |
$16.4 |
|
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, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions) |
|
|
|
|
Cash flow from operating activities |
$72.3 |
|
$62.5 |
|
$114.7 |
|
$121.3 |
|
Less: operating cash flow used by non-mine site activity |
|
(5.2 |
) |
|
(5.7 |
) |
|
(16.5 |
) |
|
(15.3 |
) |
Cash flow from operating mine-sites |
$77.5 |
|
$68.2 |
|
$131.2 |
|
$136.6 |
|
|
|
|
|
|
Mineral property, plant and equipment expenditure |
$71.1 |
|
$53.4 |
|
$124.4 |
|
$104.9 |
|
Less: capital expenditures from development projects, and
corporate |
|
(7.2 |
) |
|
(7.6 |
) |
|
(13.2 |
) |
|
(15.0 |
) |
Capital expenditure from mine-sites |
$63.9 |
|
$45.8 |
|
$111.2 |
|
$89.9 |
|
|
|
|
|
|
Total
mine-site free cash flow |
$13.6 |
|
$22.4 |
|
$20.0 |
|
$46.7 |
|
Young-Davidson
Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions) |
|
|
|
|
Cash flow from operating activities |
$23.6 |
|
$22.5 |
|
$46.5 |
|
$49.9 |
|
Mineral property, plant and equipment expenditure |
|
(26.7 |
) |
|
(18.5 |
) |
|
(49.0 |
) |
|
(41.4 |
) |
Mine-site free cash flow |
($3.1 |
) |
$4.0 |
|
($2.5 |
) |
$8.5 |
|
Mulatos Mine-Site Free
Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions) |
|
|
|
|
Cash flow from operating activities |
$23.2 |
|
$24.1 |
|
$23.8 |
|
$40.2 |
|
Mineral property, plant and equipment expenditure |
|
(19.2 |
) |
|
(9.5 |
) |
|
(31.8 |
) |
|
(16.7 |
) |
Mine-site free cash flow |
$4.0 |
|
$14.6 |
|
($8.0 |
) |
$23.5 |
|
Island Gold Mine-Site
Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions) |
|
|
|
|
Cash flow from operating activities |
$29.7 |
|
$22.0 |
|
$58.7 |
|
$45.7 |
|
Mineral property, plant and equipment expenditure |
|
(18.0 |
) |
|
(17.6 |
) |
|
(30.4 |
) |
|
(31.5 |
) |
Mine-site free cash flow |
$11.7 |
|
$4.4 |
|
$28.3 |
|
$14.2 |
|
El Chanate Mine-Site
Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions) |
|
|
|
|
Cash flow from operating activities |
$1.0 |
|
($0.4 |
) |
$2.2 |
|
$0.8 |
|
Mineral property, plant and equipment expenditure |
|
— |
|
|
(0.2 |
) |
|
— |
|
|
(0.3 |
) |
Mine-site free cash flow |
$1.0 |
|
($0.6 |
) |
$2.2 |
|
$0.5 |
|
Total Cash Costs per ounce
Total cash costs per ounce is a non-GAAP term
typically used by gold mining companies to assess the level of
gross margin available to the Company by subtracting these costs
from the unit price realized during the period. This non-GAAP term
is also used to assess the ability of a mining company to generate
cash flow from operations. Total cash costs per ounce includes
mining and processing costs plus applicable royalties, and net of
by-product revenue and net realizable value adjustments. Total cash
costs per ounce is exclusive of exploration costs.
Total cash costs per ounce is intended to
provide additional information only and does not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other mining companies. It should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. The measure is not
necessarily indicative of cash flow from operations under IFRS or
operating costs presented under IFRS.
All-in Sustaining Costs per ounce and
Mine-site All-in Sustaining Costs
The Company adopted an “all-in sustaining costs
per ounce” non-GAAP performance measure in accordance with the
World Gold Council published in June 2013. The Company
believes the measure more fully defines the total costs associated
with producing gold; however, this performance measure has no
standardized meaning. Accordingly, there may be some
variation in the method of computation of “all-in sustaining costs
per ounce” as determined by the Company compared with other mining
companies. In this context, “all-in sustaining costs per ounce” for
the consolidated Company reflects total mining and processing
costs, corporate and administrative costs, share-based
compensation, exploration costs, sustaining capital, and other
operating costs.
For the purposes of calculating "mine-site
all-in sustaining costs" at the individual mine-sites, the Company
does not include an allocation of corporate and administrative
costs and share-based compensation, as detailed in the
reconciliations below.
Sustaining capital expenditures are expenditures
that do not increase annual gold ounce production at a mine site
and excludes all expenditures at the Company’s development projects
as well as certain expenditures at the Company’s operating sites
that are deemed expansionary in nature. For each mine-site
reconciliation, corporate and administrative costs, and non-site
specific costs are not included in the all-in sustaining cost per
ounce calculation.
All-in sustaining costs per gold ounce is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures presented by other mining companies. It should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.
The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.
Total Cash Costs and All-in Sustaining
Costs per Ounce Reconciliation Tables
The following tables reconciles these non-GAAP
measures to the most directly comparable IFRS measures on a
Company-wide and individual mine-site basis.
Total Cash
Costs and AISC Reconciliation - Company-wide |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$86.4 |
|
$101.3 |
|
$168.6 |
|
$198.2 |
|
Royalties |
|
3.4 |
|
|
6.3 |
|
|
8.8 |
|
|
12.0 |
|
Total cash costs |
$89.8 |
|
$107.6 |
|
$177.4 |
|
$210.2 |
|
Gold ounces sold |
|
128,457 |
|
|
129,272 |
|
|
248,162 |
|
|
259,317 |
|
Total cash costs per ounce |
$699 |
|
$832 |
|
$715 |
|
$811 |
|
|
|
|
|
|
Total cash costs |
$89.8 |
|
$107.6 |
|
$177.4 |
|
$210.2 |
|
Corporate and administrative(1) |
|
4.6 |
|
|
4.6 |
|
|
10.1 |
|
|
9.0 |
|
Sustaining capital expenditures(2) |
|
19.6 |
|
|
12.1 |
|
|
35.7 |
|
|
22.8 |
|
Share-based compensation |
|
2.7 |
|
|
2.5 |
|
|
6.0 |
|
|
4.1 |
|
Sustaining exploration |
|
1.4 |
|
|
1.1 |
|
|
2.8 |
|
|
2.8 |
|
Accretion of decommissioning liabilities |
|
0.8 |
|
|
0.9 |
|
|
1.4 |
|
|
1.5 |
|
Total all-in sustaining
costs |
$118.9 |
|
$128.8 |
|
$233.4 |
|
$250.4 |
|
Gold ounces sold |
|
128,457 |
|
|
129,272 |
|
|
248,162 |
|
|
259,317 |
|
All-in sustaining costs per ounce |
$926 |
|
$996 |
|
$941 |
|
$966 |
|
(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, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions) |
|
|
|
|
Capital expenditures per cash
flow statement |
$71.1 |
|
$53.4 |
|
$124.4 |
|
$104.9 |
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
Young-Davidson |
|
(15.5 |
) |
|
(10.6 |
) |
|
(27.8 |
) |
|
(25.9 |
) |
Mulatos |
|
(17.0 |
) |
|
(7.7 |
) |
|
(28.6 |
) |
|
(14.1 |
) |
Island Gold |
|
(11.8 |
) |
|
(15.4 |
) |
|
(19.1 |
) |
|
(27.1 |
) |
Corporate and other |
|
(7.2 |
) |
|
(7.6 |
) |
|
(13.2 |
) |
|
(15.0 |
) |
Sustaining capital expenditures |
$19.6 |
|
$12.1 |
|
$35.7 |
|
$22.8 |
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$36.0 |
|
$36.5 |
|
$71.9 |
|
$72.5 |
|
Royalties |
|
0.7 |
|
|
0.9 |
|
|
1.7 |
|
|
1.8 |
|
Total cash costs |
$36.7 |
|
$37.4 |
|
$73.6 |
|
$74.3 |
|
Gold ounces sold |
|
44,665 |
|
|
42,006 |
|
|
88,661 |
|
|
86,796 |
|
Total cash costs per ounce |
$822 |
|
$890 |
|
$830 |
|
$856 |
|
|
|
|
|
|
Total cash costs |
$36.7 |
|
$37.4 |
|
$73.6 |
|
$74.3 |
|
Sustaining capital expenditures |
|
11.2 |
|
|
7.9 |
|
|
21.2 |
|
|
15.5 |
|
Exploration |
|
0.1 |
|
|
0.1 |
|
|
0.2 |
|
|
0.1 |
|
Accretion of decommissioning liabilities |
|
0.1 |
|
|
0.1 |
|
|
0.1 |
|
|
0.1 |
|
Total all-in sustaining
costs |
$48.1 |
|
$45.5 |
|
$95.1 |
|
$90.0 |
|
Gold ounces sold |
|
44,665 |
|
|
42,006 |
|
|
88,661 |
|
|
86,796 |
|
Mine-site all-in sustaining costs per ounce |
$1,077 |
|
$1,083 |
|
$1,073 |
|
$1,037 |
|
Mulatos
Total Cash Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$28.8 |
|
$35.4 |
|
$53.3 |
|
$67.3 |
|
Royalties |
|
0.3 |
|
|
3.8 |
|
|
2.6 |
|
|
7.0 |
|
Total cash costs |
$29.1 |
|
$39.2 |
|
$55.9 |
|
$74.3 |
|
Gold ounces sold |
|
40,116 |
|
|
49,326 |
|
|
76,205 |
|
|
93,985 |
|
Total cash costs per ounce |
$725 |
|
$795 |
|
$734 |
|
$791 |
|
|
|
|
|
|
Total cash costs |
$29.1 |
|
$39.2 |
|
$55.9 |
|
$74.3 |
|
Sustaining capital expenditures |
|
2.2 |
|
|
1.8 |
|
|
3.2 |
|
|
2.6 |
|
Exploration |
|
0.8 |
|
|
0.5 |
|
|
1.6 |
|
|
1.7 |
|
Accretion of decommissioning liabilities |
|
0.6 |
|
|
0.6 |
|
|
1.2 |
|
|
1.1 |
|
Total all-in sustaining
costs |
$32.7 |
|
$42.1 |
|
$61.9 |
|
$79.7 |
|
Gold ounces sold |
|
40,116 |
|
|
49,326 |
|
|
76,205 |
|
|
93,985 |
|
Mine-site all-in sustaining costs per ounce |
$815 |
|
$854 |
|
$812 |
|
$848 |
|
Island
Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$16.2 |
|
$14.4 |
|
$30.8 |
|
$28.0 |
|
Royalties |
|
2.4 |
|
|
1.6 |
|
|
4.5 |
|
|
3.2 |
|
Total cash costs |
$18.6 |
|
$16.0 |
|
$35.3 |
|
$31.2 |
|
Gold ounces sold |
|
39,300 |
|
|
27,257 |
|
|
72,885 |
|
|
54,760 |
|
Total cash costs per ounce |
$473 |
|
$587 |
|
$484 |
|
$570 |
|
|
|
|
|
|
Total cash costs |
$18.6 |
|
$16.0 |
|
$35.3 |
|
$31.2 |
|
Sustaining capital expenditures |
|
6.2 |
|
|
2.2 |
|
|
11.3 |
|
|
4.4 |
|
Total all-in sustaining
costs |
$24.8 |
|
$18.2 |
|
$46.6 |
|
$35.6 |
|
Gold ounces sold |
|
39,300 |
|
|
27,257 |
|
|
72,885 |
|
|
54,760 |
|
Mine-site all-in sustaining costs per ounce |
$631 |
|
$668 |
|
$639 |
|
$650 |
|
El Chanate
Total Cash Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$5.4 |
|
$15.0 |
|
$12.6 |
|
$30.4 |
|
Total cash costs |
$5.4 |
|
$15.0 |
|
$12.6 |
|
$30.4 |
|
Gold ounces sold |
|
4,376 |
|
|
10,683 |
|
|
10,411 |
|
|
23,776 |
|
Total cash costs per ounce |
$1,234 |
|
$1,404 |
|
$1,210 |
|
$1,279 |
|
|
|
|
|
|
Total cash costs |
$5.4 |
|
$15.0 |
|
$12.6 |
|
$30.4 |
|
Sustaining capital expenditures |
|
— |
|
|
0.2 |
|
|
— |
|
|
0.3 |
|
Accretion of decommissioning liabilities |
|
0.1 |
|
|
0.2 |
|
|
0.1 |
|
|
0.3 |
|
Total all-in sustaining
costs |
$5.5 |
|
$15.4 |
|
$12.7 |
|
$31.0 |
|
Gold ounces sold |
|
4,376 |
|
|
10,683 |
|
|
10,411 |
|
|
23,776 |
|
Mine-site all-in sustaining costs per ounce |
$1,257 |
|
$1,442 |
|
$1,220 |
|
$1,304 |
|
Earnings Before Interest, Taxes,
Depreciation, and Amortization (“EBITDA”)
EBITDA represents net earnings before interest,
taxes, depreciation, and amortization. EBITDA is an indicator of
the Company’s ability to generate liquidity by producing operating
cash flow to fund working capital needs, service debt obligations,
and fund capital expenditures.
EBITDA does not have any standardized meaning
under IFRS and may not be comparable to similar measures presented
by other mining companies. It should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with IFRS.
The following is a reconciliation of EBITDA to
the consolidated financial statements:
(in millions) |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net earnings |
$23.6 |
|
($8.9 |
) |
$40.4 |
|
($8.3 |
) |
Add back: |
|
|
|
|
Finance expense |
|
0.7 |
|
|
0.9 |
|
|
1.2 |
|
|
1.8 |
|
Amortization |
|
41.3 |
|
|
42.4 |
|
|
80.7 |
|
|
84.5 |
|
Deferred income tax (recovery) expense |
|
(3.7 |
) |
|
11.8 |
|
|
(7.4 |
) |
|
18.8 |
|
Current income tax expense |
|
7.2 |
|
|
5.7 |
|
|
14.7 |
|
|
13.7 |
|
EBITDA |
$69.1 |
|
$51.9 |
|
$129.6 |
|
$110.5 |
|
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.Condensed Interim Consolidated Statements of
Financial Position(Unaudited - stated in millions of
United States dollars)
|
June 30, 2019 |
|
|
December 31, 2018 |
|
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$183.2 |
|
|
$206.0 |
|
Equity securities |
|
15.8 |
|
|
|
7.8 |
|
Amounts receivable |
|
36.3 |
|
|
|
40.5 |
|
Inventory |
|
124.5 |
|
|
|
110.2 |
|
Other current assets |
|
15.0 |
|
|
|
15.5 |
|
Total Current
Assets |
|
374.8 |
|
|
|
380.0 |
|
|
|
|
|
Non-Current
Assets |
|
|
|
Long-term inventory |
|
29.8 |
|
|
|
30.0 |
|
Mineral property, plant and
equipment |
|
2,850.5 |
|
|
|
2,813.3 |
|
Other non-current assets |
|
43.4 |
|
|
|
41.9 |
|
Total Assets |
$3,298.5 |
|
|
$3,265.2 |
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$115.9 |
|
|
$118.7 |
|
Income taxes payable |
|
13.1 |
|
|
|
6.2 |
|
Total Current
Liabilities |
|
129.0 |
|
|
|
124.9 |
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
486.0 |
|
|
|
491.5 |
|
Decommissioning
liabilities |
|
44.3 |
|
|
|
44.9 |
|
Other non-current
liabilities |
|
3.1 |
|
|
|
1.6 |
|
Total Liabilities |
|
662.4 |
|
|
|
662.9 |
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,686.0 |
|
|
$3,705.2 |
|
Contributed surplus |
|
92.7 |
|
|
|
87.3 |
|
Warrants |
|
— |
|
|
|
3.9 |
|
Accumulated other
comprehensive loss |
|
(5.0 |
) |
|
|
(9.2 |
) |
Deficit |
|
(1,137.6 |
) |
|
|
(1,184.9 |
) |
Total Equity |
|
2,636.1 |
|
|
|
2,602.3 |
|
Total Liabilities and Equity |
$3,298.5 |
|
|
$3,265.2 |
|
ALAMOS GOLD
INC.Condensed Interim Consolidated Statements of
Comprehensive Income (Loss)(Unaudited - stated in millions
of United States dollars, except share and per share amounts)
|
For three months ended |
|
For six months ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
OPERATING
REVENUES |
$168.1 |
|
|
$168.9 |
|
|
$324.2 |
|
|
$342.0 |
|
|
|
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
|
|
|
Mining and processing |
|
86.4 |
|
|
|
101.3 |
|
|
|
168.6 |
|
|
|
198.2 |
|
Royalties |
|
3.4 |
|
|
|
6.3 |
|
|
|
8.8 |
|
|
|
12.0 |
|
Amortization |
|
41.3 |
|
|
|
42.4 |
|
|
|
80.7 |
|
|
|
84.5 |
|
|
|
131.1 |
|
|
|
150.0 |
|
|
|
258.1 |
|
|
|
294.7 |
|
EXPENSES |
|
|
|
|
|
|
|
Exploration |
|
1.5 |
|
|
|
2.2 |
|
|
|
3.1 |
|
|
|
6.1 |
|
Corporate and
administrative |
|
4.6 |
|
|
|
4.6 |
|
|
|
10.1 |
|
|
|
9.0 |
|
Share-based compensation |
|
2.7 |
|
|
|
2.5 |
|
|
|
6.0 |
|
|
|
4.1 |
|
|
|
139.9 |
|
|
|
159.3 |
|
|
|
277.3 |
|
|
|
313.9 |
|
EARNINGS FROM
OPERATIONS |
|
28.2 |
|
|
|
9.6 |
|
|
|
46.9 |
|
|
|
28.1 |
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
|
|
|
Finance expense |
|
(0.7 |
) |
|
|
(0.9 |
) |
|
|
(1.2 |
) |
|
|
(1.8 |
) |
Foreign exchange gain
(loss) |
|
0.1 |
|
|
|
(2.1 |
) |
|
|
0.3 |
|
|
|
(3.4 |
) |
Other (loss) gain |
|
(0.5 |
) |
|
|
2.0 |
|
|
|
1.7 |
|
|
|
1.3 |
|
EARNINGS BEFORE INCOME
TAXES |
$27.1 |
|
|
$8.6 |
|
|
$47.7 |
|
|
$24.2 |
|
|
|
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
|
|
|
Current income tax
expense |
|
(7.2 |
) |
|
|
(5.7 |
) |
|
|
(14.7 |
) |
|
|
(13.7 |
) |
Deferred income tax recovery
(expense) |
|
3.7 |
|
|
|
(11.8 |
) |
|
|
7.4 |
|
|
|
(18.8 |
) |
NET EARNINGS
(LOSS) |
$23.6 |
|
|
($8.9 |
) |
|
$40.4 |
|
|
($8.3 |
) |
|
|
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized gain (loss) on currency hedging instruments, net of
taxes |
|
1.7 |
|
|
|
(4.0 |
) |
|
|
5.0 |
|
|
|
(5.4 |
) |
Unrealized (loss) gain on fuel hedging instruments, net of
taxes |
|
(0.1 |
) |
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized loss on equity securities, net of taxes |
|
(3.6 |
) |
|
|
(2.5 |
) |
|
|
(1.3 |
) |
|
|
(1.5 |
) |
Total other
comprehensive (loss) income |
($2.0 |
) |
|
($6.5 |
) |
|
$4.2 |
|
|
($6.9 |
) |
COMPREHENSIVE INCOME
(LOSS) |
$21.6 |
|
|
($15.4 |
) |
|
$44.6 |
|
|
($15.2 |
) |
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE |
|
|
|
|
|
|
|
– basic |
$0.06 |
|
|
($0.02 |
) |
|
$0.10 |
|
|
($0.02 |
) |
–
diluted |
$0.06 |
|
|
($0.02 |
) |
|
$0.10 |
|
|
($0.02 |
) |
Weighted average number of
common shares outstanding (000's) |
|
|
|
|
|
|
|
– basic |
|
389,218 |
|
|
|
389,602 |
|
|
|
389,475 |
|
|
|
389,429 |
|
– diluted |
|
392,974 |
|
|
|
389,602 |
|
|
|
393,203 |
|
|
|
389,429 |
|
ALAMOS GOLD
INC.Condensed Interim 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, |
|
2019 |
|
2018 |
2019 |
|
2018 |
CASH PROVIDED BY (USED
IN): |
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net earnings (loss) for the
period |
$23.6 |
|
|
($8.9 |
) |
|
$40.4 |
|
|
($8.3 |
) |
Adjustments for items not
involving cash: |
|
|
|
|
|
|
|
Amortization |
|
41.3 |
|
|
|
42.4 |
|
|
|
80.7 |
|
|
|
84.5 |
|
Foreign exchange (gain) loss |
|
(0.1 |
) |
|
|
2.1 |
|
|
|
(0.3 |
) |
|
|
3.4 |
|
Current income tax expense |
|
7.2 |
|
|
|
5.7 |
|
|
|
14.7 |
|
|
|
13.7 |
|
Deferred income tax (recovery) expense |
|
(3.7 |
) |
|
|
11.8 |
|
|
|
(7.4 |
) |
|
|
18.8 |
|
Share-based compensation |
|
2.7 |
|
|
|
2.5 |
|
|
|
6.0 |
|
|
|
4.1 |
|
Finance expense |
|
0.7 |
|
|
|
0.9 |
|
|
|
1.2 |
|
|
|
1.8 |
|
Other items |
|
(2.0 |
) |
|
|
(1.8 |
) |
|
|
(3.9 |
) |
|
|
(0.7 |
) |
Changes in working capital and
cash taxes |
|
2.6 |
|
|
|
7.8 |
|
|
|
(16.7 |
) |
|
|
4.0 |
|
|
|
72.3 |
|
|
|
62.5 |
|
|
|
114.7 |
|
|
|
121.3 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Mineral property, plant and
equipment |
|
(71.1 |
) |
|
|
(53.4 |
) |
|
|
(124.4 |
) |
|
|
(104.9 |
) |
Proceeds from sale of equity
securities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
24.9 |
|
Other |
|
(1.1 |
) |
|
|
— |
|
|
|
(1.1 |
) |
|
|
— |
|
|
|
(72.2 |
) |
|
|
(53.4 |
) |
|
|
(125.5 |
) |
|
|
(80.0 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Repayment of equipment
financing obligations |
|
(0.7 |
) |
|
|
(1.0 |
) |
|
|
(1.8 |
) |
|
|
(2.2 |
) |
Repurchase and cancellation of
common shares |
|
(0.8 |
) |
|
|
— |
|
|
|
(11.4 |
) |
|
|
— |
|
Proceeds from the exercise of
options and warrants |
|
— |
|
|
|
0.4 |
|
|
|
0.6 |
|
|
|
1.1 |
|
Dividends paid |
|
(3.9 |
) |
|
|
(3.9 |
) |
|
|
(7.8 |
) |
|
|
(3.9 |
) |
Proceeds from issuance of
flow-through shares |
|
7.5 |
|
|
|
— |
|
|
|
7.5 |
|
|
|
— |
|
|
|
2.1 |
|
|
|
(4.5 |
) |
|
|
(12.9 |
) |
|
|
(5.0 |
) |
Effect of exchange rates on
cash and cash equivalents |
|
0.4 |
|
|
|
(1.3 |
) |
|
|
0.9 |
|
|
|
(2.0 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
2.6 |
|
|
|
3.3 |
|
|
|
(22.8 |
) |
|
|
34.3 |
|
Cash and cash equivalents -
beginning of period |
|
180.6 |
|
|
|
231.8 |
|
|
|
206.0 |
|
|
|
200.8 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$183.2 |
|
|
$235.1 |
|
|
$183.2 |
|
|
$235.1 |
|
Alamos Gold (NYSE:AGI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Alamos Gold (NYSE:AGI)
Historical Stock Chart
From Jul 2023 to Jul 2024