Alamos Gold Inc. (
TSX:AGI;
NYSE:AGI) (“Alamos” or the “Company”) today provided 2020
production and operating guidance.
“Alamos remains on track to achieve 2019 production and cost
guidance driven by a strong year from both of our Canadian
operations. Young-Davidson is having a solid year operationally
while making excellent progress on the construction of the lower
mine expansion. Island Gold has already established another record
for annual production and free cash flow, and with the ongoing
exploration success we expect a further increase in both mineral
reserves and resources with our year end update,” said John A.
McCluskey, President and Chief Executive Officer.
“The lower mine expansion at Young-Davidson remains on track to
be completed in June 2020 after which we expect to transition to a
period of strong free cash flow growth. We intend to complete the
Phase III expansion study at Island Gold during the first half of
2020 which will showcase a highly profitable long-life operation.
Both initiatives support an improving operating and financial
outlook for the Company which will in turn support growing returns
to our shareholders. Given this strong outlook, we are pleased to
announce a 50% increase in our dividend starting in the first
quarter of 2020,” Mr. McCluskey added.
2019 Operational Update
- On track to meet full year 2019 production and cost
guidance: gold production is on track to be within the
guidance range of 480,000 to 520,000 ounces. Similarly, total cash
costs and all-in sustaining costs are expected to be consistent
with guidance
2020 Guidance Overview
- Production guidance of 425,000 to 465,000 ounces of
gold: down from 2019 reflecting the previously guided
lower production from Young-Davidson during the first half of 2020
while completing the tie-in of the upper and lower mines, as well
as the end of production from El Chanate
- Total cash cost guidance of $770 to $810 per ounce and
all-in sustaining cost (“AISC”) guidance of $1,020 to $1,060 per
ounce: up from 2019 guidance largely reflecting higher
costs at Young-Davidson during the first half of 2020
- Total capital budget of $180 to $205 million:
down from 2019 guidance of $240 to $265 million with the majority
of the capital focused on growth initiatives at existing
operations. This includes completing the lower mine expansion at
Young-Davidson and upgrading Island Gold’s surface infrastructure
to support the growing operation and mine life
- Expanding exploration budget to $36 million:
up from a 2019 exploration budget of $33 million reflecting
increased spending at Island Gold and Mulatos, as well as a new
underground exploration program at Young-Davidson for the first
time since the start of operations
- Growing free cash flow starting in H2 2020: at
the current gold price, the Company expects to transition to
positive free cash flow in the second half of 2020 with the
completion of the lower mine expansion at Young-Davidson
- 50% increase in dividend starting in the first quarter
of 2020: reflecting the strong free cash flow outlook, the
Company is increasing its quarterly dividend by 50% to an annual
rate of US$0.06 per common share
- Phase III expansion study and construction decision for
La Yaqui Grande expected in the second quarter of
2020
2021 Outlook
- Production increasing to approximately 500,000 ounces
per year from existing operating mines: reflecting higher
production from Young-Davidson driven by increased mining
rates
- Declining cost profile: costs are expected to
decrease in 2021 driven by lower costs at Young-Davidson
- Strong free cash flow growth to drive increasing
returns to shareholders: the Company expects to further
increase returns to shareholders as it generates higher levels of
free cash flow
2020 Guidance
|
2020
Guidance |
2019Guidance |
|
Young-Davidson |
Mulatos |
Island Gold |
|
|
Other (2) |
Total |
Total |
Gold
production (000’s ounces) |
145-160 |
150-160 |
130-145 |
|
|
|
425-465 |
480-520 |
Cost of sales,
including amortization (in
millions)(4) |
$207 |
$168 |
$120 |
|
|
— |
$495 |
$537 |
Cost of sales, including amortization ($ per
ounce)(4) |
$1,360 |
$1,085 |
$880 |
|
|
— |
$1,130 |
$1,075 |
Total cash
costs ($ per ounce)(1) |
$910-950 |
$840-880 |
$520-560 |
|
|
— |
$770-810 |
$710-750 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
|
|
— |
$1,020-1,060 |
$920-960 |
Mine-site all-in
sustaining costs ($ per ounce)(1),(3) |
$1,110-1,150 |
$940-980 |
$780-820 |
|
|
— |
|
|
Amortization costs ($ per ounce)(1) |
$430 |
$225 |
$340 |
|
|
— |
$340 |
$345 |
Corporate & Administrative (in millions) |
|
|
|
|
|
|
$20 |
$20 |
Capital
expenditures (in millions) |
|
|
|
|
|
|
|
|
Sustaining capital(1) |
$30-35 |
$15-20 |
$35-40 |
|
|
— |
$80-95 |
$75-85 |
Growth capital(1) |
$45-50 |
$5 |
$15-20 |
|
|
$35 (2) |
$100-110 |
$165-180 |
Total capital expenditures(1) |
$75-85 |
$20-25 |
$50-60 |
|
|
$35 |
$180-205 |
$240-265 |
(1) Refer to the "Non-GAAP Measures and Additional
GAAP" disclosure at the end of this press release for a description
of these measures.(2) Includes capitalized exploration
at all operating sites of $20 million and development
projects.(3) For the purposes of calculating mine-site
all-in sustaining costs at individual mine sites, the Company does
not include an allocation of corporate and administrative and share
based compensation expenses to the mine sites.(4) Cost
of sales includes mining and processing costs, royalties, and
amortization expense, and is calculated based on the mid-point of
total cash cost guidance.
Production rates are expected to be similar in
the first and second half of the year, while costs at
Young-Davidson and company-wide capital spending are expected to
decline through the year driving stronger mine-site free cash flow
in the second half of the year.
The 2020 production forecast and operating cost estimates are
based on the following currency assumptions:
Foreign Exchange Rate |
2020 |
Operating Sites ForeignCurrency Exposure |
Change |
Free Cash FlowSensitivity |
USD/CAD |
$0.75:1 |
95% |
$0.05 |
~$26 million |
MXN/USD |
19.0:1 |
40% |
1.00 |
~$3 million |
The Company has entered into foreign exchange transactions to
date representing approximately 35% of its Canadian
dollar-denominated operating and capital costs for 2020, ensuring a
maximum USD/CAD foreign exchange rate of $0.76:1 and allowing the
Company to participate in weakness in the USD/CAD up to a rate of
$0.73:1.
Additionally, the Company has entered into foreign exchange
transactions to date representing approximately 80% of its Mexican
peso-denominated operating and capital costs in 2020, ensuring a
minimum MXN/USD foreign exchange rate of 19.6:1 and allowing the
Company to participate in weakness in the MXN/USD up to a rate of
22.1:1.
The Company also periodically enters into short term gold
hedging arrangements. Currently, the Company has hedged 47,550
ounces during the first half of 2020 ensuring an average minimum
gold price of $1,404 per ounce and participation up to an average
gold price of $1,633 per ounce.
Young-Davidson
Young-Davidson |
|
Q3 YTD2019 |
2019guidance |
2020 guidance |
H1 2020guidance |
H2 2020guidance |
Gold Production |
000 oz |
140 |
180 - 190 |
145 - 160 |
55 - 60 |
90 - 100 |
|
|
|
|
|
|
|
Cost of Sales(1) |
$/oz |
$1,252 |
$1,220 |
$1,360 |
|
|
Total Cash Costs(2) |
$/oz |
$813 |
$750-790 |
$910-950 |
$1,130-1,170 |
$770-810 |
Mine-site AISC(2) |
$/oz |
$1,033 |
$940-980 |
$1,110-1,150 |
$1,350-1,390 |
$950-990 |
|
|
|
|
|
|
|
Tonnes of ore processed |
tpd |
7,140 |
6,500-7,800 |
|
4,000-5,000 |
6,500-7,500 |
Grade processed |
g/t Au |
2.40 |
2.35-2.65 |
2.35-2.65 |
|
|
Average recovery rate |
% |
91% |
90-92% |
90-92% |
|
|
|
|
|
|
|
|
|
Sustaining capital(2) |
$ millions |
$30 |
$35-40 |
$30-35 |
$13-15 |
$17-20 |
Growth capital(2) |
$ millions |
$43 |
$45-50 |
$45-50 |
$33-35 |
$12-15 |
Total capital |
$ millions |
$73 |
$80-90 |
$75-85 |
$46-50 |
$29-35 |
(1) Cost of sales includes mining and processing
costs, royalties, and amortization expense, and is calculated based
on the mid-point of total cash cost guidance.(2) Refer
to the "Non-GAAP Measures and Additional GAAP" disclosure at the
end of this press release and the Q3 2019 MD&A for a
description and calculation of these measures.
Gold production is expected to decrease at Young-Davidson in
2020 and costs increase reflecting the previously guided temporary
downtime of the Northgate shaft during the first half of the year.
The tie-in of the lower mine is expected to begin in March 2020 and
be completed in June 2020. During this downtime, ore will be
trucked to surface from the upper mine at a rate of approximately
2,500 tonnes per day (“tpd”). Given the lower production rate and a
full workforce to support ongoing development during this period,
total cash costs and mine-site AISC are expected to increase
significantly in the first half of the year.
Following completion of the tie-in in June, underground mining
rates are expected to increase from approximately 6,500 tpd to a
rate of 7,500 tpd by the end of 2020. This is expected to drive
production higher and costs significantly lower in the second half
of 2020.
Capital spending in 2020 is expected to total $75 to $85
million, down from guidance of $80 to $90 million in 2019. This is
higher than previously anticipated reflecting higher capital for
the construction of the new life of mine tailings facility (“TIA
1”). This includes additional grouting requirements and the
modification of the facility from an upstream to centerline design.
Construction of TIA 1 began in 2019 and represents a significant
multi-year investment that will be completed in 2021, providing
capacity for the remaining mine life at Young-Davidson.
Capital spending is expected to be lower during the second half
of 2020 with approximately 60% of the capital budget planned for
the first half of the year to complete the lower mine tie-in.
Combined with higher production and lower costs, Young-Davidson is
expected to generate strong free cash flow in the second half of
2020.
Higher mining rates are expected to drive annual gold production
to approximately 200,000 ounces in 2021. Combined with declining
costs and capital spending, Young-Davidson is expected to generate
strong free cash flow growth.
Island Gold
Island Gold |
|
Q3 YTD 2019 |
2019 guidance |
2020 guidance |
Gold Production |
000 oz |
112 |
135-145 |
130-145 |
|
|
|
|
|
Cost of Sales(1) |
$/oz |
$845 |
$855 |
$880 |
Total Cash Costs(2) |
$/oz |
$490 |
$460-500 |
$520-560 |
Mine-site AISC(2) |
$/oz |
$658 |
$730-770 |
$780-820 |
|
|
|
|
|
Tonnes of ore processed |
tpd |
1,126 |
1,100 |
1,150-1,200 |
Grade processed |
g/t Au |
11.49 |
10.5-11.5 |
10.0-11.0 |
Average recovery rate |
% |
97% |
96-97% |
96-97% |
|
|
|
|
|
Sustaining capital(2) |
$ millions |
$18 |
$35-40 |
$35-40 |
Growth capital(2) |
$ millions |
$14 |
$15-20 |
$15-20 |
Total capital (ex. exploration) |
$ millions |
$33 |
$50-60 |
$50-60 |
|
|
|
|
|
Capitalized exploration |
$ millions |
$12 |
$18 |
$19 |
(1) Cost of sales includes mining and processing
costs, royalties, and amortization expense, and is calculated based
on the mid-point of total cash cost guidance.(2) Refer
to the "Non-GAAP Measures and Additional GAAP" disclosure at the
end of this press release and the Q3 2019 MD&A for a
description and calculation of these measures.
Gold production at Island Gold is expected to be in a similar
range as 2019 guidance with slightly higher throughput offsetting
slightly lower grades. Underground mining rates are expected to
increase to a range of 1,150 to 1,200 tpd. Grades mined and
processed in 2020 are expected to average between 10 and 11 grams
per tonne of gold (“g/t Au”), consistent with the Mineral Reserve
grade. Grades are expected to be higher during the first half of
2020 and lower during the second half of the year reflecting mine
sequencing.
Total cash costs and mine-site all-in sustaining costs are
expected to increase slightly from 2019 guidance largely reflecting
the lower grades expected in 2020.
Capital spending at Island Gold is expected to total $50 to $60
million in 2020. This is consistent with 2019 guidance reflecting
capital carried over from 2019. Additionally, the Company is
undertaking a number of projects to support the growing operation
and mine life. This includes an expansion of the tailings facility,
and the construction of a new administration building, dry
facility, and underground workshop.
Phase III Expansion Study
The Phase III expansion study of the operation beyond 1,200 tpd
is expected to be completed during the second quarter of 2020. This
study will incorporate the 2019 year end Mineral Reserve and
Resource update for Island Gold which is expected to demonstrate
further growth in Mineral Reserves and Resources given the
exploration success over the past year.
Mulatos District
Mulatos District |
|
Q3 YTD 2019 |
2019 guidance |
2020 guidance |
Gold Production |
oz |
108 |
150- 160 |
150-160 |
|
|
|
|
|
Cost of Sales(1) |
$/oz |
$960 |
$1,065 |
$1,085 |
Total Cash Costs(2) |
$/oz |
$772 |
$820-860 |
$840-880 |
Mine-site AISC(2) |
$/oz |
$861 |
$860-900 |
$940-980 |
|
|
|
|
|
Tonnes of ore stacked |
tpd |
20,000 |
20,500 |
22,000 |
Grades stacked |
g/t Au |
0.92 |
0.8-1.0 |
0.9-1.1 |
Combined Recovery Ratio |
% |
67% |
70% |
60% |
|
|
|
|
|
Sustaining capital(2) |
$ millions |
$5 |
$5 |
$15-20 |
Growth capital(2),(3) |
$ millions |
$39 |
$45-50 |
$5 |
Total capital |
$ millions |
$45 |
$50-55 |
$20-25 |
(1) Cost of sales includes mining and processing
costs, royalties, and amortization expense, and is calculated based
on the mid-point of total cash cost guidance.(2) Refer
to the "Non-GAAP Measures and Additional GAAP" disclosure at the
end of this press release and the Q3 2019 MD&A for a
description and calculation of these measures.(3) Growth
capital guidance in 2019 included $33 million for Cerro Pelon and
La Yaqui Grande.
Production from the Mulatos District is expected to total
150,000 to 160,000 ounces of gold in 2020, consistent with long
term guidance. Ore will be mined and stacked from multiple sources
in 2020, including the Mulatos, El Victor and San Carlos open pits,
as well as new production coming from Cerro Pelon and the
processing of surface stockpiles. Construction of Cerro Pelon is
now complete, on budget and ahead of schedule. The crushing and
stacking of surface stockpiles will ramp up through the year as
mining activities wind down in the San Carlos and El Victor pits in
the first half of 2020.
Total cash costs are expected to increase slightly from 2019
reflecting the processing of lower recovery stockpiles, which carry
historical inventory costs resulting in a higher cash cost per
ounce. These inventory costs have been incurred in previous years
and have the impact of increasing total cash costs across all
Mulatos production by approximately $25 per ounce. Mine-site all-in
sustaining costs are also expected to increase due to higher
sustaining capital, mainly related to waste stripping activities at
Cerro Pelon.
Capital spending across all of the Mulatos District deposits is
expected to total $20 to $25 million, the majority of which is
sustaining capital. The Company expects to make a construction
decision on the La Yaqui Grande project during the first half of
2020. La Yaqui Grande is fully permitted having received the
approval of the environmental impact assessment ("MIA") during the
second quarter of 2019 and the Change in Land Use permit in July
2019. The Company has completed detailed engineering and is
currently finalizing the project design and economics.
2020 Global Operating and Development Capital
Budget
|
2020 Guidance |
2019Guidance |
|
Sustaining Capital |
Growth Capital |
Total |
Total |
Operating Mines (in millions) |
|
|
|
|
Young-Davidson |
$30-35 |
$45-50 |
$75-85 |
$80-90 |
Island Gold |
$35-40 |
$15-20 |
$50-60 |
$50-60 |
Mulatos |
$15-20 |
$5 |
$20-25 |
$50-55 |
Total – Operating Mines |
$80-95 |
$65-75 |
$145-170 |
$180-205 |
Development Projects (in millions) |
|
|
|
|
Turkey |
- |
$5 |
$5 |
$25 |
Lynn Lake |
- |
$3 |
$3 |
$5 |
Other |
- |
$2 |
$2 |
$3 |
Total – Development Projects |
- |
$10 |
$10 |
$33 |
Capitalized Exploration (in millions) |
|
|
|
|
Young-Davidson |
- |
$1 |
$1 |
|
Island Gold |
- |
$19 |
$19 |
$18 |
Mulatos |
- |
- |
- |
$3 |
Lynn Lake |
- |
$5 |
$5 |
$6 |
Total – Capitalized Exploration |
- |
$25 |
$25 |
$27 |
Total Consolidated Budget |
$80-95 |
$100-110 |
$180-205 |
$240-265 |
2020 Capital Budget for Development
Projects
Capital spending on the Company’s development projects and
capitalized exploration at existing operations is expected to total
$35 million in 2020. The majority of this spending will be focused
on exploration at Island Gold and exploration, permitting and
development activities at Lynn Lake.
Kirazlı Development Budget
On October 14, 2019, the Company suspended all construction
activities on its Kirazlı project pending the renewal of its
Turkish mining concessions which expired on October 13, 2019.
Although the mining concessions have not been revoked and can be
renewed following this expiration date, no further construction
activities can be completed until the concessions have been
renewed.
Given the uncertainty around the timing of the concession
renewal, initial production from Kirazlı has been delayed from
previous guidance of late 2020. The current capital budget for 2020
of $5 million reflects holding costs. The Company will provide
updated guidance on the construction schedule and budget for
Kirazlı following the receipt of the concession renewal and
resumption of construction activities.
Lynn Lake Development Budget
The 2019 capital budget for Lynn Lake is $8 million, including
$3 million for development activities and $5 million for
exploration. Development spending will be focused on baseline work
in support of the Environmental Impact Study (“EIS”) for the
project and other permitting activities. The EIS is expected to be
submitted in the first quarter of 2020. The permitting process is
expected to take approximately two years followed by two years of
construction.
2020 Exploration Budget
The 2020 global exploration budget is $36 million, up from the
2019 budget of $33 million reflecting increased exploration
spending at Island Gold and Mulatos, as well the initiation of
underground exploration drilling at Young-Davidson. Island Gold
remains the primary focus of exploration with $21 million budgeted,
up from the 2019 budget of $19 million. Mulatos and Lynn Lake
remain the other two areas of focus with $7 million and $5 million
budgeted, respectively. Approximately 70% of the 2020 budget will
be capitalized.
Island Gold
A total of $21 million has been budgeted in 2020 for surface and
underground exploration at Island Gold with a focus on continuing
to define new near mine Mineral Resources across the two-kilometre
long Island Gold Main Zone. The 2020 exploration budget includes
46,000 metres (“m”) of surface directional drilling, 30,000 m of
underground exploration drilling, and 900 m of underground
exploration development to extend drill platforms on the 620, 790,
and 840-levels.
Drilling completed in 2019 was successful in extending high
grade gold mineralization laterally and down-plunge of the Island
Gold Deposit across all three areas of focus including the Main,
Western, and Eastern Extensions. In addition, drilling in 2019
intersected high-grade mineralization over a lateral extent of 300
m within a previously untested area between the Eastern and Main
Extensions. Continued lateral and down-plunge drilling within these
areas will be the focus of surface and underground exploration
drilling in 2020.
A regional exploration program which includes 10,000 m of
drilling is also planned in 2020, focused on evaluating and
advancing exploration targets outside the main Island Gold Mine
area on the 9,750-hectare Island Gold Property.
Mulatos
A total of $7 million has been budgeted at Mulatos for
exploration in 2020 which includes 14,000 m of drilling focused in
the Mulatos near-mine, Carricito and La Yaqui Grande areas.
A number of regional exploration targets have been identified in
2019 from the property-wide VTEM geophysical survey that was
completed in late-2018. A focus of the 2020 regional exploration
program will be to further evaluate these targets through
systematic mapping, sampling, and ground geophysics.
Lynn Lake
A total of $5 million which includes 15,000 m of drilling has
been budgeted for exploration at the Lynn Lake project in
2020. The key focus of the 2020 exploration program will be
to test exploration targets in proximity to the Gordon and
MacLellan deposits with the goal of adding to Mineral Resources.
Another area of focus for 2020 is the continued evaluation and
advancement of a pipeline of prospective exploration targets within
the 58,500-hectare Lynn Lake Property.
Young-Davidson
A total 10,500 m of underground exploration drilling is planned
at Young-Davidson in 2020. Underground exploration drilling will be
completed from a drill platform that has been established within
the lower mine infrastructure. The objective of the drill program
is to explore the down-dip extension of the Young-Davidson ore
body, below current Mineral Resources and beyond the extent of any
previous drill holes.
Qualified Persons
Chris Bostwick, Alamos’ Vice President, Technical Services, who
is a qualified person within the meaning of National Instrument
43-101 Standards of Disclosure for Mineral Projects, has reviewed
and approved the scientific and technical information contained in
this press release.
About Alamos
Alamos is a Canadian-based intermediate gold producer with
diversified production from three operating mines in North America.
This includes the Young-Davidson and Island Gold mines in northern
Ontario, Canada and the Mulatos mine in Sonora State, Mexico.
Additionally, the Company has a significant portfolio of
development stage projects in Canada, Mexico, Turkey, and the
United States. Alamos employs more than 1,700 people and is
committed to the highest standards of sustainable development. The
Company’s shares are traded on the TSX and NYSE under the symbol
“AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K. ParsonsVice 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 news release contains forward-looking statements and
forward-looking information as defined under Canadian and U.S.
securities laws which are referred to herein as “forward
looking-looking statements”. All statements, other than statements
of historical fact, are, or may be deemed to be, forward-looking
statements and are generally, but not always, identified by the use
of forward-looking terminology such as "expect", “is expected”,
“outlook”, “on track”, ongoing”, "will", "intend", "estimate",
"forecast", "budget" or variations of such words and phrases and
similar expressions or statements that certain actions, events or
results “may", “could”, “would”, "might" or "will" be taken, occur
or be achieved or the negative connotation of such terms.
Forward-looking statements include information as to strategy,
plans or future financial or operating performance, such as the
Company's production forecasts and plans, expected sustaining
costs, expected improvements in cash flows and margins,
expectations of changes in capital expenditures, expansion plans,
project timelines, and expected sustainable productivity increases,
expected increases in mining activities and corresponding cost
efficiencies, expected drilling targets, forecasted cash shortfalls
and the Company's ability to fund them, cost estimates, projected
exploration results, projected development and permitting
timelines, expected production rates and use of the stockpile
inventory, expected recoveries, sufficiency of working capital for
future commitments, Mineral Reserve and Mineral Resource estimates,
and other statements that express management's expectations or
estimates of future performance.
Forward-looking statements are necessarily based
upon a number of factors and assumptions that, while considered
reasonable by management at the time of making such statements, are
inherently subject to significant business, economic, technical,
legal, political and competitive uncertainties and contingencies.
Known and unknown factors could cause actual results to differ
materially from those projected in the forward-looking statements,
and undue reliance should not be placed on such statements and
information.
Such factors and assumptions underlying the forward-looking
statements in this news release, 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 Canadian dollar, U.S. dollar, Mexican peso
and Turkish Lira); the impact of inflation; any decision to declare
a dividend; employee and community relations (including maintaining
social license to operate in Turkey); labour and contractor
availability (and being able to secure the same on favourable
terms); 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; inherent risks and hazards
associated with mining and mineral processing including
environmental hazards, industrial accidents, unusual or unexpected
formations, pressures and cave-ins; 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, risks in obtaining and maintaining necessary
licenses, permits and authorizations, contests over title to
properties; the renewal of the Company’s mining concessions in
Turkey; timely resumption of construction and development at the
Kirazlı project; expropriation or nationalization of property;
political or economic developments in Canada, Mexico, the United
States, Turkey and other jurisdictions in which the Company may
carry on business in the future; increased costs and risks related
to the potential impact of climate change; changes in national and
local government legislation, controls or regulations (including
tax legislation) in jurisdictions in which the Company does or may
carry on business in the future; the costs and timing of
construction and development of new deposits; risk of loss due to
sabotage, protests and other civil disturbances; the impact of
global liquidity and credit availability and the values of assets
and liabilities based on projected future cash flows; risks arising
from holding derivative instruments; and business opportunities
that may be pursued by the Company.
For a more detailed discussion of such risks and
other factors that may affect the Company's ability to achieve the
expectations set forth in the forward-looking statements contained
in this news release, see the Company’s latest 40-F/Annual
Information Form and Management’s Discussion and Analysis, 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 news
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
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.
“Cash flow from operating activities before changes in non-cash
working capital” 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 non-cash working capital to “Cash provided by (used in)
operating activities” as presented on the Company’s consolidated
statements of cash flows. “Free cash flow” is a non-GAAP
performance measure that is calculated as cash flows from
operations net of cash flows invested in mineral property, plant
and equipment and exploration and evaluation assets as presented on
the Company’s consolidated statements of cash flows and that would
provide an indication of the Company’s ability to generate cash
flows from its mineral projects. “Mine site free cash flow” is a
non-GAAP measure which includes cash flow from operating activities
at, less capital expenditures at each mine site. Return on Equity
is defined as Earnings from Continuing Operations divided by the
average Total Equity for the current and previous year. “Mining
cost per tonne of ore” and “Cost per tonne of ore” are non-GAAP
performance measures that could provide an indication of the mining
and processing efficiency and effectiveness of the mine. These
measures are calculated by dividing the relevant mining and
processing costs and total costs by the tonnes of ore processed in
the period. “Cost per tonne of ore” is usually affected by
operating efficiencies and waste-to-ore ratios in the period.
“Total cash costs per ounce”, “all-in sustaining costs per ounce”,
and “mine-site all-in sustaining costs” 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 these metrics as
determined by the Company compared with other mining companies. In
this context, “total cash costs” reflects mining and processing
costs allocated from in-process and dore inventory associated and
associated royalties with ounces of gold sold in the period. Total
cash costs per ounce are exclusive of exploration costs. “All-in
sustaining costs per ounce” include total cash costs, exploration,
corporate and administrative, share based compensation and
sustaining capital costs. “Mine-site all-in sustaining costs”
include total cash costs, exploration, and sustaining capital costs
for the mine-site, but exclude an allocation of corporate and
administrative and share based compensation.
Additional GAAP measures that are presented on the face of the
Company’s consolidated statements of comprehensive income 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. This includes “Earnings
from operations”, which is intended to provide an indication of the
Company’s operating performance, and represents the amount of
earnings before net finance income/expense, foreign exchange
gain/loss, other income/loss, and income tax expense. 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. A reconciliation of
historical non-GAAP and additional GAAP measures are available at
www.alamosgold.com.
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