Alamos Gold Inc. (
TSX:AGI;
NYSE:AGI) (“Alamos” or the “Company”) today reported
results of the positive Phase III Expansion Study conducted on its
Island Gold mine, located in Ontario, Canada. Based on the results
of the study, the Company is proceeding with an expansion of the
operation to 2,000 tonnes per day (“tpd”) (“Shaft Expansion”). This
follows a detailed evaluation of several scenarios which
demonstrated the Shaft Expansion as the best option, having the
strongest economics, being the most efficient and productive
scenario, and the best positioned to capitalize on further growth
in Mineral Reserves and Resources. All amounts are in United States
dollars, unless otherwise stated.
Phase III Expansion Study Highlights – Shaft
Expansion
- Average annual gold production of 236,000 ounces per
year starting in 2025 upon completion of the shaft. This
represents a 72% increase from the mid-point of previously issued
2020 production guidance
- Industry low average total cash costs of $403 per ounce
of gold and mine-site all-in sustaining costs of $534 per
ounce starting in 2025, a 19% and 30% decrease from the
mid-point of previously issued 2020 guidance, respectively
- After-tax net present value (“NPV”) of $1.02
billion at a 5% discount rate and an after-tax internal
rate of return (“IRR”) of 17%, using a base case gold price
assumption of $1,450 per ounce and a USD/CAD foreign exchange rate
of $0.75:1
- After-tax NPV of $1.45 billion and an after-tax IRR of
22%, at a 5% discount rate using a gold price assumption
of $1,750 per ounce and a USD/CAD foreign exchange rate of
$0.75:1
- Mine life of 16 years, double the current eight year
Mineral Reserve life. This is based on a mineable Mineral
Resource of 9.6 million tonnes grading 10.45 grams per tonne of
gold (“g/t Au”) containing 3.2 million ounces of gold
- Lowest combined capital and operating costs of all
scenarios evaluated. Total life of mine capital of $1,066
million including sustaining capital. Higher life-of-mine growth
capital of $514 million with the Shaft Expansion is more than
offset by the lowest sustaining capital and operating costs of all
scenarios evaluated.
“Island Gold has been a tremendous acquisition for Alamos Gold.
We acquired Island Gold in 2017 at a cost of approximately $600
million when it had 1.8 million ounces of Mineral Reserves and
Resources. This high-grade deposit has more than doubled to 3.7
million ounces and we expect further growth yet. The Phase III
Expansion Study showcases the growing value of Island Gold. Already
one of the most profitable mines in Canada, the expansion will
increase production, lower costs, and make this operation even more
profitable. The expansion will also best position the operation to
benefit from additional exploration success,” said John A.
McCluskey, President and Chief Executive
Officer.
Phase III Expansion Study Highlights –
Shaft Expansion |
Life of Mine (starting January
2020) |
Post Completion of Shaft (2025+) |
Production |
|
|
Mine life (years) |
|
16 |
|
|
|
|
|
Total gold production (000 ounces) |
|
3,104 |
|
|
|
|
|
Average annual gold production (000 ounces) |
|
201 |
|
|
236 |
|
|
|
Total mill feed (000 tonnes) |
|
9,572 |
|
|
|
|
|
Average gold grade (grams per tonne) |
|
10.45 |
|
|
|
|
|
Recovery (%) |
|
96.5 |
% |
|
|
|
|
Average mill throughput (tpd) |
|
1,700 |
|
|
2,000 |
|
|
|
Operating Costs |
|
|
Total cost per tonne of mill feed1 (C$) |
$ |
182 |
|
$ |
178 |
|
|
|
Total cash cost (per ounce sold)2 |
$ |
422 |
|
$ |
403 |
Mine-site all-in sustaining cost (per ounce sold)2 |
$ |
598 |
|
$ |
534 |
|
|
|
Capital Costs (millions) |
|
|
Growth (project) capital expenditure |
$ |
514 |
|
|
Sustaining capital expenditure |
$ |
552 |
|
|
Total capital expenditure |
$ |
1,066 |
|
|
|
|
|
Base Case Economic Analysis |
|
|
IRR vs current 1,200 tpd operation (after-tax)3 |
|
17 |
% |
|
|
|
|
NPV @ 0% discount rate (millions, after-tax) |
$ |
1,659 |
|
|
NPV @ 5% discount rate (millions, after-tax) |
$ |
1,019 |
|
|
|
|
|
Gold price assumption (average, per ounce sold) |
$ |
1,450 |
|
|
Exchange Rate (US Dollar/Canadian Dollar) |
|
0.75 |
|
|
|
|
|
Economic Analysis at $1,750 per ounce Gold
Price |
|
|
IRR vs current 1,200 tpd operation (after-tax)3 |
|
22 |
% |
|
|
|
|
NPV @ 0% discount rate (millions, after-tax) |
$ |
2,280 |
|
|
NPV @ 5% discount rate (millions, after-tax) |
$ |
1,450 |
|
|
|
|
|
Gold price assumption (average, per ounce sold) |
$ |
1,750 |
|
|
Exchange Rate (US Dollar/Canadian Dollar) |
|
0.75 |
|
|
|
|
|
|
|
|
- Total unit cost per tonne (“t”) of ore includes royalties and
silver as a by-product credit
- Total cash costs and mine-site all-in sustaining costs include
royalties and silver as a by-product credit
- The IRR is calculated on the differential after-tax cash flow
between the Shaft Expansion scenario and continuing to mine at
1,200 tpd with ramp access and with a paste fill plant
Mineable Resource
A Mineable Resource totaling 9.6 million tonnes, grading 10.45
g/t Au containing 3.2 million ounces of gold has been included in
the Phase III Expansion Study. This incorporates Mineral Reserves
and approximately 80% of Measured and Indicated and Inferred
Mineral Resources as of December 31, 2019. Mineral Resources
included in the study had stoping outlines applied and then were
assigned Island Gold’s standard zonal dilution and recovery rates.
Stopes were evaluated against applicable cut-off grades and a mine
design and sequence was generated. The inclusion of 80% of
the Mineral Resource is consistent with the historical conversion
rate of Inferred Mineral Resource to Mineral Reserve which has
averaged 83% since 2016. This also reflects the high degree of
confidence in the quality of the Mineral Resource which is part of
the same structure as Mineral Reserves with a consistent style of
mineralization.
Mineable Resource as of December 31, 2019
|
December 31, 2019 |
Undiluted Resource Used in Phase III Study |
Diluted & Recovered Resource Used in Phase III
Study |
|
Tonnes (000) |
Grade(g/t Au) |
Ounces(000) |
Tonnes (000) |
Grade(g/t Au) |
Ounces(000) |
Tonnes (000) |
Grade(g/t Au) |
Ounces(000) |
Mineral Reserves |
|
|
|
|
|
|
|
|
|
Proven |
786 |
13.48 |
341 |
|
|
|
786 |
13.48 |
341 |
Probable |
2,857 |
9.52 |
874 |
|
|
|
2,857 |
9.52 |
874 |
Total Reserves |
3,643 |
10.37 |
1,215 |
|
|
|
3,643 |
10.37 |
1,215 |
Mineral Resources |
|
|
|
|
|
|
|
|
|
Measured |
25 |
4.52 |
4 |
21 |
4.52 |
3 |
24 |
3.85 |
3 |
Indicated |
853 |
6.57 |
180 |
724 |
6.57 |
153 |
807 |
5.60 |
145 |
Total Measured & Indicated |
879 |
6.51 |
184 |
746 |
6.51 |
156 |
831 |
5.55 |
148 |
Inferred |
5,392 |
13.26 |
2,298 |
4,576 |
13.26 |
1,950 |
5,099 |
11.30 |
1,853 |
|
|
|
|
|
Phase III Mill Feed |
9,572 |
10.45 |
3,216 |
|
|
|
|
|
|
|
|
|
Economic Analysis
The Shaft Expansion to 2,000 tpd has an estimated base case
after-tax NPV of $1.02 billion and after-tax IRR of 17% using a 5%
discount rate and assuming a gold price of $1,450 per ounce and
USD/CAD foreign exchange rate of $0.75:1.
Assuming a $1,750 per ounce gold price, the after-tax NPV
increases to $1.45 billion and after-tax IRR increases to 22%. The
mine plan, operating parameters and capital estimates incorporated
in the study are effective January 1, 2020. The project economics
are sensitive to metal price assumptions and input costs as
detailed in the tables below.
Shaft Expansion After-Tax NPV (5%) Sensitivity ($
Millions)
|
|
-10% |
|
|
-5% |
|
Base Case |
|
5% |
|
|
10% |
|
Gold Price |
$ |
808 |
|
$ |
914 |
|
$ |
1,019 |
$ |
1,124 |
|
$ |
1,228 |
|
Canadian Dollar |
$ |
1,127 |
|
$ |
1,073 |
|
$ |
1,019 |
$ |
964 |
|
$ |
910 |
|
Capital Costs |
$ |
1,083 |
|
$ |
1,051 |
|
$ |
1,019 |
$ |
988 |
|
$ |
954 |
|
Operating Costs |
$ |
1,077 |
|
$ |
1,048 |
|
$ |
1,019 |
$ |
991 |
|
$ |
961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shaft Expansion After-Tax NPV (5%) and IRR Sensitivity
to Gold Price
Gold Price |
After-Tax NPV5% ($M) |
After-Tax IRR (%) |
$1,250 |
$727 |
14% |
$1,350 |
$874 |
16% |
$1,450 |
$1,019 |
17% |
$1,550 |
$1,164 |
19% |
$1,650 |
$1,308 |
20% |
$1,750 |
$1,450 |
22% |
$1,850 |
$1,593 |
24% |
|
|
|
Phase III Expansion Scenarios Evaluated
Five scenarios were evaluated as part of the Phase III Expansion
Study as follows:
- Ramp 1,200 tpd (current base case operation with no paste
plant);
- Ramp 1,200 tpd (R1200);
- Ramp Expansion to 1,600 tpd (R1600);
- Shaft Expansion to 1,600 tpd (S1600); and
- Shaft Expansion to 2,000 tpd (S2000).
With the exception of the first scenario (maintaining the
current operation) all of the other scenarios included the addition
of a paste plant. Detailed mine plans were created for all
scenarios with multiple optimizations for each. Design engineering
and costing for each scenario were completed to pre-feasibility
level. Costing was based on first principles and with a high degree
of confidence given existing operating experience.
Phase III Shaft Expansion Overview
The Phase III Expansion of Island Gold to 2,000 tpd from a
current rate of approximately 1,200 tpd will involve various
infrastructure investments. These include the installation of a
shaft, paste plant, and an expansion of the mill and tailings
facility. Following the completion of the shaft construction in
2025, the operation will transition from trucking ore and waste to
skipping ore and waste to surface through the new shaft
infrastructure, driving production higher and costs significantly
lower.
Mining
Long-hole open stoping will continue to be utilized as the
primary mining method; however, increased development and key
infrastructure changes including the addition of a paste plant and
shaft will allow for mining rates to increase to 2,000 tpd.
Shaft
A 5.0 metre diameter concrete lined shaft will be constructed
with a steel head frame. The shaft will house two 12 tonne skips in
dedicated compartments for ore and waste movement, and a
double-deck service cage for the transport of personnel and
materials. The shaft will be sunk to an initial depth of 1,373
metres. The hoisting plant is designed for an ultimate depth of
2,000 metres providing flexibility to accommodate future
exploration success. At the initial depth of 1,373 metres, the
shaft has a capacity of 4,500 tpd, more than sufficient to
accommodate the peak mining rates of 3,300 tpd (ore &
waste).
A conventional blind sink methodology will be utilized providing
improved schedule reliability with minimal impact on existing
operations. A combined raise-bore from the 840 metre level, and
blind sink option below the 840 metre level was evaluated; however,
this option would significantly impact existing operations. The
cuttings from the raise bore in the upper mine, and waste generated
from the conventional sink in the lower mine would displace
underground throughput capacity and significantly reduce mining
rates below 1,200 tpd by as much as 400 tpd over the next several
years.
The underground ore and waste handling and loading pocket will
be a conventional configuration similar to that of Young-Davidson.
Once skipped to surface, ore will be trucked to the expanded mill
circuit.
Ventilation requirements under the Shaft Expansion are lower
than under the ramp scenarios given the significantly smaller
mobile fleet allowing the shaft to serve as the only new required
fresh air source. The total construction capital for the shaft
installation including all supporting infrastructure is $232
million4.
Paste plant
With the exception of the current base case operation, the
addition of a paste plant was included in all scenarios for a
number of reasons, principally the high project returns with an
after-tax IRR of 32%. The addition of paste fill underground will
allow for faster stope cycling, thereby supporting higher mining
rates and providing increased geotechnical stability. It will also
increase mining recovery resulting in an additional 100,000 ounces
of gold recovered over the life of mine, an in-situ value of $145
million at a gold price of $1,450 per ounce. Further, 56% of
tailings will be placed underground reducing tailings dam raise
requirements, a capital savings of $13 million.
The paste plant will have a capacity of 2,000 tpd and capital
cost of $34 million4 with the plant expected to be completed in the
fourth quarter of 2023.
Mobile fleet
Mining rates are expected to ramp up to 2,000 tpd following the
completion of the shaft in 2025. This will be supported by a
significantly smaller mobile fleet than required under the ramp
scenarios. Post completion of the shaft, a total of five haul
trucks will be required to support a mining rate of 2,000 tpd. This
compares to a peak of 18 haul trucks required to sustain ramp
haulage at 1,200 tpd and 25 haul trucks for ramp haulage at 1,600
tpd. This contributes to the lower ventilation requirements with
the Shaft Expansion, and significantly lower diesel usage and green
house gas emissions.
Processing and Infrastructure
The expanded mill will be a conventional milling operation with
a nominal capacity of 2,000 tpd, up from approximately 1,200 tpd
currently. The expansion will include upgrading the crushing
circuit, adding a second parallel ball mill, and a new elution and
carbon in pulp (“CIP”) circuit with carbon screens. The total cost
of the mill expansion is $40 million4.
The flow sheet of the new circuit includes upgrades and
expansions for the following major process operations:
- New vibratory grizzly feeder;
- New primary crusher;
- New fine ore stockpile and conveyors;
- Additional primary ball mill;
- Primary Ball Mill screen for both ball mill circuits;
- Existing thickener converted to high-rate thickener;
- Two additional leach tanks;
- New elution plant and kiln (ADR); and
- Tailing pumps.
Mill recoveries are expected to average 96.5% over the life of
mine, consistent with the historical performance of the existing
operation.
To accommodate the increased electricity requirements with the
larger mill and shaft, the power line to site will be upgraded at a
cost of $14 million. The same power line upgrade is required under
all scenarios including maintaining the existing operating rates of
1,200 tpd. This reflects increased ventilation requirements with
the ramp scenarios as mining progresses deeper.
An expansion of the existing tailings impoundment area is
underway and required under all scenarios to accommodate the growth
in the deposit over the last several years. With two planned future
raises beyond 2020 and the addition of the paste plant, the
tailings facility has sufficient capacity to accommodate existing
Mineral Reserves and Resources.
Operating Costs
Total cash costs are expected to average $403 per ounce and
mine-site all-in sustaining costs $534 per ounce following the
completion of the shaft construction in 2025. These represent a 19%
and 30% decrease from the mid-point of previous 2020 guidance,
respectively. These are also the lowest costs of any scenario
evaluated reflecting the significant productivity improvements,
decreased ventilation requirements, increased automation, and
higher throughput rates associated with the shaft.
Total life of mine operating costs of $1,310 million with the
Shaft Expansion are significantly lower than all the other
scenarios evaluated. This includes continuing ramp access mining at
the current rate of 1,200 tpd which carried total operating costs
of $1,648 million. The lower operating costs more than offset the
higher capital such that total combined life of mine operating
costs and capital with the Shaft Expansion are the lowest of any
scenario.
Total operating costs are expected to average C$178 per tonne of
mill feed post completion of the project. This includes average
mining costs of C$96 per tonne. Both are the lowest of any scenario
evaluated. This becomes even more significant as mining moves
deeper with unit mining costs remaining relatively stable under the
Shaft Expansion, while steadily increasing with the ramp
scenarios.
The breakdown of unit costs is summarized as follows.
|
Life of mine |
Post project (2025) |
Total LOM |
Operating Cost1 |
C$/t Processed |
C$/t Processed |
C$M |
Mining |
$ |
98 |
$ |
96 |
$ |
936 |
Processing |
$ |
31 |
$ |
31 |
$ |
300 |
General and Administration |
$ |
39 |
$ |
37 |
$ |
377 |
Royalties |
$ |
15 |
$ |
15 |
$ |
146 |
Silver Credit |
-$ |
1 |
-$ |
1 |
-$ |
12 |
Total Operating Costs |
$ |
182 |
$ |
178 |
$ |
1,747 |
|
|
|
|
|
|
|
Royalty
Production from Island Gold is subject to third party net
smelter return (“NSR”) royalties which vary by claim location. The
NSR royalties average 2.4% over the life of mine.
Capital Costs
Each scenario evaluated included several common infrastructure
investments required to incorporate the Mineable Resource which is
165% larger than the current Mineral Reserve, resulting in a longer
mine life. The Shaft Expansion has extended the mine life to 16
years, from the current eight year Mineral Reserve life, while the
ramp scenarios at lower throughput rates extended the mine life to
as many as 22 years.
These common infrastructure changes include the following:
- Addition of a paste plant;
- Power line upgrade;
- Surface infrastructure upgrades including the employee camp,
kitchen, administration building and warehouse; and
- Tailings expansion.
The combined capital cost for these projects is $104
million4.
Growth capital for the Shaft Expansion is expected to total $514
million. This is expected to be spent over the next five years
until the completion of the shaft and expansion of the mill in
2025. The bulk of this spending will occur between 2022 and 2024.
This includes the above noted $104 million4 of capital for
infrastructure projects that would be spent under every scenario,
including maintaining the current 1,200 tpd operation. Other
significant capital items include $40 million4 for the mill
expansion and $232 million4 for shaft installation. Sustaining
capital is expected to total $552 million, averaging $37 million
per year.
Combined growth and sustaining capital are expected to total
$1,066 million over the life of mine. This is $118 million
higher than the ramp 1,200 tpd scenario (R1200) reflecting higher
growth capital for the shaft and mill expansion, partially offset
by lower sustaining capital with less development and mobile
equipment requirements.
This higher combined capital was more than offset by $338
million of savings through lower operating costs with the Shaft
Expansion. Total combined capital and operating costs with the
Shaft Expansion are $220 million lower than the R1200 scenario.
A breakdown of the capital requirements for the ramp 1,200 tpd
option (R1200) and Shaft Expansion (S2000) is detailed as
follows.
Sustaining Capital (in C$ millions) |
R1200 |
S2000 |
Difference |
TSF Earthworks |
$ |
13 |
$ |
13 |
$ |
0 |
Misc U/G
Infrastructure |
$ |
17 |
$ |
14 |
-$ |
3 |
U/G Mine
Dewatering |
$ |
23 |
$ |
23 |
$ |
0 |
U/G
Power |
$ |
58 |
$ |
58 |
$ |
0 |
General
UG Facilities |
$ |
35 |
$ |
24 |
-$ |
11 |
Mobile Equipment |
$ |
234 |
$ |
144 |
-$ |
90 |
Subtotal |
$ |
379 |
$ |
276 |
-$ |
104 |
Indirects |
$ |
29 |
$ |
29 |
$ |
0 |
Contingency |
$ |
20 |
$ |
27 |
$ |
7 |
Capital Development |
$ |
541 |
$ |
373 |
-$ |
168 |
Total Sustaining Capital |
$ |
998 |
$ |
730 |
-$ |
268 |
Reclamation |
$ |
6 |
$ |
6 |
$ |
0 |
Total (including Reclamation, C$) |
$ |
1,004 |
$ |
736 |
-$ |
268 |
Total (including Reclamation, US$ millions) |
$ |
753 |
$ |
552 |
-$ |
201 |
|
|
|
|
|
|
|
Growth Capital (in C$ millions) |
R1200 |
S2000 |
Difference |
Site Wide Surface Works |
$ |
43 |
$ |
41 |
-$ |
2 |
Power
Supply Upgrade |
$ |
18 |
$ |
18 |
$ |
0 |
Mill
Expansion |
|
- |
$ |
36 |
$ |
36 |
Paste
Plant |
$ |
38 |
$ |
38 |
$ |
0 |
Shaft
Surface Works |
|
- |
$ |
9 |
$ |
9 |
Headframe
and Hoisting Plant |
|
- |
$ |
59 |
$ |
59 |
Shaft
Sinking and Equipping |
|
- |
$ |
78 |
$ |
78 |
U/G Ore
and Waste Handling |
|
- |
$ |
13 |
$ |
13 |
U/G
Misc. |
$ |
16 |
$ |
18 |
$ |
2 |
Other |
$ |
6 |
$ |
6 |
$ |
0 |
Subtotal Direct Costs |
$ |
121 |
$ |
315 |
$ |
194 |
Indirect
Costs |
$ |
21 |
$ |
104 |
$ |
83 |
EPCM |
$ |
4 |
$ |
22 |
$ |
18 |
Owner's
Costs |
$ |
1 |
$ |
7 |
$ |
6 |
Contingency |
$ |
8 |
$ |
70 |
$ |
62 |
Capital Development |
$ |
105 |
$ |
166 |
$ |
61 |
Total Growth Capital (C$) |
$ |
260 |
$ |
685 |
$ |
425 |
Total Growth Capital (US$ millions) |
$ |
195 |
$ |
514 |
$ |
319 |
|
|
|
|
|
|
|
4. Total capital for individual projects referenced in the text
include contingency and indirects
Total Capital & Operating Costs (in C$
millions) |
R1200 |
S2000 |
Difference |
|
|
|
|
Sustaining Capital |
$ |
1,004 |
$ |
736 |
-$ |
268 |
Growth Capital |
$ |
260 |
$ |
685 |
$ |
425 |
|
|
|
|
Total Capital (C$) |
$ |
1,264 |
$ |
1,421 |
$ |
157 |
Total Capital (US$, millions) |
$ |
948 |
$ |
1,066 |
$ |
118 |
Total Operating Costs (C$) |
$ |
2,197 |
$ |
1,747 |
-$ |
450 |
Total Operating Costs (US$, millions) |
$ |
1,648 |
$ |
1,310 |
-$ |
338 |
Total Capital & Operating Costs (US$,
millions) |
$ |
2,596 |
$ |
2,376 |
-$ |
220 |
|
|
|
|
|
|
|
Taxes
Given existing tax pools, Island Gold is not expected to pay
cash taxes for approximately five years based on a $1,450 per ounce
gold price, after which the effective tax rate is expected to
average approximately 32% including federal tax and Ontario mining
tax.
Permitting
The Shaft Expansion, as currently configured is not expected to
require a lengthy environmental assessment process and the majority
of the permitting requirements fall within the provincial
government jurisdiction. These include amendments to existing
authorizations and new authorizations for construction activities.
All of the Shaft Expansion permitting requirements are expected to
be completed within an 18 to 24 month timeframe. This is a well
known jurisdiction within which Alamos has successfully operated
for years, achieving various permitting milestones at both of its
Young-Davidson and Island Gold mines.
Consultant Contributions
The Phase III Expansion Study was consolidated by Alamos Gold’s
technical team in collaboration with the following third party
consulting firms in their respective areas of expertise:
- Hatch: Overall Infrastructure Design/Engineering
- Cementation: Sinking Engineering & Design
- Airfinders: Ventilation Engineering
- Golder: Paste Fill Plant & UDS Design; Water Management
& Tails Dam; and Environmental Baseline Monitoring &
Permitting Support
- Halyard: Mill Expansion
- SRK: Mine Simulation Consultant
- DMC Estimating: 3rd Party Master Estimate Review
Island Gold Phase III Expansion Study
Webcast
The Company will be hosting a webcast on
Wednesday, July 15, 2020 at 8:30 am ET to discuss the results of
the Phase III Expansion Study.
Participants may join the webcast at
www.alamosgold.com or by dialling (416) 340-2216 or (800) 377-0758
for calls within Canada and the United States.
Technical Disclosure
Chris Bostwick, FAusIMM, Alamos Gold's Vice President,
Technical Services, has reviewed and approved the scientific and
technical information contained in this news release. Mr.
Bostwick is a Qualified Person within the meaning
of Canadian Securities Administrators' National Instrument
43-101 ("NI 43-101").
The Company will file a technical report prepared in accordance
with NI 43-101 on SEDAR at www.sedar.com within 45 days of the date
of this release.
About Alamos
Alamos is a Canadian-based intermediate gold producer with
diversified production from three operating mines in North America.
This includes the Young-Davidson and Island Gold mines in northern
Ontario, Canada and the Mulatos mine in Sonora State, Mexico.
Additionally, the Company has a significant portfolio of
development stage projects in Canada, Mexico, Turkey, and the
United States. Alamos employs more than 1,700 people and is
committed to the highest standards of sustainable development. The
Company’s shares are traded on the TSX and NYSE under the symbol
“AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K. Parsons Vice President, Investor
Relations (416) 368-9932 x 5439
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 Regarding Forward Looking
Statements
This news release includes certain statements
that constitute forward-looking information within the meaning of
applicable Canadian and U.S. securities laws ("forward-looking
statements"). All statements in this news release, other than
statements of historical fact, which address events, results,
outcomes or developments that Alamos expects to occur are
forward-looking statements. Forward-looking statements are
generally, but not always, identified by the use of forward-looking
terminology such as “continue”, "expect", “believe", "anticipate",
"plan", “forecast”, "estimate", "intend", “budget” or “potential”
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. In particular, this news
release contains forward-looking statements including, without
limitation, with respect to the Phase III Expansion of Island Gold
including permitting requirements, growth and sustaining
capital for the shaft expansion, expected mining rates, operating
costs, cash costs and all-in sustaining costs, changes in Mineral
Resources and Proven and Probable Mineral Reserves, future tax
rates, and other information that is based on forecasts and
projections of future operational, geological or financial results,
estimates of amounts not yet determinable and assumptions of
management.
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 include:: the
actual results of current exploration activities, conclusions of
economic and geological evaluations, changes in project parameters
as plans continue to be refined, operations may be exposed to
widespread pandemic; the impact of the COVID-19 pandemic on the
broader market; provincial and federal orders or mandates
(including with respect to mining operations generally or auxiliary
businesses or services required for our operations) in Canada,
Mexico, the United States and Turkey; the duration of regulatory
responses to the COVID-19 pandemic; changes in national and local
government legislation, controls or regulations, failure to comply
with environmental and health and safety laws and regulations;
labour and contractor availability (and being able to secure
the same on favourable terms); disruptions in the maintenance or
provision of required infrastructure and information technology
systems; fluctuations in the price of gold or certain other
commodities such as, diesel fuel, natural gas, and electricity;
operating or technical difficulties in connection with mining or
development activities, including geotechnical challenges and
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; changes
in foreign exchange rates (particularly the Canadian dollar, U.S.
dollar, Mexican peso and Turkish 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; 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; 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; 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; 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.
Cautionary Note to U.S. Investors - Mineral Reserve and
Resource Estimates
All Mineral Resource and Reserve estimates
included in this news release or documents referenced in this news
release have been prepared in accordance with Canadian National
Instrument 43-101 - Standards of Disclosure for Mineral Projects
("NI 43-101") and the Canadian Institute of Mining, Metallurgy and
Petroleum (the "CIM") - CIM Definition Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council, as
amended (the "CIM Standards"). NI 43-101 is a rule developed by the
Canadian Securities Administrators, which established standards for
all public disclosure an issuer makes of scientific and technical
information concerning mineral projects. The terms "Mineral
Reserve", "Proven Mineral Reserve" and "Probable Mineral Reserve"
are Canadian mining terms as defined in accordance with NI 43-101
and the CIM Standards. 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” which differ materially from the
definitions in SEC Industry Guide 7 under the United States
Securities Exchange Act of 1934, as amended. Investors are
cautioned not to assume that all or any part of mineral deposits in
these categories will ever be converted into Mineral Reserves.
“Inferred Mineral Resources” have a great amount of uncertainty as
to their existence, and great uncertainty as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies, except in very limited circumstances. Disclosure of
“contained ounces” in a Mineral Resource is permitted disclosure
under Canadian regulations; however, the SEC normally only permits
issuers to report mineralization that does not constitute “Mineral
Reserves” by SEC standards as in place tonnage and grade without
reference to unit measures.
The SEC has adopted final rules, effective
February 25, 2019, to replace SEC Industry Guide 7 with new mining
disclosure rules under sub-part 1300 of Regulation S-K of the U.S.
Securities Act (the “SEC Modernization Rules”).
The SEC Modernization Rules replace the historical property
disclosure requirements included in SEC Industry Guide 7. As a
result of the adoption of the SEC Modernization Rules, the SEC now
recognizes estimates of “Measured Mineral Resources”, “Indicated
Mineral Resources” and “Inferred Mineral Resources”. In addition,
the SEC has amended its definitions of “Proven Mineral Reserves”
and “Probable Mineral Reserves” to be substantially similar to
international standards. The SEC Modernization Rules will become
mandatory for U.S. reporting companies beginning with the first
fiscal year commencing on or after January 1, 2021.
Table 1: Phase III Shaft Expansion
Production Schedule
|
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
|
2030 |
|
2031 |
|
2032 |
|
2033 |
|
2034 |
|
2035 |
Mill Feed mined |
|
410,593 |
|
438,000 |
|
437,999 |
|
437,994 |
|
439,198 |
|
557,150 |
|
719,805 |
|
730,000 |
|
731,957 |
|
729,934 |
|
729,951 |
|
730,000 |
|
731,947 |
|
730,000 |
|
721,154 |
|
296,654 |
Waste mined |
|
342,999 |
|
440,063 |
|
611,313 |
|
688,082 |
|
478,034 |
|
317,066 |
|
336,839 |
|
471,093 |
|
414,888 |
|
371,636 |
|
255,838 |
|
190,337 |
|
32,774 |
|
571 |
|
- |
|
- |
Total tonnes mined |
|
753,592 |
|
878,063 |
|
1,049,312 |
|
1,126,076 |
|
917,233 |
|
874,216 |
|
1,056,643 |
|
1,201,093 |
|
1,146,845 |
|
1,101,570 |
|
985,789 |
|
920,337 |
|
764,721 |
|
730,571 |
|
721,154 |
|
296,654 |
Grades (g/t Au) |
|
10.87 |
|
10.17 |
|
9.85 |
|
8.37 |
|
9.70 |
|
13.08 |
|
11.41 |
|
9.22 |
|
10.62 |
|
13.91 |
|
8.81 |
|
9.37 |
|
10.32 |
|
11.09 |
|
9.60 |
|
9.77 |
Gold production (oz) |
|
137,720 |
|
138,231 |
|
133,802 |
|
113,743 |
|
132,131 |
|
226,081 |
|
254,866 |
|
208,849 |
|
241,279 |
|
314,971 |
|
199,445 |
|
212,271 |
|
234,370 |
|
251,179 |
|
214,715 |
|
89,925 |
Operating costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit mining costs (C$/t) |
$ |
114 |
$ |
103 |
$ |
96 |
$ |
97 |
$ |
115 |
$ |
108 |
$ |
96 |
$ |
84 |
$ |
87 |
$ |
91 |
$ |
95 |
$ |
95 |
$ |
103 |
$ |
103 |
$ |
101 |
$ |
92 |
Unit milling costs (C$/t) |
$ |
37 |
$ |
33 |
$ |
33 |
$ |
33 |
$ |
34 |
$ |
33 |
$ |
30 |
$ |
30 |
$ |
30 |
$ |
30 |
$ |
30 |
$ |
30 |
$ |
30 |
$ |
30 |
$ |
30 |
$ |
33 |
Unit G&A costs (C$/t) |
$ |
49 |
$ |
47 |
$ |
47 |
$ |
46 |
$ |
48 |
$ |
42 |
$ |
36 |
$ |
33 |
$ |
34 |
$ |
34 |
$ |
35 |
$ |
36 |
$ |
39 |
$ |
39 |
$ |
39 |
$ |
43 |
Total unit costs (C$/t) |
$ |
214 |
$ |
195 |
$ |
188 |
$ |
188 |
$ |
211 |
$ |
200 |
$ |
177 |
$ |
159 |
$ |
165 |
$ |
175 |
$ |
173 |
$ |
174 |
$ |
187 |
$ |
187 |
$ |
183 |
$ |
179 |
Total cash costs (US$/oz) |
$ |
478 |
$ |
464 |
$ |
460 |
$ |
542 |
$ |
527 |
$ |
370 |
$ |
375 |
$ |
418 |
$ |
375 |
$ |
304 |
$ |
475 |
$ |
449 |
$ |
438 |
$ |
408 |
$ |
460 |
$ |
442 |
Mine-site AISC (US$/oz) |
$ |
779 |
$ |
771 |
$ |
818 |
$ |
941 |
$ |
899 |
$ |
566 |
$ |
531 |
$ |
668 |
$ |
573 |
$ |
437 |
$ |
651 |
$ |
592 |
$ |
497 |
$ |
469 |
$ |
465 |
$ |
442 |
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sustaining capex (US$ M) |
$ |
41 |
$ |
43 |
$ |
48 |
$ |
45 |
$ |
49 |
$ |
44 |
$ |
40 |
$ |
52 |
$ |
48 |
$ |
42 |
$ |
35 |
$ |
30 |
$ |
14 |
$ |
15 |
$ |
1 |
$ |
0 |
Growth capex (US$ M) |
$ |
36 |
$ |
82 |
$ |
139 |
$ |
117 |
$ |
120 |
$ |
21 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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