Alamos Gold Inc. (
TSX:AGI;
NYSE:AGI) (“Alamos” or the “Company”) today provided 2021
production and operating guidance.
“This has been a transformational year for Alamos.
Operationally, we continue to execute and remain on track to
achieve our 2020 production, cost, and capital guidance. We also
delivered on several significant catalysts which have solidified
our strong outlook. We completed the lower mine expansion at
Young-Davidson, transitioned to strong free cash flow generation in
the third quarter, and began construction on the high-return La
Yaqui Grande project and Phase III Expansion at Island Gold,” said
John A. McCluskey, President and Chief Executive Officer.
“The ramp up of mining rates at Young-Davidson is expected to
drive a 17% increase in our production in 2021. Young-Davidson will
also be a key driver of strong ongoing free cash flow generation
supporting both higher returns to shareholders and the reinvestment
into high-return growth opportunities at Island Gold and Mulatos.
These investments form a key part of our balanced approach to
capital allocation which will provide further growth and returns
that are sustainable over the long term,” Mr. McCluskey added.
2020 Operational
Update
- Production and costs
remain on track to achieve full year 2020
guidance
2021
Guidance Overview
- Strong production growth with guidance
of
470,000
to 510,000
ounces of
gold: a 17% increase from 2020 guidance
(based on the mid-point), driven by significantly higher production
at Young-Davidson with the completion of the lower mine expansion
in July 2020
- Lower costs with total cash cost
guidance of $710
to $760
per ounce: an 8% decrease from
2020 guidance (based on the mid-point) reflecting lower costs at
Young-Davidson as mining rates continue to ramp up from the new
lower mine infrastructure. This includes approximately $25 per
ounce of COVID-19 testing and other related health and safety costs
across all operations
- All-in sustaining cost
(“AISC”) guidance of
$1,025 to
$1,075 per
ounce: consistent with 2020 guidance with
lower total cash costs offset by higher sustaining capital at
Mulatos, which includes $50 per ounce globally related to El Salto
pre-stripping activities
- Total capital
guidance,
excluding capitalized
exploration, of $320
to $350
million: an increase from 2020
guidance of $185 to $215 million primarily reflecting higher
capital spending on internal growth initiatives including La Yaqui
Grande and the Phase III Expansion at Island Gold. This total
capital budget includes:
- Sustaining capital guidance
of $110 to
$125 million: a
temporary increase from guidance of $80 to $95 million in 2020 to
complete $25 million of stripping activities at the El Salto
portion of the Mulatos pit
- Growth capital guidance
of $210
to $225
million: an increase from the 2020 guidance of
$105 to $120 million in 2020 reflecting the ramp up of construction
of La Yaqui Grande and the Phase III Expansion at Island Gold. This
is partly offset by lower growth capital at Young-Davidson with the
completion of the lower mine expansion in 2020
- Exploration budget increased to
$50
million: up from the initial 2020
exploration budget of $36 million, reflecting increased spending at
Island Gold, Mulatos, and Lynn Lake, as well as Young-Davidson,
with improved access for underground drilling from the lower
mine
- Strong ongoing free cash
flow: La Yaqui Grande and the Phase III
Expansion at Island Gold are expected to be self-funded by their
respective operations at current gold prices with Young-Davidson
providing strong ongoing free cash flow generation
- Increased dividend of US$0.02 per share
(US$0.08 annually) to be paid out
later this month, representing a 33% increase from the previous
quarter: with the higher dividend rate supported by the
Company’s strong free cash flow outlook at current gold prices
Outlook to 2025
- Production growth to
approximately 600,000
ounces per year from existing operating mines in
2025: driven by low cost growth at Island
Gold with the completion of the Phase III Expansion
- Additional growth potential to approximately 750,000
ounces per year in 2025: incorporating growth from the
Lynn Lake project with permitting expected to be completed in
2022
- Declining cost profile: the completion of La
Yaqui Grande and the Phase III Expansion are expected to drive
all-in sustaining costs lower to approximately $800 per ounce by
2025
- Fully funded organic growth:
the Company’s growth initiatives are expected to be funded
internally given its strong balance sheet and free cash flow
outlook
2021
Guidance
|
|
2021 Guidance |
2020 Revised Guidance (4) |
|
Young-Davidson |
Island Gold |
Mulatos |
Other (2) |
Total |
Total |
Gold
production (000’s ounces) |
190-205 |
130-145 |
150-160 |
|
470-510 |
405-435 |
Cost of sales,
including amortization
(in millions)(3) |
$255 |
$108 |
$177 |
— |
$540 |
$487 |
Cost of sales,
including amortization ($ per
ounce)(3) |
$1,290 |
$785 |
$1,145 |
— |
$1,105 |
$1,160 |
Total cash costs ($ per ounce)(1) |
$790-840 |
$430-480 |
$840-890 |
— |
$710-760 |
$780-820 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
— |
$1,025-1,075 |
$1,030-1,070 |
Mine-site all-in sustaining costs ($ per
ounce)(1),(2) |
$1,000-1,050 |
$750-800 |
$1,060-1,110 |
— |
|
|
Amortization costs ($ per ounce)(1) |
$475 |
$330 |
$280 |
— |
$370 |
$365 |
Corporate & Administrative (in millions) |
|
|
|
|
$20 |
$20 |
Capital expenditures (in millions) |
|
|
|
|
|
|
Sustaining capital(1) |
$40-45 |
$40-45 |
$30-35 |
— |
$110-125 |
$80-95 |
Growth capital(1) |
$25-30 |
$80-85 |
$95-100 |
$10 |
$210-225 |
$105-120 |
Total sustaining & growth
capital(1) |
$65-75 |
$120-130 |
$125-135 |
$10 |
$320-350 |
$185-215 |
Capitalized exploration(1) |
$7 |
$20 |
- |
$7 |
$34 |
$20 |
Total capital
expenditures(1) |
$72-82 |
$140-150 |
$125-135 |
$17 |
$354-384 |
$205-235 |
(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) 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.(3) 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.(4) 2020 guidance
was revised on July 29, 2020 reflecting COVID-19 related temporary
operational suspensions & delays during Q2 2020.
The 2021 production forecast and operating cost
estimates are based on the following assumptions:
Foreign Exchange Rate |
2021 |
Operating Sites Foreign Currency Exposure |
Change |
Free Cash Flow Sensitivity |
USD/CAD |
$0.75:1 |
95% |
$0.05 |
~$30 million |
MXN/USD |
21.0:1 |
40% |
1.00 |
~$3 million |
Current foreign exchange and gold hedging
commitments
The Company has entered into the following foreign exchange and
short term hedging arrangements to date:
- Canadian
dollar: approximately 8% of Canadian
dollar-denominated operating and capital costs for 2021 have been
hedged, 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.
- Mexican
peso: approximately 45% of Mexican peso-denominated
operating and capital costs in 2021 have been hedged, ensuring a
minimum MXN/USD foreign exchange rate of 21.0:1 and allowing the
Company to participate in weakness in the MXN/USD up to a rate of
25.4:1.
- Gold collar
contracts: The Company also periodically enters into short
term gold hedging arrangements. Currently, the Company has hedged
31,500 ounces during the first half of 2021, ensuring an average
minimum gold price of $1,730 per ounce and participation up to an
average gold price of $2,070 per ounce.
Gold production and costs are expected to be relatively
consistent on a company-wide basis throughout 2021. Total cash
costs and all-in sustaining costs include approximately $25 per
ounce of COVID-19 testing and other related health and safety costs
across all three operating mines.
Capital spending is expected to be slightly higher during the
first half of the year, reflecting pre-stripping activities at
Mulatos, and trend lower in the second half of the year.
Accordingly, all-in sustaining costs are expected to be slightly
lower in the second half of 2021.
Young-Davidson
Young-Davidson |
|
Q3 YTD 2020 |
2020 Revised
Guidance (4) |
2021
Guidance |
Gold Production |
000 oz |
88 |
135 – 145 |
190 – 205 |
|
|
|
|
|
Cost of Sales(1) |
$/oz |
$1,617 |
$1,490 |
$1,290 |
Total Cash Costs(2) |
$/oz |
$1,145 |
$990-1,030 |
$790-840 |
Mine-site
AISC(2),(3) |
$/oz |
$1,370 |
$1,180-1,220 |
$1,000-1,050 |
|
|
|
|
|
Tonnes of ore processed |
tpd |
5,298 |
4,000-7,500 |
7,500-8,000 |
Grade processed |
g/t Au |
2.01 |
2.35-2.65 |
2.20-2.65 |
Average recovery rate |
% |
92% |
90-92% |
90-92% |
|
|
|
|
|
Sustaining
capital(2) |
$ millions |
$19 |
$30-35 |
$40-45 |
Growth capital(2) |
$ millions |
$63 |
$45-50 |
$25-30 |
Total sustaining & growth
capital(2) (ex. exploration) |
$ millions |
$82 |
$75-85 |
$65-75 |
|
|
|
|
|
Capitalized
exploration(2) |
$ millions |
- |
$1 |
$7 |
(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 2020 MD&A for a
description and calculation of these measures.(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) 2020 guidance was revised on
July 29, 2020 reflecting COVID-19 related temporary operational
suspensions & delays during Q2 2020.
Gold production at Young-Davidson is expected to increase by 41%
in 2021 (based on the mid-point of guidance) driven by
significantly higher mining rates following the completion of the
lower mine expansion in July 2020. Underground mining rates are
expected to ramp up from 7,500 tpd early in 2021 to design rates of
8,000 tpd in the second half of the year. Grades mined and
processed are expected to increase through the year, ranging
between 2.20 and 2.65 grams per tonne of gold (“g/t Au”).
Increasing mining rates and grades are expected to drive gold
production higher through the year.
Total cash costs and mine-site all-in sustaining costs are
expected to decrease 19% and 15% respectively from 2020 (based on
the mid-point of guidance), reflecting higher mining rates and
productivity improvements with the transition to the lower mine
infrastructure. Costs are expected to decrease through the year
reflecting the above noted increasing mining rates and grades.
Capital spending in 2021 (excluding exploration) is expected to
be between $65 and $75 million, down significantly from 2020. The
2021 budget includes $14 million of spending on the new tailings
facility (“TIA 1”) which will be utilized for the remaining mine
life at Young-Davidson. Construction of TIA 1 is expected to be
completed by the end of 2021.
Capital spending is expected to decrease in the second half of
2021 with approximately 55% of the capital budget planned for the
first half of the year. With the completion of the lower mine
expansion in 2020 and TIA 1 in 2021, capital spending is expected
to continue to trend lower over the next few years to a long-term
rate of $40 to 50 million per year.
Between higher production, lower costs and lower capital,
Young-Davidson is expected to generate record mine-site free cash
flow of approximately $120 million in 2021 at an $1,800 per ounce
gold price.
Island Gold
Island Gold |
|
Q3 YTD 2020 |
2020 Revised
Guidance (4) |
2021
Guidance |
Gold Production |
000 oz |
98 |
130-140 |
130-145 |
|
|
|
|
|
Cost of Sales(1) |
$/oz |
$806 |
$840 |
$785 |
Total Cash Costs(2) |
$/oz |
$438 |
$480-520 |
$430-480 |
Mine-site
AISC(2),(3) |
$/oz |
$653 |
$740-780 |
$750-800 |
|
|
|
|
|
Tonnes of ore processed |
tpd |
1,026 |
1,150-1,200 |
1,200 |
Grade processed |
g/t Au |
11.52 |
10.0-11.0 |
9.0-11.0 |
Average recovery rate |
% |
97% |
96-97% |
96-97% |
|
|
|
|
|
Sustaining
capital(2) |
$ millions |
$21 |
$35-40 |
$40-45 |
Growth capital(2) |
$ millions |
$25 |
$35-40 |
$80-85 |
Total sustaining & growth
capital(2) (ex. exploration) |
$ millions |
$46 |
$70-80 |
$120-130 |
|
|
|
|
|
Capitalized exploration(2) |
$ millions |
$8 |
$15 |
$20 |
(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 2020 MD&A for a
description and calculation of these measures.(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) 2020 guidance was revised on
July 29, 2020 reflecting COVID-19 related temporary operational
suspensions & delays during Q2 2020.
Gold production is expected to be in the same range as 2020
guidance and consistent with the parameters outlined in the Phase
III Expansion study released in July. Mining rates are expected to
be consistent with the 2020 budget and remain stable through the
year. Grades mined are expected to be above the Mineral Reserve
grade in the first quarter and trend lower through the year to
average slightly above 10 g/t Au for the full year. As a result,
approximately 60% of full year production is expected to be in the
first half of 2021.
Total cash costs and mine-site all-in sustaining costs are also
expected to be similar to 2020 guidance and consistent with the
Phase III Expansion study.
Capital spending at Island Gold (excluding exploration) is
expected to be between $120 and $130 million in 2021, consistent
with the Phase III Expansion study. As planned, this represents an
increase from the 2020 budget, reflecting the ramp up of spending
on the Phase III Expansion. This includes advancing detailed
engineering on the shaft infrastructure and paste plant,
procurement of long lead time items, and starting construction on
the hoist house and shaft sinking setup. A number of additional
surface and underground infrastructure projects are also expected
to be completed in 2021 to support the expanding operation. These
include the expansion of the tailings facility, the underground
workshop, and additional camp improvements.
Mulatos District
Mulatos District |
|
Q3 YTD 2020 |
2020 Revised
Guidance (5) |
2021
Guidance |
Gold Production |
oz |
120 |
140-150 |
150-160 |
|
|
|
|
|
Cost of Sales(1) |
$/oz |
$1,075 |
$1,135 |
$1,145 |
Total Cash Costs(2) |
$/oz |
$772 |
$840-880 |
$840-890 |
Mine-site
AISC(2),(3) |
$/oz |
$928 |
$940-980 |
$1,060-1,110 |
|
|
|
|
|
Tonnes of ore stacked |
tpd |
19,484 |
22,000 |
21,000 |
Grades stacked |
g/t Au |
1.17 |
0.9-1.1 |
0.8-1.2 |
Combined Recovery Ratio |
% |
59% |
60% |
60% |
|
|
|
|
|
Sustaining capital(2) |
$ millions |
$15 |
$15-20 |
$30-35 |
Growth
capital(2),(4) |
$ millions |
$6 |
$15-20 |
$95-100 |
Total sustaining & growth
capital(2),(4) (ex.
exploration) |
$ millions |
$21 |
$30-40 |
$125-135 |
|
|
|
|
|
Capitalized exploration(2) |
$ millions |
$1 |
- |
- |
(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 2020 MD&A for a
description and calculation of these measures.(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) Growth capital guidance
of $95-100 million in 2021 is all related to construction of La
Yaqui Grande.(5) 2020 guidance was revised on July 29, 2020
reflecting COVID-19 related temporary operational suspensions &
delays during Q2 2020.
The Mulatos District is expected to produce 150,000 to 160,000
ounces of gold in 2021, consistent with long term guidance and up
7% from 2020 guidance (based on the mid-point). Cerro Pelon, the
Mulatos pit, and surface stockpiles will be the main contributors
to production in 2021. Grades stacked are expected to range between
0.8 g/t Au and 1.2 g/t Au and trend lower through the year
resulting in higher production during the first half of the
year.
Total cash costs are expected to be consistent with 2020
guidance and stable throughout 2021. Mine-site all-in sustaining
costs are expected to increase from 2020 and be significantly
higher during the first half of 2021, reflecting $25 million of
spending to complete pre-stripping of the El Salto area of the
Mulatos pit. This represents the majority of the 2021 sustaining
capital budget. El Salto is expected to start contributing ore
during the second half of the year.
Capital spending across the Mulatos District is expected to be
between $125 and $135 million in 2021. This is an increase from
2020 reflecting higher sustaining capital to complete the above
noted pre-stripping activities at El Salto and $95 to $100 million
of growth capital for construction of La Yaqui Grande. Development
of La Yaqui Grande started in the third quarter of 2020 with
pre-stripping of the open pit area commencing in the fourth
quarter. The focus in 2021 will be ongoing stripping activities,
and construction of the camp facilities, heap leach facility and
crushing circuit. La Yaqui Grande remains on track to begin ramping
up low-cost production in the third quarter of 2022.
2021 Global
Operating and Development Capital
Budget
|
|
2021
Guidance |
2020
RevisedGuidance (2) |
|
Sustaining Capital(1) |
Growth
Capital(1) |
Total |
Total |
Operating Mines (in millions) |
|
|
|
|
Young-Davidson |
$40-45 |
$25-30 |
$65-75 |
$75-85 |
Island Gold |
$40-45 |
$80-85 |
$120-130 |
$70-80 |
Mulatos |
$30-35 |
$95-100 |
$125-135 |
$30-40 |
Total – Operating Mines |
$110-125 |
$200-215 |
$310-340 |
$175-205 |
Development Projects (in millions) |
|
|
|
|
|
Lynn Lake |
- |
$6 |
$6 |
$3 |
Other |
- |
$4 |
$4 |
$7 |
Total – Development Projects |
- |
$10 |
$10 |
$10 |
Capitalized Exploration(1) (in
millions) |
|
|
|
|
|
Young-Davidson |
- |
$7 |
$7 |
$1 |
Island Gold |
- |
$20 |
$20 |
$15 |
Mulatos |
- |
- |
- |
- |
Lynn Lake |
- |
$7 |
$7 |
$4 |
Total – Capitalized
Exploration(1) |
- |
$34 |
$34 |
$20 |
Total Consolidated Budget |
$110-125 |
$244-259 |
$354-384 |
$205-235 |
(1) Refer to the "Non-GAAP Measures and Additional
GAAP" disclosure at the end of this press release and the Q3 2020
MD&A for a description and calculation of these
measures.(2) 2020 guidance was revised on July 29, 2020
reflecting COVID-19 related temporary operational suspensions &
delays during Q2 2020.
2021
Capital Budget for Development Projects
Capital spending on the Company’s development projects,
excluding exploration, is expected to total $10 million. This
includes $6 million focused on advancing the Lynn Lake project
through the permitting process with the majority of the remainder
focused on permitting and community engagement at Esperanza.
Additionally, the Company expects to spend $34 million in
capitalized exploration, of which the majority is earmarked for
Island Gold, followed by Young-Davidson and Lynn
Lake.
Lynn Lake Development Budget
The 2021 capital budget for Lynn Lake is $13 million, including
$6 million for development activities and $7 million for
exploration. Development spending will be focused on ongoing
environmental baseline work to support permitting of the project,
community engagement, and other engineering and geotechnical work.
The Environmental Impact Study (“EIS”) for the project was
submitted in the second quarter of 2020, initiating a permitting
process which is expected to take approximately two years. This
would be followed by approximately two years of construction
assuming a positive construction decision.
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.
The Company has met all the regulatory requirements and
conditions for the concessions to be renewed and reasonably
expected the renewal by the expiration date. The communities local
to the Kirazlı project remain supportive. As such, the Company is
working with the Turkish Department of Energy and Natural Resources
on securing the renewal of the mining concessions which will allow
for a resumption of construction activities.
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.
Holding costs for the Company’s Turkish projects are expected to
total approximately $0.7 million per month.
2021
Exploration Budget
The 2021 global exploration budget has increased to $50 million
from the initial 2020 budget of $36 million. The increase reflects
larger exploration programs at each of Island Gold, Mulatos,
Young-Davidson and Lynn Lake. Island Gold remains the primary focus
and continues to account for the largest portion of the budget with
$25 million planned for 2021. This is followed by a $9 million
budget at Mulatos and $7 million budgeted at each of Young-Davidson
and Lynn Lake. Approximately 70% of the 2021 budget will be
capitalized.
Island Gold
A total of $25 million has been budgeted in 2021 for surface and
underground exploration at Island Gold, up from the initial 2020
budget of $21 million. The focus remains on continuing to define
new near mine Mineral Resources across the two-kilometre long
Island Gold Main Zone, as well as advancing and evaluating several
regional targets. The 2021 exploration budget includes 27,500
metres (“m”) of surface directional drilling, 24,000 m of
underground directional drilling, 28,000 m of underground
exploration drilling, and 900 m of underground exploration
development to extend drill platforms on the 620, 790, and
840-levels.
Surface and underground exploration drilling completed in 2020
was successful in further extending high grade gold mineralization
laterally and down-plunge of the Island Gold Deposit. This included
the best surface exploration hole to date, MH25-04 grading 28.97
g/t Au (26.89 g/t cut) over 21.76 m true width, and MH25-03 grading
15.38 g/t Au (14.19 g/t cut) over 15.02m (both previously
reported). These intercepts have extended high-grade gold
mineralization over significantly greater widths in Island East up
to 100 m down-plunge from the nearest Inferred Mineral Resource
block (719,800 ounces grading 18.74 g/t Au (1.2 million tonnes) as
of December 31, 2019).
The 2021 surface and underground exploration drilling program
will continue to test the lateral and down-plunge extensions of
Island Main, West, and East.
A significantly larger regional exploration program including
25,000 m of drilling is also planned in 2021. The focus will be on
evaluating and advancing exploration targets outside the main
Island Gold Mine area on the 9,511-hectare Island Gold
property.
Mulatos
A total of $9 million has been budgeted at Mulatos for
exploration in 2021. This includes 19,400 m of drilling focused on
the Mulatos near-mine area, and regional targets including
Carricito and Halcon.
Several regional exploration targets have been identified from a
property-wide VTEM geophysical survey that was completed in late
2018. A focus of the 2021 regional exploration program will be to
further evaluate these targets through systematic mapping,
sampling, and ground geophysics with the objective of defining
drill targets.
Young-Davidson
A total $7 million has been budgeted for exploration at
Young-Davidson in 2021. This represents the first significant
exploration program at Young-Davidson since 2011 with the focus
over the last several years on completing the lower mine expansion
and with improved access to drill from underground at depth.
The 2021 program includes 13,000 m of underground exploration
drilling, 10,000 m of underground directional drilling, 3,000 m of
surface drilling, and 560 m of underground exploration development
to extend drill platforms on the 9220-level. The focus of the
underground exploration drilling program will be to expand Mineral
Reserves and Mineral Resources in five target areas that have been
identified within proximity to existing underground infrastructure.
The objective of the underground directional drilling program will
be to utilize drill platforms that have been established within the
lower mine infrastructure to target mineralization down-plunge of
the Mineral Reserves and Resources, beyond the extent of any
previous exploration drilling.
In addition, 3,000 m of surface drilling is planned to test
near-surface targets to both the east and west along strike from
Young-Davidson.
Lynn Lake
A total of $7 million, including 17,000 m of drilling, has been
budgeted for exploration at the Lynn Lake project in 2021. Testing
exploration targets in proximity to the Gordon and MacLellan
deposits will remain the primary focus with the goal of adding to
Mineral Resources. The exploration program will also further
evaluate the Burnt Timber and Linkwood deposits, including updating
the geological models, and defining and testing exploration targets
with the objective of expanding Mineral Resources at both deposits.
The Burnt Timber and Linkwood deposits contained an Inferred
Mineral Resource of 1.6 million ounces grading 1.1 g/t Au (44
million tonnes) as of December 31, 2019 and represent potential
upside to the 2017 Feasibility Study.
The other key area of focus for 2021 is the continued evaluation
and advancement of a pipeline of prospective exploration targets
within the 58,500-hectare Lynn Lake Property, building on the
exploration work completed in 2020.
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.
Parsons |
|
Vice President, Investor
Relations |
|
(416) 368-9932 x 5439 |
|
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this release.
Cautionary Note
This news release contains or incorporates by
reference “forward-looking statements” and “forward-looking
information” as defined under applicable Canadian and U.S.
securities laws which are referred to herein as “forward
looking-looking statements”. All statements, other than statements
of historical fact, which address events, results, outcomes or
developments that the Company expects to occur are, or may be
deemed to be, forward-looking statements and are generally, but not
always, identified by the use of forward-looking terminology such
as "expect", “is expected”, “outlook”, “on track”, “continue”,
“ongoing”, "will", “believe”, “anticipate”, "intend", "estimate",
"forecast", "budget", “target”, “plan” or variations of such words
and phrases and similar expressions or statements that certain
actions, events or results “may", “could”, “would”, "might" or
"will" be taken, occur or be achieved or the negative connotation
of such terms.
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); operations may be exposed to new diseases, epidemics
and pandemics, including the effects and potential effects of the
global COVID-19 widespread pandemic; the impact of the COVID-19
pandemic on the broader market and the trading price of the
Company’s shares; provincial, state and federal orders or mandates
(including with respect to mining operations generally or auxiliary
businesses or services required for the Company’s operations) in
Canada, Mexico, the United States and Turkey; the duration of
regulatory responses to the COVID-19 pandemic; government and the
Company’s attempts to reduce the spread of COVID-19 which may
affect many aspects of the Company’s operations including the
ability to transport personnel to and from site, contractor and
supply availability and the ability to sell or deliver gold dore
bars; fluctuations in the price of gold or certain other
commodities such as, diesel fuel, natural gas and electricity;
changes in foreign exchange rates (particularly the Canadian
dollar, U.S. dollar, Mexican peso and Turkish Lira); the impact of
inflation; changes in the Company’s credit rating; 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 Kirazlı project or those that may be related to future
developments and expansion at Island Gold 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
All Mineral Resource and Reserve estimates
included in this Release or documents referenced in it 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.
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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