Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
and year ended December 31, 2020.
“We closed 2020 on a strong note, meeting full
year guidance with our highest production for the year in the
fourth quarter. This was driven by another record quarter at Island
Gold and significantly higher production at Young-Davidson
following the completion of the lower mine expansion. With ongoing
strong margins we had another solid quarter financially, generating
$58 million of free cash flow,” said John A. McCluskey, President
and Chief Executive Officer.
“We are expecting production to grow 15% in
2021, supporting strong ongoing free cash flow generation while we
reinvest in high-return organic growth projects. This includes the
Phase III Expansion at Island Gold where we just added another
million ounces of combined high-grade Mineral Reserves and
Resources as the value of the operation continues to grow.
Reflecting the strong quarter and outlook, we are pleased to
announce a further 25% increase in our dividend marking our second
consecutive quarterly increase,” Mr. McCluskey added.
Fourth Quarter 2020
- Generated quarterly free cash flow1
of $58.0 million, the second consecutive quarter with strong free
cash flow, driven by higher margins at all operations
- Announced a 25% increase in the
dividend to US$0.025 per share to be paid in the first quarter of
2021, bringing the annual dividend to US$0.10 per share and marking
the second consecutive quarterly increase
- Production increased to 120,400
ounces of gold, the highest quarterly total in 2020, driven by
strong performances at Young-Davidson and Island Gold
- Young-Davidson produced 48,000
ounces of gold and generated record mine-site free cash flow1 of
$30.8 million, driven by record mining rates of 7,651 tonnes per
day ("tpd") from the new lower mine infrastructure, exceeding year
end targets
- Island Gold produced a record
41,200 ounces of gold and generated mine-site free cash flow1 of
$31.8 million
- Sold 121,831 ounces of gold at an
average realized price of $1,860 per ounce for record revenues of
$226.6 million
- Generated record cash flow from
operating activities of $131.4 million ($126.5 million, or $0.32
per share, before changes in working capital1), a 69% increase from
the fourth quarter of 2019
- Consolidated total cash costs1 of
$733 per ounce and all-in sustaining costs ("AISC")1 of $1,030 per
ounce were below and at the low end of revised full year guidance,
respectively. As well, cost of sales per ounce of $1,115 were below
guidance
- Record adjusted net earnings1 of
$58.2 million, or $0.15 per share1, which includes adjustments for
unrealized foreign exchange gains of $16.4 million recorded within
deferred taxes and foreign exchange, and other one-time gains of
$2.3 million. Adjusted net earnings increased 81% compared to the
fourth quarter of 2019
- Realized record net earnings of
$76.9 million, or $0.20 per share
- Ended the quarter with cash and
cash equivalents of $220.5 million and equity securities of $43.7
million. In October 2020, the Company repaid $100.0 million drawn
earlier in the year on its credit facility and is debt free
- Acquired Trillium Mining Corp.
(“Trillium”) for cash consideration of $19.5 million, increasing
its land package adjacent to, and along strike from the Island Gold
deposit, by approximately 60%
Full Year 2020
- Produced 426,800 ounces of gold,
meeting revised production guidance. The Company met or exceeded
production guidance at all three of its operations
- Implemented extensive health and
safety measures in response to COVID-19, including testing of all
employees and contractors at its three operations
- Island Gold produced 139,000
ounces, driving record mine-site free cash flow1 of $101.4
million
- Successfully completed the lower
mine expansion at Young-Davidson with the commissioning of the
Northgate shaft and new lower mine infrastructure in July
- Generated free cash flow1 of $122.3
million, reflecting a strong second half performance following the
completion of the lower mine expansion at Young-Davidson, and the
restart of operations at Island Gold and Mulatos which were
impacted by COVID-19 in the second quarter
- Sold 424,325 ounces of gold at an
average realized price of $1,763 per ounce for record revenues of
$748.1 million
- Total cash costs1 of $761 per ounce
were 2% below the low-end of revised cost guidance for the year,
reflecting lower costs at both Island Gold and Mulatos. AISC1 of
$1,046 per ounce were in line with revised guidance. Cost of sales
of $1,136 per ounce were 2% below guidance reflecting lower total
cash costs
- Realized adjusted net earnings1 of
$156.5 million, or $0.40 per share1, an 87% increase compared to
2019. Adjusted net earnings include adjustments for unrealized
foreign exchange losses recorded within both deferred taxes and
foreign exchange of $4.5 million and COVID costs of $6.5 million,
partially offset by other items totaling $1.3 million
- Reported net earnings of $144.2
million, or $0.37 per share
- Record cash flow from operating
activities of $368.4 million ($382.9 million, or $0.98 per share,
before changes in working capital1), a 41% increase from 2019
- Paid $25.6 million in dividends, a
64% increase compared to 2019. In addition, the Company repurchased
1.1 million shares at a cost of $5.5 million, or $4.89 per share,
under its Normal Course Issuer Bid ("NCIB").
- Reported year end 2020 Mineral
Reserves of 9.9 million ounces, up from 9.7 million ounces at the
end of 2019 with additions at Island Gold, Young-Davidson and Lynn
Lake more than offsetting mining depletion. This included an 8%
increase in Mineral Reserves and 40% increase in Inferred Mineral
Resources at Island Gold, for a combined increase of 1.0 million
ounces
- Repurchased a 3% net smelter return
("NSR") royalty payable on the majority of Mineral Reserves and
Resources at Island Gold for cash consideration of $54.8 million.
This reduced the effective royalty rate from 4.4% to 2.2% on
Mineral Reserves
- Reported results of the Island Gold
Phase III Expansion Study, which is expected to drive a 70%
increase in average annual production to 236,000 ounces and a
significant decrease in mine-site AISC to $534 per ounce starting
in 2025
- Commenced construction of the
low-cost, high-return La Yaqui Grande project in Mexico
- Equity securities value increased
to $43.7 million at year end; During the year, sold $9.7 million of
equity securities for a realized gain of $6.6 million, recorded in
retained earnings
(1) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.
Highlight Summary
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
|
2019 |
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$ |
226.6 |
|
$ |
186.0 |
|
$ |
748.1 |
|
$ |
683.1 |
|
Cost of sales (1) |
$ |
135.8 |
|
$ |
136.0 |
|
$ |
482.0 |
|
$ |
521.4 |
|
Earnings from operations |
$ |
81.3 |
|
$ |
41.6 |
|
$ |
227.6 |
|
$ |
126.0 |
|
Earnings before income taxes |
$ |
85.8 |
|
$ |
43.8 |
|
$ |
218.2 |
|
$ |
128.9 |
|
Net earnings |
$ |
76.9 |
|
$ |
38.0 |
|
$ |
144.2 |
|
$ |
96.1 |
|
Adjusted net earnings (2) |
$ |
58.2 |
|
$ |
32.1 |
|
$ |
156.5 |
|
$ |
83.5 |
|
Earnings before interest, depreciation and amortization (2) |
$ |
133.6 |
|
$ |
88.4 |
|
$ |
381.7 |
|
$ |
296.4 |
|
Cash provided by operations before working capital and cash
taxes(2) |
$ |
126.5 |
|
$ |
81.7 |
|
$ |
382.9 |
|
$ |
293.1 |
|
Cash provided by operating activities |
$ |
131.4 |
|
$ |
77.8 |
|
$ |
368.4 |
|
$ |
260.4 |
|
Capital expenditures (sustaining) (2) |
$ |
27.5 |
|
$ |
23.3 |
|
$ |
82.1 |
|
$ |
76.8 |
|
Capital expenditures (growth) (2) (3) |
$ |
41.9 |
|
$ |
43.6 |
|
$ |
151.2 |
|
$ |
169.1 |
|
Capital expenditures (capitalized exploration) (4) |
$ |
4.0 |
|
$ |
6.0 |
|
$ |
12.8 |
|
$ |
17.7 |
|
Operating Results |
|
|
|
|
Gold production (ounces) |
|
120,400 |
|
|
122,100 |
|
|
426,800 |
|
|
494,500 |
|
Gold sales (ounces) |
|
121,831 |
|
|
127,148 |
|
|
424,325 |
|
|
494,702 |
|
Per Ounce Data |
|
|
|
|
Average realized gold price |
$ |
1,860 |
|
$ |
1,463 |
|
$ |
1,763 |
|
$ |
1,381 |
|
Average spot gold price (London PM Fix) |
$ |
1,874 |
|
$ |
1,481 |
|
$ |
1,770 |
|
$ |
1,393 |
|
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$ |
1,115 |
|
$ |
1,070 |
|
$ |
1,136 |
|
$ |
1,054 |
|
Total cash costs per ounce of gold sold (2) |
$ |
733 |
|
$ |
722 |
|
$ |
761 |
|
$ |
720 |
|
All-in sustaining costs per ounce of gold sold (2) |
$ |
1,030 |
|
$ |
972 |
|
$ |
1,046 |
|
$ |
951 |
|
Share Data |
|
|
|
|
Earnings per share, basic and diluted |
$ |
0.20 |
|
$ |
0.10 |
|
$ |
0.37 |
|
$ |
0.25 |
|
Adjusted earnings per share, basic and diluted(2) |
$ |
0.15 |
|
$ |
0.08 |
|
$ |
0.40 |
|
$ |
0.21 |
|
Weighted average common shares outstanding (basic) (000’s) |
|
392,720 |
|
|
391,076 |
|
|
391,675 |
|
|
390,160 |
|
Financial Position (in millions) |
|
|
|
|
Cash and cash equivalents |
|
|
$ |
220.5 |
|
$ |
182.8 |
|
Debt and financing obligations |
|
|
$ |
— |
|
$ |
— |
|
(1) Cost of sales includes mining and processing
costs, royalties, and amortization expense. For the three months
and twelve months ended December 31, 2020, cost of sales also
includes COVID-19 costs of $nil and $6.5 million, respectively (2)
Refer to the “Non-GAAP Measures and Additional GAAP Measures”
disclosure at the end of this press release and associated MD&A
for a description and calculation of these measures(3) Includes
growth capital from operating sites. Excludes the Island Gold
royalty repurchase completed in March 2020 for $54.8 million, and
the acquisition of Trillium Mining Corp for $19.5 million in
December 2020(4) Includes capitalized exploration at Mulatos and
Island Gold
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Gold production (ounces) |
|
|
|
|
Young-Davidson |
|
48,000 |
|
|
48,000 |
|
|
136,200 |
|
|
188,000 |
|
Mulatos |
|
31,200 |
|
|
34,100 |
|
|
150,800 |
|
|
142,000 |
|
Island Gold |
|
41,200 |
|
|
38,600 |
|
|
139,000 |
|
|
150,400 |
|
El Chanate (1) |
|
— |
|
|
1,400 |
|
|
800 |
|
|
14,100 |
|
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
|
48,094 |
|
|
51,694 |
|
|
134,987 |
|
|
188,785 |
|
Mulatos |
|
31,132 |
|
|
34,127 |
|
|
149,724 |
|
|
141,496 |
|
Island Gold |
|
42,605 |
|
|
39,652 |
|
|
139,614 |
|
|
149,746 |
|
El Chanate (1) |
|
— |
|
|
1,675 |
|
|
— |
|
|
14,675 |
|
Cost of sales (in
millions)(2) |
|
|
|
|
Young-Davidson |
$ |
60.8 |
|
$ |
59.4 |
|
$ |
201.3 |
|
$ |
231.1 |
|
Mulatos |
$ |
41.3 |
|
$ |
35.8 |
|
$ |
168.8 |
|
$ |
138.9 |
|
Island Gold |
$ |
33.7 |
|
$ |
36.4 |
|
$ |
111.9 |
|
$ |
129.4 |
|
El Chanate (1) |
$ |
— |
|
$ |
4.4 |
|
$ |
— |
|
$ |
22.0 |
|
Cost of
sales per ounce of gold sold (includes amortization) |
|
|
|
Young-Davidson |
$ |
1,264 |
|
$ |
1,149 |
|
$ |
1,491 |
|
$ |
1,224 |
|
Mulatos |
$ |
1,327 |
|
$ |
1,049 |
|
$ |
1,127 |
|
$ |
982 |
|
Island Gold |
$ |
791 |
|
$ |
918 |
|
$ |
801 |
|
$ |
864 |
|
El Chanate (1) |
$ |
— |
|
$ |
2,627 |
|
$ |
— |
|
$ |
1,499 |
|
Total cash costs per ounce of gold sold
(3) |
|
|
|
|
Young-Davidson |
$ |
792 |
|
$ |
766 |
|
$ |
1,019 |
|
$ |
800 |
|
Mulatos |
$ |
986 |
|
$ |
820 |
|
$ |
816 |
|
$ |
784 |
|
Island Gold |
$ |
481 |
|
$ |
507 |
|
$ |
451 |
|
$ |
495 |
|
El Chanate (1) |
$ |
— |
|
$ |
2,448 |
|
$ |
— |
|
$ |
1,390 |
|
Mine-site
all-in sustaining costs per ounce of gold sold
(3),(4) |
|
|
|
Young-Davidson |
$ |
934 |
|
$ |
1,083 |
|
$ |
1,214 |
|
$ |
1,047 |
|
Mulatos |
$ |
1,426 |
|
$ |
891 |
|
$ |
1,032 |
|
$ |
868 |
|
Island Gold |
$ |
676 |
|
$ |
653 |
|
$ |
660 |
|
$ |
656 |
|
El Chanate (1) |
$ |
— |
|
$ |
2,448 |
|
$ |
— |
|
$ |
1,411 |
|
Capital
expenditures (sustaining, growth and capitalized exploration) (in
millions)(3) |
|
|
Young-Davidson |
$ |
19.5 |
|
$ |
27.0 |
|
$ |
101.7 |
|
$ |
99.9 |
|
Mulatos(5) |
$ |
20.5 |
|
$ |
9.5 |
|
$ |
42.1 |
|
$ |
54.2 |
|
Island Gold (6) |
$ |
26.9 |
|
$ |
24.7 |
|
$ |
80.8 |
|
$ |
68.9 |
|
Other |
$ |
6.5 |
|
$ |
11.7 |
|
$ |
21.5 |
|
$ |
40.6 |
|
(1) El Chanate transitioned to the reclamation
phase of the mine life in the fourth quarter of 2019. Incremental
production is a result of rinsing the leach pad. Gold sales from El
Chanate in 2020 are not included in revenue and cost of sales.(2)
Cost of sales includes mining and processing costs, royalties and
amortization. (3) Refer to the “Non-GAAP Measures and Additional
GAAP Measures” disclosure at the end of this press release and
associated MD&A for a description and calculation of these
measures.(4) For the purposes of calculating mine-site all-in
sustaining costs, the Company does not include an allocation of
corporate and administrative and share based compensation
expenses.(5) Includes capitalized exploration at Mulatos of $0.2
million and $0.9 million for the three and twelve months ended
December 31, 2020 (spending of $1.3 million for the three and
twelve months ended December 31, 2019).(6) Includes capitalized
exploration at Island Gold of $3.8 million and $11.9 million for
the three and twelve months ended December 31, 2020 (spending of
$4.7 million and $16.4 million for the three and twelve months
ended December 31, 2019); 2020 capital expenditures exclude the
Island Gold royalty repurchase for $54.8 million and the
acquisition of Trillium Mining Corp for $19.5 million.
Environment, Social and Governance
Summary Performance
Health and Safety
- Annual recordable injury frequency
rate1 of 2.25, a 28% improvement compared to 2019
- Annual lost time injury frequency
rate1 of 0.14, a 17% improvement compared to 2019
- Performed over
13,000 COVID-19 tests on Alamos employees, contractors and visitors
as part of enhanced workplace safety screening measures
In 2020, the Company improved its health and
safety performance and finished the year with five lost time
injuries (seven in 2019) and 81 recordable injuries (131 in 2019).
Alamos strives to maintain a safe, healthy working environment for
all, with a strong safety culture where everyone is continually
reminded of the importance of keeping themselves and their
colleagues healthy and injury-free. The Company’s overarching
commitment is to have all employees and contractors return Home
Safe Every Day.
The World Health Organization declared COVID-19
a pandemic on March 11, 2020. The Company responded rapidly and
proactively and implemented several initiatives to help protect the
health and safety of our employees, their families and the
communities in which we operate.
Specifically, each mine site activated
established crisis management plans and developed site-specific
plans that have enabled them to meet and respond to changing
conditions associated with COVID-19. The Company has adopted the
advice of public health authorities and is adhering to government
regulations with respect to COVID-19 in the jurisdictions in which
it operates.
The following measures have been instituted across the Company
to prevent the potential spread of the virus:
- Medical screening for all personnel
prior to entry to site for symptoms of COVID-19
- Testing of personnel at all
operating sites prior to starting their work rotation
- Training on proper hand hygiene and
social distancing
- Remote work options have been
implemented for eligible employees
- Social distancing practices have
been implemented for all meetings, huddles and transportation
- Mandatory use of personal protective
equipment for employees where social distancing is not
practicable
- Rigid camp and site hygiene
protocols have been instituted and are being followed
- Elimination of all non-essential
business travel
- Required 14-day quarantine for any
employees returning from out of country travel
- In addition,
since the COVID-19 pandemic began the Company’s teams in Canada,
Mexico, and Turkey have donated their time, medical supplies, and
funds to help combat the effects and spread of the virus
COVID 19 - Impact on Operations
In order to protect nearby communities and align
with government requirements, two of the Company's mines were
temporarily suspended earlier in 2020, but resumed normal
operations during the second quarter. During the temporary
suspensions, indirect production costs that exceeded normal
operating capacity were expensed as incurred and not included in
the inventory valuation. The Company identified indirect production
costs of $5.4 million that were directly expensed as COVID-19 costs
as incurred in the second quarter of 2020 and not included in
inventory. All operating costs incurred subsequent to the mine
sites returning to planned operating levels have been included in
mining and processing costs. As a result, there were no amounts
classified as COVID-19 costs after June 30, 2020.
Since the pandemic began, operations have
continued to incur additional costs related to testing of
personnel, lodging and transportation, which have been included in
mining and processing costs rather than COVID-19 costs after June
30, 2020. These incremental costs have increased total cash costs
globally by approximately $25 per ounce and are expected to be
incurred throughout 2021.
Environment
- Zero significant environmental
incidents, consistent with 2019
- Announced the
Phase III expansion of Island Gold which is anticipated to reduce
life of mine greenhouse gas (GHG) emissions by 35% relative to the
current operation
- Advanced
construction of the powerline which will connect the Mulatos mine
to grid power, which will eliminate the need for site diesel power
generation and reduce annual mine GHG emissions by 12%
- Submitted the Environmental Impact
Statement for Lynn Lake and advanced project permitting
In 2020, the Company’s mine sites operated in
compliance with applicable environmental regulations, with the
exception of two minor spills that triggered reporting to external
agencies. Both incidents were addressed as per internal response
procedures with no residual impacts. In addition to existing
management measures to minimize and mitigate its environmental
impacts, Alamos took steps in 2020 to improve its understanding of
the transition and physical risks presented by climate change that
could potentially affect operating sites and projects. This
analysis will play an important role in the Company’s strategic
planning, decision making and enterprise risk management.
Community
- Donated time,
medical supplies, food supplies and funds across all operations and
projects to help combat the effects and spread of COVID-19 in local
communities
- Awarded the
prestigious Ethics and Values in Industry Award by the Industrial
Chambers Confederation of Mexico (CONCAMIN), recognizing
exceptional performance in corporate social responsibility by
Alamos Gold’s subsidiary Minas de Oro Nacional
- Received
recognition for Mulatos and El Chanate as Socially Responsible
Mining Companies by CEMEFI, the Mexican Center for Philanthropy and
the Alliance for Corporate Responsibility; the 12th consecutive
year Alamos has been recognized with this award
- Published
Economic Benefits Assessment reports for Young-Davidson and Island
Gold mines, providing an overview of each mine’s economic value and
community benefits in the regions they impact. Copies are available
on the Company’s website (www.alamosgold.com)
- The Company in
partnership with Marcel Colomb First Nation (MCFN) launched a Youth
Development Project, with support from the Manitoba Mineral
Development Fund
Alamos believes that excellence in
sustainability provides a net benefit to all stakeholders.
Throughout 2020 the Company continued to engage with local
communities and offer support during the COVID-19 pandemic. The
team at the Mulatos mine worked with local stakeholders to develop
a COVID-19 Community Action Plan aimed at the prevention, response,
management and monitoring of COVID-19 within the local community.
The team at the Kirazlı project worked with village Mukhtars to
donate medical supplies to local clinics, and provided digital
tablets to local students to ensure they were able to continue
their education virtually and undisrupted while required to stay
home. Alamos engaged in ongoing dialogue with host communities to
understand local challenges, priorities and expectations of the
Company.
Governance and Disclosure
- Published a
Sustainability Policy, Human Rights Policy and Supply Chain Policy;
and updated the Company’s Anti-Bribery, Anti-Corruption and
Anti-Competition Policy
- Received
independent assurance over the Company’s inaugural Responsible Gold
Mining Principles ("RGMP") Progress Report
- Advanced steps
to adopt the recommendations of the Task Force on Climate-related
Financial Disclosures ("TCFD")
- Top quartile
ranking in 2020 Globe and Mail Board Games
Alamos maintains the highest standards of
corporate governance to ensure that corporate decision-making
reflects its values, including the Company’s commitment to
sustainable development. In 2020 the Company finalized new
corporate policies to strengthen its governance and approach to
managing business activities responsibly. The Company also advanced
its implementation of the Responsible Gold Mining Principles,
developed by the World Gold Council as a framework that sets clear
expectations as to what constitutes responsible gold mining. In
addition to the Company’s inaugural RGMP Progress Report, in 2020
Alamos published expanded environmental, social and governance
("ESG") disclosures within its annual ESG Report, Conflict-Free
Gold Report, and response to the Investor Mining & Tailings
Safety Initiative. Copies are available on the Sustainability
section of the Company’s website (www.alamosgold.com).
(1) Frequency rate is calculated as incidents per 200,000 hours
worked.
Outlook and Strategy
2021 Guidance |
|
Young-Davidson |
Island Gold |
Mulatos |
Other (2) |
Total |
Gold
production (000’s ounces) |
190 - 205 |
130 - 145 |
150 - 160 |
|
470 - 510 |
Cost of sales, including amortization (in
millions)(4) |
$255 |
$108 |
$177 |
— |
$540 |
Cost of sales,
including amortization ($ per
ounce)(4) |
$1,290 |
$785 |
$1,145 |
— |
$1,105 |
Total cash costs ($ per ounce)(1) |
$790 - $840 |
$430 - $480 |
$840 - $890 |
— |
$710 - $760 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
|
$1,025 - $1,075 |
Mine-site all-in sustaining costs ($ per
ounce)(1)(3) |
$1,000 - $1,050 |
$750 - $800 |
$1,060 - $1,110 |
— |
|
Amortization costs ($ per ounce)(1) |
$475 |
$330 |
$280 |
— |
$370 |
Capital expenditures (in millions) |
|
|
|
|
|
Sustaining capital(1) |
$40 - $45 |
$40 - $45 |
$30 - $35 |
$— |
$110 - $125 |
Growth capital(1) |
$25 - $30 |
$80 - $85 |
$95 - $100 |
$10 |
$210 - $225 |
Total Sustaining and Growth
Capital(1) |
$65 - $75 |
$120 - $130 |
$125 - $135 |
$10 |
$320 - $350 |
Capitalized exploration(1) |
$7 |
$20 |
$— |
$7 |
$34 |
Total capital expenditures and capitalized
exploration(1) |
$72 - $82 |
$140 - $150 |
$125 - $135 |
$17 |
$354 - $384 |
(1) Refer to the "Non-GAAP Measures and
Additional GAAP" disclosure at the end of this press release and
associated MD&A for a description of these measures.(2)
Includes growth capital and capitalized exploration at the
Company's development projects (Turkey, Lynn Lake, Esperanza and
Quartz Mountain).(3) For the purposes of calculating mine-site
all-in sustaining costs at individual mine sites, the Company does
not include an allocation of corporate and administrative and share
based compensation expenses to the mine sites. (4) Cost of sales
includes mining and processing costs, royalties, and amortization
expense, and is calculated based on the mid-point of guidance.
The Company’s objective is to operate a
sustainable business model that can support growing returns to all
stakeholders over the long-term through growing production,
expanding margins, and increasing profitability. This includes a
balanced approach to capital allocation focused on generating
strong ongoing free cash flow while re-investing in high-return
internal growth opportunities and supporting higher returns to
shareholders.
Despite a challenging environment with COVID-19,
2020 was a transformational year for Alamos. In addition to meeting
revised annual production and cost guidance, the Company executed
on several significant catalysts which have solidified its strong
long-term outlook. This included the completion of the lower mine
expansion at Young-Davidson in July, which drove significant free
cash flow growth in the second half of 2020 and is expected to
drive a 15% increase in consolidated gold production in 2021. In
addition, the Company announced the start of construction on the
high-return La Yaqui Grande project and demonstrated a significant
increase in value of the Island Gold mine through the Phase III
expansion of the operation. With another substantial increase in
high-grade Mineral Reserves and Resources at Island Gold announced
earlier this week, beyond what was incorporated in the Phase III
expansion study, the value of Island Gold continues to grow.
The Company met revised production guidance and
was below the low end of revised total cash cost guidance in 2020.
Combined with a rising gold price, the Company generated free cash
flow of $134 million in the second half of 2020. The Company
expects strong ongoing free cash flow to support higher dividends
while also reinvesting in the high return La Yaqui Grande project
and Phase III expansion at Island Gold. These projects will in turn
drive free cash flow higher and support growing, sustainable
returns to shareholders over the long-term.
Production is expected to grow to between
470,000 to 510,000 ounces of gold in 2021, a 15% increase from 2020
(based on the mid-point of guidance). The increase is expected to
be driven by significantly higher production at Young-Davidson with
the completion of the lower mine expansion. This is also expected
to drive total cash costs lower to between $710 and $760 per ounce,
a 3% decrease from 2020 (based on the mid-point of guidance). This
includes costs of approximately $25 per ounce for COVID-19 testing
and other related health and safety costs budgeted across all
operations. All-in sustaining costs are expected to range between
$1,025 and $1,075 per ounce, which is consistent with 2020,
reflecting the lower total cash costs offset by higher sustaining
capital at Mulatos.
Gold production is expected to be between
120,000 and 125,000 ounces in the first quarter of 2021 at costs
in-line with annual guidance. Gold production and costs are
expected to be relatively consistent on a company-wide basis
throughout 2021.
Total capital spending, including capitalized
exploration, is expected to range between $354 million and $384
million in 2021. The increase from 2020 reflects the investment in
high-return growth projects at Island Gold and Mulatos, as well as
an expanded exploration program at all of the Company's
operations.
Gold production at Young-Davidson is expected to
increase by 45% 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. Total cash costs and
mine-site all-in sustaining costs are expected to decrease 20% and
16%, 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. Combined with
lower capital spending, this is expected to drive record mine-site
free cash flow of approximately $120 million in 2021.
At Island Gold, gold production and total cash
costs are expected to be in the same range as 2020 and consistent
with the parameters outlined in the Phase III Expansion study
released in July, 2020. A total of $25 million has been budgeted
for exploration at Island Gold, a significant increase from $12.9
million spent in 2020. The larger program will follow up on another
extremely successful drilling campaign in 2020 whereby Mineral
Reserves were more than replaced and now total 1.3 million ounces
grading 9.71 grams per tonne of gold ("g/t Au") (4.2 million tonnes
(“mt”)) and Inferred Mineral Resources increased 40% to 3.2 million
ounces with grades also increasing 9% to 14.43 g/t Au (6.9 mt).
The Mulatos District is expected to produce
150,000 to 160,000 ounces of gold in 2021, up 3% from 2020 (based
on the mid-point of guidance). Cerro Pelon, the Mulatos pit, and
surface stockpiles will supply all production in 2021. Mine-site
all-in sustaining costs are expected to increase 5% from 2020 and
are expected to be 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. In the first quarter of 2021, mine-site
free cash flow will be impacted by annual tax payments relating to
2020, which are expected to be approximately $20 million.
The Company submitted its Environmental Impact
Statement ("EIS") for the Lynn Lake project in the second quarter
of 2020 and continues to progress along the anticipated two-year
permitting process. The 2021 capital budget for Lynn Lake is $13
million, including $6 million for development activities to support
the permitting process and $7 million for exploration. The Company
will provide updated guidance for Kirazlı following the concession
renewal.
The 2021 global exploration budget has increased
to $50 million from $25.3 million spent in 2020. 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 as noted above. 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.
The Company's liquidity position remains strong,
ending the year with $220.5 million of cash and cash equivalents,
$43.7 million in equity securities, and no debt. Additionally, the
Company has a $500.0 million undrawn credit facility providing
$720.5 million of liquidity. The Company expects strong ongoing
free cash flow generation in 2021 while funding its high-return
internal growth initiatives.
Fourth Quarter and Year-End 2020
Results
Young-Davidson Financial and Operational
Review
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
|
|
2019 |
|
Gold production (ounces) |
|
48,000 |
|
|
48,000 |
|
|
136,200 |
|
|
|
188,000 |
|
Gold
sales (ounces) |
|
48,094 |
|
|
51,694 |
|
|
134,987 |
|
|
|
188,785 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$ |
89.3 |
|
$ |
75.9 |
|
$ |
239.4 |
|
|
$ |
262.1 |
|
Cost of sales (1) |
$ |
60.8 |
|
$ |
59.4 |
|
$ |
201.3 |
|
|
$ |
231.1 |
|
Earnings from operations |
$ |
28.5 |
|
$ |
16.5 |
|
$ |
38.1 |
|
|
$ |
31.0 |
|
Cash provided by operating
activities |
$ |
50.3 |
|
$ |
38.9 |
|
$ |
101.3 |
|
|
$ |
112.7 |
|
Capital expenditures
(sustaining) (2) |
$ |
6.8 |
|
$ |
16.4 |
|
$ |
26.1 |
|
|
$ |
46.2 |
|
Capital expenditures (growth)
(2) |
$ |
12.7 |
|
$ |
10.6 |
|
$ |
75.6 |
|
|
$ |
53.7 |
|
Mine-site free cash flow
(2) |
$ |
30.8 |
|
$ |
11.9 |
|
$ |
(0.4 |
) |
|
$ |
12.8 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$ |
1,264 |
|
$ |
1,149 |
|
$ |
1,491 |
|
|
$ |
1,224 |
|
Total cash costs per ounce of gold sold (2) |
$ |
792 |
|
$ |
766 |
|
$ |
1,019 |
|
|
$ |
800 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$ |
934 |
|
$ |
1,083 |
|
$ |
1,214 |
|
|
$ |
1,047 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
703,898 |
|
|
644,010 |
|
|
1,956,198 |
|
|
|
2,452,623 |
|
Tonnes of ore mined per day |
|
7,651 |
|
|
7,000 |
|
|
5,345 |
|
|
|
6,720 |
|
Average grade of gold (4) |
|
2.20 |
|
|
2.65 |
|
|
2.24 |
|
|
|
2.56 |
|
Metres developed |
|
3,223 |
|
|
2,925 |
|
|
12,549 |
|
|
|
11,519 |
|
Mill
Operations |
|
|
|
|
Tonnes of ore processed |
|
729,747 |
|
|
622,002 |
|
|
2,181,324 |
|
|
|
2,571,319 |
|
Tonnes of ore processed per day |
|
7,932 |
|
|
6,761 |
|
|
5,960 |
|
|
|
7,045 |
|
Average grade of gold (4) |
|
2.21 |
|
|
2.65 |
|
|
2.08 |
|
|
|
2.46 |
|
Contained ounces milled |
|
51,774 |
|
|
53,043 |
|
|
145,733 |
|
|
|
203,452 |
|
Average recovery rate |
|
91 |
% |
|
92 |
% |
|
92 |
% |
|
|
91 |
% |
(1) Cost of sales includes mining and processing
costs, royalties and amortization.(2) Refer to the “Non-GAAP
Measures and Additional GAAP Measures” disclosure at the end of
this press release and associated MD&A for a description and
calculation of these measures. (3) For the purposes of calculating
mine-site all-in sustaining costs, the Company does not include an
allocation of corporate and administrative and share based
compensation expenses. (4) Grams per tonne of gold ("g/t Au").
Young-Davidson produced 48,000 ounces of gold in
the fourth quarter of 2020, consistent with the same period in
2019, resulting in production of 136,200 ounces for the year.
Production was in line with revised guidance for the year, but a
decrease from 2019, reflecting planned downtime of the Northgate
shaft to complete the tie-in of the lower mine. During that period,
ore was trucked to surface from the upper mine, which resulted in
lower tonnes mined.
Following completion of the lower mine expansion
in July, underground mining rates steadily increased through the
second half of the year, averaging a record 7,651 tpd in the fourth
quarter. This exceeded the year end targeted rate of 7,500 tpd,
further demonstrating the expanded capacity of the lower mine
infrastructure. Underground mining rates are expected to average
approximately 7,500 tpd in the first half of 2021 and increase to
the design rate of 8,000 tpd in the second half of the year.
The average mined grade was 2.20 g/t Au in the
quarter and averaged 2.24 g/t Au for the full year. Grades mined
are expected to increase in 2021, ranging between 2.20 and 2.65 g/t
Au. Mining rates and grades are expected to increase through the
year, driving gold production higher in 2021.
Mill throughput was 7,932 tpd in the fourth
quarter, a 17% increase from the same period in 2019 reflecting
record underground mining rates. Milling rates exceeded mining
rates in the fourth quarter with excess underground ore that had
been mined and stockpiled during third quarter supplementing mill
feed. Mill throughput is expected to equal underground mining rates
moving forward. Mill recoveries averaged 91% in the quarter and 92%
for the year, in line with guidance and slightly above 2019.
Gold production at Young-Davidson is expected to
increase 45% in 2021 (based on the mid-point of guidance) driven by
significantly higher mining rates. 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.
Financial Review
Fourth quarter revenues of $89.3 million were
18% higher than the prior year quarter, reflecting a higher
realized gold price, partially offset by lower ounces sold due to
the timing of shipments. Revenues in 2020 were 9% lower than in the
prior year period due to the lower production during the temporary
shutdown of the Northgate shaft to complete the lower mine
expansion, partially offset by a higher realized gold price.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $60.8
million in the fourth quarter were in line with the comparative
quarter in 2019, with higher tonnes mined offset by lower
underground mining costs. Underground mining cost per tonne
decreased to CAD $44 in the quarter, and averaged CAD $45 in the
second half of 2020, reflecting productivity improvements following
the transition to the lower mine infrastructure in July. Full year
cost of sales were $201.3 million in 2020, down from the prior year
period due to lower underground mining rates during the tie-in
period from February through July 2020.
Total cash costs of $792 per ounce in the fourth
quarter were higher than the comparative period in 2019 due to a
17% reduction in grades mined, partially offset by lower
underground mining costs. Mine-site AISC of $934 per ounce in the
fourth quarter were substantially lower than the comparative
quarter in 2019, reflecting a $9.6 million reduction in sustaining
capital. Capital expenditures in the quarter included $6.8 million
of sustaining capital and $12.7 million of growth capital with
spending focused on a number of projects including the new tailings
infrastructure. Capital expenditures of $101.7 million in 2020 were
consistent with 2019, and are expected to decrease significantly in
2021, reflecting the completion of the lower mine expansion in
2020.
The fourth quarter marked the first full quarter
operating from the new lower mine infrastructure, driving record
mining rates and a significant reduction in costs. As a result,
Young-Davidson generated mine-site free cash flow of $30.8 million
in the fourth quarter, bringing full year mine-site free cash flow
to break-even. Higher mining rates and grades mined are expected to
drive strong production growth and lower costs in 2021, resulting
in significant free cash flow growth.
Island Gold Financial and Operational
Review
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Gold production (ounces) |
|
41,200 |
|
|
38,600 |
|
|
139,000 |
|
|
150,400 |
|
Gold sales (ounces) |
|
42,605 |
|
|
39,652 |
|
|
139,614 |
|
|
149,746 |
|
Financial Review (in
millions) |
|
|
|
|
Operating Revenues |
$ |
79.6 |
|
$ |
58.2 |
|
$ |
247.0 |
|
$ |
207.3 |
|
Cost of sales (1) |
$ |
33.7 |
|
$ |
36.4 |
|
$ |
111.9 |
|
$ |
129.4 |
|
Earnings from operations |
$ |
45.4 |
|
$ |
21.5 |
|
$ |
134.1 |
|
$ |
76.8 |
|
Cash provided by operating
activities |
$ |
58.7 |
|
$ |
34.1 |
|
$ |
182.2 |
|
$ |
133.4 |
|
Capital expenditures
(sustaining) (2) |
$ |
8.3 |
|
$ |
5.7 |
|
$ |
29.0 |
|
$ |
24.1 |
|
Capital expenditures (growth)
(2) |
$ |
14.8 |
|
$ |
14.3 |
|
$ |
39.9 |
|
$ |
28.4 |
|
Capital expenditures
(capitalized exploration) (2) |
$ |
3.8 |
|
$ |
4.7 |
|
$ |
11.9 |
|
$ |
16.4 |
|
Mine-site free cash flow (2) |
$ |
31.8 |
|
$ |
9.4 |
|
$ |
101.4 |
|
$ |
64.5 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$ |
791 |
|
$ |
918 |
|
$ |
801 |
|
$ |
864 |
|
Total cash costs per ounce of gold sold (2) |
$ |
481 |
|
$ |
507 |
|
$ |
451 |
|
$ |
495 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$ |
676 |
|
$ |
653 |
|
$ |
660 |
|
$ |
656 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
113,540 |
|
|
102,652 |
|
|
412,169 |
|
|
380,266 |
|
Tonnes of ore mined per day ("tpd") |
|
1,234 |
|
|
1,116 |
|
|
1,126 |
|
|
1,042 |
|
Average grade of gold (4) |
|
10.77 |
|
|
12.44 |
|
|
11.18 |
|
|
12.28 |
|
Metres developed |
|
1,854 |
|
|
1,831 |
|
|
6,168 |
|
|
6,031 |
|
Mill
Operations |
|
|
|
|
Tonnes of ore processed |
|
105,509 |
|
|
93,912 |
|
|
386,591 |
|
|
401,276 |
|
Tonnes of ore processed per day |
|
1,147 |
|
|
1,021 |
|
|
1,056 |
|
|
1,099 |
|
Average grade of gold (4) |
|
11.88 |
|
|
13.03 |
|
|
11.62 |
|
|
11.85 |
|
Contained ounces milled |
|
40,305 |
|
|
39,345 |
|
|
144,378 |
|
|
152,905 |
|
Average recovery rate |
|
97 |
% |
|
97 |
% |
|
97 |
% |
|
97 |
% |
(1) Cost of sales includes mining and processing
costs, royalties, COVID-19 costs and amortization.(2) Refer to the
“Non-GAAP Measures and Additional GAAP Measures” disclosure at the
end of this press release and associated MD&A for a description
and calculation of these measures. (3) For the purposes of
calculating mine-site all-in sustaining costs, the Company does not
include an allocation of corporate and administrative and share
based compensation expenses. (4) Grams per tonne of gold ("g/t
Au").
Island Gold produced a record 41,200 ounces in
the fourth quarter, a 7% increase from the comparative period in
2019, reflecting higher underground mining rates, partially offset
by lower grades mined and processed. For the full year, Island Gold
produced 139,000 ounces, in line with the top end of revised
production guidance. Full year production was 8% lower than in the
prior year, primarily reflecting the five week temporary shutdown
of operations in the second quarter of 2020 due to COVID-19.
Underground mining rates averaged 1,234 tpd in
the fourth quarter, an 11% increase from the prior year period and
in line with annual guidance of 1,200 tpd. Full year underground
mining rates were 1,126 tpd and reflect the five week temporary
shutdown of operations in the second quarter. Underground grades
mined averaged 10.77 g/t Au, bringing full year grades mined to
11.18 g/t Au, in line with full year guidance.
Mill throughput of 1,147 tpd in the fourth
quarter was consistent with the prior year period, but lower than
tonnes mined due to approximately four days of unplanned mill down
time in November. Higher grade ore was prioritized, resulting in
grades processed exceeding grades mined in the quarter. For the
full year, mill throughput was consistent with the prior year. Mill
recoveries of 97% in the quarter and full year were in line with
the prior year period and guidance.
Phase III Expansion Study
On July 14, 2020 the Company reported results of
the positive Phase III expansion study conducted on its Island Gold
mine. Based on the results of the study, the Company is proceeding
with an expansion of the operation to 2,000 tpd. 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, and the best positioned to
capitalize on further growth in Mineral Reserves and Resources. The
Phase III expansion is expected to drive average annual gold
production to 236,000 ounces per year starting in 2025 upon
completion of the shaft, representing a 70% increase from 2020
production. This will also reduce total cash costs to an average of
$403 per ounce of gold and mine-site all-in sustaining costs to
$534 per ounce to starting in 2025.
The Phase III expansion study was based on
Mineral Reserves and Resources at Island Gold as of December 31,
2019 and does not include the significant growth over the past year
as outlined in the 2020 year end Mineral Reserve and Resource
statement. Incorporating this growth is expected to improve already
attractive economics. This growth included an 8% increase in
Mineral Reserves to 1.3 million ounces of gold (4.2 mt grading 9.71
g/t Au) and a 0.9 million ounce, or 40% increase in Inferred
Mineral Resources to 3.2 million ounces with grades also increasing
9% to 14.43 g/t Au (6.9 mt).
The Company is currently focused on permitting,
detailed engineering of the shaft and associated infrastructure,
and the tendering and procurement of long lead time items. All of
the shaft expansion permitting requirements are expected to be
completed in 2022 with the sinking of the shaft expected to begin
in 2023.
Financial Review
Island Gold generated revenues of $79.6 million
in the fourth quarter, a 37% increase compared to the prior year
period, reflecting a 7% increase in ounces sold, and a
significantly higher realized gold price. For the year, revenues of
$247.0 million were higher than in the comparative period as higher
realized prices were partially offset by lower sales due to the
temporary suspension of operations during the second quarter.
Cost of sales (includes mining and processing
costs, royalties, COVID-19 costs and amortization expense) of $33.7
million in the fourth quarter were 7% lower than in the comparative
period of 2019, reflecting lower unit mining costs, and lower
royalty rates following the repurchase of a third-party royalty in
the first quarter of 2020. This was partially offset by the
inclusion of additional expenses in the quarter related to COVID-19
testing, transportation and lodging costs, which have been included
in mining and processing costs in 2020. All operating costs
incurred subsequent to the mine site returning to planned operating
levels have been included in mining and processing costs. As a
result, there were no amounts classified as COVID-19 costs
subsequent to June 30, 2020. Cost of sales in 2020 of $111.9
million were lower than in 2019 due to lower unit mining costs,
lower royalty rates and less tonnes milled.
Total cash costs of $481 per ounce in the fourth
quarter and $451 per ounce for the full year were both lower than
in the comparative periods of 2019, driven by lower unit mining and
milling costs and a lower royalty per ounce, partially offset by
lower grades mined. Fourth quarter and full year mine-site AISC
were slightly higher than in the prior year as higher sustaining
capital more than offset lower total cash costs. Full year total
cash costs and mine-site AISC were both below the low end of
guidance.
Total capital expenditures were $26.9 million in
the fourth quarter, including capitalized exploration. Spending was
focused on lateral development, tailings construction, and
permitting and engineering of the Phase III expansion. This
included $8.3 million of sustaining capital and $18.6 million of
growth capital, inclusive of capitalized exploration. For the full
year, capital spending, including capitalized exploration, of $80.8
million was higher than the prior year period reflecting higher
spending on tailings construction and Phase III engineering,
partially offset by lower capitalized exploration with less
drilling completed than planned in 2020 given the impact of
COVID-19.
In the first quarter of 2020, the Company
acquired and canceled a 3% NSR royalty payable on production from
the Island Gold mine for cash consideration of $54.8 million. The
royalty was applicable to all future gold production from the
Goudreau Lake claims, which comprise the majority of the Mineral
Reserves and Resources at Island Gold deposit.
Island Gold generated mine-site free cash flow
of $31.8 million during the fourth quarter, bringing full year cash
flow to a record $101.4 million, despite over one month of downtime
due to COVID-19. Strong mine-site free cash flow was driven by
operating margins of $1,312 per ounce given the low cost structure
at Island Gold.
Mulatos Financial and Operational
Review
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
|
2019 |
|
Gold production (ounces) |
|
31,200 |
|
|
34,100 |
|
|
150,800 |
|
|
142,000 |
|
Gold
sales (ounces) |
|
31,132 |
|
|
34,127 |
|
|
149,724 |
|
|
141,496 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$ |
57.7 |
|
$ |
49.7 |
|
$ |
261.7 |
|
$ |
194.4 |
|
Cost of sales (1) |
$ |
41.3 |
|
$ |
35.8 |
|
$ |
168.8 |
|
$ |
138.9 |
|
Earnings from operations |
$ |
14.8 |
|
$ |
13.0 |
|
$ |
88.7 |
|
$ |
51.9 |
|
Cash provided by operating
activities |
$ |
24.6 |
|
$ |
10.5 |
|
$ |
110.5 |
|
$ |
41.5 |
|
Capital expenditures
(sustaining) (2) |
$ |
12.4 |
|
$ |
1.2 |
|
$ |
27.0 |
|
$ |
6.5 |
|
Capital expenditures (growth)
(2) |
$ |
7.9 |
|
$ |
7.0 |
|
$ |
14.2 |
|
$ |
46.4 |
|
Capital expenditures
(capitalized exploration) (2) |
$ |
0.2 |
|
$ |
1.3 |
|
$ |
0.9 |
|
$ |
1.3 |
|
Mine-site free cash flow
(2) |
$ |
4.1 |
|
$ |
1.0 |
|
$ |
68.4 |
|
$ |
(12.7 |
) |
Cost of
sales, including amortization per ounce of gold sold (1) |
$ |
1,327 |
|
$ |
1,049 |
|
$ |
1,127 |
|
$ |
982 |
|
Total cash costs per ounce of gold sold (2) |
$ |
986 |
|
$ |
820 |
|
$ |
816 |
|
$ |
784 |
|
Mine site all-in sustaining costs per ounce of gold sold
(2),(3) |
$ |
1,426 |
|
$ |
891 |
|
$ |
1,032 |
|
$ |
868 |
|
Open Pit Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
1,270,425 |
|
|
1,558,458 |
|
|
5,641,346 |
|
|
7,166,679 |
|
Total waste mined - open pit (6) |
|
3,913,900 |
|
|
2,058,732 |
|
|
9,534,900 |
|
|
7,095,650 |
|
Total tonnes mined - open pit |
|
5,184,324 |
|
|
3,617,190 |
|
|
15,176,245 |
|
|
14,262,329 |
|
Waste-to-ore ratio (operating) |
|
0.61 |
|
|
0.98 |
|
|
0.68 |
|
|
0.73 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,969,732 |
|
|
1,823,418 |
|
|
7,308,457 |
|
|
7,289,811 |
|
Average grade of gold processed (5) |
|
0.83 |
|
|
0.99 |
|
|
1.08 |
|
|
0.94 |
|
Contained ounces stacked |
|
52,281 |
|
|
58,205 |
|
|
253,736 |
|
|
219,655 |
|
Average recovery rate |
|
60 |
% |
|
59 |
% |
|
59 |
% |
|
65 |
% |
Ore crushed per day (tonnes) - combined |
|
21,400 |
|
|
19,800 |
|
|
20,000 |
|
|
20,000 |
|
(1) Cost of sales includes mining and processing
costs, royalties, COVID-19 costs and amortization.(2) Refer to the
“Non-GAAP Measures and Additional GAAP Measures” disclosure at the
end of this press release and associated MD&A for a description
and calculation of these measures. (3) For the purposes of
calculating mine-site all-in sustaining costs, the Company does not
include an allocation of corporate and administrative and share
based compensation expenses. (4) Includes ore stockpiled during the
quarter.(5) Grams per tonne of gold ("g/t Au").(6) Total waste
mined includes operating waste and capitalized stripping.
Mulatos produced 31,200 ounces in the fourth
quarter, 9% lower than in the prior year quarter, reflecting lower
grades mined. Full year production of 150,800 ounces exceeded
revised production guidance and represented a 6% increase from
2019, driven by the contribution of higher grade ore from Cerro
Pelon which commenced operations in the fourth quarter of 2019.
Tonnes of ore mined in the fourth quarter and
the full year of 2020 decreased compared to the prior year while
total tonnes mined increased given the additional stripping
requirements at both Cerro Pelon and the El Salto portion of the
Mulatos pit. Pre-stripping costs at El Salto and the excess tonnes
of waste mined above the life-of-mine waste-to-ore ratio at Cerro
Pelon were capitalized in the year.
Total crusher throughput in the fourth quarter
averaged 21,400 tpd for a total of 1,969,732 tonnes stacked at a
grade of 0.83 g/t Au. Tonnes stacked in the quarter exceeded tonnes
mined due to the processing of SAS stockpiles. For the full year,
tonnes stacked were consistent with the prior year. In 2020, grades
stacked were 15% higher than in 2019, reflecting higher grade ore
from Cerro Pelon throughout 2020. The recovery rate of 59% in the
year was in line with guidance. The decrease in recoveries in 2020
reflected both the timing of ore stacked on the leach pad, as well
as the stacking of lower recovery SAS ore.
Financial Review
Fourth quarter revenues of $57.7 million were
16% higher than in the prior year quarter, driven by higher
realized gold prices. For the full year, revenues of $261.7 million
were 35% higher than in the prior year, reflecting both a 6%
increase in ounces sold and higher realized gold prices.
Cost of sales (includes mining and processing
costs, royalties, COVID-19 costs and amortization expense) of $41.3
million in the fourth quarter and $168.8 million for the full year
of 2020 were higher than the comparative periods, driven by higher
stacking rates in the quarter and a higher mining cost per tonne
through the year related to longer haulage distances. In addition,
Mulatos incurred COVID-19 testing, transportation and lodging costs
in the second half of 2020, which have been included in mining and
processing costs. All operating costs incurred subsequent to the
mine site returning to planned operating levels have been included
in mining and processing costs. As a result, there were no amounts
classified as COVID-19 costs subsequent to June 30, 2020.
Total cash costs in the quarter and full year
were higher compared to the respective prior year periods as a
result of higher mining and processing costs, partially offset by
higher grades stacked from Cerro Pelon ore. Capital spending
totaled $20.5 million in the fourth quarter, of which $12.4 million
was sustaining capital primarily related to capitalized stripping
at El Salto. In addition, the Company ramped up construction of La
Yaqui Grande, incurring $7.8 million in the quarter which is
included in growth capital. Mine-site AISC of $1,426 per ounce in
the fourth quarter and $1,032 per ounce for the year were both
higher than the prior year period driven by capitalized stripping
costs at El Salto and Cerro Pelon. Total capital spending in 2020
was slightly lower than in the comparative period, as 2019 capital
costs included the construction of Cerro Pelon.
Mulatos generated mine-site free cash flow of
$4.1 million in the fourth quarter, down from earlier in the year
reflecting lower production and increased capital spending related
to the construction of La Yaqui Grande and stripping of El Salto.
For the full year, Mulatos generated $68.4 million in mine-site
free cash flow after all capital and exploration spending, driven
by increased operating margins.
Fourth Quarter 2020 Development Activities
Mulatos District (Sonora,
Mexico)
La Yaqui Grande
On July 28, 2020, the Company reported results
of an internal study completed on its fully permitted La Yaqui
Grande project located in the Mulatos District in Sonora, Mexico.
La Yaqui Grande is located approximately 7 kilometres (straight
line) from the existing Mulatos operation and adjacent to the past
producing La Yaqui Phase I operation. As with La Yaqui Phase I, La
Yaqui Grande is being developed with an independent heap leach pad
and crushing circuit. Construction activities began ramping up
during the third quarter with initial production expected in the
second half of 2022.
La Yaqui Grande is expected to produce an
average of 123,000 ounces of gold per year starting in the third
quarter of 2022 at mine-site all-in sustaining costs of $578 per
ounce, significantly reducing the Mulatos District all-in
sustaining costs from the mid-point of 2021 guidance of $1,085 per
ounce. This will replace higher cost production from the main
Mulatos pit, keeping combined production at approximately 150,000
ounces per year. Initial capital is expected to be $137 million to
be spent over a two year period.
Construction ramped up in the fourth quarter
with spending of $7.8 million, bringing full year spend to $12.0
million. Spending during the year was focused on the following:
- Clearing of the
project area, comprising approximately 240 ha, was 90% complete by
the end of the year
- Contract mining
activities commenced in November 2020, focused on haul road
construction and early stripping activities. Mining rates have
continued to ramp up in the first quarter of 2021
- Construction of
camp facilities
- Detailed
engineering, including the heap leach facility, water treatment
plant and water supply
- Initiated
procurement of long lead time items
La Yaqui Grande Site Overview
A photo accompanying this announcement is
available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/9b4deecb-96a4-4459-a94e-ccab51e7f5f2
Kirazlı (Çanakkale, Turkey)
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 renewal is required from the same government
department that granted the Operating Permit for Kirazlı in March
2019. The Company will provide updated guidance for Kirazlı
following the concession renewal.
The Company spent $1.7 million at Kirazlı during
the fourth quarter of 2020, and $6.6 million for the full year on
holding costs and government, public and community relations
initiatives.
Lynn Lake (Manitoba,
Canada)
The Company released a positive Feasibility
Study on the Lynn Lake project in December 2017 outlining average
annual production of 143,000 ounces over a 10 year mine life at
average mine-site all-in sustaining costs of $745 per ounce.
The project economics based on the 2017
Feasibility Study at $1,500 per ounce gold price include an
after-tax IRR of 21.5% and an after-tax NPV of $290 million (12.5%
IRR at a $1,250 per ounce gold price). During the second quarter of
2020, the Company filed the Environmental Impact Statement ("EIS")
with the federal government. The federal and provincial permitting
process is expected to take approximately two years, with a
construction decision planned for 2022.
Development spending (excluding exploration) was
$0.5 million in the fourth quarter and $3.9 million for 2020.
Spending earlier in the year was primarily related to baseline work
and preparation of the EIS submission.
Fourth Quarter 2020 Exploration Activities
Island Gold (Ontario, Canada)
The 2020 exploration drilling program was
focused on expanding high-grade mineralization in the down-plunge
and lateral extensions of the Island Gold deposit with the
objective of adding new near mine Mineral Resources across the two
kilometre long Island Gold deposit. Despite completing less
drilling than planned due to COVID-19, 2020 was another successful
year for exploration drilling as outlined in the 2020 Mineral
Reserve and Resource statement issued on February 23, 2021. This
growth included an 8% increase in Mineral Reserves to 1.3 million
ounces of gold (4.2 mt grading 9.71 g/t Au) and a 0.9 million
ounce, or 40% increase in Inferred Mineral Resources to 3.2 million
ounces with grades also increasing 9% to 14.43 g/t Au (6.9 mt).
Surface directional drilling continued with
three drill rigs operating in the fourth quarter. Four underground
diamond drill rigs operated through the quarter, including two
focused on underground directional drilling. A total of 21,415 m of
surface directional drilling, 8,352 m of underground directional
drilling, and 15,170 m of standard underground exploration drilling
was completed in 2020.
Surface exploration drilling
A total of 3,990 m was completed in four holes
during the fourth quarter as part of the surface directional
drilling program. Directional drilling targeted areas peripheral to
the Inferred Mineral Resource blocks below the 1,000 m level, with
drill hole spacing ranging from 75 m to 100 m. The area that was
targeted by the surface directional drill program extends
approximately 2,000 m in strike length between the 1,000 m and
1,500 m elevation below surface.
Previously reported (January 27, 2021)
highlights in the fourth quarter from the surface drilling program
in Island Lower East (E1E-Zone) include:
- 54.18 g/t Au
(31.94 g/t cut) over 6.54 m (MH25-05);
- 123.74 g/t Au
(15.75 g/t cut) over 5.06 m (MH25-06); and
- 15.26 g/t Au
(12.69 g/t cut) over 2.83 m (MH26-01).
Drillhole MH25-05 (54.18 g/t Au (31.94 g/t cut)
over 6.54 m) intersected high-grade mineralization up to 70 m below
and west of previously reported drillholes MH25-03 and MH25-04.
Drillhole MH25-04 (28.97 g/t Au (26.89 g/t cut) over 21.76 m) is
the best surface directional hole drilled to date at Island Gold in
terms of gold content for a drill hole intersect.
Underground exploration drilling
During the fourth quarter of 2020, four holes
totaling 2,851 m of underground directional drilling, and 17 holes
totaling 3,240 m of underground standard exploration drilling was
completed from the 620, 790 and 840 levels. The objective of the
underground drilling is to identify new Mineral Resources close to
existing Mineral Resource or Reserve blocks. A total of 34 m of
underground exploration drift development was completed on the 340,
740, and 840 levels during the fourth quarter of 2020.
Previously reported (January 27, 2021)
highlights from fourth quarter from the underground drilling
programs (directional and standard) from Island East. Main, and
West include:
Island East:
- 10.92 g/t Au
(10.92 g/t cut) over 3.67 m (620-623-04);
- 14.41 g/t Au
(11.08 g/t cut) over 3.61 m (620-MH3-01); and
- 21.88 g/t Au
(21.88 g/t cut) over 2.52 m (620-623-07).
Island Main:
- 18.64 g/t Au
(18.64 g/t cut) over 5.89 m (840-578-11);
- 97.76 g/t Au
(36.40 g/t cut) over 2.00 m (840-578-13);
- 16.90 g/t Au
(16.90 g/t cut) over 3.31 m (840-578-12);
- 8.78 g/t Au
(8.78 g/t cut) over 5.46 m (840-572-10); and
- 5.33 g/t Au
(5.33 g/t cut) over 7.01 m (840-578-04).
Island West:
- 72.45 g/t Au
(72.45 g/t cut) over 2.04 m (740-471-36); and
- 10.88 g/t Au
(10.88 g/t cut) over 2.0 m (740-471-37).
Total exploration expenditures during the fourth
quarter were $4.3 million, of which $3.8 million was capitalized.
For 2020, $12.9 million was spent, of which $11.9 million was
capitalized.
Acquisition of Trillium
On December 17, 2020, the Company acquired
Trillium for cash consideration of $19.5 million. Trillium holds a
large land package comprised of 5,418 ha directly adjacent to, and
along strike from the Island Gold Deposit within the Michipicoten
Greenstone Belt. This newly acquired land includes significant
exploration potential in proximity to existing high-grade Mineral
Resources at Island Gold and regionally. The acquisition of
Trillium is consistent with the Company's strategy of consolidating
prospective land in proximity to the Island Gold mine which has
experienced significant exploration success over the last several
years.
Based on the current geological interpretation
of the E1E structure which hosts the Island Gold Deposit, there is
strong potential for the structure to extend onto the Trillium
mineral tenure. The Trillium land package also provides significant
regional exploration potential, adding 10 kilometres of strike
extent within the Goudreau Lake Deformation Zone (GLDZ), a primary
control on gold mineralization within the Goudreau-Lochalsh segment
of the Michipicoten Greenstone Belt. The larger consolidated land
package will allow for Alamos to apply a systematic, district scale
approach to exploration with targeting based on greenstone belt
scale structural and stratigraphic controls on gold
mineralization.
Mulatos District (Sonora,
Mexico)
The Company has a large exploration package
covering 28,972 hectares with the majority of past exploration
efforts focused around the Mulatos mine. Exploration has moved
beyond the main Mulatos pit area and is focused on earlier stage
prospects throughout the wider district.
Exploration activities were suspended at the
beginning of the second quarter of 2020 in response to COVID-19 and
resumed early in the fourth quarter. Exploration activities focused
primarily on El Carricito, Carboneras, and along the Puerto del
Aire trend. During the fourth quarter, exploration spending totaled
$1.8 million, of which $0.2 million was capitalized. For 2020,
exploration expenditures were $5.1 million, of which $0.9 million
was capitalized related to La Yaqui Grande.
Lynn Lake (Manitoba,
Canada)
In the fourth quarter of 2020, 1,604 m of
drilling was completed in nine holes. Interpretation of data
collected during the 2020 field season was undertaken in the fourth
quarter with a focus on continuing to advance a pipeline of
prospective regional exploration targets. Exploration spending
totaled $1.8 million in the fourth quarter and $5.3 million for
2020.
Review of Fourth Quarter Financial
Results
During the fourth quarter of 2020, the Company
sold 121,831 ounces of gold for revenue of $226.6 million, a 22%
increase from the prior year period driven by higher realized gold
prices, partially offset by lower ounces sold. All operations
successfully mitigated the impact of COVID-19 on production and
sales in the fourth quarter.
The average realized gold price in the fourth
quarter was $1,860 per ounce, a 27% increase compared to $1,463 per
ounce realized in the prior year period. The average realized gold
price was below the average London PM Fix price of $1,874 per ounce
due to the impact of gold hedges entered into earlier in the
year.
Cost of sales were $135.8 million in the fourth
quarter, which was consistent with the prior year period.
Mining and processing costs were $86.0 million,
2% lower than the comparative period. The decrease was driven by
lower mining costs at Young Davidson, which transitioned to the new
lower mine infrastructure in the third quarter, as well as lower
costs at Island Gold. Partially offsetting these improvements were
COVID-19 testing and other incremental costs, which have been
included in mining and processing costs in the quarter.
Consolidated total cash costs for the quarter
were $733 per ounce, a 2% increase compared to $722 per ounce in
the prior year period. Lower grades mined in the quarter drove
total cash costs higher at Mulatos, which were partially offset by
lower costs at Island Gold.
AISC were $1,030 per ounce in the quarter, a 6%
increase from the comparative period in 2019 due to higher
sustaining capital costs at Mulatos related to stripping activities
at El Salto.
Royalty expense was $3.3 million in the quarter,
lower than the prior year period of $4.4 million due to a reduced
royalty obligation at Island Gold following the repurchase of a
royalty in the first quarter of 2020.
Amortization of $46.5 million in the quarter was
higher than the prior year period due to higher amortization
charges at Young-Davidson and Mulatos. Amortization of $382 per
ounce was $34 per ounce higher than the prior year reflecting
increased production from Cerro Pelon which carries a higher
amortization per ounce expense. In addition, amortization per ounce
increased following the completion of the lower-mine tie-in at
Young-Davidson, which commenced amortization of the new
infrastructure.
The Company recognized earnings from operations
of $81.3 million in the quarter, 95% higher than the prior year
period due to improved operating margins driven by an increase in
realized gold prices.
The Company reported net earnings of $76.9
million in the quarter, compared to net earnings of $38.0 million
in the comparative period. Net earnings benefited from an
increasing gold price as well as the strengthening Canadian dollar
and Mexican Peso, which resulted in a $2.7 million foreign exchange
gain and an additional $13.7 million foreign exchange gain recorded
within deferred tax expense. On an adjusted basis, earnings of
$58.2 million, or $0.15 per share, were 88% higher compared to the
prior year primarily driven by improved operating margins. Adjusted
earnings reflect adjustments for one-time gains and losses, as well
as foreign exchange movements.
Review of 2020 Financial
Results
For the full year 2020, the Company sold 424,325
ounces of gold for record revenues of $748.1 million, a 10%
increase compared to 2019 driven by higher realized gold prices,
partially offset by lower ounces sold. The decrease in ounces sold
is primarily a result of the planned temporary shutdown of the
Northgate shaft at Young-Davidson to facilitate the tie in of the
lower mine infrastructure, resulting in lower mining rates and
production between February and mid-July. In addition, Island Gold
and Mulatos temporarily suspended operations in the second quarter
in response to COVID-19. Lower gold sales were offset by higher
realized gold prices of $1,763 per ounce for the full year compared
to $1,381 per ounce in 2019.
Cost of sales were $482.0 million in 2020, down
from $521.4 million in 2019 due to the lower mining and processing
rates at all sites, partially offset by incremental COVID-19 costs
incurred at the Company's operating sites throughout the last nine
months of the year.
Mining and processing costs decreased to $312.6
million in 2020 from $339.0 million in the prior year, primarily
due to lower tonnes mined at Young-Davidson and Mulatos. Lower
throughput levels had the impact of increasing consolidated total
cash costs by 6% to $761 per ounce in 2020 compared to $720 per
ounce in the prior year. The increase in total cash costs was
primarily driven by higher cost production at Young-Davidson during
the lower mine tie-in as underground ore was trucked to surface and
lower grade stockpiles were processed.
AISC increased to $1,046 per ounce in 2020 from
$951 per ounce in the prior year. The increase was primarily driven
by the higher total cash costs and higher sustaining capital on a
per ounce basis given lower ounces sold in 2020.
Royalty expense was $10.2 million for 2020, a
41% decrease compared to $17.4 million in the prior year. This was
primarily due to 14% less ounces sold, a lower royalty obligation
at Mulatos with the completion of the third-party royalty
commitment in the first quarter of 2019, and a lower royalty
obligation at Island Gold following the repurchase of a 3% NSR
royalty in the first quarter of 2020.
Amortization of $152.7 million for 2020 was
lower than the prior year due to fewer ounces sold. On a per ounce
basis, amortization was $360 per ounce, or $26 per ounce higher
than the prior year due to the start of production from Cerro Pelon
in 2020 which carries higher amortization per ounce.
The Company recognized record earnings from
operations of $227.6 million for 2020, compared to $126.0 million
in 2019. The increase in earnings from operations was driven by a
28% increase in realized gold prices.
The Company reported net earnings of $144.2
million in 2020 compared to net earnings of $96.1 million in 2019.
Net earnings were impacted by the volatility in the Canadian dollar
and Mexican Peso, which resulted in a $1.4 million foreign exchange
loss, as well as a $3.1 million foreign exchange loss recorded
within deferred tax expense. In addition, the Company incurred
incremental costs related to COVID-19 in 2020. On an adjusted
basis, earnings of $156.5 million or $0.40 per share for 2020 were
90% higher than in the prior year, driven by higher realized gold
prices. Adjusted earnings reflect adjustments for one-time gains
and losses, COVID-19 expenses incurred in the second quarter, as
well as foreign exchange movements recorded in deferred taxes and
foreign exchange loss.
Associated Documents
This press release should be read in conjunction
with the Company’s interim consolidated financial statements for
the year ended December 31, 2020 and associated Management’s
Discussion and Analysis (“MD&A”), which are available from the
Company's website, www.alamosgold.com, in the "Investors" section
under "Reports and Financials", and on SEDAR (www.sedar.com) and
EDGAR (www.sec.gov).
Reminder of Fourth Quarter and Year-End
2020 Results Conference Call
The Company's senior management will host a
conference call on Thursday, February 25, 2021 at 11:00 am ET to
discuss the fourth quarter and year-end 2020 results.
Participants may join the conference call by
dialling (416) 340-2216 or (800) 273-9672 for calls within Canada
and the United States, or via webcast at www.alamosgold.com.
A playback will be available until March 28,
2021 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The pass code is 5619316#. The webcast will be
archived at www.alamosgold.com.
Qualified Persons
Chris Bostwick, FAusIMM, Alamos’ Vice President,
Technical Services, who is a qualified person within the meaning of
National Instrument 43-101 ("Qualified Person"), has reviewed and
approved the scientific and technical information contained in this
press release.
About Alamos
Alamos is a Canadian-based intermediate gold
producer with diversified production from 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 Regarding Forward-Looking
Statements
This press release contains or incorporates by
reference “forward-looking statements” and “forward-looking
information” as defined under applicable Canadian and U.S.
securities legislation. 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. Forward-looking
statements are generally, but not always, identified by the use of
forward-looking terminology such as "expect", "believe",
"anticipate", "intend", "estimate", "forecast", "budget", “target”,
“outlook”, “continue”, “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.
Such statements include information as to
strategy, plans or future financial or operating performance, such
as the Company’s expansion plans, project timelines, production
plans and expected sustainable productivity increases, expected
increases in mining activities and corresponding cost efficiencies,
expected drilling targets, expected sustaining costs, expected
improvements in cash flows and margins, expectations of changes in
capital expenditures, forecasted cash shortfalls and the Company’s
ability to fund them, cost estimates, projected exploration
results, reserve and resource estimates, expected production rates
and use of the stockpile inventory, expected recoveries,
sufficiency of working capital for future commitments and other
statements that express management’s expectations or estimates of
future performance.
Alamos cautions that forward-looking statements
are necessarily based upon a number of factors and assumptions
that, while considered reasonable by the Company at the time of
making such statements, are inherently subject to significant
business, economic, legal, political and competitive uncertainties
and contingencies. Known and unknown factors could cause actual
results to differ materially from those projected in the
forward-looking statements.
Such factors and assumptions underlying the
forward-looking statements in this document include, but are not
limited to: changes to current estimates of mineral reserves and
resources; changes to production estimates (which assume accuracy
of projected ore grade, mining rates, recovery timing and recovery
rate estimates and may be impacted by unscheduled maintenance;
labour and contractor availability and other operating or technical
difficulties); 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 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; governments 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, Mexican Peso,
U.S. Dollar and Turkish Lira); the impact of inflation; changes in
our credit rating; any decision to declare a quarterly dividend;
employee and community relations (including maintaining social
license to operate in Turkey); 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 the Island Gold
mine; inherent risks associated with mining and mineral processing;
the risk that the Company’s mines may not perform as planned;
uncertainty with the Company’s ability to secure additional capital
to execute its business plans; the speculative nature of mineral
exploration and development, including the risks of obtaining and
maintaining necessary licenses and permits, including the necessary
licenses, permits, authorizations and/or approvals from the
appropriate regulatory authorities for the Company’s development
stage and operating assets, including the renewal of the Company’s
mining concessions in Turkey; the timely resumption of construction
and development at the Kirazlı project; labour and contractor
availability (and being able to secure the same on favourable
terms); contests over title to properties; expropriation or
nationalization of property; inherent risks and hazards associated
with mining including environmental hazards, industrial accidents,
unusual or unexpected formations, pressures and cave-ins; changes
in national and local government legislation (including tax
legislation), controls or regulations in Canada, Mexico, Turkey,
the United States and other jurisdictions in which the Company does
or may carry on business in the future; increased costs and risks
related to the potential impact of climate change; failure to
comply with environmental and health and safety laws and
regulations; disruptions in the maintenance or provision of
required infrastructure and information technology systems; 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.
Additional risk factors and details with respect
to risk factors affecting the Company’s ability to achieve the
expectations set forth in the forward-looking statements contained
in this MD&A are set out in the Company's 40-F/Annual
Information Form for the year ended December 31, 2019 under the
heading “Risk Factors”, which is 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
MD&A.
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.
Note to U.S. Investors Concerning
Measured, Indicated and Inferred Resources
All 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. Investors are cautioned not to assume that
all or any part of mineral deposits in these categories will ever
be converted into 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. Investors are cautioned not to assume that all or
any part of an Inferred Mineral Resource exists or is economically
or legally mineable. Disclosure of "contained ounces" in a resource
is permitted disclosure under Canadian regulations.
International Financial Reporting
Standards: The consolidated financial statements of the
Company have been prepared by management in accordance with
International Financial Reporting Standards, as issued by the
International Accounting Standards Board (note 2 and 3 to the
consolidated financial statements for the year ended December 31,
2020). These accounting principles differ in certain material
respects from accounting principles generally accepted in the
United States of America. The Company’s reporting currency is the
United States dollar unless otherwise noted.
Non-GAAP Measures and Additional GAAP
Measures
The Company has included certain non-GAAP
financial measures to supplement its Consolidated Financial
Statements, which are presented in accordance with IFRS, including
the following:
- adjusted net earnings and adjusted
earnings per share;
- cash flow from operating activities
before changes in working capital and taxes received;
- Company-wide free cash flow;
- total mine-site free cash flow;
- mine-site free cash flow;
- net cash;
- total cash cost per ounce of gold
sold;
- all-in sustaining cost ("AISC") per
ounce of gold sold;
- mine-site all-in sustaining cost
("Mine-site AISC") per ounce of gold sold;
- sustaining and non-sustaining
capital expenditures; and
- earnings before interest, taxes,
depreciation, and amortization
The Company believes that these measures,
together with measures determined in accordance with IFRS, provide
investors with an improved ability to evaluate the underlying
performance of the Company. Non-GAAP financial measures do not have
any standardized meaning prescribed under IFRS, and therefore they
may not be comparable to similar measures employed by other
companies. The data is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS.
Management's determination of the components of non-GAAP and
additional measures are evaluated on a periodic basis influenced by
new items and transactions, a review of investor uses and new
regulations as applicable. Any changes to the measures are dully
noted and retrospectively applied as applicable.
Adjusted Net Earnings and Adjusted
Earnings per Share
“Adjusted net earnings” and “adjusted earnings
per share” are non-GAAP financial measures with no standard meaning
under IFRS which exclude the following from net earnings:
- Foreign exchange gain (loss)
- Items included in other gain
(loss)
- Certain non-reoccurring items
- Foreign exchange gain (loss)
recorded in deferred tax expense
Net earnings have been adjusted, including the
associated tax impact, for the group of costs in “Other loss” on
the consolidated statement of comprehensive income. Transactions
within this grouping are: the fair value changes on non-hedged
derivatives; the renunciation of flow-through exploration
expenditures; and loss on disposal of assets. The adjusted entries
are also impacted for tax to the extent that the underlying entries
are impacted for tax in the unadjusted net earnings.
The Company uses adjusted net earnings for its
own internal purposes. Management’s internal budgets and forecasts
and public guidance do not reflect the items which have been
excluded from the determination of adjusted net earnings.
Consequently, the presentation of adjusted net earnings enables
shareholders to better understand the underlying operating
performance of the core mining business through the eyes of
management. Management periodically evaluates the components of
adjusted net earnings based on an internal assessment of
performance measures that are useful for evaluating the operating
performance of our business and a review of the non-GAAP measures
used by mining industry analysts and other mining companies.
Adjusted net earnings is intended to provide
additional information only and does not have any standardized
meaning under IFRS and may not be comparable to similar measures
presented by other companies. It should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. The measure is not necessarily indicative
of operating profit or cash flows from operations as determined
under IFRS. The following table reconciles this non-GAAP measure to
the most directly comparable IFRS measure.
(in
millions) |
|
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2018 |
Net earnings (loss) |
$ |
76.9 |
|
|
$ |
38.0 |
|
|
$ |
144.2 |
|
|
$ |
96.1 |
|
|
($ |
72.6 |
) |
Adjustments: |
|
|
|
|
|
COVID-19 costs |
|
— |
|
|
|
— |
|
|
|
6.5 |
|
|
|
— |
|
|
|
— |
|
Foreign exchange (gain) loss |
|
(2.7 |
) |
|
|
— |
|
|
|
1.4 |
|
|
|
(0.3 |
) |
|
|
4.4 |
|
Other (gain) loss |
|
(3.1 |
) |
|
|
(2.6 |
) |
|
|
3.7 |
|
|
|
(5.1 |
) |
|
|
8.4 |
|
Unrealized foreign exchange (gain) loss recorded in deferred tax
expense |
|
(13.7 |
) |
|
|
(8.6 |
) |
|
|
3.1 |
|
|
|
(13.2 |
) |
|
|
28.8 |
|
Impairment of El Chanate inventory |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
64.0 |
|
Tax impact on impairment of El Chanate inventory |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14.1 |
) |
Other income tax and mining tax adjustments |
|
0.8 |
|
|
|
5.3 |
|
|
|
(2.4 |
) |
|
|
6.0 |
|
|
|
0.7 |
|
Adjusted net earnings |
$ |
58.2 |
|
|
$ |
32.1 |
|
|
$ |
156.5 |
|
|
$ |
83.5 |
|
|
$ |
19.6 |
|
Adjusted earnings per share - basic and diluted |
$ |
0.15 |
|
|
$ |
0.08 |
|
|
$ |
0.40 |
|
|
$ |
0.21 |
|
|
$ |
0.05 |
|
Cash Flow from Operating Activities
before Changes in Working Capital and Cash Taxes
“Cash flow from operating activities before
changes in working capital and cash taxes” is a non-GAAP
performance measure that could provide an indication of the
Company’s ability to generate cash flows from operations, and is
calculated by adding back the change in working capital and taxes
received to “Cash provided by (used in) operating activities” as
presented on the Company’s consolidated statements of cash flows.
“Cash flow from operating activities before changes in working
capital” is a non-GAAP financial measure with no standard meaning
under IFRS.
The following table reconciles the non-GAAP
measure to the consolidated statements of cash flows.
(in
millions) |
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Cash flow from operating activities |
$ |
131.4 |
|
|
$ |
77.8 |
|
$ |
368.4 |
|
$ |
260.4 |
|
Add (less): Changes in working
capital and cash taxes |
|
(4.9 |
) |
|
|
3.9 |
|
|
14.5 |
|
|
32.7 |
|
Cash flow from operating activities before changes in
working capital and cash taxes |
$ |
126.5 |
|
|
$ |
81.7 |
|
$ |
382.9 |
|
$ |
293.1 |
|
Company-wide Free Cash Flow
“Company-wide free cash flow" is a non-GAAP
performance measure calculated from the consolidated operating cash
flow, less consolidated mineral property, plant and equipment
expenditures. The Company believes this to be a useful indicator of
our ability to operate without reliance on additional borrowing or
usage of existing cash company-wide. Company-wide free cash flow is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other mining
companies. Company-wide free cash flow should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
(in
millions) |
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Cash flow from operating activities |
$ |
131.4 |
|
|
$ |
77.8 |
|
|
$ |
368.4 |
|
|
$ |
260.4 |
|
Less:
mineral property, plant and equipment expenditures (1) |
|
(73.4 |
) |
|
|
(72.9 |
) |
|
|
(246.1 |
) |
|
|
(263.6 |
) |
Company-wide free cash flow |
$ |
58.0 |
|
|
$ |
4.9 |
|
|
$ |
122.3 |
|
|
$ |
(3.2 |
) |
(1) Mineral property, plant and equipment
expenditures exclude the Island Gold royalty repurchase of $54.8
million in the first quarter of 2020, and the acquisition of
Trillium Mining Corp. for $19.5 million in the fourth quarter of
2020.
Mine-site Free Cash Flow
"Mine-site free cash flow" is a non-GAAP
financial performance measure calculated as cash flow from
mine-site operating activities, less mineral property, plant and
equipment expenditures. The Company believes this to be a useful
indicator of our ability to operate without reliance on additional
borrowing or usage of existing cash. Mine-site free cash flow is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other mining
companies. Mine-site free cash flow should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
Total Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$ |
131.4 |
|
|
$ |
77.8 |
|
|
$ |
368.4 |
|
|
$ |
260.4 |
|
Add:
operating cash flow used by non-mine site activity |
|
2.2 |
|
|
|
1.6 |
|
|
|
25.6 |
|
|
|
24.3 |
|
Cash flow from operating mine-sites |
$ |
133.6 |
|
|
$ |
79.4 |
|
|
$ |
394.0 |
|
|
$ |
284.7 |
|
|
|
|
|
|
Mineral property, plant and
equipment expenditure 1 |
$ |
73.4 |
|
|
$ |
72.9 |
|
|
$ |
246.1 |
|
|
$ |
263.6 |
|
Less:
capital expenditures from development projects, and corporate |
|
(6.5 |
) |
|
|
(11.7 |
) |
|
|
(21.5 |
) |
|
|
(40.6 |
) |
Capital expenditure from mine-sites |
$ |
66.9 |
|
|
$ |
61.2 |
|
|
$ |
224.6 |
|
|
$ |
223.0 |
|
|
|
|
|
|
Total mine-site free cash flow |
$ |
66.7 |
|
|
$ |
18.2 |
|
|
$ |
169.4 |
|
|
$ |
61.7 |
|
(1) Excludes a royalty repurchase of $54.8
million at Island Gold in the first quarter of 2020 and $19.5
million paid for the acquisition of Trillium Mining Corp. in the
fourth quarter of 2020
|
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$ |
50.3 |
|
|
$ |
38.9 |
|
|
$ |
101.3 |
|
|
$ |
112.7 |
|
Mineral
property, plant and equipment expenditure |
|
(19.5 |
) |
|
|
(27.0 |
) |
|
|
(101.7 |
) |
|
|
(99.9 |
) |
Mine-site free cash flow |
$ |
30.8 |
|
|
$ |
11.9 |
|
|
$ |
(0.4 |
) |
|
$ |
12.8 |
|
Mulatos Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$ |
24.6 |
|
|
$ |
10.5 |
|
|
$ |
110.5 |
|
|
$ |
41.5 |
|
Mineral property, plant and
equipment expenditure |
|
(20.5 |
) |
|
|
(9.5 |
) |
|
|
(42.1 |
) |
|
|
(54.2 |
) |
Mine-site free cash flow |
$ |
4.1 |
|
|
$ |
1.0 |
|
|
$ |
68.4 |
|
|
$ |
(12.7 |
) |
Island Gold Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$ |
58.7 |
|
|
$ |
34.1 |
|
|
$ |
182.2 |
|
|
$ |
133.4 |
|
Mineral property, plant and
equipment expenditure 1 |
|
(26.9 |
) |
|
|
(24.7 |
) |
|
|
(80.8 |
) |
|
|
(68.9 |
) |
Mine-site free cash flow |
$ |
31.8 |
|
|
$ |
9.4 |
|
|
$ |
101.4 |
|
|
$ |
64.5 |
|
(1) Excludes a royalty repurchase of
$54.8 million at Island Gold in the first quarter of
2020Net Cash
The Company defines net cash as cash and cash equivalents less
long-term debt.
Total Cash Costs per ounce
Total cash costs per ounce is a non-GAAP term
typically used by gold mining companies to assess the level of
gross margin available to the Company by subtracting these costs
from the unit price realized during the period. This non-GAAP term
is also used to assess the ability of a mining company to generate
cash flow from operations. Total cash costs per ounce includes
mining and processing costs plus applicable royalties, and net of
by-product revenue and net realizable value adjustments. This
metric excludes COVID-19 costs incurred in the period. Total cash
costs per ounce is exclusive of exploration costs.
Total cash costs per ounce is intended to
provide additional information only and does not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other mining companies. It should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. The measure is not
necessarily indicative of cash flow from operations under IFRS or
operating costs presented under IFRS.
All-in Sustaining Costs per ounce and
Mine-site All-in Sustaining Costs
The Company adopted an “all-in sustaining costs
per ounce” non-GAAP performance measure in accordance with the
World Gold Council published in June 2013. The Company believes the
measure more fully defines the total costs associated with
producing gold; however, this performance measure has no
standardized meaning. Accordingly, there may be some variation in
the method of computation of “all-in sustaining costs per ounce” as
determined by the Company compared with other mining companies. In
this context, “all-in sustaining costs per ounce” for the
consolidated Company reflects total mining and processing costs,
corporate and administrative costs, share-based compensation,
exploration costs, sustaining capital, and other operating
costs.
For the purposes of calculating "mine-site
all-in sustaining costs" at the individual mine-sites, the Company
does not include an allocation of corporate and administrative
costs and share-based compensation, as detailed in the
reconciliations below.
Sustaining capital expenditures are expenditures
that do not increase annual gold ounce production at a mine site
and excludes all expenditures at the Company’s development projects
as well as certain expenditures at the Company’s operating sites
that are deemed expansionary in nature. For each mine-site
reconciliation, corporate and administrative costs, and non-site
specific costs are not included in the all-in sustaining cost per
ounce calculation.
All-in
sustaining costs per gold ounce is
intended to provide additional information only and does not
have any standardized
meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.
Total Cash Costs and All-in Sustaining
Costs per Ounce Reconciliation Tables
The following tables reconciles these non-GAAP
measures to the most directly comparable IFRS measures on a
Company-wide and individual mine-site basis.
Total Cash
Costs and AISC Reconciliation - Company-wide |
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2018 |
(in millions, except ounces
and per ounce figures) |
|
|
|
|
|
Mining and processing |
$ |
86.0 |
|
$ |
87.4 |
|
$ |
312.6 |
|
$ |
339.0 |
|
$ |
387.2 |
|
Royalties |
|
3.3 |
|
|
4.4 |
|
|
10.2 |
|
|
17.4 |
|
|
21.6 |
|
Total cash costs |
|
89.3 |
|
|
91.8 |
|
|
322.8 |
|
|
356.4 |
|
|
408.8 |
|
Gold ounces sold |
|
121,831 |
|
|
127,148 |
|
|
424,325 |
|
|
494,702 |
|
|
509,879 |
|
Total cash costs per ounce |
$ |
733 |
|
$ |
722 |
|
$ |
761 |
|
$ |
720 |
|
$ |
802 |
|
|
|
|
|
|
|
Total cash costs |
$ |
89.3 |
|
$ |
91.8 |
|
$ |
322.8 |
|
$ |
356.4 |
|
$ |
408.8 |
|
Corporate and
administrative(1) |
|
5.7 |
|
|
5.2 |
|
|
21.0 |
|
|
19.8 |
|
|
17.4 |
|
Sustaining capital
expenditures(2) |
|
27.5 |
|
|
23.3 |
|
|
82.1 |
|
|
76.8 |
|
|
63.8 |
|
Share-based compensation |
|
1.2 |
|
|
1.5 |
|
|
10.3 |
|
|
9.2 |
|
|
6.6 |
|
Sustaining exploration |
|
1.2 |
|
|
1.2 |
|
|
5.0 |
|
|
5.4 |
|
|
4.8 |
|
Accretion of decommissioning
liabilities |
|
0.6 |
|
|
0.6 |
|
|
2.6 |
|
|
2.8 |
|
|
3.0 |
|
Total all-in sustaining costs |
$ |
125.5 |
|
$ |
123.6 |
|
$ |
443.8 |
|
$ |
470.4 |
|
$ |
504.4 |
|
Gold
ounces sold |
|
121,831 |
|
|
127,148 |
|
|
424,325 |
|
|
494,702 |
|
|
509,879 |
|
All-in sustaining costs per ounce |
$ |
1,030 |
|
$ |
972 |
|
$ |
1,046 |
|
$ |
951 |
|
$ |
989 |
|
(1) Corporate and administrative expenses
exclude expenses incurred at development properties.(2) Sustaining
capital expenditures are defined as those expenditures which do not
increase annual gold ounce production at a mine site and exclude
all expenditures at growth projects and certain expenditures at
operating sites which are deemed expansionary in nature. Total
sustaining capital for the period is as follows:
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2018 |
(in millions) |
|
|
|
|
|
Capital expenditures per cash flow statement |
$ |
73.4 |
|
|
$ |
72.9 |
|
|
$ |
246.1 |
|
|
$ |
263.6 |
|
|
$ |
221.5 |
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
|
Young-Davidson |
|
(12.7 |
) |
|
|
(10.6 |
) |
|
|
(75.6 |
) |
|
|
(53.7 |
) |
|
|
(50.8 |
) |
Mulatos |
|
(8.1 |
) |
|
|
(8.3 |
) |
|
|
(15.1 |
) |
|
|
(47.7 |
) |
|
|
(28.1 |
) |
Island Gold |
|
(18.6 |
) |
|
|
(19.0 |
) |
|
|
(51.8 |
) |
|
|
(44.8 |
) |
|
|
(45.9 |
) |
Corporate and other |
|
(6.5 |
) |
|
|
(11.7 |
) |
|
|
(21.5 |
) |
|
|
(40.6 |
) |
|
|
(32.9 |
) |
Sustaining capital expenditures |
$ |
27.5 |
|
|
$ |
23.3 |
|
|
$ |
82.1 |
|
|
$ |
76.8 |
|
|
$ |
63.8 |
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(in millions, except ounces
and per ounce figures) |
|
|
|
|
Mining and processing |
$ |
36.9 |
|
$ |
38.1 |
|
$ |
133.9 |
|
$ |
146.6 |
|
Royalties |
|
1.2 |
|
|
1.5 |
|
|
3.7 |
|
|
4.4 |
|
Total cash costs |
$ |
38.1 |
|
$ |
39.6 |
|
$ |
137.6 |
|
$ |
151.0 |
|
Gold
ounces sold |
|
48,094 |
|
|
51,694 |
|
|
134,987 |
|
|
188,785 |
|
Total cash costs per ounce |
$ |
792 |
|
$ |
766 |
|
$ |
1,019 |
|
$ |
800 |
|
|
|
|
|
|
Total cash costs |
$ |
38.1 |
|
$ |
39.6 |
|
$ |
137.6 |
|
$ |
151.0 |
|
Sustaining capital
expenditures |
|
6.8 |
|
|
16.4 |
|
|
26.1 |
|
|
46.2 |
|
Sustaining exploration |
|
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
Accretion of decommissioning liabilities |
|
— |
|
|
— |
|
|
0.2 |
|
|
0.1 |
|
Total all-in sustaining costs |
$ |
44.9 |
|
$ |
56.0 |
|
$ |
163.9 |
|
$ |
197.6 |
|
Gold
ounces sold |
|
48,094 |
|
|
51,694 |
|
|
134,987 |
|
|
188,785 |
|
Mine-site all-in sustaining costs per ounce |
$ |
934 |
|
$ |
1,083 |
|
$ |
1,214 |
|
$ |
1,047 |
|
Mulatos
Total Cash Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(in millions, except ounces
and per ounce figures) |
|
|
|
|
Mining and processing |
$ |
30.4 |
|
$ |
27.8 |
|
$ |
120.9 |
|
$ |
107.8 |
|
Royalties |
|
0.3 |
|
|
0.2 |
|
|
1.3 |
|
|
3.1 |
|
Total cash costs |
$ |
30.7 |
|
$ |
28.0 |
|
$ |
122.2 |
|
$ |
110.9 |
|
Gold
ounces sold |
|
31,132 |
|
|
34,127 |
|
|
149,724 |
|
|
141,496 |
|
Total cash costs per ounce |
$ |
986 |
|
$ |
820 |
|
$ |
816 |
|
$ |
784 |
|
|
|
|
|
|
Total cash costs |
$ |
30.7 |
|
$ |
28.0 |
|
$ |
122.2 |
|
$ |
110.9 |
|
Sustaining capital
expenditures |
|
12.4 |
|
|
1.2 |
|
|
27.0 |
|
|
6.5 |
|
Sustaining exploration |
|
0.7 |
|
|
0.7 |
|
|
3.0 |
|
|
3.1 |
|
Accretion of decommissioning liabilities |
|
0.6 |
|
|
0.5 |
|
|
2.3 |
|
|
2.3 |
|
Total all-in sustaining costs |
$ |
44.4 |
|
$ |
30.4 |
|
$ |
154.5 |
|
$ |
122.8 |
|
Gold
ounces sold |
|
31,132 |
|
|
34,127 |
|
|
149,724 |
|
|
141,496 |
|
Mine-site all-in sustaining costs per ounce |
$ |
1,426 |
|
$ |
891 |
|
$ |
1,032 |
|
$ |
868 |
|
Island
Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
(in millions, except ounces
and per ounce figures) |
|
|
|
|
Mining and processing |
$ |
18.7 |
|
$ |
17.4 |
|
$ |
57.8 |
|
$ |
64.2 |
|
Royalties |
|
1.8 |
|
|
2.7 |
|
|
5.2 |
|
|
9.9 |
|
Total cash costs |
$ |
20.5 |
|
$ |
20.1 |
|
$ |
63.0 |
|
$ |
74.1 |
|
Gold
ounces sold |
|
42,605 |
|
|
39,652 |
|
|
139,614 |
|
|
149,746 |
|
Total cash costs per ounce |
$ |
481 |
|
$ |
507 |
|
$ |
451 |
|
$ |
495 |
|
|
|
|
|
|
Total cash costs |
$ |
20.5 |
|
$ |
20.1 |
|
$ |
63.0 |
|
$ |
74.1 |
|
Sustaining capital
expenditures |
|
8.3 |
|
|
5.7 |
|
|
29.0 |
|
|
24.1 |
|
Accretion of decommissioning liabilities |
|
— |
|
|
0.1 |
|
|
0.1 |
|
|
0.1 |
|
Total all-in sustaining costs |
$ |
28.8 |
|
$ |
25.9 |
|
$ |
92.1 |
|
$ |
98.3 |
|
Gold
ounces sold |
|
42,605 |
|
|
39,652 |
|
|
139,614 |
|
|
149,746 |
|
Mine-site all-in sustaining costs per ounce |
$ |
676 |
|
$ |
653 |
|
$ |
660 |
|
$ |
656 |
|
Earnings Before Interest, Taxes, Depreciation, and
Amortization (“EBITDA”)
EBITDA represents net earnings before interest,
taxes, depreciation, and amortization. EBITDA is an indicator of
the Company’s ability to generate liquidity by producing operating
cash flow to fund working capital needs, service debt obligations,
and fund capital expenditures.
EBITDA does not have any standardized meaning
under IFRS and may not be comparable to similar measures presented
by other mining companies. It should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with IFRS.
The following is a reconciliation of EBITDA to
the consolidated financial
statements:
(in
millions) |
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net earnings |
$ |
76.9 |
|
|
$ |
38.0 |
|
|
$ |
144.2 |
|
$ |
96.1 |
|
Add back: |
|
|
|
|
COVID-19 costs |
|
— |
|
|
|
— |
|
|
|
6.5 |
|
|
— |
|
Finance expense |
|
1.3 |
|
|
|
0.4 |
|
|
|
4.3 |
|
|
2.5 |
|
Amortization |
|
46.5 |
|
|
|
44.2 |
|
|
|
152.7 |
|
|
165.0 |
|
Deferred income tax (recovery) expense |
|
(0.8 |
) |
|
|
11.6 |
|
|
|
43.9 |
|
|
20.1 |
|
Current income tax expense (recovery) |
|
9.7 |
|
|
|
(5.8 |
) |
|
|
30.1 |
|
|
12.7 |
|
EBITDA |
$ |
133.6 |
|
|
$ |
88.4 |
|
|
$ |
381.7 |
|
$ |
296.4 |
|
Additional GAAP Measures
Additional GAAP measures are presented on the
face of the Company’s consolidated statements of comprehensive
income (loss) and are not meant to be a substitute for other
subtotals or totals presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measures. The
following additional GAAP measures are used and are intended to
provide an indication of the Company’s mine and operating
performance:
- Earnings from
operations - represents the amount of earnings before net finance
income/expense, foreign exchange gain/loss, other income/loss, loss
on redemption of senior secured notes and income tax expense
Unaudited Consolidated Statements of
Financial Position, ComprehensiveIncome, and Cash
Flow
ALAMOS GOLD
INC.Consolidated Statements of Financial
Position(Unaudited - stated in millions of United States
dollars)
|
December 31, 2020 |
|
December 31, 2019 |
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$ |
220.5 |
|
|
$ |
182.8 |
|
Equity securities |
|
43.7 |
|
|
|
22.8 |
|
Amounts receivable |
|
34.7 |
|
|
|
37.4 |
|
Income taxes receivable |
|
— |
|
|
|
4.6 |
|
Inventory |
|
148.5 |
|
|
|
126.9 |
|
Other current assets |
|
26.0 |
|
|
|
19.8 |
|
Total Current
Assets |
|
473.4 |
|
|
|
394.3 |
|
|
|
|
|
Non-Current
Assets |
|
|
|
Long-term inventory |
|
17.9 |
|
|
|
25.7 |
|
Mineral property, plant and
equipment |
|
3,101.3 |
|
|
|
2,933.4 |
|
Other non-current assets |
|
43.9 |
|
|
|
43.1 |
|
Total Assets |
$ |
3,636.5 |
|
|
$ |
3,396.5 |
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$ |
131.4 |
|
|
$ |
127.3 |
|
Income taxes payable |
|
15.5 |
|
|
|
— |
|
Total Current
Liabilities |
|
146.9 |
|
|
|
127.3 |
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
559.9 |
|
|
|
513.7 |
|
Decommissioning
liabilities |
|
75.2 |
|
|
|
57.1 |
|
Other non-current
liabilities |
|
3.0 |
|
|
|
3.1 |
|
Total Liabilities |
|
785.0 |
|
|
|
701.2 |
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$ |
3,702.9 |
|
|
$ |
3,693.3 |
|
Contributed surplus |
|
88.5 |
|
|
|
90.7 |
|
Accumulated other
comprehensive income (loss) |
|
18.2 |
|
|
|
(0.2 |
) |
Deficit |
|
(958.1 |
) |
|
|
(1,088.5 |
) |
Total Equity |
|
2,851.5 |
|
|
|
2,695.3 |
|
Total Liabilities and Equity |
$ |
3,636.5 |
|
|
$ |
3,396.5 |
|
|
ALAMOS GOLD
INC.Consolidated Statements of Comprehensive
Income(Unaudited - stated in millions of United States
dollars, except share and per share amounts)
|
For three months ended |
|
For twelve months ended |
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
OPERATING REVENUES |
$ |
226.6 |
|
|
$ |
186.0 |
|
|
$ |
748.1 |
|
|
$ |
683.1 |
|
|
|
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
|
|
|
Mining and processing |
|
86.0 |
|
|
|
87.4 |
|
|
|
312.6 |
|
|
|
339.0 |
|
Royalties |
|
3.3 |
|
|
|
4.4 |
|
|
|
10.2 |
|
|
|
17.4 |
|
COVID-19 costs |
|
— |
|
|
|
— |
|
|
|
6.5 |
|
|
|
— |
|
Amortization |
|
46.5 |
|
|
|
44.2 |
|
|
|
152.7 |
|
|
|
165.0 |
|
|
|
135.8 |
|
|
|
136.0 |
|
|
|
482.0 |
|
|
|
521.4 |
|
EXPENSES |
|
|
|
|
|
|
|
Exploration |
|
2.6 |
|
|
|
1.7 |
|
|
|
7.2 |
|
|
|
6.7 |
|
Corporate and
administrative |
|
5.7 |
|
|
|
5.2 |
|
|
|
21.0 |
|
|
|
19.8 |
|
Share-based compensation |
|
1.2 |
|
|
|
1.5 |
|
|
|
10.3 |
|
|
|
9.2 |
|
|
|
145.3 |
|
|
|
144.4 |
|
|
|
520.5 |
|
|
|
557.1 |
|
EARNINGS FROM
OPERATIONS |
|
81.3 |
|
|
|
41.6 |
|
|
|
227.6 |
|
|
|
126.0 |
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
|
|
|
Finance expense |
|
(1.3 |
) |
|
|
(0.4 |
) |
|
|
(4.3 |
) |
|
|
(2.5 |
) |
Foreign exchange gain
(loss) |
|
2.7 |
|
|
|
— |
|
|
|
(1.4 |
) |
|
|
0.3 |
|
Other gain (loss) |
|
3.1 |
|
|
|
2.6 |
|
|
|
(3.7 |
) |
|
|
5.1 |
|
EARNINGS BEFORE INCOME
TAXES |
$ |
85.8 |
|
|
$ |
43.8 |
|
|
$ |
218.2 |
|
|
$ |
128.9 |
|
|
|
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
|
|
|
Current income tax
expense |
|
(9.7 |
) |
|
|
5.8 |
|
|
|
(30.1 |
) |
|
|
(12.7 |
) |
Deferred income tax recovery
(expense) |
|
0.8 |
|
|
|
(11.6 |
) |
|
|
(43.9 |
) |
|
|
(20.1 |
) |
NET
EARNINGS |
$ |
76.9 |
|
|
$ |
38.0 |
|
|
$ |
144.2 |
|
|
$ |
96.1 |
|
|
|
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized gain on currency hedging instruments, net of taxes |
|
3.7 |
|
|
|
1.8 |
|
|
|
1.1 |
|
|
|
6.0 |
|
Unrealized gain on fuel hedging instruments, net of taxes |
|
0.4 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.5 |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized gain on equity securities, net of taxes |
|
9.9 |
|
|
|
3.5 |
|
|
|
23.8 |
|
|
|
2.5 |
|
Total other
comprehensive income |
$ |
14.0 |
|
|
$ |
5.3 |
|
|
$ |
25.0 |
|
|
$ |
9.0 |
|
COMPREHENSIVE
INCOME |
$ |
90.9 |
|
|
$ |
43.3 |
|
|
$ |
169.2 |
|
|
$ |
105.1 |
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE |
|
|
|
|
|
|
|
– basic |
$ |
0.20 |
|
|
$ |
0.10 |
|
|
$ |
0.37 |
|
|
$ |
0.25 |
|
–
diluted |
$ |
0.19 |
|
|
$ |
0.10 |
|
|
$ |
0.37 |
|
|
$ |
0.24 |
|
Weighted average number of
common shares outstanding (000's) |
|
|
|
|
|
|
|
– basic |
|
392,720 |
|
|
|
391,076 |
|
|
|
391,675 |
|
|
|
390,160 |
|
– diluted |
|
396,033 |
|
|
|
394,353 |
|
|
|
394,862 |
|
|
|
393,427 |
|
|
ALAMOS GOLD
INC.Consolidated Statements of Cash
Flows(Unaudited - stated in millions of United States
dollars)
|
For three months ended |
|
For twelve months ended |
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
CASH PROVIDED BY (USED
IN): |
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net earnings for the period |
$ |
76.9 |
|
|
$ |
38.0 |
|
|
$ |
144.2 |
|
|
$ |
96.1 |
|
Adjustments for items not
involving cash: |
|
|
|
|
|
|
|
Amortization |
|
46.5 |
|
|
|
44.2 |
|
|
|
153.8 |
|
|
|
165.0 |
|
Foreign exchange (gain) loss |
|
(2.7 |
) |
|
|
— |
|
|
|
1.4 |
|
|
|
(0.3 |
) |
Current income tax expense |
|
9.7 |
|
|
|
(5.8 |
) |
|
|
30.1 |
|
|
|
12.7 |
|
Deferred income tax expense |
|
(0.8 |
) |
|
|
11.6 |
|
|
|
43.9 |
|
|
|
20.1 |
|
Share-based compensation |
|
1.2 |
|
|
|
1.5 |
|
|
|
10.3 |
|
|
|
9.2 |
|
Finance expense |
|
1.3 |
|
|
|
0.4 |
|
|
|
4.3 |
|
|
|
2.5 |
|
Other items |
|
(5.6 |
) |
|
|
(8.2 |
) |
|
|
(5.1 |
) |
|
|
(12.2 |
) |
Changes in working capital and
taxes paid |
|
4.9 |
|
|
|
(3.9 |
) |
|
|
(14.5 |
) |
|
|
(32.7 |
) |
|
|
131.4 |
|
|
|
77.8 |
|
|
|
368.4 |
|
|
|
260.4 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Mineral property, plant and
equipment |
|
(73.4 |
) |
|
|
(72.9 |
) |
|
|
(246.1 |
) |
|
|
(263.6 |
) |
Repurchase of Island Gold
royalty |
|
— |
|
|
|
— |
|
|
|
(54.8 |
) |
|
|
— |
|
Acquisition of Trillium Mining
Corp. |
|
(19.5 |
) |
|
|
— |
|
|
|
(19.5 |
) |
|
|
— |
|
Proceeds from disposition of
equity securities |
|
8.6 |
|
|
|
— |
|
|
|
9.7 |
|
|
|
— |
|
Investment in equity
securities |
|
(1.1 |
) |
|
|
(2.4 |
) |
|
|
(3.4 |
) |
|
|
(4.0 |
) |
|
|
(85.4 |
) |
|
|
(75.3 |
) |
|
|
(314.1 |
) |
|
|
(267.6 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Proceeds from draw down of
credit facility |
|
— |
|
|
|
— |
|
|
|
100.0 |
|
|
|
— |
|
Repayment of credit
facility |
|
(100.0 |
) |
|
|
— |
|
|
|
(100.0 |
) |
|
|
— |
|
Proceeds from optional share
purchase plan |
|
8.3 |
|
|
|
— |
|
|
|
8.3 |
|
|
|
— |
|
Repayment of equipment
financing obligations |
|
(0.1 |
) |
|
|
(0.7 |
) |
|
|
(0.5 |
) |
|
|
(3.3 |
) |
Credit facility interest and
transaction fees |
|
(0.7 |
) |
|
|
(1.2 |
) |
|
|
(1.5 |
) |
|
|
(1.2 |
) |
Repurchase and cancellation of
common shares |
|
— |
|
|
|
— |
|
|
|
(5.5 |
) |
|
|
(11.4 |
) |
Proceeds from the exercise of
options |
|
0.1 |
|
|
|
— |
|
|
|
7.5 |
|
|
|
7.0 |
|
Dividends paid |
|
(7.4 |
) |
|
|
(3.9 |
) |
|
|
(23.9 |
) |
|
|
(15.6 |
) |
Proceeds from issuance of
flow-through shares |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7.5 |
|
|
|
(99.8 |
) |
|
|
(5.8 |
) |
|
|
(15.6 |
) |
|
|
(17.0 |
) |
|
|
— |
|
|
|
|
|
|
|
Effect of exchange rates on
cash and cash equivalents |
|
0.2 |
|
|
|
0.5 |
|
|
|
(1.0 |
) |
|
|
1.0 |
|
Net increase (decrease) in
cash and cash equivalents |
|
(53.6 |
) |
|
|
(2.8 |
) |
|
|
37.7 |
|
|
|
(23.2 |
) |
Cash and cash equivalents -
beginning of period |
|
274.1 |
|
|
|
185.6 |
|
|
|
182.8 |
|
|
|
206.0 |
|
CASH AND
CASH EQUIVALENTS - END OF YEAR |
$ |
220.5 |
|
|
$ |
182.8 |
|
|
$ |
220.5 |
|
|
$ |
182.8 |
|
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