Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
and year ended December 31, 2022.
“We closed 2022 with our strongest performance
of the year. This included record production and our lowest costs
of the year driving stronger free cash flow of $18 million in the
fourth quarter. We met our full year production and cost guidance,
with the latter coming in below the mid-point of guidance, a solid
result given industry-wide cost pressures. This reflects not only
the strong ongoing operational performance of all three mines, but
the quality of our assets,” said John A. McCluskey, President and
Chief Executive Officer.
“As outlined in our three-year guidance, we
expect this trend to continue with a 9% increase in production in
2023 and 17% decrease in all-in sustaining costs by 2025. We
continue to benefit from our investment in low-cost growth with La
Yaqui Grande performing extremely well and a key driver of our
near-term improving performance. We are also making significant
progress on the Phase 3+ Expansion at Island Gold which will be the
driver of a further increase in production and lower costs once
completed in 2026. Additionally, we continue to add value through
exploration with Mineral Reserves increasing for the fourth
consecutive year, at 3% higher grades. This reflects higher-grade
additions at Island Gold and PDA which we expect will be
high-margin ounces, supporting our growing, low-cost production
base,” Mr. McCluskey added.
Fourth Quarter
2022
- Record quarterly production of
134,200 ounces of gold, a 9% increase from the third quarter,
driven by strong performances at all operations including a
significant increase in production from the Mulatos District. Full
year production was in-line with the mid-point of guidance
- Mulatos District production
increased 15% from the third quarter to total 49,100 ounces, at
substantially lower costs driving mine-site free cash flow1 of
$28.8 million. This reflected the ramp up of low-cost production at
La Yaqui Grande
- Island Gold had its strongest
quarter of 2022, producing 40,500 ounces while continuing to make
substantial progress on the Phase 3+ Expansion including completing
the pre-sink of the shaft
- Young-Davidson continued to be a
consistent performer, producing 44,600 ounces and generating
mine-site free cash flow1 of $24.0 million
- Sold 133,164 ounces of gold at an
average realized price of $1,741 per ounce, for record revenues of
$231.9 million. The average realized gold price was $15 per ounce
above the London PM fix for the quarter
- Total cash costs1 of $810 per
ounce, and all-in sustaining costs ("AISC"1) of $1,138 per ounce
were the lowest of the year, and below annual guidance, reflecting
low-cost production growth at La Yaqui Grande, and the weaker
Canadian dollar. Full year total cash costs and AISC were both
below the mid-point of annual guidance, a solid performance given
industry-wide inflationary pressures
- Realized adjusted net earnings1 for
the quarter of $33.7 million, or $0.09 per share1. Adjusted net
earnings includes adjustments for net unrealized foreign exchange
gains recorded within both deferred taxes and foreign exchange of
$12.0 million, partially offset by other losses totaling $5.1
million
- Reported net earnings of $40.6
million
- Generated cash flow from operating
activities of $102.3 million ($109.3 million, or $0.28 per share,
before changes in working capital1), the highest quarterly cash
flow generated in the past two years
- Free cash flow1 increased to $17.5
million driven by strong operating results. The Company expects to
continue generating strong free cash flow over the next several
years while funding the Phase 3+ Expansion at Island Gold
- Paid a quarterly dividend of $9.9 million, or $0.025 per share
(annualized rate of $0.10)
- Cash and cash equivalents increased
to $129.8 million at the end of the year, along with equity
securities of $18.6 million, and the Company remains debt-free
- Provided exploration updates at
Island Gold and Puerto Del Aire (Mulatos), extending high-grade
gold mineralization beyond existing Mineral Reserves and Resources
at both deposits
- Announced the sale of non-core
royalties, including a silver stream on the Esperanza Project in
Mexico, for proceeds of $5 million. The sale is expected to close
by the end of February, 2023
Full Year 2022
- Produced 460,400 ounces of gold,
achieving the mid-point of annual guidance. All three operations
performed well, meeting their respective production guidance
- Young-Davidson produced 192,200
ounces, driving record mine-site free cash flow1 of $101.3
million
- Island Gold produced 133,700
ounces, while self funding $102.0 million of growth capital with
the ramp up of construction activities on the Phase 3+
Expansion
- Mulatos produced 134,500 ounces,
with a substantial improvement in second half production and costs
following the completion of construction at La Yaqui Grande
- Sold 456,574 ounces of gold at an
average realized price of $1,799 per ounce for revenues of $821.2
million
- Total cash costs1 of $884 per
ounce, AISC1 of $1,204 per ounce, and cost of sales of $1,334 per
ounce were in line with annual guidance
- Realized adjusted net earnings1 for
the year of $107.9 million, or $0.28 per share1. Adjusted net
earnings includes adjustments for a non-cash after tax inventory
net realizable value adjustment at Mulatos of $22.4 million, a
non-cash, after tax impairment charge of $26.7 million triggered by
the sale of the Esperanza Project, a net unrealized foreign
exchange loss recorded within both deferred taxes and foreign
exchange of $17.7 million, and other losses totaling $4.0
million
- Reported net earnings of $37.1
million, or $0.09 per share
- Cash flow from operating activities
of $298.5 million (including $361.6 million, or $0.92 per share
before changes in working capital1)
- Returned $47.3 million to
shareholders, including $39.2 million paid in dividends and $8.2
million of shares repurchased under the Company's Normal Course
Issuer Bid ("NCIB") at a price of $7.41 per share
- Issued three-year guidance on
January 12, 2023, which included increased production guidance for
2023 and 2024. Production is expected to increase 9% in 2023 at
declining costs, with an 17% decrease in AISC expected by 2025.
This is expected to drive strong free cash flow over the next three
years while continuing to fund the Phase 3+ Expansion
- Reported year-end 2022 Mineral
Reserves of 10.5 million ounces of gold, a 2% increase from the end
of 2021 having more than replaced mining depletion for the fourth
consecutive year. Mineral Reserve grades also increased 3% driven
by higher grade additions at Island Gold and Mulatos. Additionally,
Measured and Indicated Mineral Resources increased 14% to 3.9
million ounces and Inferred Mineral Resources increased 2% to 7.1
million ounces
(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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$231.9 |
|
$203.1 |
|
$821.2 |
|
$823.6 |
|
Cost of sales (1) |
$153.4 |
|
$138.4 |
|
$608.9 |
|
$534.1 |
|
Earnings (loss) from operations |
$61.6 |
|
$49.8 |
|
$111.5 |
|
$14.9 |
|
Earnings (loss) before income taxes |
$52.6 |
|
$43.6 |
|
$102.4 |
|
$2.3 |
|
Net earnings (loss) |
$40.6 |
|
$29.5 |
|
$37.1 |
|
($66.7 |
) |
Adjusted net earnings (2) |
$33.7 |
|
$36.7 |
|
$107.9 |
|
$162.1 |
|
Earnings before interest, depreciation and amortization (2) |
$100.4 |
|
$88.0 |
|
$351.7 |
|
$402.0 |
|
Cash provided by operations before working capital and cash
taxes(2) |
$109.3 |
|
$91.8 |
|
$361.6 |
|
$410.9 |
|
Cash provided by operating activities |
$102.3 |
|
$88.1 |
|
$298.5 |
|
$356.5 |
|
Capital expenditures (sustaining) (2) |
$26.5 |
|
$32.2 |
|
$95.2 |
|
$113.4 |
|
Capital expenditures (growth) (2) (3) (5) |
$50.2 |
|
$51.2 |
|
$191.9 |
|
$218.0 |
|
Capital expenditures (capitalized exploration) (4) |
$8.1 |
|
$8.2 |
|
$26.6 |
|
$27.0 |
|
Free cash flow (2) |
$17.5 |
|
($3.5 |
) |
($15.2 |
) |
($1.9 |
) |
Operating Results |
|
|
|
|
Gold production (ounces) |
|
134,200 |
|
|
112,500 |
|
|
460,400 |
|
|
457,200 |
|
Gold sales (ounces) |
|
133,164 |
|
|
112,966 |
|
|
456,574 |
|
|
457,517 |
|
Per Ounce Data |
|
|
|
|
Average realized gold price |
$1,741 |
|
$1,798 |
|
$1,799 |
|
$1,800 |
|
Average spot gold price (London PM Fix) |
$1,726 |
|
$1,795 |
|
$1,800 |
|
$1,799 |
|
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,152 |
|
$1,225 |
|
$1,334 |
|
$1,167 |
|
Total cash costs per ounce of gold sold (2) |
$810 |
|
$843 |
|
$884 |
|
$794 |
|
All-in sustaining costs per ounce of gold sold (2) |
$1,138 |
|
$1,237 |
|
$1,204 |
|
$1,135 |
|
Share Data |
|
|
|
|
Earnings (loss) earnings per share, basic and diluted |
$0.10 |
|
$0.08 |
|
$0.09 |
|
($0.17 |
) |
Adjusted earnings per share, basic and diluted(2) |
$0.09 |
|
$0.09 |
|
$0.28 |
|
$0.41 |
|
Weighted average common shares outstanding (basic) (000’s) |
|
393,034 |
|
|
392,333 |
|
|
392,172 |
|
|
392,649 |
|
Financial Position (in millions) |
|
|
|
|
Cash and cash equivalents(5) |
|
|
$129.8 |
|
$172.5 |
|
(1) Cost of sales includes mining and processing
costs, royalties, and amortization expense. For the year ended
December 31, 2022, cost of sales includes a $33.9 million
non-cash inventory net realizable value adjustment, respectively,
at Mulatos District.(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.
(4) Includes capitalized exploration at Island Gold, Young-Davidson
and Mulatos District.(5) Includes capital advances of nil for the
three and twelve months ended December 31, 2022 (nil and $9.8
million for the three and twelve months ended December 31,
2021).(6) Comparative cash and cash equivalents balance as at
December 31, 2021.
|
Three Months Ended December 31, |
|
Years Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
|
|
|
Young-Davidson |
|
44,600 |
|
|
51,900 |
|
|
192,200 |
|
|
195,000 |
|
Island Gold |
|
40,500 |
|
|
37,500 |
|
|
133,700 |
|
|
140,900 |
|
Mulatos District(7) |
|
49,100 |
|
|
23,100 |
|
|
134,500 |
|
|
121,300 |
|
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
|
44,781 |
|
|
53,006 |
|
|
192,186 |
|
|
194,937 |
|
Island Gold |
|
39,145 |
|
|
38,101 |
|
|
130,652 |
|
|
139,946 |
|
Mulatos District |
|
49,238 |
|
|
21,859 |
|
|
133,736 |
|
|
122,634 |
|
Cost of sales (in
millions)(1) |
|
|
|
|
Young-Davidson |
$62.2 |
|
$62.6 |
|
$250.5 |
|
$244.4 |
|
Island Gold |
$35.2 |
|
$33.1 |
|
$120.4 |
|
$112.3 |
|
Mulatos District |
$56.0 |
|
$42.7 |
|
$238.0 |
|
$177.4 |
|
Cost of sales per ounce of gold sold (includes
amortization) |
|
|
|
Young-Davidson |
$1,389 |
|
$1,181 |
|
$1,303 |
|
$1,254 |
|
Island Gold |
$899 |
|
$869 |
|
$922 |
|
$802 |
|
Mulatos District(1) |
$1,137 |
|
$1,953 |
|
$1,780 |
|
$1,447 |
|
Total cash costs per ounce of gold sold
(2) |
|
|
|
|
Young-Davidson |
$942 |
|
$775 |
|
$878 |
|
$846 |
|
Island Gold |
$605 |
|
$575 |
|
$637 |
|
$529 |
|
Mulatos District |
$851 |
|
$1,473 |
|
$1,134 |
|
$1,013 |
|
Mine-site all-in sustaining costs per ounce of gold
sold (2),(3) |
|
|
Young-Davidson |
$1,284 |
|
$1,017 |
|
$1,133 |
|
$1,072 |
|
Island Gold |
$863 |
|
$871 |
|
$918 |
|
$863 |
|
Mulatos District |
$922 |
|
$1,899 |
|
$1,241 |
|
$1,240 |
|
Capital
expenditures (sustaining, growth, capitalized exploration and
capital advances) (in millions)(2) |
|
Young-Davidson (4) |
$20.6 |
|
$24.8 |
|
$71.5 |
|
$88.6 |
|
Island Gold (5) |
$53.9 |
|
$27.4 |
|
$157.3 |
|
$120.0 |
|
Mulatos District (6) |
$5.5 |
|
$34.2 |
|
$62.7 |
|
$128.3 |
|
Other |
$4.8 |
|
$5.2 |
|
$22.2 |
|
$21.5 |
|
(1) Cost of sales includes mining and processing
costs, royalties, and amortization. For the year ended December 31,
2022, cost of sales includes a $33.9 million non-cash
inventory net realizable value adjustment, at the Mulatos
District.(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 capitalized exploration at Young-Davidson of
$1.5 million and $5.0 million for the three and twelve months ended
December 31, 2022 ($2.7 million and $6.5 million for the three and
twelve months ended December 31, 2021).(5) Includes capitalized
exploration at Island Gold of $4.9 million and $18.8 million for
the three and twelve months ended December 31, 2022 ($5.2 million
and $18.8 million for the three and twelve months ended December
31, 2021). Island Gold capital expenditures in 2021 exclude an NPI
royalty repurchased for $15.7 million.(6) Includes capitalized
exploration at Mulatos District of $1.7 million and $2.8 million
for the three and twelve months ended December 31, 2022 ($0.3 and
$1.7 million for the three and twelve months ended December 31,
2021).(7) The Mulatos district includes both the Mulatos pit, as
well as La Yaqui Grande
Environment, Social and Governance
Summary Performance
Health and Safety
- Total recordable
injury frequency rate1("TRIFR") of 1.26, a 39% decrease from the
third quarter of 2022
- Lost time injury
frequency rate1 ("LTIFR") of 0.09, an increase from zero in the
third quarter of 2022; one fatal accident occurred at the
Young-Davidson mine during the quarter, as discussed below
- Full-year TRIFR
of 1.59 and LTIFR of 0.06, a decline of 22% and 71%, respectively
from 2021
On the afternoon of November 29th, employees, family and friends
were shocked and deeply saddened by the loss of a colleague in a
fatal accident. The tragic accident involved a piece of mobile
equipment underground at the Young-Davidson mine. The Company has
cooperated fully with all investigative authorities.
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.
Environment
- Zero significant
environmental incidents in the fourth quarter of 2022 and for the
full year
- Island Gold
received additional construction permits for the mill expansion and
shaft site storage areas
- Young Davidson
submitted a Closure Plan Amendment to the Ministry of Mines
- Fish habitat
compensation projects were completed at Young-Davidson as part of
the mine’s commitments for the newly constructed tailings
facility
- Continued to
advance federal and provincial permitting at the Lynn Lake Gold
project
One reportable spill occurred during the fourth quarter at
Young-Davidson when a vendor’s compressed natural gas ("CNG")
trailer malfunctioned, causing the release of some of its contents.
The incident was immediately reported to local authorities and is
being investigated by the vendor to determine the cause of the
release. There were no injuries reported in relation to the
incident and there was no impact to air intake fans feeding
underground operations. The Company is committed to preserving the
long-term health and viability of the natural environment that
surround its operations and projects. This includes investing in
new initiatives to reduce our environmental footprint with the goal
of minimizing the environmental impacts of our activities and
offsetting any impacts that cannot be fully mitigated or
rehabilitated.
Community
Ongoing donations, medical support and
infrastructure investments being provided to local communities,
including:
- Community road
repairs and maintenance following heavy rainfall in the quarter at
Mulatos
- Donation to, and
partnership with, the Lady Dunn Health Centre’s Wish Campaign to
support healthcare initiatives for the Wawa and regional
community
- Health
consultations at the Matarachi community clinic (dentistry,
pediatrics, vaccinations, and general consultations) and campaigns
in support of Breast Cancer Awareness Month
- Cultural and
artistic programs, and community celebrations at Matarachi for Day
of the Dead and Christmas
- Scholarship
payments for students in Matarachi and Sahuaripa, and sponsorship
of the Young Mining Professionals Scholarship Fund
Alamos believes that excellence in
sustainability provides a net benefit to all stakeholders. The
Company continues to engage with local communities to understand
local challenges and priorities. Ongoing investments in local
infrastructure, health care, education, cultural and community
programs remain a focus of the Company.
Governance and Disclosure
- Finalized six
sustainability standards during the quarter and 34 to-date as part
of Alamos’ Sustainability Performance Management Framework that
addresses governance, health & safety, security, environment,
and community relations management
- Top 35% ranking
in 2022 Globe and Mail Board Games, a ranking of Canada’s corporate
boards
- Received an ‘A’
ESG rating within Alamos’ most recent MSCI ESG Ratings Report
- Received a
‘Medium’ ESG Risk Rating from Sustainalytics, positioning Alamos in
the top 22nd percentile of its industry
- Received a ‘B-’
climate change score from the Carbon Disclosure Project, ahead of
the industry ‘C’ average
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. During the quarter, the Company continued
to advance 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.
(1) Frequency rate is calculated as incidents
per 200,000 hours worked.
Outlook and Strategy
2023 Guidance |
|
Young-Davidson |
Island Gold |
Mulatos |
Lynn Lake |
Total |
Gold production (000’s ounces) |
185 - 200 |
120 - 135 |
175 - 185 |
|
480 - 520 |
Cost of sales, including amortization (in
millions)(3) |
|
|
|
|
$625 |
Cost of sales, including amortization ($ per
ounce)(3) |
|
|
|
|
$1,250 |
Total cash costs ($ per ounce)(1) |
$900 - $950 |
$600 - $650 |
$900 - $950 |
— |
$825 - $875 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
|
$1,125 - $1,175 |
Mine-site all-in sustaining costs ($ per
ounce)(1)(2) |
$1,175 - $1,225 |
$950 - $1,000 |
$950 - $1,000 |
— |
|
Capital expenditures (in millions) |
|
|
|
|
|
Sustaining capital(1) |
$50 - $55 |
$45 - $50 |
$10 |
— |
$105 - $115 |
Growth capital(1) |
$5 - $10 |
$165 - $185 |
$5 - $10 |
$12 |
$187 - $217 |
Total Sustaining and Growth
Capital(1) |
$55 - $65 |
$210 - $235 |
$15 - $20 |
$12 |
$292 - $332 |
Capitalized exploration(1) |
$5 |
$11 |
$4 |
$5 |
$25 |
Total capital expenditures and capitalized
exploration(1) |
$60 - $70 |
$221 - $246 |
$19 - $24 |
$17 |
$317 - $357 |
(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) For the
purposes of calculating mine-site all-in sustaining costs at
individual mine sites, the Company does not include an allocation
of corporate and administrative and share based compensation
expenses to the mine sites. (3) Cost of sales includes mining and
processing costs, royalties, and amortization expense, and is
calculated based on the mid-point of total cash cost guidance.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.
The Company had a successful 2022, continuing to
deliver on its long-term objectives including strong operational
execution at all its operations. Full year production was in-line
with guidance and total cash costs and AISC were below the
mid-point of guidance, a solid performance given industry-wide
inflationary pressures. This included a strong finish to the year
with record quarterly production and sales in the fourth quarter of
2022 at the lowest costs of the year, driving strong free cash flow
growth. Mulatos was a significant contributor to this growth with
the ramp up of low cost production at La Yaqui Grande, as was
Young-Davidson which generated over $100 million of mine-site free
cash flow for the second consecutive year.
In addition, the Company delivered on several
key catalysts in 2022 which have solidified its strong outlook.
This included completing construction at La Yaqui Grande mid-year,
and announcing the Phase 3+ Expansion of Island Gold, which will
create a larger, more profitable and valuable operation. At Island
Gold, the Phase 3+ Expansion is advancing well, while the strong
operational performance continued to self-fund the ramp up in
construction activities.
The Company continues to add value through
successful exploration programs at its operating mines. This
included more than replacing mining depletion to drive a 2%
increase in Global Mineral Reserves to 10.5 million ounces (200 mt
grading 1.63 g/t Au) and 3% increase in grades. This was driven by
higher-grade additions at Island Gold and Puerto Del Aire ("PDA")
in the Mulatos District. Island Gold continues to grow with Mineral
Reserves increasing 9% to 1.5 million ounces, at 6% higher grades.
PDA's Mineral Reserves increased 70% to 728,000 ounces with grades
also increasing 4%. With both deposits open in multiple directions,
and significant exploration programs planned at both operations,
there is excellent potential for this growth to continue.
The Company provided three-year production and
operating guidance in January 2023, which outlined higher
production at significantly lower costs over the next three years.
Refer to the Company’s January 12, 2023 guidance press release for
a summary of the key assumptions and related risks associated with
the comprehensive 2023 guidance and three-year production, cost and
capital outlook. Production is expected to increase to between
480,000 and 520,000 ounces in 2023, a 9% increase from 2022, and
remain at similar levels in 2024 and 2025. Production guidance was
increased from previous guidance for 2023 and 2024 with stronger
production expected from Island Gold and Mulatos. Additional upside
potential exists in 2025 as production guidance excludes the
higher-grade PDA project in the Mulatos District. This upside is
expected to be outlined in a new development plan for PDA to be
completed in the second half of 2023, which will incorporate the
70% larger Mineral Reserve outlined in the recently released 2022
Mineral Reserve and Resource statement.
As outlined in the 2023 guidance, production is
expected to be relatively balanced between the first and second
half of 2023, with first quarter production expected to be between
120,000 and 125,000 ounces. AISC are expected to be slightly above
the range of full year guidance during the first quarter and trend
lower through the year. This reflects lower planned grades at
Young-Davidson and higher sustaining capital at Mulatos during the
first half of the year.
Total cash costs are expected to decrease 4% in
2023 to between $825 and $875 per ounce, and 21% by 2025 to between
$650 and $750 per ounce, driven by low-cost production growth from
La Yaqui Grande and Island Gold. A further improvement in costs is
expected in 2026 following the completion of the Phase 3+
Expansion. Similarly, AISC are expected to decrease 4% in 2023 and
17% by 2025 to between $950 and $1,050 per ounce.
Capital spending is expected to be consistent
with 2022, with approximately 55% of full year capital expected to
be spent during the first half of the year. Capital spending and
costs are expected to decline in the second half of the year, which
is anticipated to drive stronger free cash flow.
Gold production from Young-Davidson in 2023 is
expected to be consistent with 2022, reflecting similar grades and
mining and processing rates. Total cash costs and mine-site AISC
are expected to increase slightly from 2022 levels, primarily
reflecting industry-wide cost inflation. Costs are expected to
remain at similar levels over the next three years. Capital
spending in 2023 (excluding exploration) is expected to range
between $55 and $65 million, similar to 2022. For the second
consecutive year, Young-Davidson generated over $100 million of
mine-site free cash flow reflecting strong operational consistency.
With a 15-year Mineral Reserve life, Young-Davidson is well
positioned to generate similar free cash flow in 2023 and over the
long-term.
Island Gold is expected to produce at similar
levels in 2023 as in 2022 with similar grades and processing rates.
As outlined in the Phase 3+ Expansion study released in June 2022,
grades mined are expected to increase in 2024, driving production
higher. A further increase in grades and increase in mining rates
toward the latter part of 2025, is expected to drive another
increase in production in 2025. Total cash costs and mine-site AISC
at Island Gold are expected to increase slightly in 2023 compared
to 2022, reflecting industry-wide cost inflation. Costs are
expected to decrease slightly in 2024 and 2025, reflecting higher
grades processed. Capital spending at Island Gold (excluding
exploration) is expected to be between $210 and $235 million in
2023 as spending on the Phase 3+ Expansion ramps up, and is
expected to remain at similar levels in 2024 and 2025 and then drop
considerably in 2026 once the expansion is complete.
Combined gold production from the Mulatos
District (including La Yaqui Grande) is expected to be between
175,000 and 185,000 ounces in 2023. This represents a 34% increase
from 2022 driven by a full year of low-cost production from La
Yaqui Grande. Gold production is expected to decrease to a range of
140,000 to 150,000 ounces in 2024 with La Yaqui Grande providing
the majority of production and driving a further improvement in
costs. Production guidance for 2025 of 110,000 to 120,000 ounces
includes La Yaqui Grande only and excludes potential upside from
the PDA higher-grade underground deposit. This upside is expected
to be outlined in a new development plan for PDA to be completed in
the second half of 2023. Total cash costs are expected to remain
relatively stable through 2023 while mine-site AISC are expected to
decrease in the second half of 2023 with the majority of sustaining
capital to be spent during the first half of the year. Capital
spending at the Mulatos District is expected to total $15 to $20
million in 2023, a considerable decrease from 2022, with La Yaqui
Grande construction complete. Capital spending is expected to
decrease further in 2024 and 2025 (excluding PDA development).
Capital spending on the Lynn Lake project,
excluding exploration, is expected to total $12 million. The focus
will be on advancing detailed engineering and permitting, as well
as completing an updated Feasibility Study. The Environmental
Impact Statement for Lynn Lake is expected to be approved during
the first half of 2023 after which the Company expects to release
an updated Feasibility Study. Additionally, $5 million has been
budgeted for exploration at Lynn Lake for total spending of $17
million.
The global exploration budget for 2023 is $47
million, consistent with spending in 2022. The Mulatos District
accounts for the largest portion with an increased budget at $17
million, followed by $14 million at Island Gold, $8 million at
Young-Davidson and $5 million at Lynn Lake. The increased budget at
Mulatos was partially offset by a lower exploration budget at
Island Gold reflecting an expanded underground drilling program,
which is lower cost than surface directional drilling. The
exploration focus in 2023 will follow up on another successful
program in 2022, with Mineral Reserves increasing for the fourth
consecutive year to 10.5 million ounces of gold, and grades
increasing 3%.
The Company's liquidity position remains strong,
ending the quarter with $129.8 million of cash and cash
equivalents, $18.6 million in equity securities, and no debt.
Additionally, the Company has a $500 million undrawn credit
facility, providing total liquidity of $629.8 million. As part of a
balanced approach to growth and capital allocation, the current
focus of growth capital is the Phase 3+ Expansion at Island Gold.
With no significant capital expected to be spent on developing Lynn
Lake until the Phase 3+ Expansion is well underway, the Company
remains well positioned to fund this growth internally while
generating strong free cash flow over the next several years. The
Company expects a further increase in free cash flow in 2026 with
the completion of the Phase 3+ Expansion.
Fourth Quarter and Year-End 2022
results
Young-Davidson Financial and Operational
Review
|
Three Months Ended December 31, |
|
Years Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
44,600 |
|
|
51,900 |
|
|
192,200 |
|
|
195,000 |
|
Gold
sales (ounces) |
|
44,781 |
|
|
53,006 |
|
|
192,186 |
|
|
194,937 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$78.1 |
|
$95.2 |
|
$347.8 |
|
$350.5 |
|
Cost of sales (1) |
$62.2 |
|
$62.6 |
|
$250.5 |
|
$244.4 |
|
Earnings from operations |
$15.6 |
|
$31.9 |
|
$93.0 |
|
$105.4 |
|
Cash provided by operating
activities |
$44.6 |
|
$55.2 |
|
$172.8 |
|
$188.9 |
|
Capital expenditures
(sustaining) (2) |
$15.2 |
|
$12.8 |
|
$48.8 |
|
$43.8 |
|
Capital expenditures (growth)
(2) |
$3.9 |
|
$9.3 |
|
$17.7 |
|
$38.3 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.5 |
|
$2.7 |
|
$5.0 |
|
$6.5 |
|
Mine-site free cash flow
(2) |
$24.0 |
|
$30.4 |
|
$101.3 |
|
$100.3 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,389 |
|
$1,181 |
|
$1,303 |
|
$1,254 |
|
Total cash costs per ounce of gold sold (2) |
$942 |
|
$775 |
|
$878 |
|
$846 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,284 |
|
$1,017 |
|
$1,133 |
|
$1,072 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
661,012 |
|
|
758,089 |
|
|
2,783,831 |
|
|
2,879,662 |
|
Tonnes of ore mined per day |
|
7,185 |
|
|
8,240 |
|
|
7,627 |
|
|
7,889 |
|
Average grade of gold (4) |
|
2.32 |
|
|
2.47 |
|
|
2.30 |
|
|
2.31 |
|
Metres developed |
|
2,731 |
|
|
3,116 |
|
|
11,664 |
|
|
12,367 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
697,816 |
|
|
723,247 |
|
|
2,859,608 |
|
|
2,883,241 |
|
Tonnes of ore processed per day |
|
7,585 |
|
|
7,861 |
|
|
7,835 |
|
|
7,899 |
|
Average grade of gold (4) |
|
2.31 |
|
|
2.47 |
|
|
2.31 |
|
|
2.31 |
|
Contained ounces milled |
|
51,814 |
|
|
57,459 |
|
|
212,548 |
|
|
213,769 |
|
Average recovery rate |
|
91 |
% |
|
91 |
% |
|
91 |
% |
|
91 |
% |
(1) Cost of sales includes mining and processing
costs, royalties and amortization.(2) Refer to the “Non-GAAP
Measures and Additional GAAP Measures” disclosure at the end of
this press release and associated MD&A for a description and
calculation of these measures. (3) For the purposes of calculating
mine-site all-in sustaining costs, the Company does not include an
allocation of corporate and administrative and share based
compensation expenses. (4) Grams per tonne of gold ("g/t Au").
Young-Davidson produced 44,600 ounces of gold in
the fourth quarter, lower than the prior year period reflecting
both lower tonnes and grades processed. For the year,
Young-Davidson produced 192,200 ounces achieving the mid-point of
annual production guidance.
Underground mining rates were lower than the
prior year period and target, averaging 7,185 tpd in the fourth
quarter and 7,627 tpd for the full year. Mining rates in the
quarter were impacted by unscheduled downtime for maintenance on
the underground conveyor in the fourth quarter. In addition, mining
activity in the quarter was paused for a number of days to
investigate the tragic accident on the ramp system which resulted
in a fatality in November. Underground mining rates have returned
to normal levels in January, averaging more than 8,000 tpd, and are
expected to remain at similar levels through the rest of the first
quarter of 2023. Grades mined averaged 2.32 g/t Au in the fourth
quarter and 2.30 g/t Au for the full year, both consistent with
annual guidance of between 2.15 and 2.35 g/t Au.
Mill throughput averaged 7,585 tpd in the fourth
quarter with grades processed averaging 2.31 g/t Au. Milling rates
decreased from the first three quarters of 2022 reflecting
additional time to complete a planned mill liner change in the
fourth quarter. For the full year, milling rates averaged 7,835
tpd, consistent with the prior year. Milling rates exceeded mining
rates during the quarter with underground ore mined and stockpiled
in previous quarters supplementing mill feed. Mill recoveries
averaged 91% in the quarter and for the year, in line with guidance
and the prior year periods.
Financial Review
Fourth quarter revenues of $78.1 million were
18% lower than the prior year period reflecting less ounces sold.
For the full year revenues of $347.8 million were 1% lower than the
prior year, primarily driven by less ounces sold.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $62.2
million in the fourth quarter were consistent with the prior year
period, due to less ounces sold offset by higher unit mining costs.
Underground unit mining costs were CAD $51 per tonne in the
quarter, higher than the prior year and previous quarters,
primarily due to the lower mining rates experienced in the quarter,
as well as inflationary cost pressures. Cost of sales of $250.5
million for the year were higher than the comparable period given
higher input costs, offset by less ounces sold and a weaker
Canadian dollar.
Total cash costs of $942 per ounce in the fourth
quarter were 22% higher than the prior year period driven by the
higher unit mining costs in the quarter and lower grades processed,
partially offset by the weaker Canadian dollar. Mine-site AISC of
$1,284 per ounce in the fourth quarter were 26% higher than the
prior year period, consistent with the increase in total cash
costs. Total cash costs of $878 and mine-site AISC of $1,133 for
the full year were both higher than the comparable period but in
line with annual guidance.
Capital expenditures in the quarter included
$15.2 million of sustaining capital and $3.9 million of growth
capital. In addition, $1.5 million was invested in capitalized
exploration in the quarter. Capital expenditures, inclusive of
capitalized exploration totaled $71.5 million in 2022, a 19%
decrease from the prior year and in line with annual guidance.
Young-Davidson has consistently generated strong
free cash flow since completion of the lower mine expansion in
2020, including mine-site free cash flow of $24.0 million in the
fourth quarter of 2022 and $101.3 million for the year. This marks
the second consecutive year in which the operation has generated in
excess of $100 million of mine-site free cash flow. With a 15 year
Mineral Reserve life, Young-Davidson is well positioned to generate
similar free cash flow in 2023 and over the long-term.
Island Gold Financial and Operational
Review
|
Three Months Ended December 31, |
|
Years Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
40,500 |
|
|
37,500 |
|
|
133,700 |
|
|
140,900 |
|
Gold
sales (ounces) |
|
39,145 |
|
|
38,101 |
|
|
130,652 |
|
|
139,946 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$68.0 |
|
$68.6 |
|
$235.3 |
|
$252.0 |
|
Cost of sales (1) |
$35.2 |
|
$33.1 |
|
$120.4 |
|
$112.3 |
|
Earnings from operations |
$32.1 |
|
$34.0 |
|
$110.2 |
|
$135.0 |
|
Cash provided by operating
activities |
$39.1 |
|
$43.2 |
|
$148.1 |
|
$173.1 |
|
Capital expenditures
(sustaining) (2) |
$10.1 |
|
$11.2 |
|
$36.5 |
|
$46.7 |
|
Capital expenditures (growth)
(2) (5) |
$38.9 |
|
$11.0 |
|
$102.0 |
|
$54.5 |
|
Capital expenditures
(capitalized exploration) (2) |
$4.9 |
|
$5.2 |
|
$18.8 |
|
$18.8 |
|
Mine-site free cash flow (2) |
($14.8 |
) |
$15.8 |
|
($9.2 |
) |
$53.1 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$899 |
|
$869 |
|
$922 |
|
$802 |
|
Total cash costs per ounce of gold sold (2) |
$605 |
|
$575 |
|
$637 |
|
$529 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$863 |
|
$871 |
|
$918 |
|
$863 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
101,045 |
|
|
109,541 |
|
|
420,801 |
|
|
438,731 |
|
Tonnes of ore mined per day ("tpd") |
|
1,098 |
|
|
1,191 |
|
|
1,153 |
|
|
1,202 |
|
Average grade of gold (4) |
|
12.13 |
|
|
10.98 |
|
|
10.03 |
|
|
10.27 |
|
Metres developed |
|
2,109 |
|
|
1,906 |
|
|
7,114 |
|
|
7,472 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
119,924 |
|
|
114,689 |
|
|
456,592 |
|
|
435,297 |
|
Tonnes of ore processed per day |
|
1,304 |
|
|
1,247 |
|
|
1,251 |
|
|
1,193 |
|
Average grade of gold (4) |
|
10.70 |
|
|
10.51 |
|
|
9.64 |
|
|
10.35 |
|
Contained ounces milled |
|
41,274 |
|
|
38,742 |
|
|
141,530 |
|
|
144,804 |
|
Average recovery rate |
|
97 |
% |
|
96 |
% |
|
96 |
% |
|
96 |
% |
(1) Cost of sales includes mining and processing
costs, royalties, and amortization.(2) Refer to the “Non-GAAP
Measures and Additional GAAP Measures” disclosure at the end of
this press release and associated MD&A for a description and
calculation of these measures. (3) For the purposes of calculating
mine-site all-in sustaining costs, the Company does not include an
allocation of corporate and administrative and share based
compensation expenses. (4) Grams per tonne of gold ("g/t Au").(5)
Includes capital advances of nil and $1.4 million for the three and
twelve months ended December 31, 2022 (nil and $1.4 million for the
three and twelve months ended December 31, 2021).
Island Gold produced 40,500 ounces in the fourth
quarter of 2022, an 8% improvement from the prior year period
reflecting higher grades mined and higher tonnes processed. For the
full year, Island Gold produced 133,700 ounces, at the high end of
the production guidance range.
Underground mining rates averaged 1,098 tpd in
the fourth quarter, lower than planned due to reduced equipment
availability. Mining rates have returned to planned levels,
averaging 1,200 tpd in January 2023. Full year underground mining
rates averaged 1,153 tpd, slightly below annual guidance. Grades
mined averaged 12.13 g/t Au in the fourth quarter and 10.03 g/t Au
for the full year, the latter towards the upper end of full year
guidance.
Mill throughput averaged 1,304 tpd, 9% above
annual guidance of 1,200 tpd, reflecting the processing of 5,800
tonnes of Island Gold stockpiled ore at the Young-Davidson mill.
Given current permit limits at Island Gold, excess stockpiles were
trucked to Young-Davidson during the second and third quarters and
processed as capacity was available at the Young-Davidson mill,
boosting production and cash flow. No further stockpiles were
trucked to Young-Davidson during the fourth quarter with the excess
stockpiles at Island Gold having now been processed by the end of
the year. Mill recoveries averaged 97% in the quarter and 96% for
the full year, both in line with guidance and the prior year
periods.
Financial Review
Island Gold generated revenues of $68.0 million
in the fourth quarter, consistent with the prior year period,
driven by more ounces sold, offset by a lower realized gold price.
For the year, revenues were $235.3 million, lower than the prior
year as a result of less ounces sold.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $35.2 million in the
fourth quarter were 6% higher than the prior year period,
reflecting higher unit mining and processing costs and more tonnes
processed, partially offset by a weaker Canadian dollar. Cost of
sales of $120.4 million for the year were higher than the
comparable period given similar reasons.
Total cash costs of $605 per ounce in the fourth
quarter were higher than the prior year period, due to higher
mining and processing costs, partially offset by higher grades
processed and the weaker Canadian dollar. Mine-site AISC of $863
per ounce in the fourth quarter were lower than the prior year
period due to the timing of sustaining capital expenditures. Total
cash costs and mine-site AISC for the full year were both above the
top end of guidance and higher than the comparable period as a
result of lower grades processed, reflecting the processing of
lower grade stockpiled ore at Young-Davidson which increased
production and cash flow but reflect a higher cost structure.
Total capital expenditures were $53.9 million in
the fourth quarter, including $4.9 million of capitalized
exploration. Spending ramped up significantly on the Phase 3+
Expansion during the second half of the year, including shaft site
preparation and clearing. This included the pre-sinking of the
shaft which was completed down to its 42 metre final depth in
November. In addition, capital spending was focused on lateral
development and other surface infrastructure. For 2022, capital
spending was $157.3 million, inclusive of capitalized exploration
of $18.8 million, higher than the prior year period given the ramp
up of construction activities on the Phase 3+ Expansion.
Island Gold generated negative mine-site free
cash flow of $14.8 million in the fourth quarter and $9.2 million
for the full year given higher capital spending related to the
Phase 3+ Expansion. At current gold prices, Island Gold is expected
to largely self-finance the Phase 3+ Expansion capital, after which
the operation is expected to generate significant free cash flow
from 2026 onward.
Mulatos Financial and Operational Review
|
Three Months Ended December 31, |
|
Years Ended December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
49,100 |
|
|
23,100 |
|
|
134,500 |
|
|
121,300 |
|
Gold
sales (ounces) |
|
49,238 |
|
|
21,859 |
|
|
133,736 |
|
|
122,634 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$85.8 |
|
$39.3 |
|
$238.1 |
|
$221.1 |
|
Cost of sales (1) |
$56.0 |
|
$42.7 |
|
$238.0 |
|
$177.4 |
|
(Loss) earnings from
operations |
$28.8 |
|
($5.0 |
) |
($7.4 |
) |
$36.4 |
|
Cash (used) provided by
operating activities |
$34.3 |
|
($6.3 |
) |
$25.9 |
|
$32.1 |
|
Capital expenditures
(sustaining) (2) |
$1.2 |
|
$8.2 |
|
$9.9 |
|
$22.9 |
|
Capital expenditures (growth)
(2) (7) |
$2.6 |
|
$25.7 |
|
$50.0 |
|
$103.7 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.7 |
|
$0.3 |
|
$2.8 |
|
$1.7 |
|
Mine-site free cash flow
(2) |
$28.8 |
|
($40.5 |
) |
($36.8 |
) |
($96.2 |
) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,137 |
|
$1,953 |
|
$1,780 |
|
$1,447 |
|
Total cash costs per ounce of gold sold (2) |
$851 |
|
$1,473 |
|
$1,134 |
|
$1,013 |
|
Mine site all-in sustaining costs per ounce of gold sold
(2),(3) |
$922 |
|
$1,899 |
|
$1,241 |
|
$1,240 |
|
Mulatos Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
1,065,739 |
|
|
660,576 |
|
|
3,666,515 |
|
|
3,116,492 |
|
Total waste mined - open pit (6) |
|
756,749 |
|
|
2,496,896 |
|
|
5,994,109 |
|
|
9,060,201 |
|
Total tonnes mined - open pit |
|
1,822,487 |
|
|
3,157,472 |
|
|
9,660,624 |
|
|
12,176,694 |
|
Waste-to-ore ratio (operating) |
|
0.71 |
|
|
0.55 |
|
|
1.36 |
|
|
1.23 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,477,642 |
|
|
1,760,629 |
|
|
6,020,558 |
|
|
7,074,460 |
|
Average grade of gold processed (5) |
|
0.78 |
|
|
0.85 |
|
|
0.73 |
|
|
0.99 |
|
Contained ounces stacked |
|
37,262 |
|
|
48,133 |
|
|
142,227 |
|
|
225,551 |
|
Average recovery rate |
|
32 |
% |
|
48 |
% |
|
47 |
% |
|
54 |
% |
Ore crushed per day (tonnes) |
|
16,100 |
|
|
19,100 |
|
|
16,500 |
|
|
19,400 |
|
La Yaqui Grande Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
1,034,974 |
|
|
— |
|
|
2,271,387 |
|
|
— |
|
Total waste mined - open pit (6) |
|
6,133,308 |
|
|
— |
|
|
23,602,762 |
|
|
— |
|
Total tonnes mined - open pit |
|
7,168,282 |
|
|
— |
|
|
25,874,149 |
|
|
— |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,020,449 |
|
|
— |
|
|
2,147,558 |
|
|
— |
|
Average grade of gold processed (5) |
|
1.43 |
|
|
— |
|
|
1.38 |
|
|
— |
|
Contained ounces stacked |
|
46,931 |
|
|
— |
|
|
95,064 |
|
|
— |
|
Average recovery rate |
|
79 |
% |
|
— |
|
|
71 |
% |
|
— |
|
Ore crushed per day (tonnes) |
|
11,100 |
|
|
— |
|
|
7,809 |
|
|
— |
|
(1) Cost of sales includes mining and processing
costs, royalties, and amortization expense. For the year ended
December 31, 2022, cost of sales includes a $33.9 million
non-cash inventory net realizable value adjustment, at the Mulatos
District.(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. (7) Includes a drawdown of capital
advances of $1.4 million for the year ended December 31, 2022 ($8.4
million of advances for the year ended December 31, 2021).
The Mulatos District produced 49,100 ounces in
the fourth quarter from the Mulatos and La Yaqui Grande operations,
15% higher than the third quarter and more than double the prior
year given the ramp up of La Yaqui Grande starting in June 2022.
For the full year, the Mulatos District produced 134,500 ounces,
in-line with full year guidance and an increase of 11% from the
prior year reflecting the start of production from La Yaqui
Grande.
Mulatos Operational Review
Mulatos produced 11,800 ounces in the fourth
quarter, and 66,900 ounces for the year. Total crusher throughput
in the fourth quarter averaged 16,100 tpd, for a total of 1,477,642
tonnes stacked at a grade of 0.78 g/t Au, including stockpiles.
Mining rates and tonnes stacked in the quarter were impacted by
delays accessing the El Salto portion of the pit following the
heavy rainfall during the third quarter rainy season. This was
partly offset by the processing of additional stockpiled ore.
Mining of the El Salto portion of the pit is expected to ramp up in
2023, contributing to higher production from Mulatos through the
first half of the year.
Recovery rates were 32%, down from the previous
three quarters reflecting the higher stacking rates of lower
recovery stockpiled ore late in the quarter with longer leach
cycles. Recovery rates are expected to increase to guided levels of
50 to 55% in 2023 as these ounces stacked late in the year are
recovered.
La Yaqui Grande Operational Review
La Yaqui Grande is an open pit mine with an
independent leach pad located approximately seven kilometres from
the existing Mulatos operation. Construction was completed ahead of
schedule in the second quarter and the operation has performed
extremely well since achieving initial production in June 2022.
This included producing 37,300 ounces in the fourth quarter, a 47%
increase from the third quarter, driving the significant growth in
Mulatos District production. Since the start of operations, La
Yaqui Grande produced 67,600 ounces.
Mining and stacking rates continued to ramp up
through the fourth quarter with the operation exceeding designed
capacity. A total of 1,034,974 tonnes of ore were mined during the
fourth quarter, up 40% from the third quarter. Stacking rates also
increased to average 11,100 tpd in the quarter, exceeding the
design level of 10,000 tpd. Grades stacked on the leach pad
averaged 1.43 g/t Au in the fourth quarter, above the Mineral
Reserve grade also contributing to the strong quarter. Recoveries
in the quarter and year-to-date are in line with expectations for
the leach curve of La Yaqui Grande
Financial Review (Mulatos District)
Revenues of $85.8 million in the fourth quarter
and $238.1 million for the full year were higher than the prior
year periods reflecting higher gold sales with the start of
production at La Yaqui Grande in June 2022, which contributed
37,188 ounces sold in the quarter, and 65,557 ounces for the full
year.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $56.0 million in the
fourth quarter were higher than in the comparative period, driven
by the increase in ounces sold and higher processing costs. For
2022, cost of sales of $238.0 million were higher than the prior
year, primarily due to Mulatos leach pad inventory adjustments
recorded in the second and third quarters of the year. Given a
decline in the gold price mid-year and higher future processing
costs, the Company recorded adjustments in the second and third
quarters to reduce the carrying value of Mulatos leach pad
inventory, resulting in a non-cash net realizable value adjustment
of $33.9 million ($22.4 million after tax), increasing total cost
of sales.
Total cash costs for the Mulatos District of
$851 per ounce decreased 42% from the prior year period driven by
low-cost production growth from La Yaqui Grande, partly offset by
higher processing costs and lower tonnes and grades stacked at the
Mulatos portion of the operation. The higher processing costs have
had a more significant impact at the Mulatos portion of the
operation, which includes inflationary pressures on key inputs,
such as cyanide, as well as increased reagent consumption to
process the surface stockpiles.
Mulatos District total cash costs decreased 17%
from the third quarter with La Yaqui Grande being the key driver.
Mine-site AISC for the Mulatos District of $922 per ounce
(including $545 per ounce at La Yaqui Grande) in the quarter were
down 19% from the third quarter and 51% from the prior year period
driven by low-cost growth from La Yaqui Grande. For the full year,
total cash costs and mine-site AISC were higher than the prior
year, given heavier reliance on higher cost stockpiles in the first
half of the year. Both were below full year cost guidance given the
strong performance of La Yaqui Grande in the second half of 2022.
Looking ahead, total cash costs and mine-site AISC are expected to
decrease relative to 2022 with La Yaqui Grande providing the
majority of Mulatos District production.
Capital spending totaled $5.5 million in the
fourth quarter, down significantly from the first half of the year
reflecting completion of construction of La Yaqui Grande in June.
This included sustaining capital expenditures of $1.2 million,
primarily relating to stripping costs at La Yaqui Grande, and
capitalized exploration of $1.7 million. During 2022, capital
spending totaled $62.7 million consistent with guidance.
The Mulatos District generated mine-site free
cash flow of $28.8 million in the fourth quarter, up sharply from
$1.8 million in the third quarter driven by the increase in
low-cost production from La Yaqui Grande. This strong free cash
flow generation is expected to continue through 2023, La Yaqui
Grande's first full year of production.
Fourth Quarter 2022 Development
Activities
Island Gold (Ontario,
Canada)
Phase 3+ Expansion Study
On June 28, 2022, the Company reported results
of the Phase 3+ Expansion Study (“P3+ Expansion Study”) conducted
on its Island Gold mine, located in Ontario, Canada. The P3+
Expansion Study was an update to the Phase 3 Study ("P3 2000
Study") released on July 14, 2020.
The P3+ Expansion Study was updated to reflect
the current costing environment, as well as incorporate the
significant growth in high-grade Mineral Reserves and Resources
into an optimized mine plan. The P3+ Expansion Study outlines a
larger, more profitable, and valuable operation than what was
included in the P3 2000 Study released in 2020.
The Phase 3+ Expansion to 2,400 tpd from the
current rate of 1,200 tpd will involve various infrastructure
investments. These include the installation of a shaft, paste
plant, and an expansion of the mill. This infrastructure was all
incorporated into the P3 2000 Study with several scope changes to
accommodate the 20% increase in production rates to 2,400 tpd
including a larger mill expansion and paste plant, as well as
accelerated development to support the higher mining rates. The
Phase 3+ Expansion also includes 30% more development over the mine
life to accommodate the 43% larger mineable resource.
Following the completion of the expansion in
2026, the operation will transition from trucking ore and waste up
the ramp to skipping ore and waste to surface through the new shaft
infrastructure, driving production higher and costs significantly
lower.
Phase 3+ Expansion Study Highlights
- Higher production: average annual
gold production of 287,000 ounces starting in 2026 upon completion
of the shaft
- This represents a 22% increase from
the P3 2000 Study and a 121% increase from the mid-point of 2022
production guidance of 130,000 ounces
- Industry low costs: consistent cost
structure with the P3 2000 Study, with productivity gains and
economies of scale offsetting inflation
- Average total cash costs of $432 per
ounce (average $425 per ounce from 2026), consistent with the P3
2000 Study and 25% lower than the mid-point of 2022 guidance of
$575 per ounce
- Average mine-site all-in sustaining
costs of $610 per ounce (average $576 per ounce from 2026), a 30%
decrease from the mid-point of 2022 guidance of $875 per ounce
- Larger, longer-life operation
supported by significantly increased Mineral Reserve and Resources
- 43% increase in mineable resource to
4.6 million ounces of gold grading 10.59 g/t Au
- 18 year mine life to 2039, a four
year increase from the P3 2000 Study, while operating at 20% higher
production rates of 2,400 tpd
- Lower capital intensity: lower total
capital per ounce over the life of mine
- Growth capital of $756 million and
sustaining capital of $777 million, both up from the P3 2000 Study
reflecting the expansion, a larger mineable resource, and
industry-wide inflation
- Total capital intensity decreased 4%
to $344 per ounce reflecting the larger mineable resource with
increased ounces per vertical metre driving the lower capital
intensity and contributing to the stronger economics
- $100 million of the increase in
growth capital compared to the P3 2000 Study reflects sustaining
capital that has been brought forward to the expansion period for
accelerated underground development and infrastructure to support
the higher mining rate
- Expansion significantly de-risked
given increased detailed engineering, capital committed, and
projects completed to date, including the majority of
earthworks
- Stronger economics with expansion
and larger mineable resource more than offsetting inflation to
create a more valuable operation
- After-tax net present value (“NPV”)
(5%) of $1.6 billion, a 25% increase from the P3 2000 Study (base
case gold price assumption of $1,650 per ounce and USD/CAD foreign
exchange rate of $0.78:1)
- After-tax internal rate of return
(“IRR”) of 23%, up from 20% in P3 2000 Study
- After-tax NPV (5%) of $2.0 billion,
a 31% increase from the P3 2000 Study, and an after-tax IRR of 25%,
at gold prices of $1,850 per ounce
- Industry low Greenhouse Gas (“GHG”)
emission intensity
- 35% reduction in life of mine GHG
emissions relative to the current operation, supporting the
company-wide target of a 30% reduction in GHG emissions by
2030
- 31% additional reduction in
emissions per ounce of gold produced from already industry low
levels
- Fully funded, balanced approach to
growth: growing free cash flow expected starting in the second half
of 2022
- With no significant capital expected
to be spent on Lynn Lake until the P3+ Expansion is well underway;
the Company is well positioned to fund the expansion internally
while generating strong free cash flow over the next several
years
- The Company expects significant free
cash flow growth in 2025 and beyond as production rates ramp up at
Island Gold
Construction activities continued to ramp up
during the fourth quarter, with the focus on shaft site surface
preparation and completion of the pre-sinking of the shaft and
concrete foundations for shaft surface infrastructure. Further
details on progress to the end of the year are summarized
below:
- Shaft site earthworks, including
access road to the shaft area and buried services excavation, were
substantially completed
- Shaft pre-sink completed down to a
42 metre depth in November
- Critical path concrete foundations
completed
- Substation foundation work
commenced
- Galloway fabrication completed to
support shaft sinking
- Commenced structural steel erection
for the Hoist House and Hoist Drive Cooling Building
- Paste plant detailed engineering
ongoing
- Lateral development to support
higher mining rates with the Phase 3+ Expansion remains
ongoing
- Commenced basic engineering for the
mill expansion
During the fourth quarter of 2022, the Company
spent $38.9 million, exclusive of accounts payable and accruals,
and $102.0 million for the year, on growth capital related to the
Phase 3+ Expansion and capital development. Capital spending at
Island Gold (excluding exploration) is expected to be between $210
and $235 million in 2023 as spending on the Phase 3+ Expansion
ramps up, and is expected to remain at similar levels in 2024 and
2025 and then drop considerably in 2026 once the expansion is
complete.
Shaft site area - February
2023
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/ed9d7647-fa3f-488a-a2a8-5a4caa487c92
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 AISC of $745 per ounce.
The project economics based on the 2017
Feasibility Study at a $1,500 per ounce gold price include an
after-tax internal rate of return ("IRR") of 21.5% and an after-tax
NPV of $290 million (12.5% IRR at a $1,250 per ounce gold price).
The Company filed the Environmental Impact Statement ("EIS") with
the federal government in 2020. Approval of the EIS is expected in
the first half of 2023, following which the Company expects to
release an updated Feasibility Study on the project.
As part of the Company's balanced approach to
growth and capital allocation, no significant capital is expected
to be spent on the development of Lynn Lake until the Phase 3+
Expansion at Island Gold is well underway.
Development spending (excluding exploration) was
$3.9 million in the fourth quarter of 2022 and
$11.9 million for the year ended 2022 to support the ongoing
permitting process and engineering to support the updated
Feasibility Study.
Kirazlı (Çanakkale,
Türkiye)
On October 14, 2019, the Company suspended all
construction activities on its Kirazlı project following the
Turkish government's failure to grant a routine renewal of the
Company’s mining licenses, despite the Company having met all legal
and regulatory requirements for their renewal. In October 2020, the
Turkish government refused the renewal of the Company’s Forestry
Permit. The Company had been granted approval of all permits
required to construct Kirazlı including the Environmental Impact
Assessment approval, Forestry Permit, and GSM (Business Opening and
Operation) permit, and certain key permits for the nearby Ağı Dağı
and Çamyurt Gold Mines. These permits were granted by the Turkish
government after the project earned the support of the local
communities and passed an extensive multi-year environmental review
and community consultation process.
On April 20, 2021, the Company announced that
its Netherlands wholly-owned subsidiaries Alamos Gold Holdings
Coöperatief U.A, and Alamos Gold Holdings B.V. (the “Subsidiaries”)
would be filing an investment treaty claim against the Republic of
Türkiye for expropriation and unfair and inequitable treatment. The
claim was filed under the Netherlands-Türkiye Bilateral Investment
Treaty (the “Treaty”). Alamos Gold Holdings Coöperatief U.A. and
Alamos Gold Holdings B.V. had its claim against the Republic of
Türkiye registered on June 7, 2021 with the International Centre
for Settlement of Investment Disputes (World Bank Group).
Bilateral investment treaties are agreements
between countries to assist with the protection of investments. The
Treaty establishes legal protections for investment between Türkiye
and the Netherlands. The Subsidiaries directly own and control the
Company’s Turkish assets. The Subsidiaries invoking their rights
pursuant to the Treaty does not mean that they relinquish their
rights to the Turkish project, or otherwise cease the Turkish
operations. The Company will continue to work towards a
constructive resolution with the Republic of Türkiye.
The Company incurred $0.8 million in the fourth
quarter and $5.0 million for the year, related to ongoing holding
costs and legal costs to progress the Treaty claim, which was
expensed.
Fourth Quarter 2022 Exploration
Activities
Island Gold (Ontario,
Canada)
Total exploration spending through 2022 was
$23.5 million, in line with the annual budgeted amount of $22
million for surface and underground exploration. Exploration
remains focused on defining additional near mine Mineral Resources,
as well as advancing and evaluating several regional targets.
The 2022 exploration program was successful in
driving another increase in Mineral Reserves and Resources which
now total 5.3 million ounces, a 4% increase from the end of 2021.
This included a 9% increase in Mineral Reserves to 1.5 million
ounces (4.2 mt grading 10.78 g/t Au) with grades increasing 6%, a
2% increase in Measured and Indicated Mineral Resources to 0.3
million ounces (1.3 mt grading 7.09 g/t Au), and 2% increase in
Inferred Mineral Resources to 3.5 million ounces (8.1 mt grading
13.61 g/t Au).
During the fourth quarter, six diamond drill
rigs were focused on the surface directional exploration program,
as well as one drill rig focused on underground exploration
drilling.
Surface exploration drilling
A total of 9,547 metres ("m") of surface
directional drilling was completed in 12 holes during the fourth
quarter. Surface directional drilling targeted areas peripheral to
Inferred Mineral Resource blocks in the Island West, Main, and East
areas between 1,400 m and 1,800 m below surface with drill hole
spacing ranging from 75 m to 200 m. In 2022, a total of 30,163 m
surface directional drilling was completed in 31 drill holes.
Underground exploration drilling
During the fourth quarter of 2022, a total of
2,322 m of standard underground exploration drilling was completed
in 12 holes. The objective of the underground drilling is to
identify new Mineral Resources close to existing Mineral Resource
or Reserve blocks. A total of 61 m of underground exploration drift
development was also completed during the fourth quarter. A total
of 19,976 m underground exploration drilling was completed in 85
drill holes in 2022.
A regional exploration program was also
completed in 2022 which focused on evaluating and advancing
exploration targets outside the Island Gold Deposit on the
15,524-hectare Island Gold property. A total of 9,707 m of regional
exploration drilling was completed in 14 drill holes in 2022.
Total exploration expenditures during the fourth
quarter were $5.6 million, of which $4.9 million was
capitalized. For the full year, $23.5 million of exploration
expenditures were incurred, of which $18.8 million were
capitalized.
Young-Davidson (Ontario,
Canada)
The focus of the 2022 drill program was
following up on the success in the 2020 and 2021 programs which
extended gold mineralization below existing Mineral Reserves and
Resources and intersected higher grades in the hanging wall and
footwall of the deposit. In 2022, a total of 11,786 m of
underground exploration drilling was completed in 18 drill
holes.
Additionally, 715 m of underground exploration
drift development was completed to extend drill platforms on the
9220, 9095, and 9025-levels. The focus of the underground
exploration drilling program is to expand Mineral Resources in six
target areas that have been identified within proximity to existing
underground infrastructure.
During the fourth quarter, two underground
exploration drills completed 3,921 m in six holes. Drilling from
the 9220 West exploration drift was focused on testing down-plunge
of the existing Mineral Reserves and Resources. Drilling is
targeting syenite-hosted mineralization as well as continuing to
test mineralization in the footwall sediments and in the hanging
wall mafic-ultramafic stratigraphy.
Exploration spending totaled $1.8 million
of which $1.5 million was capitalized in the fourth quarter
2022. For the full year, exploration spending totaled
$9.3 million of which $5.0 million was capitalized.
Mulatos District (Sonora,
Mexico)
The Company has a large exploration package
covering 28,972 hectares with the majority of past exploration
efforts focused around the Mulatos mine. Exploration continues to
follow up on near-mine sulphide opportunities at PDA, as well as
several earlier stage prospects throughout the wider district.
During the fourth quarter of 2022, exploration
activities continued at PDA and the near-mine areas with 9,121 m of
drilling completed in 34 holes, and 19,186 m completed in 68 holes
for the full year. Exploration drilling at PDA has been extremely
successful with Mineral Reserves increasing 70% to 728,000 ounces
(4.7 mt grading 4.84 g/t Au) with grades also increasing 4% as of
the end of 2022. This higher-grade Mineral Reserve at PDA is
expected to be processed through the existing mill at Mulatos,
which will be expanded. Ongoing exploration results will be
incorporated into an updated development plan which is expected to
be finalized in the second half of 2023.
The regional program included 219 m of drilling
at the Halcon West target, as well as mapping and prospecting at
the Refugio/San Carlos North areas. Additionally, a drone magnetic
survey was initiated to identify structural trends in the area, and
was completed in the first quarter of 2023. In 2022, a total of
13,115 m of drilling was completed in 49 holes focused on testing
several regional targets.
During the fourth quarter, the Company incurred
$2.7 million of exploration spending of which
$1.7 million was capitalized. For the year, the Company
incurred $10.3 million of exploration spending of which
$2.8 million was capitalized.
Lynn Lake (Manitoba,
Canada)
The 2022 exploration drilling program was
completed at the end of the third quarter, with a total of 57 holes
totaling 18,233 m. All outstanding assay results from this program
were received in the fourth quarter. In addition to drilling at the
MacLellan, Gordon and Burnt Timber sites, several regional targets
were evaluated in 2022, and further follow-up drilling is planned
at the Maynard and Tulune regional target areas along with initial
tests at other early-stage regional targets.
A summer field program, consisting of geological
mapping, prospecting and soil sampling designed to help advance a
pipeline of prospective regional exploration targets to drill-ready
stage was completed early in the fourth quarter. Interpretation of
2022 field program results, along with drilling results, was
integrated into the design of the 2023 exploration program.
Exploration spending totaled $0.9 million
in the fourth quarter and $9.8 million year-to-date, all of
which was capitalized.
Review of Fourth
Quarter 2022 Financial Results
During the fourth quarter of 2022, the Company sold 133,164
ounces of gold for revenues of $231.9 million, a 14% increase from
the prior year period driven by more ounces sold, partially offset
by a lower realized gold price.
The average realized gold price in the fourth quarter was $1,741
per ounce, a 3% decrease compared to $1,798 per ounce in the prior
year period. The average realized gold price in the quarter was $15
per ounce above the London PM Fix price due to gains realized on
the settlement of gold collar contracts.
Cost of sales (which includes mining and processing costs,
royalties, and amortization expense) were $153.4 million in the
fourth quarter, 11% higher than the prior year period.
Mining and processing costs were $105.6 million, 15% higher than
the prior year period. The increase primarily reflects new
production at La Yaqui Grande in 2022, higher processing costs at
Mulatos related to stockpiled ore, as well as higher mining and
processing costs at both Young-Davidson and Island Gold, partially
offset by a weaker Canadian dollar. Although total mining and
processing costs were higher in the quarter, total cash costs of
$810 per ounce were lower than the prior year period given low-cost
production growth from La Yaqui Grande in 2022.
Royalty expense was $2.2 million in the quarter, consistent with
the prior year period of $3.0 million.
Amortization of $45.6 million in the quarter was higher than the
prior year period due to the start of production at La Yaqui
Grande, which commenced in June 2022. Amortization of $342 per
ounce was lower than guidance and 10% lower than the prior year
period.
The Company recognized earnings from operations of $61.6 million
in the quarter, higher than the prior year period as a result of
higher ounces sold. Operating margins remained relatively
consistent year over year, as the lower gold price in 2022 was
offset by a reduction in total cash costs per ounce.
The Company reported net earnings of $40.6 million in the
quarter, compared to net earnings of $29.5 million in the prior
year period. On an adjusted basis, earnings in the fourth quarter
of 2022 were $33.7 million, or $0.09 per share, mainly reflecting
an adjustment for a significant unrealized foreign exchange gain
recorded within deferred taxes and FX given the impact of the
strengthening Canadian dollar in the quarter on Canadian dollar
denominated tax pools.
Review of 2022 Financial Results
For the full year of 2022, the Company sold 456,574 ounces of
gold for revenues of $821.2 million, consistent with the prior year
as both ounces sold and the average realized gold price were in
line.
For 2022, cost of sales (which includes mining and processing
costs, inventory net realizable value adjustment, royalties, and
amortization expense) were $608.9 million, an increase from $534.1
million in the prior year.
Mining and processing costs increased to $394.4 million from
$351.5 million in the prior year period. The increase primarily
reflected higher processing costs at Mulatos related to stockpiled
ore, as well as higher mining and processing costs at both
Young-Davidson and Island Gold, offset by the weaker Canadian
dollar.
Consolidated total cash costs in the year were $884 per ounce
compared to $794 per ounce in the prior year. The increase in total
cash costs was primarily driven by inflationary pressures on costs
across the Company, lower grades processed at Island Gold and
higher processing costs for stockpiled ore at Mulatos, partially
offset by low cost production growth at La Yaqui Grande and a
weaker Canadian dollar.
AISC of $1,204 per ounce was higher than the prior year given
higher total cash costs, partially offset by lower sustaining
capital spending in the year.
The Company assesses the net realizable value of inventory at
each reporting period. Given the decrease in the gold price at the
end of the second and third quarters of the year, combined with
higher processing costs at Mulatos, the Company recorded a $33.9
million ($22.4 million after tax) reduction in the carrying value
of the heap leach inventory at Mulatos during the year.
Royalty expense was $9.1 million, a 22% decrease compared to
$11.7 million in the prior year, due to a higher proportion of
sales coming from Mulatos in 2022 which has no third party
royalties.
Amortization of $171.5 million was consistent with the prior
year, as both ounces sold and amortization of $376 per ounce were
consistent with the prior year.
During the first quarter of 2022, the Company sold the Esperanza
Project for total proceeds of up to $60.0 million, including $5.0
million in cash, $10.0 million in shares of Zacatecas Silver and
$39.0 million of milestone payments. The determination of the fair
value of the contingent consideration required the Company to make
certain assumptions and estimates in relation to future events
based on the current understanding of the facts and circumstances.
The completion of each milestone and the related payments are
subject to uncertainty.
As a result, the Company incurred an impairment charge of $38.2
million ($26.7 million after tax) in the first quarter of 2022. The
non-cash impairment charge reflects the excess of the net carrying
value of Esperanza compared to the accounting fair value of
consideration received. Refer to note 14 of the Company’s
consolidated financial statements for the years ended December 31,
2022 and December 31, 2021 for further details.
The Company recognized earnings from operations of $111.5
million, compared to $14.9 million in the prior year, a significant
improvement from the prior year period as a result of the non-cash
after-tax impairment charge on the Turkish projects of $213.8
million taken in the second quarter of 2021, partially offset by
the impairment charge and inventory net realizable value adjustment
recorded in 2022.
The Company reported net earnings of $37.1 million for 2022
compared to a net loss $66.7 million in the prior year. Net
earnings includes a non-cash net realizable value adjustment on
Mulatos heap leach inventory of $33.9 million ($22.4 million after
tax), as well as the impairment charge related to the Esperanza
sale of $38.2 million ($26.7 million after tax). Adjusting for
these items, as well as unrealized foreign exchange losses recorded
in deferred taxes and foreign exchange of $19.4 million, adjusted
earnings were $107.9 million or $0.28 per share for the year.
Adjusted earnings were lower than the prior year, given lower
operating margins and higher stock-based compensation expense.
Associated Documents
This press release should be read in conjunction
with the Company’s consolidated financial statements for the year
ended December 31, 2022 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 2022 Results
Conference Call
The Company's senior management will host a
conference call on Thursday, February 23, 2023 at 11:00 am ET to
discuss the fourth quarter and year-end 2022 results. Participants
may join the conference call via webcast or through the following
dial-in numbers:
Toronto and International: |
(416) 340-2217 |
Toll free (Canada and the United States): |
(800) 806-5484 |
Participant passcode: |
1031011# |
Webcast: |
www.alamosgold.com |
A playback will be available until March 26,
2023 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The pass code is 6543561#. The webcast will be
archived at www.alamosgold.com.
Qualified Persons
Chris Bostwick, FAusIMM, Alamos’ Senior 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 strong portfolio of
growth projects, including the Phase 3+ Expansion at Island Gold,
and the Lynn Lake project in Manitoba, Canada. Alamos employs more
than 1,900 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. ParsonsSenior Vice President, Investor
Relations(416) 368-9932 x 5439
All amounts are in United States dollars, unless otherwise
stated.
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking
Statements
This 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", “assume”, “schedule”, "believe", "anticipate",
"intend", "objective", "estimate", “potential”, "forecast",
"budget", “target”, "goal", “trend”, “on track”, “outlook”,
“continue”, “ongoing”, “plan” or variations of such words and
phrases and similar expressions or statements that certain actions,
events or results “may”, “could”, “would”, “might” or “will” be
taken, occur or be achieved or the negative connotation of such
terms.
Such statements include, but may not be limited to, expectations
pertaining to: reductions in GHG emissions; increases to
production, value of operation and decreases to costs resulting
from intended completion of the Phase 3+ expansion at Island Gold;
intended infrastructure investments in, method of funding for, and
timing of the completion of, the Phase 3+ expansion; approval of
the Environmental Impact Study for the Lynn Lake Gold Project and
the intended release of an updated feasibility study and timing
related thereto; as well as other general 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 exploration programs, targets and budgets, 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 mine life and reserve life, expected production rates,
expected recoveries, sufficiency of working capital for future
commitments, gold prices, returns to stakeholders and other
statements that express management’s expectations or estimates of
future plans and 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, technical, legal, political and competitive uncertainties
and contingencies. Known and unknown factors could cause actual
results to differ materially from those projected in the
forward-looking statements and undue reliance should not be placed
on such statements and information.
Such factors and assumptions underlying the forward-looking
statements in this 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 which may be impacted by unscheduled maintenance, weather
issues, labour and contractor availability and other operating or
technical difficulties); operations may be exposed to new diseases,
epidemics and pandemics, including the ongoing effects and
potential further effects of the COVID-19 pandemic; the impact of
the COVID-19 pandemic or any other new illness, epidemic or
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 the Company’s operations) in
Canada, Mexico, the United States and Türkiye; the duration of any
ongoing or new regulatory responses to the COVID-19 pandemic or any
other new illness, epidemic or pandemic; government and the
Company’s attempts to reduce the spread of COVID-19 which may
affect many aspects of the Company's operations including the
ability to transport personnel to and from site, contractor and
supply availability and the ability to sell or deliver gold doré
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 the Company's credit rating; any decision to
declare a quarterly dividend; employee and community relations;
litigation and administrative proceedings (including but not
limited to the investment treaty claim announced on April 20, 2021
against the Republic of Türkiye by the Company’s wholly-owned
Netherlands subsidiaries, Alamos Gold Holdings Coöperatief U.A, and
Alamos Gold Holdings B.V.); disruptions affecting operations;
availability of and increased costs associated with mining inputs
and labour; delays with the Phase 3+ expansion project at the
Island Gold mine; delays in permitting, obtaining approval of the
Environmental Impact Study, completing an updated Feasibility
Study, construction decisions and any development of the Lynn Lake
Gold Project; delays in the development or updating of mine plans;
changes with respect to the intended method of accessing and mining
the deposit at Puerto Del Aire and changes related to the intended
method of processing any ore from the deposit of Puerto Del Aire;
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; 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 and mineral
processing including environmental hazards, industrial hazards,
industrial accidents, unusual or unexpected formations, pressures
and cave-ins; changes in national and local government legislation,
controls or regulations in Canada, Mexico, Türkiye, 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. The litigation against the
Republic of Türkiye, described above, results from the actions of
the Turkish government in respect of the Company’s projects in the
Republic of Türkiye. Such litigation is a mitigation effort and may
not be effective or successful. If unsuccessful, the Company’s
projects in Türkiye may be subject to resource nationalism and
further expropriation; the Company may lose any remaining value of
its assets and gold mining projects in Türkiye and its ability to
operate in Türkiye. Even if the litigation is successful, there is
no certainty as to the quantum of any damages award or recovery of
all, or any, legal costs. Any resumption of activities in Türkiye,
or even retaining control of its assets and gold mining projects in
Türkiye can only result from agreement with the Turkish government.
The investment treaty claim described in this press release may
have an impact on foreign direct investment in the Republic of
Türkiye which may result in changes to the Turkish economy,
including but not limited to high rates of inflation and
fluctuation of the Turkish Lira which may also affect the Company’s
relationship with the Turkish government, the Company’s ability to
effectively operate in Türkiye, and which may have a negative
effect on overall anticipated project values.
Additional risk factors that may affect the Company’s ability to
achieve the expectations set forth in the forward-looking
statements contained in this press release are set out in the
Company's latest 40-F/Annual Information Form and Management’s
Discussion and Analysis, each 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, risk factors and assumptions
found in this press release.
The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new
information, future events or otherwise, except as required by
applicable law.
Cautionary Note to U.S. Investors
Concerning Measured, Indicated and Inferred Resources
Measured, Indicated and Inferred
Resources: All resource and reserve estimates included in
this press release or documents referenced in this press 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. Mining disclosure in the
United States was previously required to comply with SEC Industry
Guide 7 (“SEC Industry Guide 7”) under the United States Securities
Exchange Act of 1934, as amended. The U.S. Securities and Exchange
Commission (the “SEC”) has adopted final rules, to replace SEC
Industry Guide 7 with new mining disclosure rules under sub-part
1300 of Regulation S-K of the U.S. Securities Act (“Regulation S-K
1300”) which became mandatory for U.S. reporting companies
beginning with the first fiscal year commencing on or after January
1, 2021. Under Regulation S-K 1300, the SEC now recognizes
estimates of “Measured Mineral Resources”, “Indicated Mineral
Resources” and “Inferred Mineral Resources”. In addition, the SEC
has amended its definitions of “Proven Mineral Reserves” and
“Probable Mineral Reserves” to be substantially similar to
international standards.
Investors are cautioned that while the above
terms are “substantially similar” to CIM Definitions, there are
differences in the definitions under Regulation S-K 1300 and the
CIM Standards. Accordingly, there is no assurance any mineral
reserves or mineral resources that the Company may report as
“proven mineral reserves”, “probable mineral reserves”, “measured
mineral resources”, “indicated mineral resources” and “inferred
mineral resources” under NI 43-101 would be the same had the
Company prepared the mineral reserve or mineral resource estimates
under the standards adopted under Regulation S-K 1300. U.S.
investors are also cautioned that while the SEC recognizes
“measured mineral resources”, “indicated mineral resources” and
“inferred mineral resources” under Regulation S-K 1300, investors
should not assume that any part or all of the mineralization in
these categories will ever be converted into a higher category of
mineral resources or into mineral reserves. Mineralization
described using these terms has a greater degree of uncertainty as
to its existence and feasibility than mineralization that has been
characterized as reserves. Accordingly, investors are cautioned not
to assume that any measured mineral resources, indicated mineral
resources, or inferred mineral resources that the Company reports
are or will be economically or legally mineable.
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,
2022). 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
- The income and
mining tax impact of items included in other gain (loss)
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; loss on disposal of assets; severance costs related
to Turkish Projects; and Turkish Projects holding costs and
arbitration costs. 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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
Net earnings (loss) |
$40.6 |
|
$29.5 |
|
$37.1 |
|
($66.7 |
) |
$144.2 |
|
Adjustments: |
|
|
|
|
|
Inventory net realizable value adjustment, net of taxes |
|
— |
|
|
— |
|
|
22.4 |
|
|
— |
|
|
— |
|
Impairment charge, net of taxes |
|
— |
|
|
— |
|
|
26.7 |
|
|
213.8 |
|
|
— |
|
Foreign exchange loss (gain) |
|
0.2 |
|
|
1.1 |
|
|
(1.7 |
) |
|
0.9 |
|
|
1.4 |
|
Other loss |
|
6.6 |
|
|
3.9 |
|
|
5.1 |
|
|
7.2 |
|
|
3.7 |
|
Unrealized foreign exchange (gain) loss recorded in deferred tax
expense |
|
(12.2 |
) |
|
2.2 |
|
|
19.4 |
|
|
6.9 |
|
|
3.1 |
|
COVID-19 costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.5 |
|
Other income tax and mining tax adjustments |
|
(1.5 |
) |
|
— |
|
|
(1.1 |
) |
|
— |
|
|
(2.4 |
) |
Adjusted net earnings |
$33.7 |
|
$36.7 |
|
$107.9 |
|
$162.1 |
|
$156.5 |
|
Adjusted earnings per share - basic and diluted |
$0.09 |
|
$0.09 |
|
$0.28 |
|
$0.41 |
|
$0.40 |
|
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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Cash flow from operating activities |
$102.3 |
|
$88.1 |
|
$298.5 |
|
$356.5 |
|
Add: Changes in working
capital and cash taxes |
|
7.0 |
|
|
3.7 |
|
|
63.1 |
|
|
54.4 |
|
Cash flow from operating activities before changes in
working capital and cash taxes |
$109.3 |
|
$91.8 |
|
$361.6 |
|
$410.9 |
|
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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Cash flow from operating activities |
$102.3 |
|
$88.1 |
|
$298.5 |
|
$356.5 |
|
Less: mineral property, plant
and equipment expenditures (1) |
|
(84.8 |
) |
|
(91.6 |
) |
|
(313.7 |
) |
|
(348.6 |
) |
Less:
capital advances |
|
— |
|
|
— |
|
|
— |
|
|
(9.8 |
) |
Company-wide free cash flow |
$17.5 |
|
($3.5 |
) |
($15.2 |
) |
($1.9 |
) |
(1) Mineral property, plant and equipment
expenditures exclude royalties repurchased at Island Gold of $15.7
million in the fourth quarter of 2021.
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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$102.3 |
|
$88.1 |
|
$298.5 |
|
$356.5 |
|
Add:
operating cash flow used by non-mine site activity |
|
15.7 |
|
|
4.0 |
|
|
48.3 |
|
|
37.6 |
|
Cash flow from operating mine-sites |
$118.0 |
|
$92.1 |
|
$346.8 |
|
$394.1 |
|
|
|
|
|
|
Mineral property, plant and
equipment expenditure |
$84.8 |
|
$91.6 |
|
$313.7 |
|
$348.6 |
|
Capital advances |
|
— |
|
|
— |
|
|
— |
|
|
9.8 |
|
Less:
capital expenditures from development projects, and corporate |
|
(4.8 |
) |
($5.2 |
) |
|
(22.2 |
) |
|
(21.5 |
) |
|
|
|
|
|
Capital expenditure and capital advances from
mine-sites |
$80.0 |
|
$86.4 |
|
$291.5 |
|
$336.9 |
|
|
|
|
|
|
Total mine-site free cash flow |
$38.0 |
|
$5.7 |
|
$55.3 |
|
$57.2 |
|
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$44.6 |
|
$55.2 |
|
$172.8 |
|
$188.9 |
|
Mineral
property, plant and equipment expenditure |
|
(20.6 |
) |
|
(24.8 |
) |
|
(71.5 |
) |
|
(88.6 |
) |
Mine-site free cash flow |
$24.0 |
|
$30.4 |
|
$101.3 |
|
$100.3 |
|
Island Gold Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$39.1 |
|
$43.2 |
|
$148.1 |
|
$173.1 |
|
Mineral property, plant and
equipment expenditure (1) |
|
(53.9 |
) |
|
(27.4 |
) |
|
(157.3 |
) |
|
(120.0 |
) |
Mine-site free cash flow |
($14.8 |
) |
$15.8 |
|
($9.2 |
) |
$53.1 |
|
(1) Includes capital advances of nil and $1.4
million for the three and twelve months ended December 31, 2022
(nil and $1.4 million for the three and twelve months ended
December 31, 2021). Excludes royalties repurchased at Island Gold
of $15.7 million in the fourth quarter of 2021.
Mulatos District Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$34.3 |
|
($6.3 |
) |
$25.9 |
|
$32.1 |
|
Mineral property, plant and
equipment expenditure (1) |
|
(5.5 |
) |
|
(34.2 |
) |
|
(62.7 |
) |
|
(128.3 |
) |
Mine-site free cash flow |
$28.8 |
|
($40.5 |
) |
($36.8 |
) |
($96.2 |
) |
(1) Includes a drawdown of capital advances of
$1.4 million for the three and twelve months ended December 31,
2022 (nil and $8.4 million of advances for the three and twelve
months ended December 31, 2021).
Net 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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
|
Mining and processing |
$105.6 |
|
$92.2 |
|
$394.4 |
|
$351.5 |
|
$312.6 |
|
Royalties |
|
2.2 |
|
|
3.0 |
|
|
9.1 |
|
|
11.7 |
|
|
10.2 |
|
Total cash costs |
|
107.8 |
|
|
95.2 |
|
|
403.5 |
|
|
363.2 |
|
|
322.8 |
|
Gold
ounces sold |
|
133,164 |
|
|
112,966 |
|
|
456,574 |
|
|
457,517 |
|
|
424,325 |
|
Total cash costs per ounce |
$810 |
|
$843 |
|
$884 |
|
$794 |
|
$761 |
|
|
|
|
|
|
|
Total cash costs |
$107.8 |
|
$95.2 |
|
$403.5 |
|
$363.2 |
|
$322.8 |
|
Corporate and
administrative(1) |
|
7.2 |
|
|
6.7 |
|
|
25.9 |
|
|
24.5 |
|
|
21.0 |
|
Sustaining capital
expenditures(2) |
|
26.5 |
|
|
32.2 |
|
|
95.2 |
|
|
113.4 |
|
|
82.1 |
|
Share-based compensation |
|
7.1 |
|
|
3.9 |
|
|
18.3 |
|
|
11.1 |
|
|
10.3 |
|
Sustaining exploration |
|
0.7 |
|
|
1.1 |
|
|
2.5 |
|
|
4.9 |
|
|
5.0 |
|
Accretion of decommissioning
liabilities |
|
2.2 |
|
|
0.6 |
|
|
4.2 |
|
|
2.4 |
|
|
2.6 |
|
Total all-in sustaining costs |
$151.5 |
|
$139.7 |
|
$549.6 |
|
$519.5 |
|
$443.8 |
|
Gold
ounces sold |
|
133,164 |
|
|
112,966 |
|
|
456,574 |
|
|
457,517 |
|
|
424,325 |
|
All-in sustaining costs per ounce |
$1,138 |
|
$1,237 |
|
$1,204 |
|
$1,135 |
|
$1,046 |
|
(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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
(in millions) |
|
|
|
|
|
Capital expenditures per cash
flow statement |
$84.8 |
|
$91.6 |
|
$313.7 |
|
$348.6 |
|
$246.1 |
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
|
Young-Davidson |
|
(5.4 |
) |
|
(12.0 |
) |
|
(22.7 |
) |
|
(44.8 |
) |
|
(75.6 |
) |
Island Gold |
|
(43.8 |
) |
|
(16.2 |
) |
|
(120.8 |
) |
|
(71.9 |
) |
|
(51.8 |
) |
Mulatos District |
|
(4.3 |
) |
|
(26.0 |
) |
|
(52.8 |
) |
|
(97.0 |
) |
|
(15.1 |
) |
Corporate and other |
|
(4.8 |
) |
|
(5.2 |
) |
|
(22.2 |
) |
|
(21.5 |
) |
|
(21.5 |
) |
Sustaining capital expenditures |
$26.5 |
|
$32.2 |
|
$95.2 |
|
$113.4 |
|
$82.1 |
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$41.1 |
|
$39.8 |
|
$163.4 |
|
$159.7 |
|
Royalties |
|
1.1 |
|
|
1.3 |
|
|
5.3 |
|
|
5.3 |
|
Total cash costs |
$42.2 |
|
$41.1 |
|
$168.7 |
|
$165.0 |
|
Gold
ounces sold |
|
44,781 |
|
|
53,006 |
|
|
192,186 |
|
|
194,937 |
|
Total cash costs per ounce |
$942 |
|
$775 |
|
$878 |
|
$846 |
|
|
|
|
|
|
Total cash costs |
$42.2 |
|
$41.1 |
|
$168.7 |
|
$165.0 |
|
Sustaining capital
expenditures |
|
15.2 |
|
|
12.8 |
|
|
48.8 |
|
|
43.8 |
|
Accretion of decommissioning liabilities |
|
0.1 |
|
|
— |
|
|
0.3 |
|
|
0.2 |
|
Total all-in sustaining costs |
$57.5 |
|
$53.9 |
|
$217.8 |
|
$209.0 |
|
Gold
ounces sold |
|
44,781 |
|
|
53,006 |
|
|
192,186 |
|
|
194,937 |
|
Mine-site all-in sustaining costs per ounce |
$1,284 |
|
$1,017 |
|
$1,133 |
|
$1,072 |
|
Island
Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$23.0 |
|
$20.4 |
|
$80.6 |
|
$68.7 |
|
Royalties |
|
0.7 |
|
|
1.5 |
|
|
2.6 |
|
|
5.3 |
|
Total cash costs |
$23.7 |
|
$21.9 |
|
$83.2 |
|
$74.0 |
|
Gold
ounces sold |
|
39,145 |
|
|
38,101 |
|
|
130,652 |
|
|
139,946 |
|
Total cash costs per ounce |
$605 |
|
$575 |
|
$637 |
|
$529 |
|
|
|
|
|
|
Total cash costs |
$23.7 |
|
$21.9 |
|
$83.2 |
|
$74.0 |
|
Sustaining capital
expenditures |
|
10.1 |
|
|
11.2 |
|
|
36.5 |
|
|
46.7 |
|
Accretion of decommissioning liabilities |
|
— |
|
|
0.1 |
|
|
0.2 |
|
|
0.1 |
|
Total all-in sustaining costs |
$33.8 |
|
$33.2 |
|
$119.9 |
|
$120.8 |
|
Gold
ounces sold |
|
39,145 |
|
|
38,101 |
|
|
130,652 |
|
|
139,946 |
|
Mine-site all-in sustaining costs per ounce |
$863 |
|
$871 |
|
$918 |
|
$863 |
|
Mulatos
District Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended December 31, |
Years Ended December 31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$41.5 |
|
$32.0 |
|
$150.4 |
|
$123.1 |
|
Royalties |
|
0.4 |
|
|
0.2 |
|
|
1.2 |
|
|
1.1 |
|
Total cash costs |
$41.9 |
|
$32.2 |
|
$151.6 |
|
$124.2 |
|
Gold
ounces sold |
|
49,238 |
|
|
21,859 |
|
|
133,736 |
|
|
122,634 |
|
Total cash costs per ounce |
$851 |
|
$1,473 |
|
$1,134 |
|
$1,013 |
|
|
|
|
|
|
Total cash costs |
$41.9 |
|
$32.2 |
|
$151.6 |
|
$124.2 |
|
Sustaining capital
expenditures |
|
1.2 |
|
|
8.2 |
|
|
9.9 |
|
|
22.9 |
|
Sustaining exploration |
|
0.2 |
|
|
0.6 |
|
|
0.7 |
|
|
2.9 |
|
Accretion of decommissioning liabilities |
|
2.1 |
|
|
0.5 |
|
|
3.7 |
|
|
2.1 |
|
Total all-in sustaining costs |
$45.4 |
|
$41.5 |
|
$165.9 |
|
$152.1 |
|
Gold
ounces sold |
|
49,238 |
|
|
21,859 |
|
|
133,736 |
|
|
122,634 |
|
Mine-site all-in sustaining costs per ounce |
$922 |
|
$1,899 |
|
$1,241 |
|
$1,240 |
|
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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net earnings (loss) |
$40.6 |
|
$29.5 |
|
$37.1 |
|
($66.7 |
) |
Add back: |
|
|
|
|
Inventory net realizable value adjustment |
|
— |
|
|
— |
|
|
33.9 |
|
|
— |
|
Impairment charge |
|
— |
|
|
— |
|
|
38.2 |
|
|
224.3 |
|
Finance expense |
|
2.2 |
|
|
1.2 |
|
|
5.7 |
|
|
4.5 |
|
Amortization |
|
45.6 |
|
|
43.2 |
|
|
171.5 |
|
|
170.9 |
|
Deferred income tax (recovery) expense |
|
2.7 |
|
|
19.6 |
|
|
54.6 |
|
|
63.7 |
|
Current income tax expense (recovery) |
|
9.3 |
|
|
(5.5 |
) |
|
10.7 |
|
|
5.3 |
|
EBITDA |
$100.4 |
|
$88.0 |
|
$351.7 |
|
$402.0 |
|
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, 2022 |
|
|
December 31, 2021 |
|
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$129.8 |
|
|
$172.5 |
|
Equity securities |
|
18.6 |
|
|
|
23.9 |
|
Amounts receivable |
|
37.2 |
|
|
|
31.1 |
|
Income taxes receivable |
|
— |
|
|
|
8.7 |
|
Inventory |
|
234.2 |
|
|
|
199.0 |
|
Other current assets |
|
16.2 |
|
|
|
24.2 |
|
Assets held for sale |
|
5.0 |
|
|
|
— |
|
Total Current
Assets |
|
441.0 |
|
|
|
459.4 |
|
|
|
|
|
Non-Current
Assets |
|
|
|
Long-term inventory |
|
— |
|
|
|
10.6 |
|
Mineral property, plant and
equipment |
|
3,173.8 |
|
|
|
3,108.5 |
|
Other non-current assets |
|
59.4 |
|
|
|
43.0 |
|
Total Assets |
$3,674.2 |
|
|
$3,621.5 |
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$181.2 |
|
|
$157.4 |
|
Income taxes payable |
|
0.7 |
|
|
|
— |
|
Total Current
Liabilities |
|
181.9 |
|
|
|
157.4 |
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
660.9 |
|
|
|
623.2 |
|
Decommissioning
liabilities |
|
108.1 |
|
|
|
102.8 |
|
Other non-current
liabilities |
|
2.2 |
|
|
|
2.5 |
|
Total Liabilities |
|
953.1 |
|
|
|
885.9 |
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,703.8 |
|
|
$3,692.9 |
|
Contributed surplus |
|
90.7 |
|
|
|
89.5 |
|
Accumulated other
comprehensive (loss) income |
|
(24.8 |
) |
|
|
1.9 |
|
Deficit |
|
(1,048.6 |
) |
|
|
(1,048.7 |
) |
Total Equity |
|
2,721.1 |
|
|
|
2,735.6 |
|
Total Liabilities and Equity |
$3,674.2 |
|
|
$3,621.5 |
|
ALAMOS GOLD
INC.Consolidated Statements of Comprehensive
Income (Loss)(Unaudited - stated in millions of United
States dollars, except share and per share amounts)
|
For three months ended |
|
For twelve months ended |
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
OPERATING
REVENUES |
$231.9 |
|
|
$203.1 |
|
|
$821.2 |
|
|
$823.6 |
|
|
|
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
|
|
|
Mining and processing |
|
105.6 |
|
|
|
92.2 |
|
|
|
394.4 |
|
|
|
351.5 |
|
Inventory net realizable value
adjustment |
|
— |
|
|
|
— |
|
|
|
33.9 |
|
|
|
— |
|
Royalties |
|
2.2 |
|
|
|
3.0 |
|
|
|
9.1 |
|
|
|
11.7 |
|
Amortization |
|
45.6 |
|
|
|
43.2 |
|
|
|
171.5 |
|
|
|
170.9 |
|
|
|
153.4 |
|
|
|
138.4 |
|
|
|
608.9 |
|
|
|
534.1 |
|
EXPENSES |
|
|
|
|
|
|
|
Exploration |
|
2.6 |
|
|
|
4.3 |
|
|
|
18.4 |
|
|
|
14.7 |
|
Corporate and
administrative |
|
7.2 |
|
|
|
6.7 |
|
|
|
25.9 |
|
|
|
24.5 |
|
Share-based compensation |
|
7.1 |
|
|
|
3.9 |
|
|
|
18.3 |
|
|
|
11.1 |
|
Impairment charge |
|
— |
|
|
|
— |
|
|
|
38.2 |
|
|
|
224.3 |
|
|
|
170.3 |
|
|
|
153.3 |
|
|
|
709.7 |
|
|
|
808.7 |
|
EARNINGS (LOSS) BEFORE
INCOME TAXES |
|
61.6 |
|
|
|
49.8 |
|
|
|
111.5 |
|
|
|
14.9 |
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
|
|
|
Finance expense |
|
(2.2 |
) |
|
|
(1.2 |
) |
|
|
(5.7 |
) |
|
|
(4.5 |
) |
Foreign exchange (loss)
gain |
|
(0.2 |
) |
|
|
(1.1 |
) |
|
|
1.7 |
|
|
|
(0.9 |
) |
Other (loss) gain |
|
(6.6 |
) |
|
|
(3.9 |
) |
|
|
(5.1 |
) |
|
|
(7.2 |
) |
EARNINGS (LOSS) FROM
OPERATIONS |
$52.6 |
|
|
$43.6 |
|
|
$102.4 |
|
|
$2.3 |
|
|
|
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
|
|
|
Current income tax
expense |
|
(9.3 |
) |
|
|
5.5 |
|
|
|
(10.7 |
) |
|
|
(5.3 |
) |
Deferred income tax
expense |
|
(2.7 |
) |
|
|
(19.6 |
) |
|
|
(54.6 |
) |
|
|
(63.7 |
) |
NET EARNINGS
(LOSS) |
$40.6 |
|
|
$29.5 |
|
|
$37.1 |
|
|
($66.7 |
) |
|
|
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
|
10.0 |
|
|
|
2.1 |
|
|
|
(5.9 |
) |
|
|
(1.7 |
) |
Net change in fair value of fuel hedging instruments, net of
taxes |
|
(0.4 |
) |
|
|
— |
|
|
|
(0.3 |
) |
|
|
0.3 |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized loss on equity securities, net of taxes |
|
(1.4 |
) |
|
|
(2.3 |
) |
|
|
(20.5 |
) |
|
|
(2.9 |
) |
Total other
comprehensive loss |
$8.2 |
|
|
($0.2 |
) |
|
($26.7 |
) |
|
($4.3 |
) |
COMPREHENSIVE (LOSS)
INCOME |
$48.8 |
|
|
$29.3 |
|
|
$10.4 |
|
|
($71.0 |
) |
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE |
|
|
|
|
|
|
|
– basic |
$0.10 |
|
|
$0.08 |
|
|
$0.09 |
|
|
($0.17 |
) |
–
diluted |
$0.10 |
|
|
$0.08 |
|
|
$0.09 |
|
|
($0.17 |
) |
Weighted average number of
common shares outstanding (000's) |
|
|
|
|
|
|
|
– basic |
|
393,034 |
|
|
|
392,333 |
|
|
|
392,172 |
|
|
|
392,649 |
|
– diluted |
|
395,822 |
|
|
|
392,333 |
|
|
|
394,508 |
|
|
|
392,649 |
|
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, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
CASH PROVIDED BY (USED
IN): |
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net earnings (loss) for the
period |
$40.6 |
|
|
$29.5 |
|
|
$37.1 |
|
|
($66.7 |
) |
Adjustments for items not
involving cash: |
|
|
|
|
|
|
|
Amortization |
|
45.6 |
|
|
|
43.2 |
|
|
|
171.5 |
|
|
|
170.9 |
|
Impairment charge |
|
— |
|
|
|
— |
|
|
|
38.2 |
|
|
|
224.3 |
|
Inventory net realizable value adjustment |
|
— |
|
|
|
— |
|
|
|
33.9 |
|
|
|
— |
|
Foreign exchange (gain) loss |
|
0.2 |
|
|
|
1.1 |
|
|
|
(1.7 |
) |
|
|
0.9 |
|
Current income tax expense |
|
9.3 |
|
|
|
(5.5 |
) |
|
|
10.7 |
|
|
|
5.3 |
|
Deferred income tax expense |
|
2.7 |
|
|
|
19.6 |
|
|
|
54.6 |
|
|
|
63.7 |
|
Share-based compensation |
|
7.1 |
|
|
|
3.9 |
|
|
|
18.3 |
|
|
|
11.1 |
|
Finance expense |
|
2.2 |
|
|
|
1.2 |
|
|
|
5.7 |
|
|
|
4.5 |
|
Other items |
|
1.6 |
|
|
|
(1.2 |
) |
|
|
(6.7 |
) |
|
|
(3.1 |
) |
Changes in working capital and
taxes paid |
|
(7.0 |
) |
|
|
(3.7 |
) |
|
|
(63.1 |
) |
|
|
(54.4 |
) |
|
|
102.3 |
|
|
|
88.1 |
|
|
|
298.5 |
|
|
|
356.5 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Mineral property, plant and
equipment |
|
(84.8 |
) |
|
|
(91.6 |
) |
|
|
(313.7 |
) |
|
|
(348.6 |
) |
Capital advances |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9.8 |
) |
Repurchase of Island Gold
royalties |
|
— |
|
|
|
(15.7 |
) |
|
|
— |
|
|
|
(15.7 |
) |
Proceeds from sale of
Esperanza |
|
— |
|
|
|
— |
|
|
|
5.0 |
|
|
|
— |
|
Proceeds from disposition of
equity securities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25.8 |
|
Investment in equity
securities |
|
(0.1 |
) |
|
|
(4.0 |
) |
|
|
(4.0 |
) |
|
|
(8.8 |
) |
|
|
(84.9 |
) |
|
|
(111.3 |
) |
|
|
(312.7 |
) |
|
|
(357.1 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Dividends paid |
|
(8.8 |
) |
|
|
(8.6 |
) |
|
|
(35.1 |
) |
|
|
(34.5 |
) |
Credit facility interest and
transaction fees |
|
(0.8 |
) |
|
|
(1.1 |
) |
|
|
(0.8 |
) |
|
|
(1.1 |
) |
Repurchase and cancellation of
common shares |
|
— |
|
|
|
(5.7 |
) |
|
|
(8.2 |
) |
|
|
(11.7 |
) |
Proceeds from issuance of
flow-through shares |
|
— |
|
|
|
— |
|
|
|
10.4 |
|
|
|
— |
|
Proceeds from the exercise of
options |
|
4.6 |
|
|
|
— |
|
|
|
5.3 |
|
|
|
0.2 |
|
Repayment of equipment
financing obligations |
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
(5.0 |
) |
|
|
(15.5 |
) |
|
|
(28.4 |
) |
|
|
(47.3 |
) |
Effect of exchange rates on
cash and cash equivalents |
|
0.7 |
|
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
13.1 |
|
|
|
(38.9 |
) |
|
|
(42.7 |
) |
|
|
(48.0 |
) |
Cash and cash equivalents -
beginning of period |
|
116.7 |
|
|
|
211.4 |
|
|
|
172.5 |
|
|
|
220.5 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$129.8 |
|
|
$172.5 |
|
|
$129.8 |
|
|
$172.5 |
|
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