Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
ended March 31, 2023.
“Following up on a strong performance in 2022,
we had an excellent start to the year operationally and
financially. Production exceeded our first quarter guidance and
costs were once again in line with guidance. All three operations
continue to perform well, including another standout performance
from La Yaqui Grande, the key driver of our expected production
growth and decrease in costs this year,” said John A. McCluskey,
President and Chief Executive Officer.
“Financially, we generated record quarterly
revenues and our operating cash flow increased 16% from the fourth
quarter, marking the fourth consecutive quarterly increase. With
declining costs and expanding margins over the next several years,
this is a trend we expect to continue, supporting strong free cash
flow generation while completing the Phase 3+ Expansion at Island
Gold. Our growth initiatives continue to advance with the Phase 3+
Expansion on track for completion in 2026 and having achieved a
significant permitting milestone with the approval of the
Environmental Impact Statement for Lynn Lake, an important part of
our longer-term growth strategy. With all of this growth coming in
Canada, we remain uniquely positioned as a growing intermediate
gold producer with declining costs, increasing profitability, and
one of the lowest political risk profiles in the sector,” Mr.
McCluskey added.
First Quarter 2023
- Produced 128,400 ounces of gold,
exceeding quarterly guidance and marking a 30% increase from the
first quarter of 2022, driven by a significant increase in
production from the Mulatos District
- Mulatos District production more
than doubled from the first quarter of 2022 to 50,500 ounces, at
substantially lower costs, with La Yaqui Grande driving a
significant increase in mine-site free cash flow to $36.8
million
- Island Gold produced 32,900 ounces,
a 34% increase from the first quarter of 2022, while continuing to
make significant progress on the Phase 3+ Expansion including the
start of construction of the hoist house and other shaft
infrastructure
- Young-Davidson produced 45,000
ounces and generated mine-site free cash flow1 of $16.3 million
with mining rates averaging 8,010 tonnes per day, in line with
guidance
- Sold 132,668 ounces of gold at an
average realized price of $1,896 per ounce, for record quarterly
revenues of $251.5 million. The average realized gold price was $6
per ounce above the London PM fix for the quarter
- Total cash costs1 of $821 per
ounce, and all-in sustaining costs ("AISC"1) of $1,176 per ounce
were 17% and 14% lower than the first quarter of 2022,
respectively, reflecting low-cost production growth from La Yaqui
Grande. Total cash costs were slightly below annual guidance, while
AISC were at the top end of annual guidance, reflecting higher
stock based compensation charges resulting from the increase in the
Company's share price in the period
- Realized adjusted net earnings1 for
the quarter of $45.4 million, or $0.12 per share1. Adjusted net
earnings includes adjustments for net unrealized foreign exchange
gains recorded within both deferred taxes and foreign exchange of
$4.1 million, partially offset by other losses totaling $1.1
million
- Reported net earnings of $48.4
million
- Generated cash flow from operating
activities of $94.3 million ($127.2 million, or $0.32 per share,
before changes in working capital1). Working capital in the quarter
was impacted by a temporary build up of sales tax receivables in
Canada, of which $20 million was collected subsequent to quarter
end in April
- Free cash flow1 of $10.5 million
was impacted by the above noted delay in collecting sales tax
receivables. The $20 million collected in April is expected to
contribute to stronger free cash flow in the second quarter. 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 $9.8
million, or $0.025 per share (annualized rate of $0.10)
- Cash and cash equivalents increased
to $133.8 million, and equity securities increased to $25.8
million. The Company remains debt free
- Achieved a significant permitting
milestone for the Lynn Lake project with a positive Decision
Statement issued by the Ministry of Environment and Climate Change
Canada based on the completed Federal Environmental Impact
Statement, and Environment Act Licenses issued by the Province of
Manitoba
- 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
- Announced that the Company has
entered into a definitive agreement to acquire Manitou Gold Inc.,
which is expected to more than triple the regional land package
adjacent to and along strike from Island Gold, adding significant
exploration potential across the Michipicoten Greenstone Belt
- Announced the appointment of Greg
Fisher as Chief Financial Officer effective May 1, 2023
(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 March 31, |
|
|
2023 |
|
2022 |
Financial Results (in millions) |
|
|
Operating revenues |
$251.5 |
$184.5 |
Cost of sales (1) |
$155.2 |
$135.5 |
Earnings (loss) from operations |
$75.0 |
($5.7) |
Earnings (loss) before income taxes |
$72.2 |
($14.3) |
Net earnings (loss) |
$48.4 |
($8.5) |
Adjusted net earnings (2) |
$45.4 |
$18.0 |
Earnings before interest, depreciation and amortization (2) |
$119.9 |
$62.9 |
Cash provided by operations before working capital and taxes
paid(2) |
$127.2 |
$70.9 |
Cash provided by operating activities |
$94.3 |
$46.5 |
Capital expenditures (sustaining) (2) |
$26.9 |
$22.5 |
Capital expenditures (growth) (2) (3) |
$52.0 |
$58.7 |
Capital expenditures (capitalized exploration) (4) |
$4.9 |
$6.1 |
Free cash flow (2) |
$10.5 |
($40.8) |
Operating Results |
|
|
Gold production (ounces) |
|
128,400 |
|
98,900 |
Gold sales (ounces) |
|
132,668 |
|
98,466 |
Per Ounce Data |
|
|
Average realized gold price |
$1,896 |
$1,874 |
Average spot gold price (London PM Fix) |
$1,890 |
$1,874 |
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,170 |
$1,376 |
Total cash costs per ounce of gold sold (2) |
$821 |
$992 |
All-in sustaining costs per ounce of gold sold (2) |
$1,176 |
$1,360 |
Share Data |
|
|
Earnings (loss) per share, basic and diluted |
$0.12 |
($0.02) |
Adjusted earnings per share, basic(2) |
$0.12 |
$0.05 |
Weighted average common shares outstanding (basic) (000’s) |
|
393,960 |
|
391,913 |
Weighted average common shares outstanding (diluted) (000’s) |
|
396,954 |
|
391,913 |
Financial Position (in millions) |
|
|
Cash and cash equivalents(5) |
$133.8 |
$129.8 |
(1) Cost of sales includes mining and
processing costs, royalties, and amortization expense.
(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) Comparative cash and cash equivalents
balance as at December 31, 2022.
|
|
Three Months Ended March 31, |
|
|
2023 |
|
2022 |
Gold production (ounces) |
|
|
Young-Davidson |
|
45,000 |
|
51,900 |
Island Gold |
|
32,900 |
|
24,500 |
Mulatos District(7) |
|
50,500 |
|
22,500 |
Gold sales (ounces) |
|
|
Young-Davidson |
|
45,676 |
|
51,525 |
Island Gold |
|
33,727 |
|
23,368 |
Mulatos District |
|
53,265 |
|
23,573 |
Cost of sales (in
millions)(1) |
|
|
Young-Davidson |
$61.9 |
$64.6 |
Island Gold |
$30.9 |
$24.2 |
Mulatos District |
$62.4 |
$46.7 |
Cost of sales per ounce of gold sold (includes
amortization)(1) |
|
|
Young-Davidson |
$1,355 |
$1,254 |
Island Gold |
$916 |
$1,036 |
Mulatos District |
$1,172 |
$1,981 |
Total cash costs per ounce of gold sold
(2) |
|
|
Young-Davidson |
$941 |
$840 |
Island Gold |
$629 |
$745 |
Mulatos District |
$839 |
$1,570 |
Mine-site all-in sustaining costs per ounce of gold
sold
(2),(3) |
|
|
Young-Davidson |
$1,233 |
$1,044 |
Island Gold |
$970 |
$1,083 |
Mulatos District |
$914 |
$1,782 |
Capital
expenditures (sustaining, growth, capitalized exploration) (in
millions)(2) |
|
Young-Davidson (4) |
$17.4 |
$22.7 |
Island Gold (5) |
$57.0 |
$33.4 |
Mulatos District (6) |
$5.7 |
$26.0 |
Other |
$3.7 |
$5.2 |
(1) Cost of sales includes mining and
processing costs, royalties, and amortization
expense.(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 $1.4 million for the three months ended March 31,
2023 ($1.0 million for the three months ended March 31,
2022).(5) Includes capitalized exploration at Island Gold of
$2.4 million for the three months ended March 31, 2023 ($5.1
million for the three months ended March 31, 2022).
(6) Includes capitalized exploration at Mulatos District of
$1.1 million for the three months ended March 31, 2023 ($nil for
the three months ended March 31, 2022).(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 1.57, up from 1.26 in the fourth
quarter of 2022, and in line with the 2022 average of 1.59
- Lost time injury
frequency rate1 ("LTIFR") of 0.00, a 100% decrease from the fourth
quarter of 2022
During the first quarter of 2023, the TRIFR
increased with 17 recordable injuries, three more than the prior
quarter. There were zero lost time injuries recorded in the
quarter. 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 and zero reportable spills in the first
quarter of 2023
- Receipt of a
positive Decision Statement from the Minister of Environment and
Climate Change Canada for completion of the federal Environmental
Impact Statement (EIS) for the Lynn Lake Project
- Receipt of
Environment Act Licenses from the Province of Manitoba for the Lynn
Lake Project
The Company is committed to preserving the
long-term health and viability of the natural environment that
surrounds 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
- Completion of a
Definitive Agreement with Batchewana First Nation with respect to
Island Gold, recognizing positive and ongoing collaboration and
engagement
In addition, ongoing donations, medical support
and infrastructure investments were provided to local communities,
including:
- Donation to the
Wawa Adult Learning Centre, supporting the skills and training
needs of adult learners in north Algoma, Ontario
- Donations to
restore and upgrade the Elk Lake Playground, support Zack’s Crib
for homeless housing in New Liskeard, purchase of new gym equipment
for the Matachewan township, and complete building repairs for the
“Le Coeur du Village” community centre in Earlton, Ontario
- Various
donations to support annual fish derbies in communities around
Island Gold and Young-Davidson
- Ongoing social
investments to support public health, education, road maintenance,
and community infrastructure around the Mulatos mine
- Scholarship
payments and bursaries for students living near Mulatos and
Young-Davidson
The Company 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
- Publication of
Alamos' annual Women in Mining newsletter, showcasing a selection
of leaders from across the Company
- Alamos Gold’s
CEO John McCluskey was awarded the 2023 Viola R. MacMillan Award by
the Prospectors & Developers Association of Canada, in
recognition of John’s leadership and Alamos’ willingness to take
risks in the acquisition and development of Island Gold in Northern
Ontario
- Recipient of the
Empresa Socialmente Responsible Award from the Mexican Center for
Philanthropy for the 15th consecutive year
- Alamos was the
joint winner of the 2023 Best in Sector (Materials) Award by IR
Magazine Canada Awards
The Company 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. Alamos’ 2022 Report on Conformance to the Responsible Gold
Mining Principles and independent limited assurance report will be
published in the second quarter of 2023.
(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.
Following a successful 2022, the Company
continues to execute operationally with production of 128,400
ounces exceeding first quarter guidance and costs consistent with
annual guidance. All three operations performed well, including
another strong quarter from Mulatos driven by low-cost production
growth from La Yaqui Grande. This contributed to a solid quarter
financially with record quarterly revenues and strong ongoing free
cash flow while continuing to reinvest in organic growth. Second
quarter gold production of 2023 is expected to be between 120,000
and 130,000 ounces, with costs expected to be within the annual
guidance range.
The Company continues to advance its growth
initiatives supporting its strong outlook with growing production
and declining costs. The Phase 3+ Expansion at Island Gold is
progressing well, with construction of the hoist house well
underway and shaft sinking on track to begin in the latter part of
the year. In addition, a significant permitting milestone was
achieved at the Lynn Lake Project with the receipt of a positive
Decision Statement for the Federal Environmental Impact Statement
(“EIS”). The Company also continues to add value through
exploration including a 70% increase in Mineral Reserves at Puerto
Del Aire ("PDA") in the Mulatos District to 728,000 ounces with
grades also increasing 4%. An expanded exploration program is
underway at PDA during the first half of 2023 with excellent
potential for further growth with the deposit open in multiple
directions. This growth will be incorporated into a new development
plan for PDA to be completed in the fourth quarter of 2023 which is
expected to outline a significant mine life extension at
Mulatos.
As outlined in the three-year production and
operating guidance provided in January 2023, the Company expects
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.
Additional upside potential exists in 2025 as production guidance
excludes the higher-grade PDA project in the Mulatos District.
Company-wide AISC is expected to decrease 4% in 2023 and 17% by
2025 to between $950 and $1,050 per ounce.
In the first quarter of 2023, Young-Davidson
achieved mining rates of 8,000 tpd, in line with guidance, driving
production of 45,000 ounces. Production is expected to be between
185,000 and 200,000 ounces for the year, with an increase in future
quarters driven by higher grades mined. The operation generated
mine-site free cash flow of $16.3 million, slightly lower than
previous quarters, reflecting a delay in the collection of sales
tax receivables.
Island Gold produced 32,900 ounces in the first
quarter at total cash costs and mine-site AISC in line with annual
guidance. Island Gold is expected to produce between 120,000 and
135,000 ounces, consistent with 2022 given 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
an increase in mining rates toward the latter part of 2025 is
expected to drive an increase in production and reduction in
costs.
Combined gold production from the Mulatos
District (including La Yaqui Grande) more than doubled from the
first quarter of 2022, totaling 50,500 ounces driven by low-cost
production growth at La Yaqui Grande. With the strong start to the
year, Mulatos is well positioned to meet production guidance of
between 175,000 and 185,000 ounces in 2023. Total cash costs and
mine-site AISC were below annual guidance in the first quarter
driven by a higher proportion of production coming from La Yaqui
Grande, but are expected to be in line with guidance for the
year.
Capital spending, including capitalized
exploration, of $83.8 million in the quarter was in line with
annual guidance of $317 million to $357 million. The most
significant spending is expected at Island Gold as the Phase 3+
Expansion ramps up, with full year capital spending expected to be
between $221 and $246 million in 2023, inclusive of capitalized
exploration. Capital spending at Island Gold is expected to remain
at similar levels in 2024 and 2025 and then drop considerably in
2026 once the expansion is complete.
The global exploration budget for 2023 is
consistent with spending in 2022. The Mulatos District accounts for
the largest portion with an increased budget of $21 million,
followed by $14 million at Island Gold, $8 million at
Young-Davidson and $5 million at Lynn Lake. The exploration focus
in 2023 will follow up on a successful year 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 $133.8 million of cash and cash
equivalents, $25.8 million in equity securities, and no debt.
Additionally, the Company has a $500 million undrawn credit
facility, providing total liquidity of $633.8 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.
First Quarter 2023 results
Young-Davidson Financial and Operational
Review
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
|
Gold production (ounces) |
|
45,000 |
|
|
51,900 |
|
Gold
sales (ounces) |
|
45,676 |
|
|
51,525 |
|
Financial Review (in millions) |
|
|
Operating Revenues |
$86.3 |
|
$96.8 |
|
Cost of sales (1) |
$61.9 |
|
$64.6 |
|
Earnings from operations |
$24.0 |
|
$30.6 |
|
Cash provided by operating
activities |
$33.7 |
|
$45.9 |
|
Capital expenditures
(sustaining) (2) |
$13.2 |
|
$10.4 |
|
Capital expenditures (growth)
(2) |
$2.8 |
|
$11.3 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.4 |
|
$1.0 |
|
Mine-site free cash flow
(2) |
$16.3 |
|
$23.2 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,355 |
|
$1,254 |
|
Total cash costs per ounce of gold sold (2) |
$941 |
|
$840 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,233 |
|
$1,044 |
|
Underground Operations |
|
|
Tonnes of ore mined |
|
720,927 |
|
|
736,304 |
|
Tonnes of ore mined per day |
|
8,010 |
|
|
8,181 |
|
Average grade of gold (4) |
|
2.22 |
|
|
2.37 |
|
Metres developed |
|
2,695 |
|
|
3,246 |
|
Mill Operations |
|
|
Tonnes of ore processed |
|
701,954 |
|
|
737,728 |
|
Tonnes of ore processed per day |
|
7,799 |
|
|
8,197 |
|
Average grade of gold (4) |
|
2.22 |
|
|
2.38 |
|
Contained ounces milled |
|
50,212 |
|
|
56,740 |
|
Average recovery rate |
|
90% |
|
|
90% |
|
(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 45,000 ounces of gold in
the first quarter, lower than the prior year period reflecting both
lower tonnes and grades processed.
Underground mining rates were in line with
guidance, averaging 8,010 tpd in the first quarter. Grades mined
averaged 2.22 g/t Au in the first quarter, consistent with annual
guidance of between 2.15 and 2.35 g/t Au. Grades mined are expected
to remain at similar levels in the second quarter, and increase
through the second half of the year.
Mill throughput averaged 7,799 tpd in the first
quarter with grades processed averaging 2.22 g/t Au. Tonnes milled
were lower than mined as planned, given a scheduled liner change in
January. With mining rates exceeding milling rates during the
quarter, surface stockpiles increased and will be processed
throughout the remainder of the year. Mill recoveries averaged 90%
in the quarter, in line with guidance and the prior year
period.
Financial Review
First quarter revenues of $86.3 million were 11%
lower than the prior year period reflecting less ounces sold,
partially offset by a higher realized gold price.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $61.9
million in the first quarter were consistent with the prior year
period, due to less ounces sold offset by higher unit mining and
milling costs. Underground unit mining costs were CAD $52 per tonne
in the quarter, in line with budget and higher than the prior year
period reflecting cost inflation. Inflationary pressures on mining
and milling costs have been in line with expectations and
incorporated into 2023 cost guidance.
Total cash costs of $941 per ounce in the first
quarter were towards the higher end of guidance due to mine
sequencing with lower grades mined. Grades mined are expected to
increase in the second half of the year driving total cash costs
lower. Total cash costs were 12% higher than the prior year period
reflecting the higher unit mining costs and lower grades processed,
partially offset by the weaker Canadian dollar. Mine-site AISC of
$1,233 per ounce in the first quarter were 18% higher than the
prior year period, consistent with the increase in total cash
costs, and slightly higher than guidance due to lower grades
mined.
Capital expenditures in the quarter included
$13.2 million of sustaining capital and $2.8 million of growth
capital. In addition, $1.4 million was invested in capitalized
exploration in the quarter.
Young-Davidson continues to consistently
generate strong free cash flow, including mine-site free cash flow
of $16.3 million in the first quarter of 2023. Mine-site free cash
flow in the quarter was impacted by a temporary build up of $8
million of sales tax receivables for Young-Davidson which were
collected in April and will benefit the second quarter.
Young-Davidson has generated over $100 million in mine-site free
cash flow in each of the past two years. Young-Davidson is well
positioned to generate similar free cash flow in 2023 and over the
long-term, with a 15 year Mineral Reserve life.
Island Gold Financial and Operational
Review
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
Gold production (ounces) |
|
32,900 |
|
|
24,500 |
Gold
sales (ounces) |
|
33,727 |
|
|
23,368 |
Financial Review (in millions) |
|
|
Operating Revenues |
$63.9 |
|
$43.7 |
Cost of sales (1) |
$30.9 |
|
$24.2 |
Earnings from operations |
$32.6 |
|
$18.9 |
Cash provided by operating
activities |
$36.5 |
|
$27.4 |
Capital expenditures
(sustaining) (2) |
$11.4 |
|
$7.8 |
Capital expenditures (growth)
(2) (5) |
$43.2 |
|
$20.5 |
Capital expenditures
(capitalized exploration) (2) |
$2.4 |
|
$5.1 |
Mine-site free cash flow (2) |
($20.5) |
|
($6.0) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$916 |
|
$1,036 |
Total cash costs per ounce of gold sold (2) |
$629 |
|
$745 |
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$970 |
|
$1,083 |
Underground Operations |
|
|
Tonnes of ore mined |
|
108,396 |
|
|
102,989 |
Tonnes of ore mined per day ("tpd") |
|
1,204 |
|
|
1,144 |
Average grade of gold (4) |
|
9.56 |
|
|
8.35 |
Metres developed |
|
2,103 |
|
|
1,439 |
Mill Operations |
|
|
Tonnes of ore processed |
|
107,507 |
|
|
100,649 |
Tonnes of ore processed per day |
|
1,195 |
|
|
1,118 |
Average grade of gold (4) |
|
9.57 |
|
|
8.14 |
Contained ounces milled |
|
33,082 |
|
|
26,327 |
Average recovery rate |
|
97% |
|
|
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 $1.4 million for the
three months ended March 31, 2022.
Island Gold produced 32,900 ounces in the first
quarter of 2023, a 34% improvement from the prior year period
reflecting higher grades mined and tonnes processed.
Underground mining rates averaged 1,204 tpd in
the first quarter, in line with annual guidance and higher than the
prior year period. Grades mined averaged 9.56 g/t Au in the
quarter, consistent with annual guidance.
Mill throughput averaged 1,195 tpd, consistent
with annual guidance, and 7% higher than the prior year period.
Mill recoveries averaged 97% in the quarter, slightly above the
prior year period.
Financial Review
Island Gold generated revenues of $63.9 million
in the first quarter, 46% higher than the prior year period, driven
by more ounces sold and a higher realized gold price.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $30.9 million in the
first quarter were 28% higher than the prior year period,
reflecting more tonnes processed and higher mining and processing
costs, partially offset by a weaker Canadian dollar. Inflationary
pressures on mining and milling costs have been in line with
expectations.
Total cash costs of $629 per ounce in the first
quarter were in line with annual guidance, and lower than the prior
year period, primarily due to 18% higher grades processed and a
weaker Canadian dollar. Mine-site AISC of $970 per ounce were also
in line with guidance and lower than the prior year period.
Total capital expenditures were $57.0 million in
the first quarter, including $2.4 million of capitalized
exploration. Spending on the Phase 3+ Expansion continued through
the first quarter with construction activities focused on shaft
site surface preparation and erection of the hoist house. In
addition, capital spending was focused on lateral development and
other surface infrastructure.
Mine-site free cash flow was negative $20.5
million in the first quarter given higher capital spending related
to the Phase 3+ Expansion. Mine-site free cash flow at Island Gold
was also impacted by a temporary build up of $11 million of sales
tax receivables, which were collected in April and will benefit the
second quarter. At current gold prices, Island Gold is expected to
largely self-finance the Phase 3+ Expansion capital over the next
three years. The operation is expected to generate significant free
cash flow from 2026 onward with the completion of the
expansion.
Mulatos District Financial and
Operational Review
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
Gold production (ounces) |
|
50,500 |
|
|
22,500 |
Gold
sales (ounces) |
|
53,265 |
|
|
23,573 |
Financial Review (in millions) |
|
|
Operating Revenues |
$101.3 |
|
$44.0 |
Cost of sales (1) |
$62.4 |
|
$46.7 |
Earnings (loss) from
operations |
$36.6 |
|
($4.3) |
Cash provided (used) by
operating activities |
$42.5 |
|
($11.4) |
Capital expenditures
(sustaining) (2) |
$2.3 |
|
$4.3 |
Capital expenditures (growth)
(2) |
$2.3 |
|
$21.7 |
Capital expenditures
(capitalized exploration) (2) |
$1.1 |
|
|
$— |
Mine-site free cash flow
(2) |
$36.8 |
|
($37.4) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,172 |
|
$1,981 |
Total cash costs per ounce of gold sold (2) |
$839 |
|
$1,570 |
Mine site all-in sustaining costs per ounce of gold sold
(2),(3) |
$914 |
|
$1,782 |
La Yaqui Grande Mine |
|
|
Open Pit
Operations |
|
|
Tonnes of ore mined - open pit (4) |
|
1,032,944 |
|
|
— |
Total waste mined - open pit (6) |
|
5,830,815 |
|
|
— |
Total tonnes mined - open pit |
|
6,863,759 |
|
|
— |
Waste-to-ore ratio (operating) |
|
5.64 |
|
|
— |
Crushing and Heap Leach Operations |
|
|
Tonnes of ore stacked |
|
1,019,634 |
|
|
— |
Average grade of gold processed (5) |
|
1.55 |
|
|
— |
Contained ounces stacked |
|
50,922 |
|
|
— |
Average recovery rate |
|
75% |
|
|
— |
Ore crushed per day (tonnes) |
|
11,329 |
|
|
— |
Mulatos Mine |
|
|
Open Pit
Operations |
|
|
Tonnes of ore mined - open pit (4) |
|
1,001,785 |
|
|
613,813 |
Total waste mined - open pit (6) |
|
611,755 |
|
|
1,972,552 |
Total tonnes mined - open pit |
|
1,613,539 |
|
|
2,586,365 |
Waste-to-ore ratio (operating) |
|
0.61 |
|
|
1.60 |
Crushing and Heap Leach Operations |
|
|
Tonnes of ore stacked |
|
1,229,076 |
|
|
1,741,483 |
Average grade of gold processed (5) |
|
0.92 |
|
|
0.73 |
Contained ounces stacked |
|
36,541 |
|
|
40,852 |
Average recovery rate |
|
33% |
|
|
55% |
Ore crushed per day (tonnes) |
|
13,700 |
|
|
19,300 |
(1) Cost of sales includes
mining and processing costs, royalties, and amortization expense.
(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.
The Mulatos District produced 50,500 ounces in
the first quarter from the Mulatos and La Yaqui Grande operations,
124% higher than the prior year period and consistent with the
fourth quarter of 2022 reflecting the strong contribution from La
Yaqui Grande including record quarterly production.
La Yaqui Grande Operational Review
La Yaqui Grande produced a record 38,400 ounces
in the first quarter, up 3% from the fourth quarter of 2022
reflecting higher grades mined and stacked. La Yaqui Grande has
been the driver of the significant growth in Mulatos District
production at substantially lower costs following the start of
production in mid-2022.
Mining and stacking rates were consistent with
the fourth quarter of 2022 with La Yaqui Grande fully ramped up. A
total of 1,032,944 tonnes of ore was mined in the quarter, similar
to the previous quarter. Stacking rates increased to average 11,329
tpd in the quarter, exceeding the design level of 10,000 tpd, but
are expected to revert back to 10,000 tpd for the remainder of the
year. Grades stacked on the leach pad averaged 1.55 g/t Au, above
annual guidance of 1.15 to 1.45 g/t Au due to mine sequencing.
Grades stacked are expected to decrease through the remainder of
the year, consistent with guidance. The recovery rate in the
quarter of 75% was slightly below annual guidance reflecting higher
grades stacked later in the quarter. Recoveries are expected to
increase in the second quarter and through the rest of the year to
be consistent with guidance.
Mulatos Operational Review
Mulatos produced 12,100 ounces in the first
quarter, consistent with the fourth quarter of 2022. Mining
activities were focused on the El Salto portion of the pit, which
is expected to continue through to the middle of the year, after
which stockpiles will be processed.
Total crusher throughput averaged 13,700 tpd,
for a total of 1,229,076 tonnes stacked at a grade of 0.92 g/t Au,
including stockpiles. Crusher throughput at Mulatos was lower than
planned given maintenance required to the overland conveyor in
February.
Recovery rates were 33%, reflecting the
increased stacking rates of lower recovery stockpiled ore with
longer leach cycles.
Financial Review (Mulatos District)
Revenues of $101.3 million in the first quarter
were more than double the prior year period reflecting higher gold
sales with the start of production at La Yaqui Grande in June 2022,
which contributed 39,858 ounces sold in the quarter.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $62.4 million in the
first quarter were higher than in the comparative period, driven by
an increase in total tonnes mined and stacked at the Mulatos
District.
Total cash costs for the Mulatos District of
$839 per ounce were below annual guidance and down 47% from the
prior year period driven by low-cost production growth from La
Yaqui Grande, partially offset by higher processing costs at the
Mulatos portion of the operation. Mine-site AISC for the Mulatos
District of $914 per ounce were also below annual guidance and down
49% from the prior year period. Total cash costs and mine-site AISC
are expected to increase through the rest of the year to be
consistent with annual guidance reflecting grades in line with the
La Yaqui Grande reserve grade.
Capital spending totaled $5.7 million in the
first quarter, down significantly from the prior year period
reflecting completion of construction of La Yaqui Grande in June
2022. Current quarter capital spending included sustaining capital
expenditures of $2.3 million, and capitalized exploration of $1.1
million.
The Mulatos District generated mine-site free
cash flow of $36.8 million in the first quarter, up 28% from the
fourth quarter and the highest quarterly free cash flow in the last
10 years, driven by the low-cost production from La Yaqui Grande.
This strong free cash flow generation is expected to continue the
remainder of the year and beyond given the strong operating margins
at La Yaqui Grande.
First Quarter 2023 Development
Activities
Island Gold (Ontario,
Canada)
Phase 3+ Expansion
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.
Construction continued to advance through the
first quarter of 2023, with the focus on shaft site surface
preparation ahead of the hoist installation and headframe erection
which are expected to commence in the second quarter of 2023.
Further details on progress to the end of the first quarter are
summarized below:
- Installation of
a 44kV powerline from the existing Island Gold Mine substation to
the shaft area substation location
- Completion of
the hoist house building steel and external cladding
- Concrete
foundation installation for the collar, sub-collar, ventilation
plenum, transformer and warehouse facilities in the shaft area
ongoing
- Installation of
buried services in the vicinity of the hoist house and headframe
commenced
- Fabrication of
steel for the headframe and collar house commenced
- Paste plant
detailed engineering and issuance of long lead time equipment
procurement packages ongoing
- Mill expansion
basic engineering and preparation of long lead time equipment
procurement packages ongoing
- Lateral
development to support higher mining rates with the Phase 3+
Expansion remains ongoing
During the first quarter of 2023, the Company
spent $43.2 million, related to the Phase 3+ Expansion and capital
development. Growth capital spending at Island Gold on the Phase 3+
Expansion is expected to be between $165 and $185 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 - March
2023
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).
In March, the Company achieved a significant
permitting milestone for the Lynn Lake project with a positive
Decision Statement issued by the Ministry of Environment and
Climate Change Canada based on the completed Federal Environmental
Impact Statement, and Environment Act Licenses issued by the
Province of Manitoba. The Mathias Colomb Cree Nation has brought an
application for judicial review of the Decision Statement issued by
the Ministry of Environment and Climate Change and an internal
appeal of the Environment Act Licenses issued by the Province of
Manitoba. At this time, the application and appeal are not expected
to impact overall Lynn Lake Project timelines. The Company expects
to release an updated Feasibility Study on the project
mid-year.
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
$2.3 million in the first quarter of 2023 to support the
Federal and Provincial 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 $0.7 million in the first
quarter related to ongoing holding costs and legal costs to
progress the Treaty claim, which was expensed.
First Quarter 2023 Exploration
Activities
Island Gold (Ontario,
Canada)
A total of $14 million has been budgeted
primarily for underground exploration at Island Gold in 2023. This
is down from the 2022 budget of $22 million, reflecting the
transition from higher cost surface directional drilling to a more
cost effective expanded underground drilling program.
For the past several years, the exploration
focus has been on adding high-grade Mineral Resources at depth in
advance of the Phase 3+ Expansion Study, primarily through surface
directional drilling. This exploration strategy has been successful
in nearly tripling the Mineral Reserve and Resource base since 2017
to over five million ounces of gold. With an 18-year mine life, and
with work on the expansion ramping up, the focus will be shifting
to a more cost-effective expanded underground drilling program that
will leverage existing underground infrastructure. This drilling is
much lower cost on a per metre basis, is less technically
challenging, and requires significantly fewer metres per
exploration target.
The underground exploration drilling program has
been expanded from 27,500 m in 2022 to 45,000 m in 2023. The
program is focused on defining new Mineral Reserves and Resources
in proximity to existing production horizons and infrastructure
including along strike, and in the hanging-wall and footwall. These
potential high-grade Mineral Reserve and Resource additions would
be low cost to develop and could be incorporated into the mine plan
and mined within the next several years, further increasing the
value of the operation. To support the underground exploration
drilling program, 444 m of underground exploration drift
development is planned to extend drill platforms on the 490, 790,
945, and 980-levels. In addition to the exploration budget, 36,000
m of underground delineation drilling has been planned and included
in sustaining capital for Island Gold.
A regional exploration program including 7,500 m
of drilling is also budgeted in 2023. The focus will be on
evaluating and advancing exploration targets outside the Island
Gold Deposit on the 15,500-hectare Island Gold property.
During the first quarter of 2023, a total of
6,892 m of underground exploration drilling was completed in 29
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 first quarter.
Total exploration expenditures during the first
quarter were $2.8 million, of which $2.4 million was
capitalized.
Young-Davidson (Ontario,
Canada)
A total of $8 million has been budgeted for
exploration at Young-Davidson in 2023, up from $5 million in 2022.
The 2023 program includes 21,600 m of underground exploration
drilling, and 400 m of underground exploration development to
extend drill platforms on the 9220, 9270, and 9590-levels.
The focus of the underground exploration
drilling program will be to expand Mineral Reserves and Resources
in five target areas in proximity to existing underground
infrastructure. This includes targeting additional gold
mineralization within the syenite which hosts the majority of
Mineral Reserves and Resources, as well as within the hanging wall
and footwall of the deposit where higher grades have been
previously intersected.
In addition, 5,000 m of surface drilling is
planned to test near-surface targets across the 5,900 hectare
Young-Davidson Property.
During the first quarter of 2023, three
underground exploration drills completed 5,631 m in 13 holes from
the 9220 West exploration drift, and from the 9770 East footwall
drift. 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.
Additionally, 141 m of underground exploration
drift development was completed in the first quarter to extend
drill platforms on the 9590, 9220 and the 9200 levels.
Exploration spending totaled $1.8 million
of which $1.4 million was capitalized in the first quarter
2023.
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. For 2023, a total of $21
million has been budgeted for exploration, triple the $7 million
budget in 2022. This includes 35,000 m of surface exploration
drilling at PDA, a higher-grade underground deposit, adjacent to
the main Mulatos pit. The 2023 program will continue to expand on a
successful 2022 drill program that extended high-grade
mineralization beyond currently defined Mineral Reserves and
Resources. Additionally, the regional exploration budget has
doubled to 34,000 m with the focus on several high priority targets
including Halcon, Halcon West, Carricito, Bajios, and Jaspe.
During the first quarter of 2023, exploration
activities continued at PDA and the near-mine area with 8,578 m of
drilling completed in 28 holes. Exploration drilling at PDA has
been extremely successful with Mineral Reserves increasing 70% in
2022 to 728,000 ounces (4.7 mt grading 4.84 g/t Au) with grades
also increasing 4% as of the end of 2022. Ongoing exploration
results will be incorporated into an updated development plan which
is expected to be completed in the fourth quarter of 2023.
The regional program included 3,014 m of
drilling in seven drill holes at the Halcon West target and 2,227 m
in seven drill holes at Refugio in the first quarter. Drilling also
resumed at the Carricito project with 1,348 m in six holes.
During the first quarter, the Company incurred
$3.4 million of exploration spending of which
$1.1 million was capitalized.
Lynn Lake (Manitoba,
Canada)
A total of $5 million has been budgeted for
exploration at the Lynn Lake project in 2023. This includes 8,000 m
of drilling focused on several advanced regional targets, expansion
of Mineral Reserves and Resources in proximity to the Gordon
deposit, as well as the targeting and evaluation of the Burnt
Timber and Linkwood deposits. Burnt Timber and Linkwood contain
Inferred Mineral Resources totaling 1.6 million ounces grading 1.1
g/t Au (44 million tonnes) as of December 31, 2022 and represent
potential future upside. The other key area of focus for 2023 is
the continued evaluation and advancement of a pipeline of
prospective exploration targets within the 58,000-hectare Lynn Lake
Property including the Tulune greenfields discovery and
Maynard.
During the first quarter of 2023, 4,521 m of
drilling was completed in 13 holes at the Maynard target, and two
early-stage targets east of the Maynard area. An additional 3,500 m
of drilling is planned for the second quarter at the Gordon deposit
and the Tulune target in the north belt and at two early-stage
regional targets. Planning is underway for geological mapping,
sampling and geophysics during the summer field season to continue
development of a pipeline of drill-ready regional exploration
targets in the highly prospective Lynn Lake greenstone belt.
Exploration spending totaled $1.3 million
in the first quarter, all of which was capitalized.
Review of First Quarter Financial
Results
During the first quarter of 2023, the Company
sold 132,668 ounces of gold for record revenues of $251.5 million,
a 36% increase from the prior year period driven by more ounces
sold with the start of production at La Yaqui Grande mid-2022, as
well as a higher realized gold price.
The average realized gold price in the first
quarter was $1,896 per ounce, a 1% increase compared to $1,874 per
ounce in the prior year period. The average realized gold price in
the quarter was $6 per ounce above the London PM Fix price.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) were $155.2
million in the first quarter, 15% higher than the prior year
period.
Mining and processing costs were $106.4 million,
12% higher than the prior year period. The increase primarily
reflects new production at La Yaqui Grande, having not been in
operation during the prior year period, and the impact of inflation
on mining and processing costs across the operations, partially
offset by a weaker Canadian dollar. Although total mining and
processing costs were higher in the quarter, total cash costs of
$821 per ounce were lower than the prior year period given low-cost
production growth from La Yaqui Grande and higher grades mined at
Island Gold.
Royalty expense was $2.5 million in the quarter,
consistent with the prior year period of $2.3 million.
Amortization of $46.3 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 $349
per ounce was 9% lower than the prior year period, given lower
amortization charges associated with La Yaqui Grande.
The Company recognized earnings from operations
of $75.0 million in the quarter, higher than the prior year period
as a result of higher ounces sold and stronger operating margins.
Earnings in the prior year period were also impacted by a non-cash
impairment charge of $38.2 million related to the sale of the
Esperanza Project.
The Company reported net earnings of $48.4
million in the quarter, compared to a net loss of $8.5 million in
the prior year period. Adjusted earnings in the first quarter of
2023 were $45.4 million, or $0.12 per share, which included an
adjustment for an unrealized foreign exchange gain recorded within
deferred taxes and foreign exchange.
Associated Documents
This press release should be read in conjunction
with the Company’s interim consolidated financial statements for
the three-month period ended March 31, 2023 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 First Quarter 2023 Results
Conference Call
The Company's senior management will host a
conference call on Thursday, April 27, 2023 at 11:00 am ET to
discuss the first quarter 2023 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: |
|
7943015# |
Webcast: |
|
www.alamosgold.com |
A playback will be available until May 28, 2023
by dialling (905) 694-9451 or (800) 408-3053 within Canada and the
United States. The passcode is 1136724#. 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.
Parsons |
|
Senior 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”, “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, guidance and expectations pertaining to: free cash flow, gold
production, total cash costs, all-in sustaining costs, mine-site
all-in sustaining costs, capital expenditures, total sustaining and
growth capital, capitalized exploration, and future fluctuations in
the Company’s effective tax rate; 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; the expected completion of the
acquisition of Manitou Gold Inc. by the Company; the intended
release of an updated Feasibility Study for the Lynn Lake Gold
Project and timing related thereto; exploration potential, budgets,
focuses, programs, targets and projected exploration results;
returns to stakeholders; potential for further growth from Puerto
Del Aire (PDA), a new development plan for PDA and the expected
timing of its completion; mine life, including an anticipated mine
life extension at Mulatos; Mineral Reserve life; Mineral Reserve
and Resource grades; reserve and resource estimates; decrease in
grades stacked through the remainder of the year and increase in
recoveries at La Yaqui Grande; continued focus on the El Salto
portion of the pit at Mulatos and subsequent processing of
stockpiles; mining rates 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,
forecasted cash shortfalls and the Company’s ability to fund them,
cost estimates, sufficiency of working capital for future
commitments 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.
Risk factors that may affect Alamos’ ability to
achieve the expectations set forth in 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., the application for judicial review of
the positive Decision Statement issued by the Ministry of
Environment and Climate Change Canada commenced by the Mathias
Colomb Cree Nation (MCCN) in respect of the Lynn Lake Gold Project
and the MCCN’s corresponding internal appeal of the Environment Act
Licences issued by the Province of Manitoba for the project);
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; court or other
administrative decisions impacting the Company’s approved
Environmental Impact Study and/or issued project permits,
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 processing any ore from the deposit of Puerto
Del Aire; the risk that the Company’s mines may not perform as
planned; not receiving the requisite approvals for the completion
of the transaction pursuant to which the Company would acquire
Manitou Gold Inc.; 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 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 and details with respect
to risk factors that may affect the Company’s ability to achieve
the expectations set forth in the forward-looking statements
contained in this in this press release are set out in the
Company's latest 40-F/Annual Information Form 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 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 in this press release or documents referenced in this 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 condensed interim consolidated financial
statements of the Company have been prepared by management in
accordance with International Financial Reporting Standard 34,
Interim Financial Reporting, as issued by the International
Accounting Standards Board. 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 March 31, |
|
|
2023 |
|
|
2022 |
Net earnings (loss) |
$48.4 |
|
($8.5) |
Adjustments: |
|
|
Impairment charge, net of taxes |
|
— |
|
|
26.7 |
Foreign exchange loss |
|
0.1 |
|
|
— |
Other loss |
|
1.3 |
|
|
7.4 |
Unrealized foreign exchange gain recorded in deferred tax
expense |
|
(4.2) |
|
|
(5.8) |
Other income tax and mining tax adjustments |
|
(0.2) |
|
|
(1.8) |
Adjusted net earnings |
$45.4 |
|
$18.0 |
Adjusted earnings per share - basic |
$0.12 |
|
$0.05 |
Cash Flow from Operating Activities
before Changes in Working Capital and Cash Taxes
“Cash flow from operating activities before
changes in working capital and cash taxes” is a non-GAAP
performance measure that could provide an indication of the
Company’s ability to generate cash flows from operations, and is
calculated by adding back the change in working capital and taxes
received to “Cash provided by (used in) operating activities” as
presented on the Company’s consolidated statements of cash flows.
“Cash flow from operating activities before changes in working
capital” is a non-GAAP financial measure with no standard meaning
under IFRS.
The following table reconciles the non-GAAP
measure to the consolidated statements of cash flows.
(in
millions) |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
2022 |
Cash flow from operating activities |
$94.3 |
$46.5 |
Add: Changes in working
capital and taxes paid |
|
32.9 |
|
24.4 |
Cash flow from operating activities before changes in
working capital and taxes paid |
$127.2 |
$70.9 |
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 March 31, |
|
|
2023 |
|
|
2022 |
Cash flow from operating activities |
$94.3 |
|
$46.5 |
Less: mineral property, plant
and equipment expenditures |
|
(83.8) |
|
|
(87.3) |
Company-wide free cash flow |
$10.5 |
|
($40.8) |
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 March 31, |
|
|
2023 |
|
|
2022 |
(in millions) |
|
|
Cash flow from operating
activities |
$94.3 |
|
$46.5 |
Add:
operating cash flow used by non-mine site activity |
|
18.4 |
|
|
15.4 |
Cash flow from operating mine-sites |
$112.7 |
|
$61.9 |
|
|
|
Mineral property, plant and
equipment expenditure |
$83.8 |
|
$87.3 |
Less:
capital expenditures from development projects, and corporate |
|
(3.7) |
|
|
(5.2) |
|
|
|
Capital expenditure and capital advances from
mine-sites |
$80.1 |
|
$82.1 |
|
|
|
Total mine-site free cash flow |
$32.6 |
|
($20.2) |
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
(in millions) |
|
|
Cash flow from operating
activities |
$33.7 |
|
$45.9 |
Mineral
property, plant and equipment expenditure |
|
(17.4) |
|
|
(22.7) |
Mine-site free cash flow |
$16.3 |
|
$23.2 |
Island Gold Mine-Site Free Cash Flow |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
(in millions) |
|
|
Cash flow from operating
activities |
$36.5 |
|
$27.4 |
Mineral property, plant and
equipment expenditure (1) |
|
(57.0) |
|
|
(33.4) |
Mine-site free cash flow |
($20.5) |
|
($6.0) |
(1) Includes capital advances of $1.4 million
for the three months ended March 31, 2022.
Mulatos District Free Cash Flow |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
(in millions) |
|
|
Cash flow from operating
activities |
$42.5 |
|
($11.4) |
Mineral property, plant and
equipment expenditure (1) |
|
(5.7) |
|
|
(26.0) |
Mine-site free cash flow |
$36.8 |
|
($37.4) |
(1) Includes a drawdown of capital
advances of $1.4 million for the three months ended March 31, 2022.
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 March 31, |
|
|
2023 |
|
2022 |
(in millions, except ounces and per ounce figures) |
|
|
Mining and processing |
$106.4 |
$95.4 |
Royalties |
|
2.5 |
|
2.3 |
Total cash costs |
|
108.9 |
|
97.7 |
Gold
ounces sold |
|
132,668 |
|
98,466 |
Total cash costs per ounce |
$821 |
$992 |
|
|
|
Total cash costs |
$108.9 |
$97.7 |
Corporate and
administrative(1) |
|
6.7 |
|
6.1 |
Sustaining capital
expenditures(2) |
|
26.9 |
|
22.5 |
Share-based compensation |
|
11.1 |
|
6.3 |
Sustaining exploration |
|
0.7 |
|
0.6 |
Accretion of decommissioning
liabilities |
|
1.7 |
|
0.7 |
Total all-in sustaining costs |
$156.0 |
$133.9 |
Gold
ounces sold |
|
132,668 |
|
98,466 |
All-in sustaining costs per ounce |
$1,176 |
$1,360 |
(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
expenditures for the period are as follows:
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
(in millions) |
|
|
Capital expenditures per cash
flow statement |
$83.8 |
|
$87.3 |
Less: non-sustaining capital
expenditures at: |
|
|
Young-Davidson |
|
(4.2) |
|
|
(12.3) |
Island Gold |
|
(45.6) |
|
|
(25.6) |
Mulatos District |
|
(3.4) |
|
|
(21.7) |
Corporate and other |
|
(3.7) |
|
|
(5.2) |
Sustaining capital expenditures |
$26.9 |
|
$22.5 |
Young-Davidson Total
Cash Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
2022 |
(in millions, except ounces and per ounce figures) |
|
|
Mining and processing |
$41.6 |
$41.7 |
Royalties |
|
1.4 |
|
1.6 |
Total cash costs |
$43.0 |
$43.3 |
Gold
ounces sold |
|
45,676 |
|
51,525 |
Total cash costs per ounce |
$941 |
$840 |
|
|
|
Total cash costs |
$43.0 |
$43.3 |
Sustaining capital
expenditures |
|
13.2 |
|
10.4 |
Accretion of decommissioning liabilities |
|
0.1 |
|
0.1 |
Total all-in sustaining costs |
$56.3 |
$53.8 |
Gold
ounces sold |
|
45,676 |
|
51,525 |
Mine-site all-in sustaining costs per ounce |
$1,233 |
$1,044 |
Island Gold Total Cash
Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
2022 |
(in millions, except ounces and per ounce figures) |
|
|
Mining and processing |
$20.6 |
$16.9 |
Royalties |
|
0.6 |
|
0.5 |
Total cash costs |
$21.2 |
$17.4 |
Gold
ounces sold |
|
33,727 |
|
23,368 |
Total cash costs per ounce |
$629 |
$745 |
|
|
|
Total cash costs |
$21.2 |
$17.4 |
Sustaining capital
expenditures |
|
11.4 |
|
7.8 |
Accretion of decommissioning liabilities |
|
0.1 |
|
0.1 |
Total all-in sustaining costs |
$32.7 |
$25.3 |
Gold
ounces sold |
|
33,727 |
|
23,368 |
Mine-site all-in sustaining costs per ounce |
$970 |
$1,083 |
Mulatos District Total
Cash Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
2022 |
(in millions, except ounces and per ounce figures) |
|
|
Mining and processing |
$44.2 |
$36.8 |
Royalties |
|
0.5 |
|
0.2 |
Total cash costs |
$44.7 |
$37.0 |
Gold
ounces sold |
|
53,265 |
|
23,573 |
Total cash costs per ounce |
$839 |
$1,570 |
|
|
|
Total cash costs |
$44.7 |
$37.0 |
Sustaining capital
expenditures |
|
2.3 |
|
4.3 |
Sustaining exploration |
|
0.2 |
|
0.2 |
Accretion of decommissioning liabilities |
|
1.5 |
|
0.5 |
Total all-in sustaining costs |
$48.7 |
$42.0 |
Gold
ounces sold |
|
53,265 |
|
23,573 |
Mine-site all-in sustaining costs per ounce |
$914 |
$1,782 |
Earnings Before Interest, Taxes,
Depreciation, and Amortization (“EBITDA”)
EBITDA represents net earnings before impairment
charges, 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 March 31, |
|
|
2023 |
|
2022 |
Net earnings (loss) |
$48.4 |
($8.5) |
Add back: |
|
|
Impairment charge |
|
— |
|
38.2 |
Finance expense |
|
1.4 |
|
1.2 |
Amortization |
|
46.3 |
|
37.8 |
Deferred income tax expense (recovery) |
|
0.4 |
|
(6.5) |
Current income tax expense |
|
23.4 |
|
0.7 |
EBITDA |
$119.9 |
$62.9 |
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)
|
March 31, 2023 |
|
December 31, 2022 |
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$133.8 |
|
$129.8 |
Equity securities |
|
25.8 |
|
|
18.6 |
Amounts receivable |
|
50.5 |
|
|
37.2 |
Inventory |
|
251.8 |
|
|
234.2 |
Other current assets |
|
13.3 |
|
|
16.2 |
Assets held for sale |
|
— |
|
|
5.0 |
Total Current
Assets |
|
475.2 |
|
|
441.0 |
|
|
|
|
Non-Current
Assets |
|
|
|
Mineral property, plant and
equipment |
|
3,201.0 |
|
|
3,173.8 |
Other non-current assets |
|
59.8 |
|
|
59.4 |
Total Assets |
$3,736.0 |
|
$3,674.2 |
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$170.4 |
|
$181.2 |
Income taxes payable |
|
22.0 |
|
|
0.7 |
Total Current
Liabilities |
|
192.4 |
|
|
181.9 |
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
662.6 |
|
|
660.9 |
Decommissioning
liabilities |
|
109.6 |
|
|
108.1 |
Other non-current
liabilities |
|
2.3 |
|
|
2.2 |
Total Liabilities |
|
966.9 |
|
|
953.1 |
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,710.9 |
|
$3,703.8 |
Contributed surplus |
|
87.7 |
|
|
90.7 |
Accumulated other
comprehensive loss |
|
(19.5) |
|
|
(24.8) |
Deficit |
|
(1,010.0) |
|
|
(1,048.6) |
Total Equity |
|
2,769.1 |
|
|
2,721.1 |
Total Liabilities and Equity |
$3,736.0 |
|
$3,674.2 |
|
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 |
|
March 31, |
|
March 31, |
|
|
2023 |
|
|
2022 |
OPERATING
REVENUES |
$251.5 |
|
$184.5 |
|
|
|
|
COST OF
SALES |
|
|
|
Mining and processing |
|
106.4 |
|
|
95.4 |
Royalties |
|
2.5 |
|
|
2.3 |
Amortization |
|
46.3 |
|
|
37.8 |
|
|
155.2 |
|
|
135.5 |
EXPENSES |
|
|
|
Exploration |
|
3.5 |
|
|
4.1 |
Corporate and
administrative |
|
6.7 |
|
|
6.1 |
Share-based compensation |
|
11.1 |
|
|
6.3 |
Impairment charge |
|
— |
|
|
38.2 |
|
|
176.5 |
|
|
190.2 |
EARNINGS (LOSS) FROM
OPERATIONS |
|
75.0 |
|
|
(5.7) |
|
|
|
|
OTHER
EXPENSES |
|
|
|
Finance expense |
|
(1.4) |
|
|
(1.2) |
Foreign exchange loss |
|
(0.1) |
|
|
— |
Other loss |
|
(1.3) |
|
|
(7.4) |
EARNINGS (LOSS) BEFORE
INCOME TAXES |
$72.2 |
|
($14.3) |
|
|
|
|
INCOME
TAXES |
|
|
|
Current income tax
expense |
|
(23.4) |
|
|
(0.7) |
Deferred income tax (expense)
recovery |
|
(0.4) |
|
|
6.5 |
NET EARNINGS
(LOSS) |
$48.4 |
|
($8.5) |
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
|
4.3 |
|
|
3.2 |
Net change in fair value of fuel hedging instruments, net of
taxes |
|
(0.2) |
|
|
0.9 |
Items that will not be
reclassified to net earnings: |
|
|
|
Unrealized gain (loss) on equity securities, net of taxes |
|
1.2 |
|
|
(2.5) |
Total other
comprehensive income |
$5.3 |
|
$1.6 |
COMPREHENSIVE INCOME
(LOSS) |
$53.7 |
|
($6.9) |
|
|
|
|
EARNINGS (LOSS) PER
SHARE |
|
|
|
– basic |
$0.12 |
|
($0.02) |
–
diluted |
$0.12 |
|
($0.02) |
Weighted average number of
common shares outstanding (000's) |
|
|
|
– basic |
|
393,960 |
|
|
391,913 |
– diluted |
|
396,954 |
|
|
391,913 |
|
ALAMOS GOLD
INC.Consolidated Statements of Cash
Flows(Unaudited - stated in millions of United States
dollars)
|
For three months ended |
|
March 31, |
|
March 31, |
|
|
2023 |
|
2022 |
CASH PROVIDED BY (USED
IN): |
|
|
|
OPERATING
ACTIVITIES |
|
|
|
Net earnings (loss) for the
period |
$48.4 |
|
($8.5) |
Adjustments for items not
involving cash: |
|
|
|
Amortization |
|
46.3 |
|
37.8 |
Impairment charge |
|
— |
|
38.2 |
Foreign exchange loss |
|
0.1 |
|
— |
Current income tax expense |
|
23.4 |
|
0.7 |
Deferred income tax expense (recovery) |
|
0.4 |
|
(6.5) |
Share-based compensation |
|
11.1 |
|
6.3 |
Finance expense |
|
1.4 |
|
1.2 |
Other items |
|
(3.9) |
|
1.7 |
Changes in working capital and
taxes paid |
|
(32.9) |
|
(24.4) |
|
|
94.3 |
|
46.5 |
INVESTING
ACTIVITIES |
|
|
|
Mineral property, plant and
equipment |
|
(83.8) |
|
(87.3) |
Investment in equity
securities |
|
(1.0) |
|
— |
|
|
(84.8) |
|
(87.3) |
FINANCING
ACTIVITIES |
|
|
|
Dividends paid |
|
(9.2) |
|
(8.7) |
Proceeds from the exercise of
options |
|
3.6 |
|
0.7 |
|
|
(5.6) |
|
(8.0) |
Effect of exchange rates on
cash and cash equivalents |
|
0.1 |
|
0.5 |
Net increase in cash and cash
equivalents |
|
4.0 |
|
(48.3) |
Cash and cash equivalents -
beginning of period |
|
129.8 |
|
172.5 |
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$133.8 |
|
$124.2 |
|
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/46749b8c-34fa-49e7-a662-c5fb63185b60
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