Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
ended June 30, 2023.
“We delivered a record performance in the second
quarter on multiple fronts. Operationally, we produced a record
136,000 ounces, exceeding quarterly guidance, at costs consistent
with annual guidance. This was driven by another excellent quarter
from La Yaqui Grande which contributed to the highest production
and free cash flow from the Mulatos District in more than 10 years.
With the solid first half, we are well positioned to achieve our
full year production and cost guidance,” said John A. McCluskey,
President and Chief Executive Officer.
“The strong production growth and margin expansion led to a
record quarter financially across a number of metrics including
record revenue and operating cash flow. We also generated record
free cash flow of $62 million while continuing to advance our
growth initiatives that will in turn support further free cash flow
growth. The Phase 3+ Expansion at Island Gold remains on track with
construction of the shaft surface infrastructure well underway, and
the updated Feasibility Study for the Lynn Lake project is in the
final stages of completion. Both projects are key components of our
strong outlook, with the capacity to nearly double our rate of
production in Canada at significantly lower costs,” Mr. McCluskey
added.
Second Quarter
2023
- Produced a record 136,000 ounces of gold, exceeding quarterly
guidance of 120,000 to 130,000 ounces. This represented a 31%
increase from the second quarter of 2022 and 6% increase from the
first quarter of 2023 driven by strong production growth from the
Mulatos District. The Company remains well positioned to achieve
2023 annual guidance
- Record free cash flow1 of $61.6
million reflecting strong operating results and margin expansion,
as well as benefiting from the collection of sales tax receivables
in Canada that had been temporarily delayed in the first 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
- Generated record cash flow from
operating activities of $141.8 million ($138.3 million, or $0.35
per share, before changes in working capital1)
- The Mulatos District produced
60,300 ounces, a 19% increase from the first quarter of 2023, and
the highest level in 10 years, reflecting another solid quarter
from La Yaqui Grande. The strong performance drove a 28% increase
in mine-site free cash flow from the first quarter of 2023 to $47.0
million, bringing the first half total to $83.8 million
- Young-Davidson continues to perform
well, producing 45,200 ounces, consistent with the first quarter of
2023, and generating record mine-site free cash flow1 of $35.4
million. Through the first half of the year, Young-Davidson
generated $51.7 million of mine-site free cash flow and remains on
track to generate over $100 million for the third consecutive
year
- Island Gold produced 30,500 ounces
and continues to self-finance the majority of the Phase 3+
Expansion. The Expansion is progressing well with the construction
of the hoist house largely complete, the headframe well underway,
and shaft sinking on track to start in the fourth quarter of
2023
- Sold 131,952 ounces of gold at an
average realized price of $1,978 per ounce, for record quarterly
revenues of $261.0 million. The average realized gold price was $2
per ounce above the London PM fix for the quarter
- Total cash costs1 of $847 per ounce
were consistent with annual guidance, and all-in sustaining costs
("AISC"1) of $1,112 per ounce were below the low end of guidance
and down 5% from the first quarter of 2023, reflecting low-cost
production growth from La Yaqui Grande and lower sustaining
capital
- Realized adjusted net earnings1 of
$59.3 million, or $0.15 per share. Adjusted net earnings includes
adjustments for unrealized foreign exchange gains recorded within
both deferred taxes and foreign exchange of $13.4 million, and
other gains totaling $2.4 million. Reported net earnings were $75.1
million, or $0.19 per share
- Paid a quarterly dividend of $9.9
million, or $0.025 per share (annualized rate of $0.10 per
share)
- Cash and cash equivalents increased
to $188.6 million, up from $133.8 million at the end of the first
quarter, reflecting strong free cash flow. The Company remains debt
free
- Completed the acquisition of
Manitou Gold on May 23, 2023, adding significant exploration
potential across the Michipicoten Greenstone Belt by more than
tripling the regional land package adjacent to and along strike
from Island Gold
- Provided an exploration update at
Mulatos, further extending high-grade mineralization beyond Mineral
Reserves and Resources at Puerto Del Aire ("PDA") and intersected a
wide interval of significant gold mineralization at the Capulin
regional target
- Provided an exploration update at
Island Gold, extending high-grade mineralization across the deposit
including within recently defined hanging wall and footwall zones
in proximity to existing underground infrastructure
- Completed an Impact Benefit
Agreement and signing ceremony with Marcel Colomb First Nation for
the Lynn Lake project in Manitoba, Canada
- Publication of Alamos’ inaugural
Climate Change Report, outlining corporate governance around
climate-related risks and opportunities
(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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$261.0 |
|
$191.2 |
|
$512.5 |
|
$375.7 |
|
Cost of sales (1) |
$157.8 |
|
$151.9 |
|
$313.0 |
|
$287.4 |
|
Earnings from operations |
$88.6 |
|
$25.7 |
|
$163.6 |
|
$20.0 |
|
Earnings before income taxes |
$92.1 |
|
$30.2 |
|
$164.3 |
|
$15.9 |
|
Net earnings (loss) |
$75.1 |
|
$6.4 |
|
$123.5 |
|
($2.1 |
) |
Adjusted net earnings (2) |
$59.3 |
|
$29.3 |
|
$104.7 |
|
$47.3 |
|
Earnings before interest, depreciation and amortization (2) |
$138.9 |
|
$92.0 |
|
$258.8 |
|
$154.9 |
|
Cash provided by operations before working capital and taxes
paid(2) |
$138.3 |
|
$85.3 |
|
$265.5 |
|
$156.2 |
|
Cash provided by operating activities |
$141.8 |
|
$75.7 |
|
$236.1 |
|
$122.2 |
|
Capital expenditures (sustaining) (2) |
$23.4 |
|
$20.1 |
|
$50.3 |
|
$42.7 |
|
Capital expenditures (growth) (2) (3) |
$49.8 |
|
$43.3 |
|
$101.8 |
|
$101.9 |
|
Capital expenditures (capitalized exploration) (4) |
$7.0 |
|
$5.6 |
|
$11.9 |
|
$11.7 |
|
Free cash flow (2) |
$61.6 |
|
$6.7 |
|
$72.1 |
|
($34.1 |
) |
Operating Results |
|
|
|
|
Gold production (ounces) |
|
136,000 |
|
|
103,900 |
|
|
264,400 |
|
|
202,800 |
|
Gold sales (ounces) |
|
131,952 |
|
|
102,164 |
|
|
264,620 |
|
|
200,630 |
|
Per Ounce Data |
|
|
|
|
Average realized gold price |
$1,978 |
|
$1,871 |
|
$1,937 |
|
$1,873 |
|
Average spot gold price (London PM Fix) |
$1,976 |
|
$1,871 |
|
$1,933 |
|
$1,874 |
|
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,196 |
|
$1,487 |
|
$1,183 |
|
$1,432 |
|
Total cash costs per ounce of gold sold (2) |
$847 |
|
$895 |
|
$834 |
|
$943 |
|
All-in sustaining costs per ounce of gold sold (2) |
$1,112 |
|
$1,170 |
|
$1,144 |
|
$1,264 |
|
Share Data |
|
|
|
|
Earnings (loss) per share, basic and diluted |
$0.19 |
|
$0.02 |
|
$0.31 |
|
($0.01 |
) |
Adjusted earnings per share, basic and diluted(2) |
$0.15 |
|
$0.07 |
|
$0.27 |
|
$0.12 |
|
Weighted average common shares outstanding (basic) (000’s) |
|
395,346 |
|
|
391,761 |
|
|
394,657 |
|
|
391,837 |
|
Financial Position (in millions) |
|
|
|
|
Cash and cash equivalents(5) |
|
|
$188.6 |
|
$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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Gold production (ounces) |
|
|
|
Young-Davidson |
|
45,200 |
|
|
46,400 |
|
|
90,200 |
|
|
98,300 |
|
Island Gold |
|
30,500 |
|
|
37,300 |
|
|
63,400 |
|
|
61,800 |
|
Mulatos District(7) |
|
60,300 |
|
|
20,200 |
|
|
110,800 |
|
|
42,700 |
|
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
|
43,570 |
|
|
46,662 |
|
|
89,246 |
|
|
98,187 |
|
Island Gold |
|
28,183 |
|
|
36,797 |
|
|
61,910 |
|
|
60,165 |
|
Mulatos District |
|
60,199 |
|
|
18,705 |
|
|
113,464 |
|
|
42,278 |
|
Cost of sales (in
millions)(1) |
|
|
|
|
Young-Davidson |
$59.3 |
|
$59.8 |
|
$121.2 |
|
$124.4 |
|
Island Gold |
$27.6 |
|
$32.0 |
|
$58.5 |
|
$56.2 |
|
Mulatos District |
$70.9 |
|
$60.1 |
|
$133.3 |
|
$106.8 |
|
Cost of sales per ounce of gold sold (includes
amortization) (1) |
|
Young-Davidson |
$1,361 |
|
$1,282 |
|
$1,358 |
|
$1,267 |
|
Island Gold |
$979 |
|
$870 |
|
$945 |
|
$934 |
|
Mulatos District |
$1,178 |
|
$3,213 |
|
$1,175 |
|
$2,526 |
|
Total cash costs per ounce of gold sold
(2) |
|
Young-Davidson |
$955 |
|
$866 |
|
$948 |
|
$852 |
|
Island Gold |
$678 |
|
$590 |
|
$651 |
|
$650 |
|
Mulatos District |
$847 |
|
$1,566 |
|
$843 |
|
$1,568 |
|
Mine-site all-in sustaining costs per ounce of gold
sold
(2),(3) |
|
Young-Davidson |
$1,212 |
|
$1,087 |
|
$1,222 |
|
$1,064 |
|
Island Gold |
$1,072 |
|
$848 |
|
$1,016 |
|
$939 |
|
Mulatos District |
$894 |
|
$1,636 |
|
$903 |
|
$1,717 |
|
Capital
expenditures (sustaining, growth and capitalized exploration) (in
millions)(2) |
|
Young-Davidson (4) |
$13.5 |
|
$13.1 |
|
$30.9 |
|
$35.8 |
|
Island Gold (5) |
$54.7 |
|
$29.3 |
|
$111.7 |
|
$62.7 |
|
Mulatos District (6) |
$6.5 |
|
$21.3 |
|
$12.2 |
|
$47.3 |
|
Other |
$5.5 |
|
$5.3 |
|
$9.2 |
|
$10.5 |
|
(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 of $1.2 million and $2.6 million for
the three and six months ended June 30, 2023 ($1.3 million and $2.3
million for the three and six months ended June 30,
2022).(5) Includes capitalized exploration at Island
Gold of $3.0 million and $5.4 million for the three and six months
ended June 30, 2023 ($4.1 million and $9.2 million for the three
and six months ended June 30, 2022). (6) Includes
capitalized exploration at Mulatos District of $2.8 million and
$3.9 million for the three and six months ended June 30, 2023 ($0.2
million for the three and six months ended June 30,
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 1.23 in the second quarter,
down from 1.56 in the first quarter of 2023
- Lost time injury
frequency rate1 ("LTIFR") of 0.09 in the second quarter, up from
0.00 in the first quarter of 2023
- Year-to-date
TRIFR of 1.40 and LTIFR of 0.05
During the second quarter of 2023, the TRIFR
decreased with 13 recordable injuries, four less than the prior
quarter. One lost time injury was recorded in the quarter involving
a hand injury to an exploration drilling contractor at Mulatos.
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 second
quarter and year-to-date
- Detailed design
works completed for the reclamation of the Cerro Pelon, El Victor
and San Carlos open pits within the Mulatos District
- Completed site
visits with Alamos’ Independent Tailings Review Board to
Young-Davidson and Island Gold
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
- Completed an
Impact Benefit Agreement and signing ceremony with Marcel Colomb
First Nation for the Lynn Lake project, with the goal of providing
long term socio-economic benefits to the community and
collaboration on economic development, jobs, training and
environmental stewardship of the project
- Held a
ceremonial signing to celebrate the Definitive Agreement announced
earlier in the year between Alamos and Batchewana First Nation for
the Island Gold mine
In addition, ongoing donations, medical support
and infrastructure investments were provided to local communities,
including:
- Eye health,
dental health, and sexual education campaigns with residents of
Matarachi
- Various
contributions within the Temiskaming and Algoma districts of
Ontario, including donations to the Temiskaming Hospital
Foundation, rejuvenation of the Elk Lake playground, funds to
support the Matachewan community garden, and sponsorship of various
local events
- Island Gold
hosted its second 'Mining Showcase' event for high school students
at École St. Joseph in Wawa
- Annual clean-up
in Dubreuilville with participants from Island Gold, the township
and local students
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’ inaugural Climate Change Report, outlining corporate
governance around climate-related risks and opportunities; the
Company’s processes to identify, assess and manage climate-related
risks; alignment to Task Force on Climate-related Financial
Disclosure recommendations; and further details on Alamos’ 30%
absolute greenhouse gas emission reduction target by 2030
- Publication of
Alamos’ 2022 Report on conformance to the World Gold Council’s
Responsible Gold Mining Principles and independent assurance
report
- Publication of
the annual report outlining payments to governments under Canada’s
Extractive Sector Transparency Measures Act
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.
(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.
With a record second quarter performance, the
Company continues to successfully execute on this strategy on all
fronts. Production increased to a new record of 136,000 ounces,
exceeding second quarter guidance, while AISC decreased below the
low end of full year guidance. This was driven by another strong
quarter from the Mulatos District with La Yaqui Grande contributing
to the highest production and mine-site free cash flow from the
operation in more than 10 years. With the strong start to the year,
the Company remains on track to achieve annual production and cost
guidance.
Financially it was a record quarter on a number
of fronts reflecting the strong operational performance and higher
gold prices. The Company generated record quarterly revenues, cash
flow from operations and free cash flow. The significant increase
in free cash flow to $61.6 million was achieved while continuing to
advance a variety of growth initiatives that are expected to
support growing production, declining costs, and further free cash
flow growth in the years ahead. This included substantial progress
on the Phase 3+ Expansion at Island Gold. Construction of the hoist
house is largely complete, the erection of the headframe is well
underway, and shaft sinking is on track to begin in the fourth
quarter of 2023.
After achieving a significant permitting
milestone earlier this year at the Lynn Lake project with the
receipt of a positive Decision Statement for the Federal
Environmental Impact Statement (“EIS”), work on the updated
Feasibility Study is nearing completion. The Company expects this
to outline another attractive, low-cost, long-life growth project
in Canada with significant exploration upside.
The Company continues to have broad based
success adding value through its exploration programs. This
includes extending high-grade mineralization beyond Mineral
Reserves and Resources at Island Gold and PDA, demonstrating
ongoing growth potential at both assets. This 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 the Mulatos District.
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
range between 480,000 and 520,000 ounces in 2023, a 9% increase
from 2022, and remain at similar levels in 2024 and 2025.
Company-wide AISC is expected to decrease 4% in 2023 and 17% by
2025 to between $950 and $1,050 per ounce.
The Company is well positioned to achieve 2023
guidance with production through the first half of the year
totaling 264,400 ounces and total cash costs and AISC both in-line
with guidance. In the third quarter, production is expected to be
between 120,000 and 130,000 ounces, at AISC near the upper end of
the annual guidance range. Third quarter guidance reflects lower
planned production from the Mulatos District with the end of mining
in the main Mulatos pit and the return to guided grades and
stacking rates at La Yaqui Grande.
Young-Davidson had another strong quarter with
mining rates exceeding targeted rates, averaging 8,089 tpd in the
second quarter and 8,050 tpd through the first half of the year.
This contributed to first half production of 90,200 ounces and
mine-site free cash flow of $51.7 million. With higher grades
expected to drive stronger production in the second half of the
year, Young-Davidson is on track to achieve full year production
guidance and generate more than $100 million of mine-site free cash
flow for the third consecutive year.
Island Gold produced 63,400 ounces in the first
half of the year, and with higher mining and processing rates
expected in the second half of the year, the operation is on track
to meet full year guidance. 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 a reduction in
costs. As demonstrated in the quarter and through the first half of
the year, Island Gold continues to generate strong cash flow from
operations allowing the operation to self-finance the majority of
capital spending on the Phase 3+ Expansion.
Combined gold production from the Mulatos
District (including La Yaqui Grande) increased to the highest level
in more than 10 years in the second quarter to 60,300 ounces at
total cash costs and mine-site AISC below annual guidance. Through
the first half of the year, the operation produced 110,800 ounces,
more than double the prior year, and generated $83.8 million of
mine-site free cash flow driven by low-cost production growth from
La Yaqui Grande. As previously guided, production is expected to
decrease in the second half of the year reflecting the end of
mining within the main Mulatos pit as well as the return to guided
stacking rates and grades at La Yaqui Grande. Given the excellent
start to the year, the Mulatos District remains well positioned to
meet full year guidance.
Capital spending, including capitalized
exploration, totaled $80.2 million in the second quarter and $164.0
million though the first half of the year, consistent with annual
guidance of $317 million to $357 million. The majority of this
spending in 2023 is expected at Island Gold with the ramp up of
construction on the Phase 3+ Expansion. 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 continues to 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 continues to
strengthen with cash and cash equivalents increasing to $188.6
million at the end of the second quarter, while remaining debt
free. Additionally, the Company has a $500 million undrawn credit
facility, providing total liquidity of $688.6 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.
Second Quarter 2023 results
Young-Davidson Financial and Operational
Review
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Gold production (ounces) |
|
45,200 |
|
|
46,400 |
|
|
90,200 |
|
|
98,300 |
|
Gold
sales (ounces) |
|
43,570 |
|
|
46,662 |
|
|
89,246 |
|
|
98,187 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$86.3 |
|
$87.3 |
|
$172.6 |
|
$184.1 |
|
Cost of sales (1) |
$59.3 |
|
$59.8 |
|
$121.2 |
|
$124.4 |
|
Earnings from operations |
$25.9 |
|
$25.9 |
|
$49.9 |
|
$56.5 |
|
Cash provided by operating
activities |
$48.9 |
|
$43.9 |
|
$82.6 |
|
$89.8 |
|
Capital expenditures
(sustaining) (2) |
$11.1 |
|
$10.2 |
|
$24.3 |
|
$20.6 |
|
Capital expenditures (growth)
(2) |
$1.2 |
|
$1.6 |
|
$4.0 |
|
$12.9 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.2 |
|
$1.3 |
|
$2.6 |
|
$2.3 |
|
Mine-site free cash flow
(2) |
$35.4 |
|
$30.8 |
|
$51.7 |
|
$54.0 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,361 |
|
$1,282 |
|
$1,358 |
|
$1,267 |
|
Total cash costs per ounce of gold sold (2) |
$955 |
|
$866 |
|
$948 |
|
$852 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,212 |
|
$1,087 |
|
$1,222 |
|
$1,064 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
736,078 |
|
|
742,516 |
|
|
1,457,005 |
|
|
1,478,820 |
|
Tonnes of ore mined per day |
|
8,089 |
|
|
8,160 |
|
|
8,050 |
|
|
8,170 |
|
Average grade of gold (4) |
|
2.14 |
|
|
2.24 |
|
|
2.18 |
|
|
2.30 |
|
Metres developed |
|
2,238 |
|
|
3,097 |
|
|
4,933 |
|
|
6,344 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
696,718 |
|
|
705,014 |
|
|
1,398,672 |
|
|
1,442,742 |
|
Tonnes of ore processed per day |
|
7,656 |
|
|
7,747 |
|
|
7,727 |
|
|
7,971 |
|
Average grade of gold (4) |
|
2.13 |
|
|
2.25 |
|
|
2.18 |
|
|
2.32 |
|
Contained ounces milled |
|
47,774 |
|
|
50,975 |
|
|
97,987 |
|
|
107,445 |
|
Average recovery rate |
|
91 |
% |
|
91 |
% |
|
91 |
% |
|
91 |
% |
(1) Cost of sales includes mining and
processing costs, royalties and amortization.(2) Refer
to the “Non-GAAP Measures and Additional GAAP Measures” disclosure
at the end of this press release and associated MD&A for a
description and calculation of these measures. (3) For
the purposes of calculating mine-site all-in sustaining costs, the
Company does not include an allocation of corporate and
administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t Au").
Operational review
Young-Davidson produced 45,200 ounces of gold in
the second quarter, consistent with the first quarter of 2023 and
the prior year period. With production totaling 90,200 ounces
through the first half of the year, and higher grades and
throughput rates expected to drive stronger production in the
second half of the year, Young-Davidson remains on track to achieve
full year guidance.
Underground mining rates exceeded full year
guidance, averaging 8,089 tpd in the second quarter. Grades mined
averaged 2.14 g/t Au in the quarter, similar to the first quarter
of 2023 and consistent with the low end of annual guidance. As
previously guided, grades mined are expected to increase through
the second half of the year.
Mill throughput averaged 7,656 tpd in the second
quarter with grades processed averaging 2.13 g/t Au. Tonnes milled
were lower than mined reflecting a scheduled liner change as well
as unplanned downtime due to weather related power outages in the
region. The mill has returned to targeted operating rates in July
and is expected to average 8,000 tpd through the rest of the year.
Mill recoveries averaged 91% in the quarter, in line with guidance
and the prior year period.
Financial Review
Second quarter revenues of $86.3 million were 1%
lower than the prior year period, reflecting less ounces sold,
partially offset by a higher realized gold price. For the first
half of the year, revenues of $172.6 million were 6% lower than the
prior year, primarily driven by less ounces sold.
Cost of sales of $59.3 million in the second
quarter were consistent with the prior year period. Underground
unit mining costs were CAD $49 per tonne in the quarter, a 6%
improvement from the first quarter of 2023, and consistent with the
prior year period. Cost of sales of $121.2 million for the first
half of the year were lower than the comparable period, primarily
due to less ounces sold.
Total cash costs were $955 per ounce in the
second quarter and $948 per ounce for the first half of the year.
Mine-site AISC were $1,212 per ounce in the quarter and $1,222 per
ounce for the first half of the year, both in-line with annual
guidance. Total cash costs and mine-site AISC were above the prior
year periods reflecting inflationary pressures as well as lower
grades processed. Costs are expected to decrease in the second half
of 2023 driven by higher grades mined and processed.
Capital expenditures in the quarter included
$11.1 million of sustaining capital and $1.2 million of growth
capital. In addition, $1.2 million was invested in capitalized
exploration in the quarter. Capital expenditures, inclusive of
capitalized exploration totaled $30.9 million for the first half of
2023, a 14% decrease from the prior year. Capital expenditures are
expected to be higher in the second half of the year, and in line
with annual guidance.
Young-Davidson continues to consistently
generate strong free cash flow, including record mine-site free
cash flow of $35.4 million in the second quarter, and $51.7 million
in the first half of 2023. Mine-site free cash flow in the quarter
benefited from the collection of a temporary build up of $8 million
of sales tax receivables for Young-Davidson which were collected in
April. Young-Davidson has generated over $100 million in mine-site
free cash flow in each of the past two years. With the strong start
to the year, the operation is on pace to generate similar free cash
flow in 2023 and over the long-term, given its 15 year Mineral
Reserve life.
Island Gold Financial and Operational
Review
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Gold production (ounces) |
|
30,500 |
|
|
37,300 |
|
|
63,400 |
|
|
61,800 |
|
Gold
sales (ounces) |
|
28,183 |
|
|
36,797 |
|
|
61,910 |
|
|
60,165 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$55.8 |
|
$68.8 |
|
$119.7 |
|
$112.5 |
|
Cost of sales (1) |
$27.6 |
|
$32.0 |
|
$58.5 |
|
$56.2 |
|
Earnings from operations |
$27.0 |
|
$34.8 |
|
$59.6 |
|
$53.7 |
|
Cash provided by operating
activities |
$50.2 |
|
$49.5 |
|
$86.7 |
|
$76.9 |
|
Capital expenditures
(sustaining) (2) |
$11.0 |
|
$9.5 |
|
$22.4 |
|
$17.3 |
|
Capital expenditures (growth)
(2) |
$40.7 |
|
$15.7 |
|
$83.9 |
|
$36.2 |
|
Capital expenditures
(capitalized exploration) (2) |
$3.0 |
|
$4.1 |
|
$5.4 |
|
$9.2 |
|
Mine-site free cash flow (2) |
($4.5 |
) |
$20.2 |
|
($25.0 |
) |
$14.2 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$979 |
|
$870 |
|
$945 |
|
$934 |
|
Total cash costs per ounce of gold sold (2) |
$678 |
|
$590 |
|
$651 |
|
$650 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,072 |
|
$848 |
|
$1,016 |
|
$939 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
100,568 |
|
|
112,203 |
|
|
208,964 |
|
|
215,192 |
|
Tonnes of ore mined per day ("tpd") |
|
1,105 |
|
|
1,233 |
|
|
1,154 |
|
|
1,189 |
|
Average grade of gold (4) |
|
9.23 |
|
|
10.02 |
|
|
9.40 |
|
|
9.22 |
|
Metres developed |
|
2,134 |
|
|
1,902 |
|
|
4,237 |
|
|
3,341 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
102,000 |
|
|
114,448 |
|
|
209,508 |
|
|
215,097 |
|
Tonnes of ore processed per day |
|
1,121 |
|
|
1,258 |
|
|
1,158 |
|
|
1,118 |
|
Average grade of gold (4) |
|
9.51 |
|
|
10.09 |
|
|
9.54 |
|
|
9.18 |
|
Contained ounces milled |
|
31,180 |
|
|
37,132 |
|
|
64,262 |
|
|
63,459 |
|
Average recovery rate |
|
97 |
% |
|
96 |
% |
|
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").
Operational review
Island Gold produced 30,500 ounces in the second
quarter of 2023, an 18% decrease from the prior year period
reflecting lower tonnes and grades processed. For the first six
months of 2023, Island Gold produced 63,400 ounces, a 3% increase
from the prior year period driven by higher grades mined and
processed. With stronger mining and milling rates expected in the
second half of the year, the operation remains on track to meet
full year production guidance.
Underground mining rates averaged 1,105 tpd in
the second quarter, lower than both annual guidance and the prior
year period reflecting unplanned downtime due to smoke from
wildfires in Northern Ontario as well as weather related power
outages. Mining rates have returned to normal levels in July and
are expected to average 1,200 tpd through the second half of the
year. Grades mined averaged 9.23 g/t Au in the quarter, and 9.40
g/t Au through the first half of the year, both consistent with
annual guidance.
Mill throughput averaged 1,121 tpd, lower than
annual guidance and the prior year period, due to lower mining
rates, downtime for maintenance on the fine ore bin, and the above
noted weather related power outages. Milling rates have returned to
guided rates through July and are expected to average 1,200 tpd
through the second half of the year. Mill recoveries averaged 97%
in the quarter, slightly above the prior year period.
Financial Review
Island Gold generated revenues of $55.8 million
in the second quarter, 19% lower than the prior year period, due to
less ounces sold offset by a higher realized gold price. For the
first six months of the year, revenues were $119.7 million, higher
than the prior year as a result of more ounces sold and a higher
realized gold price.
Cost of sales of $27.6 million in the second
quarter were 14% lower than the prior year period, reflecting less
tonnes processed. Cost of sales of $58.5 million for the first half
of 2023 were higher than the comparable period, reflecting
inflationary pressures on mining and processing costs.
Total cash costs of $678 per ounce and mine-site
AISC of $1,072 per ounce in the second quarter were above the top
end of annual guidance, primarily due to higher unit mining and
processing costs resulting from lower tonnes processed. Through the
first half of 2023, total cash costs of $651 per ounce were in-line
with annual guidance while mine-site AISC of $1,016 per ounce were
slightly above annual guidance. The Company expects mine-site AISC
to decrease in the second half as throughput returns to guided
levels.
Total capital expenditures were $54.7 million in
the second quarter, including $3.0 million of capitalized
exploration. Spending on the Phase 3+ Expansion continued through
the second quarter with activities focused on shaft site
infrastructure, including the hoist house and headframe. The
construction of the hoist house is now substantially complete and
shaft sinking scheduled to commence in the fourth quarter of 2023.
Additionally, capital spending was focused on lateral development
and other surface infrastructure. For the first six months of 2023,
capital spending of $111.7 million, inclusive of capitalized
exploration of $5.4 million, reflects the ramp up of construction
activities on the Phase 3+ Expansion.
Mine-site free cash flow was negative $4.5
million in the second quarter and negative $25.0 million through
the first half of the year given higher capital spending related to
the Phase 3+ Expansion. At current gold prices, Island Gold is
expected to self-finance the majority of 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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Gold production (ounces) |
|
60,300 |
|
|
20,200 |
|
|
110,800 |
|
|
42,700 |
|
Gold
sales (ounces) |
|
60,199 |
|
|
18,705 |
|
|
113,464 |
|
|
42,278 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$118.9 |
|
$35.1 |
|
$220.2 |
|
$79.1 |
|
Cost of sales (1) |
$70.9 |
|
$60.1 |
|
$133.3 |
|
$106.8 |
|
Earnings (loss) from
operations |
$45.7 |
|
($27.8 |
) |
$82.3 |
|
($32.1 |
) |
Cash provided (used) by
operating activities |
$53.5 |
|
($8.7 |
) |
$96.0 |
|
($20.1 |
) |
Capital expenditures
(sustaining) (2) |
$1.3 |
|
$0.4 |
|
$3.6 |
|
$4.8 |
|
Capital expenditures (growth)
(2) |
$2.4 |
|
$20.7 |
|
$4.7 |
|
$42.3 |
|
Capital expenditures
(capitalized exploration) (2) |
$2.8 |
|
$0.2 |
|
$3.9 |
|
$0.2 |
|
Mine-site free cash flow
(2) |
$47.0 |
|
($30.0 |
) |
$83.8 |
|
($67.4 |
) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,178 |
|
$3,213 |
|
$1,175 |
|
$2,526 |
|
Total cash costs per ounce of gold sold (2) |
$847 |
|
$1,566 |
|
$843 |
|
$1,568 |
|
Mine site all-in sustaining costs per ounce of gold sold
(2),(3) |
$894 |
|
$1,636 |
|
$903 |
|
$1,717 |
|
La Yaqui Grande Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
996,117 |
|
|
343,884 |
|
|
2,029,060 |
|
|
496,818 |
|
Total waste mined - open pit (6) |
|
5,603,937 |
|
|
6,260,883 |
|
|
11,434,752 |
|
|
12,142,114 |
|
Total tonnes mined - open pit |
|
6,600,053 |
|
|
6,604,767 |
|
|
13,463,812 |
|
|
12,638,932 |
|
Waste-to-ore ratio (operating) |
|
5.00 |
|
|
4.00 |
|
|
5.00 |
|
|
4.00 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,013,932 |
|
|
333,166 |
|
|
2,033,567 |
|
|
333,166 |
|
Average grade of gold processed (5) |
|
1.52 |
|
|
1.57 |
|
|
1.54 |
|
|
1.57 |
|
Contained ounces stacked |
|
49,552 |
|
|
16,777 |
|
|
100,474 |
|
|
16,777 |
|
Average recovery rate |
|
87 |
% |
|
30 |
% |
|
81 |
% |
|
30 |
% |
Ore crushed per day (tonnes) |
|
11,000 |
|
|
5,500 |
|
|
11,200 |
|
|
5,500 |
|
Mulatos Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
1,167,727 |
|
|
1,227,625 |
|
|
2,169,512 |
|
|
1,841,438 |
|
Total waste mined - open pit (6) |
|
566,761 |
|
|
1,691,474 |
|
|
1,178,516 |
|
|
3,664,026 |
|
Total tonnes mined - open pit |
|
1,734,488 |
|
|
2,919,099 |
|
|
3,348,027 |
|
|
5,505,464 |
|
Waste-to-ore ratio (operating) |
|
0.49 |
|
|
1.38 |
|
|
0.54 |
|
|
1.45 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,417,645 |
|
|
1,526,771 |
|
|
2,646,721 |
|
|
3,268,254 |
|
Average grade of gold processed (5) |
|
1.10 |
|
|
0.68 |
|
|
1.02 |
|
|
0.70 |
|
Contained ounces stacked |
|
49,911 |
|
|
33,197 |
|
|
86,452 |
|
|
74,049 |
|
Average recovery rate |
|
35 |
% |
|
46 |
% |
|
34 |
% |
|
51 |
% |
Ore crushed per day (tonnes) |
|
15,600 |
|
|
16,800 |
|
|
14,600 |
|
|
18,100 |
|
(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.
Mulatos District Operational Review
The Mulatos District produced 60,300 ounces in
the second quarter, 19% higher than the first quarter of 2023, and
nearly 200% higher than the prior year period, reflecting low-cost
production growth from La Yaqui Grande. For the first six months of
2023, the Mulatos District produced 110,800 ounces, including
81,400 ounces from La Yaqui Grande. As previously guided,
production rates are expected to decrease in the second half of the
year reflecting the depletion of the main Mulatos open pit, as well
as a decrease in stacking rates and grades at La Yaqui Grande to
levels consistent with full year guidance. Given the strong start
to the year, the Mulatos District is well positioned to achieve
full year guidance.
La Yaqui Grande Operational Review
La Yaqui Grande produced 43,000 ounces in the
second quarter, a 12% increase from the first quarter of 2023.
Mining and stacking rates were both consistent with the first
quarter of 2023, and above full year guidance. Stacking rates
exceeded design rates, averaging 11,100 tpd in the quarter. With
the start of the rainy season in Mexico, stacking rates are
expected to return to design rates of 10,000 tpd in the third
quarter and on an ongoing basis. Grades stacked on the leach pad
averaged 1.52 g/t Au, above annual guidance of 1.15 to 1.45 g/t Au
due to positive grade reconciliation. Grades stacked are expected
to decrease in the second half of the year to be consistent with
full year guidance. The recovery rate was 87% in the quarter and
81% through the first half of the year, in line with annual
guidance.
Mulatos Operational Review
Mulatos produced 17,300 ounces in the second
quarter, an increase from the first quarter of 2023, reflecting
higher stacking rates and grades stacked. Total crusher throughput
averaged 15,600 tpd, with a total of 1,417,645 tonnes stacked at a
grade of 1.10 g/t Au, including stockpiles. Mining activities are
expected to decrease in the third quarter with mining in the El
Salto portion of the pit to be completed in July. Stockpiles will
continue to be stacked at declining rates into the fourth quarter.
Recovery rates of 35% were similar to the first quarter and reflect
higher levels of stockpiled ore stacked with longer leach
cycles.
Financial Review (Mulatos District)
Revenues of $118.9 million in the second quarter
were more than triple the prior year period reflecting the strong
contribution from La Yaqui Grande which commenced operations in
mid-2022. Similarly, revenues of $220.2 million through the first
half of 2023, were higher than the prior year as a result of more
ounces sold and a higher realized gold price.
Cost of sales of $70.9 million in the second
quarter were higher than in the comparative period, driven by a
full quarter of production from La Yaqui Grande. The comparative
period was also impacted by an adjustment related to the Mulatos
leach pad inventory totaling $22.3 million. For the first half of
2023, cost of sales of $133.3 million were higher than the
comparable period for similarly noted reasons.
Total cash costs for the Mulatos District of
$847 per ounce were below annual guidance, driven by higher grades
mined from La Yaqui Grande. Mine-site AISC for the Mulatos District
of $894 per ounce were also below annual guidance and down 45% from
the prior year period. Total cash costs and mine-site AISC for the
Mulatos District are expected to increase in the second half of the
year, bringing full year costs in-line with annual guidance. This
reflects the end of mining from El Salto in July and a decrease in
grades and stacking rates at La Yaqui Grande to levels consistent
with annual guidance.
Capital expenditures totaled $6.5 million in the
second quarter, a significant decrease from the prior year period
reflecting the completion of construction of La Yaqui Grande in
June 2022. Second quarter capital expenditures included sustaining
capital expenditures of $1.3 million, and capitalized exploration
of $2.8 million. For the first half of the year, capital spending
totaled $12.2 million, consistent with annual guidance.
The Mulatos District generated mine-site free
cash flow of $47.0 million in the second quarter, a 28% increase
from the first quarter of 2023 and the highest quarterly free cash
flow in more than ten years. Through the first half of the year,
the operation has generated $83.8 million of mine-site free cash
flow with the strong performance driven by low-cost production
growth from La Yaqui Grande. The Mulatos District is expected to
continue generating strong ongoing free cash flow in the second
half of the year, at lower quarterly levels reflecting the above
noted lower grades at La Yaqui Grande. In addition, cash taxes of
$3 to $5 million per quarter are expected in the second half of the
year, resulting from the increased profitability of the
operation.
Second 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 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, expansion of the mill as well as accelerated development to
support the higher mining rates. 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
second quarter of 2023, with the focus on shaft site surface
infrastructure, including the hoist installation and headframe
erection. Shaft surface construction will continue through the
remainder of the year, with shaft sinking commencing in the fourth
quarter. Further details on progress to the end of the second
quarter are summarized below:
- Completion of the
44kV powerline from the existing Island Gold Mine substation to the
shaft area substation location
- Completed major
mechanical components installation for Service & Production
Hoists
- Completed over 90%
of major buried services required to start shaft sinking
- Constructed crane
runway pad and commenced erection of the headframe structural
steel
- Lowered the
Galloway into the shaft pre-sink to support sinking
- Assembly and
installation of the pre-fabricated E-house building modules
- Paste plant
detailed engineering was 50% complete; issuance of long lead time
equipment procurement packages ongoing
- Mill expansion
basic engineering was 50% complete, with overall engineering being
20% complete; issuance of long lead time equipment procurement
packages ongoing
- Lateral development
to support higher mining rates with the Phase 3+ Expansion remains
ongoing
During the second quarter of 2023, the Company
spent $40.7 million, related to the Phase 3+ Expansion and capital
development. To the end of June, 36% of the total initial growth
capital of $756 million has been spent and committed on the
project. This includes progress as follows:
(in
US$M)Growth capital (including indirects and contingency) |
P3+ 2400
Study1 |
|
Spent to date |
|
Committed to date |
|
% of Spent & Committed |
Shaft & Shaft Surface Complex |
|
229 |
|
|
97 |
|
|
66 |
|
71 |
% |
Mill Expansion |
|
76 |
|
|
2 |
|
|
1 |
|
4 |
% |
Paste Plant |
|
52 |
|
|
1 |
|
|
1 |
|
4 |
% |
Power Upgrade |
|
24 |
|
|
2 |
|
|
3 |
|
21 |
% |
Effluent Treatment Plant |
|
16 |
|
|
— |
|
|
— |
|
— |
|
General Indirect Costs |
|
64 |
|
|
23 |
|
|
3 |
|
41 |
% |
Contingency |
|
55 |
|
|
— |
|
|
|
Total Growth Capital |
$516 |
|
$125 |
|
$74 |
|
39 |
% |
|
|
|
|
|
Underground Equipment &
Infrastructure |
|
79 |
|
|
17 |
|
|
— |
|
22 |
% |
Accelerated Capital Development |
|
162 |
|
|
53 |
|
|
— |
|
33 |
% |
Total Growth Capital (including Accelerated Spend) |
$756 |
|
$195 |
|
$74 |
|
36 |
% |
(1) Phase 3+ 2400 Study is as of
January 2022. Phase 3+ capital estimate based on USD/CAD exchange
$0.78:1. Spent and Committed to date based on average USD/CAD of
$0.76:1 since the start of 2022.
Growth capital spending at Island Gold on the
Phase 3+ Expansion is expected to be between $165 and $185 million
in 2023. Capital spending 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 - July 2023
Hoist house interior and drums - July
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 Company is in the
final stages of completing an updated Feasibility Study, which is
expected to be released in August 2023. The Company expects this to
outline another attractive, low-cost, long-life growth project in
Canada with significant exploration upside.
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. During the quarter the Company finalized an
Impact Benefit Agreement and participated in a signing ceremony
with Marcel Colomb First Nation, the most proximate First Nation to
the project. 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.
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
$2.7 million in the second quarter of 2023 on 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 $0.3 million in the second
quarter related to ongoing holding costs and legal costs to
progress the Treaty claim, which was expensed.
Second 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. 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 has shifted 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 metres ("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 55,300 ha Island Gold property. A total of
3,630 m of surface regional drilling in 26 holes was completed in
the second quarter. This drilling has focused on the Pine-Breccia
target where visible gold has been intersected with assays pending
(2,174 m in 22 holes), and at two early-stage targets (1,456 m in 4
holes).
A total of 16,943 m of underground exploration
drilling was also completed in the second quarter in 66 holes. The
objective of the underground drilling is to identify new Mineral
Resources close to existing Mineral Resource or Reserve blocks. In
addition to underground exploration drilling, a total of 4,408 m of
underground delineation drilling was completed in 22 holes, focused
on infill drilling to convert Mineral Resources to Mineral
Reserves. Through the first half of 2023, 95 holes totaling 23,835
m have been completed as part of the underground exploration
program, and 45 holes totaling 7,827 m as part of the underground
delineation drilling program. A total of 77 m of underground
exploration drift development was also completed during the second
quarter.
As announced in the June 15, 2023 press release,
the 2023 program has been successful in further extending
high-grade gold mineralization across the Island Gold Deposit. This
included multiple significant high-grade intercepts within several
recently defined hanging wall and footwall structures in proximity
to existing underground infrastructure with previously reported
highlights as follows:
- Island
West: high-grade mineralization extended outside of Mineral
Reserves and Resources within the main C-Zone. The C and E1E-Zones
are the main structures which host the majority of currently
defined Mineral Reserves and Resources at Island Gold.
- 146.33 g/t Au
(37.19 g/t cut) over 2.20 m (580-473-22); and
- 38.92 g/t Au (38.92
g/t cut) over 2.10 m (790-479-16).
- Island
West Hanging Wall Zones: high-grade gold mineralization intersected
within sub-parallel zones in the hanging wall, and within a newly
defined perpendicular structure, the “NS1” Zone. Multiple
sub-parallel and perpendicular hanging wall zones have been defined
over the past year in proximity of existing underground
infrastructure and represent a significant opportunity to add near
mine Mineral Reserves and Resources.
-
NS1 Zone
- 89.31 g/t Au (7.73
g/t cut) over 2.40 m (770-466-03);
- 25.57 g/t Au (5.68
g/t cut) over 2.50 m (770-466-07);
- 42.27 g/t Au (7.43
g/t cut) over 2.30 m (580-473-26);
- 16.06 g/t Au (6.95
g/t cut) over 2.80 m (770-466-02); and
- 14.50 g/t Au (10.08
g/t cut) over 3.10 m (580-473-25).
-
G1 Zone
- 60.03 g/t Au (25.70
g/t cut) over 2.50 m (790-479-13); and
- 11.13 g/t Au (6.82
g/t cut) over 2.20 m (850-471-01B).
- Island
West Footwall Zones: high-grade gold mineralization intersected
within newly defined sub-parallel structure the “DN” zone.
- 22.34 g/t Au (22.34 g/t cut) over
2.90 m (790-479-04).
- Island
East: high-grade mineralization extended outside of Mineral
Reserves and Resources in the main E1E-Zone.
- 104.48 g/t Au
(50.76 g/t cut) over 3.10 m (840-608-49);
- 40.54 g/t Au (33.33
g/t cut) over 2.50 m (840-608-43); and
- 11.93 g/t Au (11.93
g/t cut) over 4.20 m (840-632-17).
- Island
East Footwall Zones: high-grade gold mineralization intersected
within sub-parallel zones in the footwall (NTH2, NTH3) in proximity
to existing underground infrastructure.
-
NTH2 Zone
- 44.48 g/t Au (9.71
g/t cut) over 3.10 m (620-629-03); and
- 17.91 g/t Au (5.34
g/t cut) over 2.10 m (620-629-01).
-
NTH3 Zone
- 12.34 g/t Au (7.65
g/t cut) over 3.30 m (840-554-44);
- 16.86 g/t Au (11.40
g/t cut) over 2.30 m (840-554-60);
- 13.21 g/t Au (13.21
g/t cut) over 2.70 m (840-554-04); and
- 11.02 g/t Au (7.29
g/t cut) over 2.30 m (840-566-08).
Note: All reported drill widths are true width
of the mineralized zones, unless otherwise stated. Drillhole
composite intervals reported as “cut” may include higher grade
samples which have been cut to: C-zone @ 225 g/t Au; E1E Zone @ 185
g/t Au. B Zone @ 90 g/t Au; D1 and G1 Zones @ 45 g/t Au; G Zone @
70 g/t Au; E1D @ 80g/t Au; DN, NS1, NTH1, NTH2, NTH3 @ 35 g/t
Au.
Total exploration expenditures during the second
quarter were $4.2 million, of which $3.0 million was
capitalized. In the first half of 2023, the Company incurred
exploration expenditures of $7.0 million, of which
$5.4 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.
During the second quarter of 2023, two
underground exploration drills completed 6,065 m in 14 holes from
the 9220 West exploration 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. During the first half of 2023, a
total of 11,696 m was completed in 27 holes.
In addition, 5,000 m of surface drilling is
planned to test near-surface targets across the 5,900 ha
Young-Davidson property. A total of 3,684 m of surface drilling in
16 holes was completed in the second quarter focused on the
MCM-target area, immediately east and adjacent to the Young
Davidson deposit.
A total of 87 m of underground exploration drift development was
completed in the second quarter to extend drill platforms on the
9620 and 9220 levels.
Total exploration expenditures during the second
quarter were $2.3 million of which $1.2 million was
capitalized. For the first half of 2023, exploration spending
totaled $4.1 million of which $2.6 million was
capitalized.
Mulatos District (Sonora,
Mexico)
The Company has a large exploration package
covering 28,972 ha with the majority of past exploration efforts
focused around the Mulatos mine. For 2023, a total of $21 million
has been budgeted for exploration, three times larger than the $7
million budget in 2022. This includes 35,000 m of surface
exploration drilling focused on continuing to expand Mineral
Reserves and Resources at PDA, a higher-grade underground deposit,
adjacent to the main Mulatos pit. Additionally, the regional
exploration budget has doubled to 34,000 m with the focus on
several high priority targets including Refugio, Capulin, Halcon
West, Carricito, Bajios, and Cerro Pelon West.
During the second quarter of 2023, exploration
activities continued at PDA and the near-mine area with 17,581 m of
drilling completed in 59 holes. Exploration drilling at PDA has
been extremely successful with Mineral Reserves increasing 70% in
2022 to 728,000 ounces (4.7mt 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 8,741 m of
drilling completed in 33 drill holes. At the Capulin target, 4,293
m in nine drill holes was completed in the second quarter. Drilling
also continued at Carricito with 748 m completed in seven holes.
Drilling at the Cerro Pelon West target began in the second quarter
with 2,431 m completed in ten drill holes.
As announced in the May 15, 2023 press release,
drilling has been successful in further extending high-grade gold
mineralization outside of Mineral Reserves and Resources at PDA.
Additionally, gold mineralization was intersected over a wide
interval at the Capulin target, located two kilometres east of the
former San Carlos open pit. Previously reported highlights are as
follows:
Puerto Del Aire (“PDA”)
-
High-grade gold mineralization further extended beyond Mineral
Reserves and Resources at PDA, supporting the potential for ongoing
growth of the deposit which remains open in multiple directions.
This follows a 71% increase in combined Mineral Reserves and
Resources in 2022 to total 1.0 million ounces. All reported
composite widths are estimated true width of the mineralized zones.
- 20.95 g/t Au (11.14 g/t cut) over
14.15 m (23MUL117);
- 8.33 g/t Au (8.33 g/t cut) over
18.00 m (23MUL119);
- 14.81 g/t Au (12.34 g/t cut) over
9.10 m (23MUL112);
- 16.19 g/t Au (7.63 g/t cut) over
7.75 m (23MUL108);
- 33.14 g/t Au (33.14 g/t cut) over
3.05 m, and 10.80 g/t Au (10.80 g/t cut) over 3.00 m (23MUL098);
and
- 15.49 g/t Au (13.89 g/t cut) over
6.00 m (23MUL115).
Capulin Target
-
Significant interval of oxide and sulphide gold mineralization
intersected in a breccia along the Capulin Fault. Follow-up
drilling is ongoing in this area to test the geometry and extent of
the gold mineralization and the breccia unit.
- 2.01 g/t Au (2.01 g/t cut) over
82.45 m core length, including 4.81 g/t Au over 16.40 m and 5.38
g/t Au over 12.35 m (23REF012).
During the second quarter, the Company incurred
$5.1 million of exploration spending of which
$2.8 million was capitalized. For the first half of 2023, the
Company incurred $8.5 million of exploration spending of which
$3.9 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 ha Lynn Lake
property including the Tulune greenfields discovery and Maynard,
Wedge, McVeigh, Gemmell and Jim.
During the second quarter of 2023, 3,458 m of
drilling was completed in 16 holes at the Gemmell, Gordon, Jim and
Tulune targets. Year-to-date, 7,979 m of drilling has been
completed in 29 holes. Geological mapping and sampling is underway
as part of the 2023 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 $2.9 million
in the second quarter and $4.2 million year-to-date, all of
which was capitalized.
Review of Second
Quarter Financial Results
During the second quarter of 2023, the Company
sold 131,952 ounces of gold for record revenues of $261.0 million.
The 37% increase from the prior year period was driven by more
ounces sold with the start of production at La Yaqui Grande in June
2022, as well as a higher realized gold price.
The average realized gold price in the second
quarter was $1,978 per ounce, a 6% increase compared to $1,871 per
ounce in the prior year period, and $2 per ounce above the London
PM Fix price.
Cost of sales (which includes mining and processing costs,
royalties, and amortization expense) were $157.8 million in the
second quarter, 4% higher than the prior year period.
Mining and processing costs were $109.2 million,
22% higher than the prior year period. The increase primarily
reflects a full quarter of production at La Yaqui Grande, having
only been in production for one month during the prior year period,
as well as the impact of inflation on mining and processing costs
across the operations. Inflationary pressures on costs have been in
line with expectations. The impact of the stronger Mexican peso
relative to the Company's guidance has been mitigated by the
Company's hedge position on the Mexican peso.
Total cash costs of $847 per ounce and AISC of
$1,112 per ounce were lower than the prior year period given the
low-cost production growth from La Yaqui Grande.
Royalty expense was $2.5 million in the quarter,
higher than the prior year period of $2.2 million due to the higher
average realized gold price.
Amortization of $46.1 million in the quarter was
higher than the prior year period due to a full quarter of
production from La Yaqui Grande. Amortization of $349 per ounce was
8% lower than the prior year period, given lower amortization
expense per ounce associated with La Yaqui Grande.
The Company recognized earnings from operations
of $88.6 million in the quarter, higher than the prior year period
as a result of higher ounces sold and margin expansion. Earnings in
the prior year period were also impacted by a non-cash net
realizable value adjustment on the Mulatos heap leach inventory of
$22.3 million.
The Company reported net earnings of $75.1
million in the quarter, compared to $6.4 million in the prior year
period. Adjusted earnings (1) in the second quarter were $59.3
million, or $0.15 per share, which included an adjustment for an
unrealized foreign exchange gain recorded within deferred taxes and
foreign exchange gains on net monetary assets and liabilities,
resulting from the strengthening of the Canadian dollar and Mexican
peso.
(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.
Associated Documents
This press release should be read in conjunction
with the Company’s interim consolidated financial statements for
the three-month period ended June 30, 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 Second Quarter 2023 Results
Conference Call
The Company's senior management will host a
conference call on Thursday, July 27, 2023 at 10:00 am ET to
discuss the 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: |
1342473# |
Webcast: |
www.alamosgold.com |
A playback will be available until August 27,
2023 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The passcode is 4253524#. The webcast will be
archived at www.alamosgold.com.
Qualified Persons
Chris Bostwick, FAusIMM, Alamos’ Senior Vice President,
Technical Services, who is a qualified person within the meaning of
National Instrument 43-101 ("Qualified Person"), has reviewed and
approved the scientific and technical information contained in this
press release.
About Alamos
Alamos is a Canadian-based intermediate gold
producer with diversified production from three operating mines in
North America. This includes the Young-Davidson and Island Gold
mines in northern Ontario, Canada and the Mulatos mine in Sonora
State, Mexico. Additionally, the Company has a strong portfolio of
growth projects, including the Phase 3+ Expansion at Island Gold,
and the Lynn Lake project in Manitoba, Canada. Alamos employs more
than 1,900 people and is committed to the highest standards of
sustainable development. The Company’s shares are traded on the TSX
and NYSE under the symbol “AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K. ParsonsSenior Vice-President, Investor
Relations(416) 368-9932 x 5439
All amounts are in United States dollars, unless otherwise
stated.
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains or incorporates by
reference “forward-looking statements” and “forward-looking
information” as defined under applicable Canadian and U.S.
securities legislation. All statements, other than statements of
historical fact, which address events, results, outcomes or
developments that the Company expects to occur are, or may be
deemed, to be, forward-looking statements and are based on
expectations, estimates and projections as at the date of this
press release. 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, and capitalized exploration; achieving 2023 annual
production and cost guidance; 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 intended release of an updated
Feasibility Study for the Lynn Lake project and timing related
thereto; and the expectation that it will outline another
attractive, low-cost long-life growth project in Canada with
significant exploration upside; expenditures on the development of
the Lynn Lake project; the effect of court and administrative
proceedings in Manitoba on project timelines for the Lynn Lake
project; exploration potential, budgets, focuses, programs, targets
and projected exploration results; returns to stakeholders; gold
prices; potential for further growth from 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; mining and milling 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 any ongoing effects and
potential further effects of COVID-19; the impact of COVID-19 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 COVID-19 or any other new illness, epidemic or
pandemic; government and the Company’s attempts to reduce the
spread of any illness, epidemic or pandemic 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 Licenses
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 project; delays in the development
or updating of mine plans; changes with respect to the intended
method of accessing and mining the deposit at PDA and changes
related to the intended method of processing any ore from the
deposit of PDA; the risk that the Company’s mines may not perform
as planned; uncertainty with the Company’s ability to secure
additional capital to execute its business plans; the speculative
nature of mineral exploration and development, including the risks
of obtaining and maintaining necessary licenses and permits,
including the necessary licenses, permits, authorizations and/or
approvals from the appropriate regulatory authorities for the
Company’s development stage and operating assets; labour and
contractor availability (and being able to secure the same on
favourable terms); contests over title to properties; expropriation
or nationalization of property; inherent risks and hazards
associated with mining and mineral processing including
environmental hazards, industrial hazards, industrial accidents,
unusual or unexpected formations, pressures and cave-ins; changes
in national and local government legislation, controls or
regulations in Canada, Mexico, Türkiye, the United States and other
jurisdictions in which the Company does or may carry on business in
the future; increased costs and risks related to the potential
impact of climate change; failure to comply with environmental and
health and safety laws and regulations; disruptions in the
maintenance or provision of required infrastructure and information
technology systems; risk of loss due to sabotage, protests and
other civil disturbances; the impact of global liquidity and credit
availability and the values of assets and liabilities based on
projected future cash flows; risks arising from holding derivative
instruments; and business opportunities that may be pursued by the
Company. The litigation against the Republic of Türkiye, described
above, results from the actions of the Turkish government in
respect of the Company’s projects in the Republic of Türkiye. Such
litigation is a mitigation effort and may not be effective or
successful. If unsuccessful, the Company’s projects in Türkiye may
be subject to resource nationalism and further expropriation; the
Company may lose any remaining value of its assets and gold mining
projects in Türkiye and its ability to operate in Türkiye. Even if
the litigation is successful, there is no certainty as to the
quantum of any damages award or recovery of all, or any, legal
costs. Any resumption of activities in Türkiye, or even retaining
control of its assets and gold mining projects in Türkiye can only
result from agreement with the Turkish government. The investment
treaty claim described in this press release may have an impact on
foreign direct investment in the Republic of Türkiye which may
result in changes to the Turkish economy, including but not limited
to high rates of inflation and fluctuation of the Turkish Lira
which may also affect the Company’s relationship with the Turkish
government, the Company’s ability to effectively operate in
Türkiye, and which may have a negative effect on overall
anticipated project values.
Additional risk factors 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 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 press release.
The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Cautionary Note to U.S. Investors
Concerning Measured, Indicated and Inferred Resources
Measured, Indicated and Inferred
Resources: All resource and reserve estimates included in
this press release or documents referenced in this press release
have been prepared in accordance with Canadian National Instrument
43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101")
and the Canadian Institute of Mining, Metallurgy and Petroleum (the
"CIM") - CIM Definition Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council, as amended (the "CIM
Standards"). NI 43-101 is a rule developed by the Canadian
Securities Administrators, which established standards for all
public disclosure an issuer makes of scientific and technical
information concerning mineral projects. Mining disclosure in the
United States was previously required to comply with SEC Industry
Guide 7 (“SEC Industry Guide 7”) under the United States Securities
Exchange Act of 1934, as amended. The U.S. Securities and Exchange
Commission (the “SEC”) has adopted final rules, to replace SEC
Industry Guide 7 with new mining disclosure rules under sub-part
1300 of Regulation S-K of the U.S. Securities Act (“Regulation S-K
1300”) which became mandatory for U.S. reporting companies
beginning with the first fiscal year commencing on or after January
1, 2021. Under Regulation S-K 1300, the SEC now recognizes
estimates of “Measured Mineral Resources”, “Indicated Mineral
Resources” and “Inferred Mineral Resources”. In addition, the SEC
has amended its definitions of “Proven Mineral Reserves” and
“Probable Mineral Reserves” to be substantially similar to
international standards.
Investors are cautioned that while the above
terms are “substantially similar” to CIM Definitions, there are
differences in the definitions under Regulation S-K 1300 and the
CIM Standards. Accordingly, there is no assurance any mineral
reserves or mineral resources that the Company may report as
“proven mineral reserves”, “probable mineral reserves”, “measured
mineral resources”, “indicated mineral resources” and “inferred
mineral resources” under NI 43-101 would be the same had the
Company prepared the mineral reserve or mineral resource estimates
under the standards adopted under Regulation S-K 1300. U.S.
investors are also cautioned that while the SEC recognizes
“measured mineral resources”, “indicated mineral resources” and
“inferred mineral resources” under Regulation S-K 1300, investors
should not assume that any part or all of the mineralization in
these categories will ever be converted into a higher category of
mineral resources or into mineral reserves. Mineralization
described using these terms has a greater degree of uncertainty as
to its existence and feasibility than mineralization that has been
characterized as reserves. Accordingly, investors are cautioned not
to assume that any measured mineral resources, indicated mineral
resources, or inferred mineral resources that the Company reports
are or will be economically or legally mineable.
International Financial Reporting Standards:
The 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;
- total cash cost per ounce of gold
sold;
- 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 ("EBITDA")
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 (gain)
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 (loss).
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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net earnings (loss) |
$75.1 |
|
$6.4 |
|
$123.5 |
|
($2.1 |
) |
Adjustments: |
|
|
|
|
Inventory net realizable value adjustment, net of taxes |
|
— |
|
|
14.7 |
|
|
— |
|
|
14.7 |
|
Impairment charge, net of taxes |
|
— |
|
|
— |
|
|
— |
|
|
26.7 |
|
Foreign exchange loss |
|
(1.2 |
) |
|
(0.4 |
) |
|
(1.1 |
) |
|
(0.4 |
) |
Other (gain) loss |
|
(3.0 |
) |
|
(5.4 |
) |
|
(1.7 |
) |
|
2.0 |
|
Unrealized foreign exchange (gain) loss recorded in deferred tax
expense |
|
(12.2 |
) |
|
12.9 |
|
|
(16.4 |
) |
|
7.1 |
|
Other income tax and mining tax adjustments |
|
0.6 |
|
|
1.1 |
|
|
0.4 |
|
|
(0.7 |
) |
Adjusted net earnings |
$59.3 |
|
$29.3 |
|
$104.7 |
|
$47.3 |
|
Adjusted earnings per share - basic |
$0.15 |
|
$0.07 |
|
$0.27 |
|
$0.12 |
|
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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Cash flow from operating activities |
$141.8 |
|
$75.7 |
|
$236.1 |
|
$122.2 |
|
Add: Changes in working
capital and cash taxes |
|
(3.5 |
) |
|
9.6 |
|
|
29.4 |
|
|
34.0 |
|
Cash flow from operating activities before changes in
working capital and cash taxes |
$138.3 |
|
$85.3 |
|
$265.5 |
|
$156.2 |
|
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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Cash flow from operating activities |
$141.8 |
|
$75.7 |
|
$236.1 |
|
$122.2 |
|
Less: mineral property, plant
and equipment expenditures |
|
(80.2 |
) |
|
(69.0 |
) |
|
(164.0 |
) |
|
(156.3 |
) |
Company-wide free cash flow |
$61.6 |
|
$6.7 |
|
$72.1 |
|
($34.1 |
) |
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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$141.8 |
|
$75.7 |
|
$236.1 |
|
$122.2 |
|
Add:
operating cash flow used by non-mine site activity |
|
10.8 |
|
|
9.0 |
|
|
29.2 |
|
|
24.4 |
|
Cash flow from operating mine-sites |
$152.6 |
|
$84.7 |
|
$265.3 |
|
$146.6 |
|
|
|
|
|
|
Mineral property, plant and
equipment expenditure |
$80.2 |
|
$69.0 |
|
$164.0 |
|
$156.3 |
|
Less:
capital expenditures from development projects, and corporate |
|
(5.5 |
) |
($5.3 |
) |
|
(9.2 |
) |
|
(10.5 |
) |
|
|
|
|
|
Capital expenditure and capital advances from
mine-sites |
$74.7 |
|
$63.7 |
|
$154.8 |
|
$145.8 |
|
|
|
|
|
|
Total mine-site free cash flow |
$77.9 |
|
$21.0 |
|
$110.5 |
|
$0.8 |
|
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$48.9 |
|
$43.9 |
|
$82.6 |
|
$89.8 |
|
Mineral
property, plant and equipment expenditure |
|
(13.5 |
) |
|
(13.1 |
) |
|
(30.9 |
) |
|
(35.8 |
) |
Mine-site free cash flow |
$35.4 |
|
$30.8 |
|
$51.7 |
|
$54.0 |
|
Island Gold Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$50.2 |
|
$49.5 |
|
$86.7 |
|
$76.9 |
|
Mineral property, plant and
equipment expenditure (1) |
|
(54.7 |
) |
|
(29.3 |
) |
|
(111.7 |
) |
|
(62.7 |
) |
Mine-site free cash flow |
($4.5 |
) |
$20.2 |
|
($25.0 |
) |
$14.2 |
|
(1) Includes capital advances of $1.4 million
for the three and six months ended June 30, 2022.
Mulatos District Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$53.5 |
|
($8.7 |
) |
$96.0 |
|
($20.1 |
) |
Mineral property, plant and
equipment expenditure |
|
(6.5 |
) |
|
(21.3 |
) |
|
(12.2 |
) |
|
(47.3 |
) |
Mine-site free cash flow |
$47.0 |
|
($30.0 |
) |
$83.8 |
|
($67.4 |
) |
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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$109.2 |
|
$89.2 |
|
$215.6 |
|
$184.6 |
|
Royalties |
|
2.5 |
|
|
2.2 |
|
|
5.0 |
|
|
4.5 |
|
Total cash costs |
|
111.7 |
|
|
91.4 |
|
|
220.6 |
|
|
189.1 |
|
Gold
ounces sold |
|
131,952 |
|
|
102,164 |
|
|
264,620 |
|
|
200,630 |
|
Total cash costs per ounce |
$847 |
|
$895 |
|
$834 |
|
$943 |
|
|
|
|
|
|
Total cash costs |
$111.7 |
|
$91.4 |
|
$220.6 |
|
$189.1 |
|
Corporate and
administrative(1) |
|
7.0 |
|
|
6.2 |
|
|
13.7 |
|
|
12.3 |
|
Sustaining capital
expenditures(2) |
|
23.4 |
|
|
20.1 |
|
|
50.3 |
|
|
42.7 |
|
Share-based compensation |
|
2.5 |
|
|
0.4 |
|
|
13.6 |
|
|
6.7 |
|
Sustaining exploration |
|
0.5 |
|
|
0.6 |
|
|
1.2 |
|
|
1.3 |
|
Accretion of decommissioning
liabilities |
|
1.6 |
|
|
0.8 |
|
|
3.3 |
|
|
1.4 |
|
Total all-in sustaining costs |
$146.7 |
|
$119.5 |
|
$302.7 |
|
$253.5 |
|
Gold
ounces sold |
|
131,952 |
|
|
102,164 |
|
|
264,620 |
|
|
200,630 |
|
All-in sustaining costs per ounce |
$1,112 |
|
$1,170 |
|
$1,144 |
|
$1,264 |
|
(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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions) |
|
|
|
|
Capital expenditures per cash
flow statement |
$80.2 |
|
$69.0 |
|
$164.0 |
|
$156.3 |
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
Young-Davidson |
|
(2.4 |
) |
|
(2.9 |
) |
|
(6.6 |
) |
|
(15.2 |
) |
Island Gold |
|
(43.7 |
) |
|
(19.8 |
) |
|
(89.3 |
) |
|
(45.4 |
) |
Mulatos District |
|
(5.2 |
) |
|
(20.9 |
) |
|
(8.6 |
) |
|
(42.5 |
) |
Corporate and other |
|
(5.5 |
) |
|
(5.3 |
) |
|
(9.2 |
) |
|
(10.5 |
) |
Sustaining capital expenditures |
$23.4 |
|
$20.1 |
|
$50.3 |
|
$42.7 |
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$40.4 |
|
$39.1 |
|
$82.0 |
|
$80.8 |
|
Royalties |
|
1.2 |
|
|
1.3 |
|
|
2.6 |
|
|
2.9 |
|
Total cash costs |
$41.6 |
|
$40.4 |
|
$84.6 |
|
$83.7 |
|
Gold
ounces sold |
|
43,570 |
|
|
46,662 |
|
|
89,246 |
|
|
98,187 |
|
Total cash costs per ounce |
$955 |
|
$866 |
|
$948 |
|
$852 |
|
|
|
|
|
|
Total cash costs |
$41.6 |
|
$40.4 |
|
$84.6 |
|
$83.7 |
|
Sustaining capital
expenditures |
|
11.1 |
|
|
10.2 |
|
|
24.3 |
|
|
20.6 |
|
Accretion of decommissioning liabilities |
|
0.1 |
|
|
0.1 |
|
|
0.2 |
|
|
0.2 |
|
Total all-in sustaining costs |
$52.8 |
|
$50.7 |
|
$109.1 |
|
$104.5 |
|
Gold
ounces sold |
|
43,570 |
|
|
46,662 |
|
|
89,246 |
|
|
98,187 |
|
Mine-site all-in sustaining costs per ounce |
$1,212 |
|
$1,087 |
|
$1,222 |
|
$1,064 |
|
Island Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$18.5 |
|
$21.0 |
|
$39.1 |
|
$37.9 |
|
Royalties |
|
0.6 |
|
|
0.7 |
|
|
1.2 |
|
|
1.2 |
|
Total cash costs |
$19.1 |
|
$21.7 |
|
$40.3 |
|
$39.1 |
|
Gold
ounces sold |
|
28,183 |
|
|
36,797 |
|
|
61,910 |
|
|
60,165 |
|
Total cash costs per ounce |
$678 |
|
$590 |
|
$651 |
|
$650 |
|
|
|
|
|
|
Total cash costs |
$19.1 |
|
$21.7 |
|
$40.3 |
|
$39.1 |
|
Sustaining capital
expenditures |
|
11.0 |
|
|
9.5 |
|
|
22.4 |
|
|
17.3 |
|
Accretion of decommissioning liabilities |
|
0.1 |
|
|
— |
|
|
0.2 |
|
|
0.1 |
|
Total all-in sustaining costs |
$30.2 |
|
$31.2 |
|
$62.9 |
|
$56.5 |
|
Gold
ounces sold |
|
28,183 |
|
|
36,797 |
|
|
61,910 |
|
|
60,165 |
|
Mine-site all-in sustaining costs per ounce |
$1,072 |
|
$848 |
|
$1,016 |
|
$939 |
|
Mulatos District Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$50.3 |
|
$29.1 |
|
$94.5 |
|
$65.9 |
|
Royalties |
|
0.7 |
|
|
0.2 |
|
|
1.2 |
|
|
0.4 |
|
Total cash costs |
$51.0 |
|
$29.3 |
|
$95.7 |
|
$66.3 |
|
Gold
ounces sold |
|
60,199 |
|
|
18,705 |
|
|
113,464 |
|
|
42,278 |
|
Total cash costs per ounce |
$847 |
|
$1,566 |
|
$843 |
|
$1,568 |
|
|
|
|
|
|
Total cash costs |
$51.0 |
|
$29.3 |
|
$95.7 |
|
$66.3 |
|
Sustaining capital
expenditures |
|
1.3 |
|
|
0.4 |
|
|
3.6 |
|
|
4.8 |
|
Sustaining exploration |
|
0.1 |
|
|
0.2 |
|
|
0.3 |
|
|
0.4 |
|
Accretion of decommissioning liabilities |
|
1.4 |
|
|
0.7 |
|
|
2.9 |
|
|
1.1 |
|
Total all-in sustaining costs |
$53.8 |
|
$30.6 |
|
$102.5 |
|
$72.6 |
|
Gold
ounces sold |
|
60,199 |
|
|
18,705 |
|
|
113,464 |
|
|
42,278 |
|
Mine-site all-in sustaining costs per ounce |
$894 |
|
$1,636 |
|
$903 |
|
$1,717 |
|
EBITDA
EBITDA represents net earnings before interest,
taxes, depreciation, and amortization. EBITDA is an indicator of
the Company’s ability to generate liquidity by producing operating
cash flow to fund working capital needs, service debt obligations,
and fund capital expenditures.
EBITDA does not have any standardized meaning
under IFRS and may not be comparable to similar measures presented
by other mining companies. It should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with IFRS.
The following is a reconciliation of EBITDA to
the consolidated financial statements:
(in
millions) |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net earnings (loss) |
$75.1 |
|
$6.4 |
|
$123.5 |
|
($2.1 |
) |
Add back: |
|
|
|
|
Inventory net realizable value adjustment |
|
— |
|
|
22.3 |
|
|
— |
|
|
22.3 |
|
Impairment charge |
|
— |
|
|
— |
|
|
— |
|
|
38.2 |
|
Finance expense |
|
0.7 |
|
|
1.3 |
|
|
2.1 |
|
|
2.5 |
|
Amortization |
|
46.1 |
|
|
38.2 |
|
|
92.4 |
|
|
76.0 |
|
Deferred income tax expense (recovery) |
|
2.2 |
|
|
23.5 |
|
|
2.6 |
|
|
17.0 |
|
Current income tax expense |
|
14.8 |
|
|
0.3 |
|
|
38.2 |
|
|
1.0 |
|
EBITDA |
$138.9 |
|
$92.0 |
|
$258.8 |
|
$154.9 |
|
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)
|
June 30, 2023 |
|
|
December 31, 2022 |
|
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$188.6 |
|
|
$129.8 |
|
Equity securities |
|
19.7 |
|
|
|
18.6 |
|
Amounts receivable |
|
36.3 |
|
|
|
37.2 |
|
Inventory |
|
269.0 |
|
|
|
234.2 |
|
Other current assets |
|
21.6 |
|
|
|
16.2 |
|
Assets held for sale |
|
— |
|
|
|
5.0 |
|
Total Current
Assets |
|
535.2 |
|
|
|
441.0 |
|
|
|
|
|
Non-Current
Assets |
|
|
|
Mineral property, plant and
equipment |
|
3,249.8 |
|
|
|
3,173.8 |
|
Other non-current assets |
|
60.9 |
|
|
|
59.4 |
|
Total Assets |
$3,845.9 |
|
|
$3,674.2 |
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$175.3 |
|
|
$181.2 |
|
Income taxes payable |
|
36.8 |
|
|
|
0.7 |
|
Total Current
Liabilities |
|
212.1 |
|
|
|
181.9 |
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
666.0 |
|
|
|
660.9 |
|
Decommissioning
liabilities |
|
113.3 |
|
|
|
108.1 |
|
Other non-current
liabilities |
|
2.3 |
|
|
|
2.2 |
|
Total Liabilities |
|
993.7 |
|
|
|
953.1 |
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,728.4 |
|
|
$3,703.8 |
|
Contributed surplus |
|
87.3 |
|
|
|
90.7 |
|
Accumulated other
comprehensive loss |
|
(19.8 |
) |
|
|
(24.8 |
) |
Deficit |
|
(943.7 |
) |
|
|
(1,048.6 |
) |
Total Equity |
|
2,852.2 |
|
|
|
2,721.1 |
|
Total Liabilities and Equity |
$3,845.9 |
|
|
$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 |
|
|
For six months ended |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
OPERATING
REVENUES |
$261.0 |
|
|
$191.2 |
|
|
$512.5 |
|
|
$375.7 |
|
|
|
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
|
|
|
Mining and processing |
|
109.2 |
|
|
|
89.2 |
|
|
|
215.6 |
|
|
|
184.6 |
|
Inventory net realizable value
adjustment |
|
— |
|
|
|
22.3 |
|
|
|
— |
|
|
|
22.3 |
|
Royalties |
|
2.5 |
|
|
|
2.2 |
|
|
|
5.0 |
|
|
|
4.5 |
|
Amortization |
|
46.1 |
|
|
|
38.2 |
|
|
|
92.4 |
|
|
|
76.0 |
|
|
|
157.8 |
|
|
|
151.9 |
|
|
|
313.0 |
|
|
|
287.4 |
|
EXPENSES |
|
|
|
|
|
|
|
Exploration |
|
5.1 |
|
|
|
7.0 |
|
|
|
8.6 |
|
|
|
11.1 |
|
Corporate and
administrative |
|
7.0 |
|
|
|
6.2 |
|
|
|
13.7 |
|
|
|
12.3 |
|
Share-based compensation |
|
2.5 |
|
|
|
0.4 |
|
|
|
13.6 |
|
|
|
6.7 |
|
Impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38.2 |
|
|
|
172.4 |
|
|
|
165.5 |
|
|
|
348.9 |
|
|
|
355.7 |
|
EARNINGS BEFORE INCOME
TAXES |
|
88.6 |
|
|
|
25.7 |
|
|
|
163.6 |
|
|
|
20.0 |
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
|
|
|
Finance expense |
|
(0.7 |
) |
|
|
(1.3 |
) |
|
|
(2.1 |
) |
|
|
(2.5 |
) |
Foreign exchange gain |
|
1.2 |
|
|
|
0.4 |
|
|
|
1.1 |
|
|
|
0.4 |
|
Other gain (loss) |
|
3.0 |
|
|
|
5.4 |
|
|
|
1.7 |
|
|
|
(2.0 |
) |
EARNINGS FROM
OPERATIONS |
$92.1 |
|
|
$30.2 |
|
|
$164.3 |
|
|
$15.9 |
|
|
|
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
|
|
|
Current income tax
expense |
|
(14.8 |
) |
|
|
(0.3 |
) |
|
|
(38.2 |
) |
|
|
(1.0 |
) |
Deferred income tax
expense |
|
(2.2 |
) |
|
|
(23.5 |
) |
|
|
(2.6 |
) |
|
|
(17.0 |
) |
NET EARNINGS
(LOSS) |
$75.1 |
|
|
$6.4 |
|
|
$123.5 |
|
|
($2.1 |
) |
|
|
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
|
3.5 |
|
|
|
4.3 |
|
|
|
7.8 |
|
|
|
(1.1 |
) |
Net change in fair value of fuel hedging instruments, net of
taxes |
|
— |
|
|
|
0.1 |
|
|
|
(0.2 |
) |
|
|
1.0 |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized loss on equity securities, net of taxes |
|
(4.1 |
) |
|
|
(10.5 |
) |
|
|
(2.9 |
) |
|
|
(13.0 |
) |
Total other
comprehensive (loss) income |
($0.6 |
) |
|
($6.1 |
) |
|
$4.7 |
|
|
($13.1 |
) |
COMPREHENSIVE INCOME
(LOSS) |
$74.5 |
|
|
$0.3 |
|
|
$128.2 |
|
|
($15.2 |
) |
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE |
|
|
|
|
|
|
|
– basic |
$0.19 |
|
|
$0.02 |
|
|
$0.31 |
|
|
($0.01 |
) |
–
diluted |
$0.19 |
|
|
$0.02 |
|
|
$0.31 |
|
|
($0.01 |
) |
ALAMOS GOLD
INC.Consolidated Statements of Cash
Flows(Unaudited - stated in millions of United States
dollars)
|
For three months ended |
|
|
For six months ended |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
CASH PROVIDED BY (USED
IN): |
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net earnings (loss) for the
period |
$75.1 |
|
|
$6.4 |
|
|
$123.5 |
|
|
($2.1 |
) |
Adjustments for items not
involving cash: |
|
|
|
|
|
|
|
Amortization |
|
46.1 |
|
|
|
38.2 |
|
|
|
92.4 |
|
|
|
76.0 |
|
Impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38.2 |
|
Inventory net realizable value adjustment |
|
— |
|
|
|
22.3 |
|
|
|
— |
|
|
|
22.3 |
|
Foreign exchange gain |
|
(1.2 |
) |
|
|
(0.4 |
) |
|
|
(1.1 |
) |
|
|
(0.4 |
) |
Current income tax expense |
|
14.8 |
|
|
|
0.3 |
|
|
|
38.2 |
|
|
|
1.0 |
|
Deferred income tax expense |
|
2.2 |
|
|
|
23.5 |
|
|
|
2.6 |
|
|
|
17.0 |
|
Share-based compensation |
|
2.5 |
|
|
|
0.4 |
|
|
|
13.6 |
|
|
|
6.7 |
|
Finance expense |
|
0.7 |
|
|
|
1.3 |
|
|
|
2.1 |
|
|
|
2.5 |
|
Other |
|
(1.9 |
) |
|
|
(6.7 |
) |
|
|
(5.8 |
) |
|
|
(5.0 |
) |
Changes in working capital and
taxes paid |
|
3.5 |
|
|
|
(9.6 |
) |
|
|
(29.4 |
) |
|
|
(34.0 |
) |
|
|
141.8 |
|
|
|
75.7 |
|
|
|
236.1 |
|
|
|
122.2 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Mineral property, plant and
equipment |
|
(80.2 |
) |
|
|
(69.0 |
) |
|
|
(164.0 |
) |
|
|
(156.3 |
) |
Proceeds from sale of
Esperanza Project |
|
— |
|
|
|
5.0 |
|
|
|
— |
|
|
|
5.0 |
|
Proceeds from disposition of
equity securities |
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
Investment in equity
securities |
|
(0.6 |
) |
|
|
(2.7 |
) |
|
|
(1.6 |
) |
|
|
(2.7 |
) |
Manitou transaction costs |
|
(0.2 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
|
(80.9 |
) |
|
|
(66.7 |
) |
|
|
(165.7 |
) |
|
|
(154.0 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Dividends paid |
|
(8.8 |
) |
|
|
(8.9 |
) |
|
|
(18.0 |
) |
|
|
(17.6 |
) |
Repurchase and cancellation of
common shares |
|
— |
|
|
|
(8.2 |
) |
|
|
— |
|
|
|
(8.2 |
) |
Proceeds from issuance of
flow-through shares |
|
— |
|
|
|
5.8 |
|
|
|
— |
|
|
|
5.8 |
|
Proceeds from the exercise of
options |
|
2.1 |
|
|
|
— |
|
|
|
5.7 |
|
|
|
0.7 |
|
|
|
(6.7 |
) |
|
|
(11.3 |
) |
|
|
(12.3 |
) |
|
|
(19.3 |
) |
Effect of exchange rates on
cash and cash equivalents |
|
0.6 |
|
|
|
(0.4 |
) |
|
|
0.7 |
|
|
|
0.1 |
|
Net increase (decrease) in
cash and cash equivalents |
|
54.8 |
|
|
|
(2.7 |
) |
|
|
58.8 |
|
|
|
(51.0 |
) |
Cash and cash equivalents -
beginning of period |
|
133.8 |
|
|
|
124.2 |
|
|
|
129.8 |
|
|
|
172.5 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$188.6 |
|
|
$121.5 |
|
|
$188.6 |
|
|
$121.5 |
|
Photos accompanying this announcement are available
at:https://www.globenewswire.com/NewsRoom/AttachmentNg/c5f7de48-9f6b-40c8-88b6-365885addcddhttps://www.globenewswire.com/NewsRoom/AttachmentNg/1a5f404b-41ad-45f8-b708-c5c69692d34a
Alamos Gold (NYSE:AGI)
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Alamos Gold (NYSE:AGI)
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