Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
ended March 31, 2022.
“Our first quarter production and costs were in
line with guidance and with stronger results expected through the
year, we remain well positioned to achieve our annual guidance. La
Yaqui Grande remains on track for initial production in the third
quarter and is expected to drive our production higher and costs
significantly lower in the second half of the year,” said John A.
McCluskey, President and Chief Executive Officer.
“We are also making good progress on our other
growth initiatives, including at Island Gold where we achieved a
key permitting milestone with approval of the Closure Plan
Amendment. We officially broke ground on the Phase III expansion
and are getting closer to completing an updated mine plan for the
operation which we plan to release mid-year. Given the significant
growth in high-grade Mineral Reserves and Resources since the
completion of the Phase III study and opportunities to optimize the
operation, we expect the updated mine plan will showcase a
significantly more valuable operation. Both of these high-return
projects support our strong outlook with growing production,
declining costs and increasing profitability,” Mr. McCluskey
added.
First Quarter 2022
- Produced 98,900 ounces of gold, in
line with guidance for the first quarter. Consistent with guidance,
gold production is expected to increase through the rest of the
year reflecting higher grades at Island Gold in the second quarter
and with La Yaqui Grande on track for initial production in the
third quarter
- Young-Davidson averaged over 8,000
tonnes per day mined in the quarter, driving production of 51,900
ounces and mine-site free cash flow1 of $23.2 million
- Sold 98,466 ounces of gold at an
average realized price of $1,874 per ounce for revenues of $184.5
million
- As previously guided, total cash
costs1 of $992 per ounce, AISC1 of $1,360 per ounce and cost of
sales of $1,376 per ounce were all above annual cost guidance.
Costs are expected to decrease through the year driven by higher
grades at Island Gold, and the start of low-cost production from La
Yaqui Grande
- Realized adjusted net earnings1 for
the quarter of $18.0 million, or $0.05 per share1. Adjusted net
earnings includes adjustments for the non-cash, after tax
impairment charge of $26.7 million triggered by the sale of the
Esperanza Project, unrealized foreign exchange gains recorded
within both deferred taxes and foreign exchange of $5.8 million,
and other losses totaling $5.6 million
- Reported a net loss of $8.5
million, or $0.02 per share
- Cash flow from operating activities
was $46.5 million ($70.9 million, or $0.18 per share, before
changes in working capital1)
- Free cash flow1 was negative in the
quarter, primarily related to lower planned production from Mulatos
as well as ongoing capital spending on the La Yaqui Grande project.
The Company expects to transition to positive free cash flow in the
second half of the year driven by lower capital spending and
low-cost production from La Yaqui Grande
- Declared a quarterly dividend of
$9.8 million, or $0.025 per share (annualized rate of $0.10)
- Ended the quarter with cash and
cash equivalents of $124.2 million, equity securities of $21.6
million, and no debt
- Announced the sale of the non-core
Esperanza Gold Project to Zacatecas Silver Corp. for total
consideration of up to $60 million, with the transaction having
closed in April 2022
- Reported year end 2021 Mineral
Reserves of 10.3 million ounces of gold, a 4% increase from the end
of 2020 with growth at all three operating mines more than
offsetting mining depletion. This included a 5% increase in global
Mineral Reserve Grades reflecting higher grade additions at Island
Gold and Mulatos. Island Gold continues to grow with combined
Mineral Reserves and Resources increasing 8% to 5.1 million ounces
of gold, net of mining depletion, marking a key milestone for the
operation and highlighting its significant upside potential
- Achieved a significant permitting
milestone for the Phase III Expansion at Island Gold with the
approval of the Closure Plan Amendment by the Ontario Government
which allows for the commencement of construction activities. A
groundbreaking ceremony was held on site on April 11, 2022, and was
attended by Carol Hughes, Member of Parliament, Greg Rickford,
Ontario Minister of Northern Development, Mines, Natural Resources
and Forestry and Minister of Indigenous Affairs, Todd Smith,
Ontario Minister of Energy, Michael Mantha, Member of Provincial
Parliament, Beverly Nantel, Mayor of Dubreuilville, as well as
other municipal government representatives, Indigenous partners,
and other key stakeholders
(1) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.
Highlight Summary
|
Three Months Ended March 31, |
|
|
2022 |
|
|
2021 |
Financial Results (in millions) |
|
|
Operating revenues |
$184.5 |
|
$227.4 |
Cost of sales (1) |
$135.5 |
|
$139.3 |
(Loss) earnings from operations |
($5.7 |
) |
$76.3 |
(Loss) earnings before income taxes |
($14.3 |
) |
$75.1 |
Net (loss) earnings |
($8.5 |
) |
$51.2 |
Adjusted net earnings (2) |
$18.0 |
|
$49.1 |
Earnings before interest, depreciation and amortization (2) |
$62.9 |
|
$119.6 |
Cash provided by operations before working capital and cash
taxes(2) |
$70.9 |
|
$119.6 |
Cash provided by operating activities |
$46.5 |
|
$99.3 |
Capital expenditures (sustaining) (2) |
$22.5 |
|
$23.6 |
Capital expenditures (growth) (2) (3) (5) |
$58.7 |
|
$60.3 |
Capital expenditures (capitalized exploration) (4) |
$6.1 |
|
$5.5 |
Free cash flow (2) |
($40.8 |
) |
$9.9 |
Operating Results |
|
|
Gold production (ounces) |
|
98,900 |
|
|
125,800 |
Gold sales (ounces) |
|
98,466 |
|
|
126,482 |
Per Ounce Data |
|
|
Average realized gold price |
$1,874 |
|
$1,798 |
Average spot gold price (London PM Fix) |
$1,877 |
|
$1,794 |
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,376 |
|
$1,101 |
Total cash costs per ounce of gold sold (2) |
$992 |
|
$757 |
All-in sustaining costs per ounce of gold sold (2) |
$1,360 |
|
$1,030 |
Share Data |
|
|
(Loss) earnings per share, basic and diluted |
($0.02 |
) |
$0.13 |
Adjusted earnings per share, basic and diluted(2) |
$0.05 |
|
$0.13 |
Weighted average common shares outstanding (basic) (000’s) |
|
391,913 |
|
|
392,776 |
Financial Position (in millions) |
|
|
Cash and cash equivalents(6) |
$124.2 |
|
$172.5 |
(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) Includes growth capital from operating
sites. (4) Includes capitalized exploration at Island
Gold, Young-Davidson and Mulatos.(5) Includes capital
advances of nil for the three months ended March 31, 2022 ($16.8
million for the three months ended March 31,
2021).(6) Comparative cash and cash equivalents balance
as at December 31, 2021.
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
Gold production (ounces) |
|
|
Young-Davidson |
|
51,900 |
|
48,000 |
Island Gold |
|
24,500 |
|
42,200 |
Mulatos |
|
22,500 |
|
35,600 |
Gold sales (ounces) |
|
|
Young-Davidson |
|
51,525 |
|
48,022 |
Island Gold |
|
23,368 |
|
39,882 |
Mulatos |
|
23,573 |
|
38,578 |
Cost of sales (in
millions)(1) |
|
|
Young-Davidson |
$64.6 |
$62.0 |
Island Gold |
$24.2 |
$29.1 |
Mulatos |
$46.7 |
$48.2 |
Cost of sales per ounce of gold sold (includes
amortization) |
|
|
Young-Davidson |
$1,254 |
$1,491 |
Island Gold |
$1,036 |
$801 |
Mulatos |
$1,981 |
$1,249 |
Total cash costs per ounce of gold sold
(2) |
|
|
Young-Davidson |
$840 |
$873 |
Island Gold |
$745 |
$466 |
Mulatos |
$1,570 |
$915 |
Mine-site all-in sustaining costs per ounce of gold
sold
(2),(3) |
|
|
Young-Davidson |
$1,044 |
$1,075 |
Island Gold |
$1,083 |
$732 |
Mulatos |
$1,782 |
$1,039 |
Capital expenditures (sustaining, growth, capitalized
exploration and capital advances) (in
millions)(2) |
|
Young-Davidson(4) |
$22.7 |
$21.9 |
Island Gold (5) |
$33.4 |
$27.4 |
Mulatos(6) |
$26.0 |
$18.8 |
Other |
$5.2 |
$4.5 |
(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) Includes capitalized exploration at
Young-Davidson $1.0 million for the three months ended March 31,
2022 ($1.0 million for the three months ended March 31,
2021).(5) Includes capitalized exploration at Island
Gold of $5.1 million for the three months ended March 31, 2022
($4.5 million for the three months ended March 31,
2021).(6) Includes capitalized exploration at Mulatos of
$nil for the three months ended March 31, 2022 ($nil for the three
months ended March 31, 2021).Environment, Social and
Governance Summary Performance
Health and Safety
- Recordable injury frequency rate1,2
of 1.65 in the quarter, a 19% decrease from 2021
- Lost time injury frequency rate1 of
0.09 in the quarter, a 56% decrease from 2021
- Commenced phasing out mandatory
COVID-19 testing across Alamos operations
During the first quarter of 2022, the recordable
injury frequency rate decreased with 18 recordable injuries, down
from 28 in the fourth quarter of 2021. One lost time injury was
reported in the quarter, down from three in the fourth quarter of
2021, resulting in an overall decrease to the Company’s lost time
injury frequency rate from the previous quarter. Alamos strives to
maintain a safe, healthy working environment for all, with a strong
safety culture where everyone is continually reminded of the
importance of keeping themselves and their colleagues healthy and
injury-free. The Company’s overarching commitment is to have all
employees and contractors return Home Safe Every Day.
The World Health Organization declared COVID-19
a pandemic on March 11, 2020. The Company responded rapidly and
proactively and implemented several initiatives to help protect the
health and safety of our employees, their families and the
communities in which we operate. Specifically, each mine site
activated established crisis management plans and developed
site-specific plans that have enabled them to meet and respond to
changing conditions associated with COVID-19. The Company has
adopted the advice of public health authorities and is adhering to
government regulations with respect to COVID-19 in the
jurisdictions in which it operates. During the first quarter of
2022, in close collaboration with medical experts, Alamos began
amending its COVID-19 measures to reflect the changing risk profile
of the pandemic in each of its operating jurisdictions. Mandatory
medical screening and testing is no longer required for full-time
employees and contractors, though they remain available on a
voluntary basis and for symptomatic personnel.
The following measures remain in place to
prevent the potential spread of the COVID-19 virus:
- Testing of personnel on a voluntary
basis
- Vaccinations offered to employees
at Island Gold and Mulatos given their unique camp set-up
- Training on proper hand hygiene and
social distancing
- Remote work options for eligible
employees
- Rigid camp and site hygiene
protocols
- In addition, since the COVID-19
pandemic began the Company has donated medical supplies and funds
to help combat the effects and spread of the virus
COVID 19 - Impact on Operations
Given the significant precautionary measures
taken by the Company, and thanks to the dedication of its
employees, contractors and stakeholders, operations remain
relatively unaffected by COVID-19. All the Company's operations
have incurred additional costs related to testing of personnel,
lodging and transportation.
Environment
- Zero significant environmental
incidents in the first quarter of 2022
- Closure Plan Amendment for the
Island Gold Mine approved by the Ontario Government, allowing for
the ramp up of Phase III construction activities at Island
Gold
- Advanced both federal and
provincial permitting for the Lynn Lake Project
- Completed greenhouse gas and energy
workshops and site visits at all Alamos operations as part of
planning to develop emission reduction targets for the Company
- Continued Indigenous community
engagement, including the signing of a Community Benefits Agreement
with the Michipicoten First Nation for Island Gold subsequent to
quarter end on April 4, 2022
- Advanced the power line project at
the Mulatos and La Yaqui Grande which will connect the operations
to grid power and eliminate the need for site diesel power
generation, reducing GHG emissions
Six minor spills occurred during the first
quarter, including two at Island Gold and four at Mulatos. All
spills were immediately cleaned and remediated with no anticipated
long-term effects. The Company is committed to preserving the
long-term health and viability of the natural environment that
surround its operations and projects. This includes investing in
new initiatives to reduce our environmental footprint with the goal
of minimizing the environmental impacts of our activities and
offsetting any impacts that cannot be fully mitigated or
rehabilitated.
Community
- Recipient of the inaugural
Reconciliation Award at the Manitoba Prospectors and Developers
Association Gala in recognition of the positive collaboration and
engagement between Alamos and Marcel Colomb First Nation with
respect to the Lynn Lake Gold Project
- Met with Matarachi community
representatives to plan the activities for 2022 following
implementation of the Mi Matarachi community development
program
- Continued to support local students
in Sahuaripa, Matarachi and Hermosillo, Mexico with 180 students
supported through the Company’s Scholarship Program
- Made various donations of school
and health supplies to local communities in Matarachi, Sahuaripa
and Arivechi
Alamos believes that excellence in
sustainability provides a net benefit to all stakeholders. The
Company continues to engage with local communities to understand
local challenges and priorities, and to offer support during the
COVID-19 pandemic. Ongoing investments in local infrastructure,
health care, education, cultural and community programs have
continued through the COVID-19 pandemic, with appropriate health
and safety protocols.
Governance and Disclosure
- Finalized three sustainability
standards during the quarter and 25 to date as part of Alamos’
Sustainability Performance Management Framework that addresses
governance, health & safety, security, environment and
community relations management
- Received independent assurance over
the Company’s 2021 Responsible Gold Mining Principles (RGMP)
Progress Report
- Advanced development of the
Company’s 2021 Environmental, Social and Corporate Governance (ESG)
Report, to be published in Q2 2022
Alamos maintains the highest standards of
corporate governance to ensure that corporate decision-making
reflects its values, including the Company’s commitment to
sustainable development. During the quarter, the Company continued
to advance its implementation of the Responsible Gold Mining
Principles, developed by the World Gold Council as a framework that
sets clear expectations as to what constitutes responsible gold
mining.
(1) Frequency rate is calculated as incidents
per 200,000 hours worked.(2) The classification of medical
treatment injuries was updated retroactive to 1 January 2020 to
align with OSHA standards, resulting in changes to previously
reported recordable injury rates.
Outlook and Strategy
2022 Guidance |
|
Young-Davidson |
Island Gold |
Mulatos |
Other (2) |
Total |
Gold production (000’s ounces) |
185 - 200 |
125 - 135 |
130 - 145 |
|
440 - 480 |
Cost of sales, including amortization (in
millions)(4) |
|
|
|
|
$610 |
Cost of sales, including amortization ($ per
ounce)(4) |
|
|
|
|
$1,325 |
Total cash costs ($ per ounce)(1) |
$850 - $900 |
$550 - $600 |
$1,225 - $1,275 |
— |
$875- $925 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
|
$1,190 - $1,240 |
Mine-site all-in sustaining costs ($ per
ounce)(1)(3) |
$1,125 - $1,175 |
$850 - $900 |
$1,325 - $1,375 |
— |
|
Capital expenditures (in millions) |
|
|
|
|
|
Sustaining capital(1) |
$50 - $55 |
$35 - $40 |
$5 - $10 |
— |
$90 - $105 |
Growth capital(1) |
$5 - $10 |
$145 - $160 |
$50 - $55 |
$15 |
$215 - $240 |
Total Sustaining and Growth
Capital(1) |
$55 - $65 |
$180 - $200 |
$55 - $65 |
$15 |
$305 - $345 |
Capitalized exploration(1) |
$4 |
$20 |
— |
$3 |
$27 |
Total capital expenditures and capitalized
exploration(1) |
$59 - $69 |
$200 - $220 |
$55 - $65 |
$18 |
$332 - $372 |
(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 and calculation of these
measures.(2) Includes growth capital and capitalized
exploration at the Company's development projects (Lynn Lake and
Esperanza).(3) For the purposes of calculating mine-site
all-in sustaining costs at individual mine sites, the Company does
not include an allocation of corporate and administrative and share
based compensation expenses to the mine sites. (4) Cost
of sales includes mining and processing costs, royalties, and
amortization expense, and is calculated based on the mid-point of
total cash cost guidance.
The Company’s objective is to operate a
sustainable business model that can support growing returns to all
stakeholders over the long-term through growing production,
expanding margins, and increasing profitability. This includes a
balanced approach to capital allocation focused on generating
strong ongoing free cash flow while re-investing in high-return
internal growth opportunities and supporting higher returns to
shareholders.
The Company continues to deliver on its key
long-term objectives including significant progress on its
high-return growth projects which are expected to provide important
catalysts over the next several months. Construction of La Yaqui
Grande is nearing completion with the project on track to achieve
initial production in the third quarter of 2022. Given its higher
grades and lower cost profile, La Yaqui Grande is expected drive
costs significantly lower in the second half of the year.
At Island Gold, the Company achieved a
significant permitting milestone with the approval of the Closure
Plan Amendment, allowing for ramp up of construction activities on
the Phase III expansion. Through ongoing exploration success,
Island Gold's Mineral Reserves and Resources have grown to more
than five million ounces of high-grade gold. This includes a 37%
increase in Mineral Reserves and Resources since the completion of
the Phase III expansion study ("Phase III Study") in 2020. This
growth and higher-grade additions in proximity to the planned shaft
are being incorporated into an optimized mine plan to be released
mid-2022 which is expected to highlight a significantly more
valuable operation.
The Company provided inaugural three-year
production and operating guidance in January 2022, which outlined
growing production at significantly lower costs over the 2022 to
2024 period. Refer to the Company’s January 17, 2022 guidance press
release for a summary of the key assumptions and related risks
associated with the comprehensive 2022 guidance and three-year
production, cost and capital outlook. Production is expected to be
between 440,000 and 480,000 ounces of gold in 2022, consistent with
2021, and increase approximately 4% (based on the mid-point of
guidance) to between 460,000 and 500,000 ounces in 2023 and 2024.
La Yaqui Grade is expected to drive Mulatos and consolidated costs
lower in the second half of 2022 and will be a key contributor to
an expected 18% decrease in AISC between 2022 and 2024. The Company
expects a further increase in production and reduction in costs
following the completion of the Phase III expansion at Island Gold
in 2025.
First quarter production of 98,900 ounces was in
line with guidance and with production expected to increase through
the year, the Company remains on track to achieve full year
guidance. Production is expected to increase to between 100,000 and
110,000 ounces in the second quarter at similar costs to the first
quarter. Production is expected to further increase and costs
decrease in the second half of the year with the start of low-cost
production from La Yaqui Grande. The Company is managing the impact
of industry-wide inflation on input costs such as diesel, cyanide,
steel, and labour.
Young-Davidson continues to perform well
operating from the new lower mine infrastructure. Mining rates of
8,181 tpd exceeded targeted rates driving strong first quarter
production of 51,900 ounces and mine-site free cash flow of $23.2
million. With the solid first quarter performance, Young-Davidson
is on track to achieve full year production and cost guidance.
Capital spending in 2022 (excluding exploration) is expected to
range between $55 and $65 million, a 27% decrease from 2021 with
construction of the new life of mine tailings facility (“TIA 1”)
completed in the fourth quarter of 2021. The operation generated
record mine-site free cash flow of $100 million in 2021, and with a
15 year Mineral Reserve life, Young-Davidson is expected to
generate similar mine-site free cash flow in 2022 and over the long
term.
Island Gold produced 24,500 ounces in the first
quarter with total cash costs and mine-site AISC above annual
guidance reflecting lower grades mined due to mine sequencing.
Consistent with annual guidance, grades mined are expected to
increase through the remainder of year driving production higher
and costs lower. Capital spending at Island Gold (excluding
exploration) is expected to increase to between $180 and $200
million in 2022, reflecting the ramp up of construction activities
on the Phase III expansion following the approval of the Closure
Plan Amendment in March.
The exploration budget for Island Gold in 2022
of $22 million will follow up on the successful drilling campaign
in 2021 that drove an 8% increase in high-grade Mineral Reserves
and Resources to 5.1 million ounces of gold. Since the completion
of the Phase III Study, Mineral Reserves and Resources have
increased 37%, or 1.4 million ounces demonstrating the significant
growth in size and value of operation. This ongoing growth will be
incorporated into an optimized mine plan to be released
mid-2022.
Combined production from the Mulatos District
totaled 22,500 ounces in the first quarter, in line with first half
guidance. With the start of production from La Yaqui Grande in the
third quarter and increasing grades from the El Salto portion of
the Mulatos pit, approximately 65% of 2022 production is expected
in the second half of the year at substantially lower costs. As
previously disclosed, total cash costs and mine-site AISC are
expected to be well above annual guidance during the first half of
2022 and trend significantly lower during the second half of the
year, driven by low-cost production from La Yaqui Grande. Capital
spending is expected to total $55 to $65 million in 2022 with the
majority being growth capital to complete construction of La Yaqui
Grande, which remains on track to achieve initial production in the
third quarter of 2022.
The total capital budget for Lynn Lake in 2022
is $14 million, including $11 million for development activities
and $3 million for exploration. Development activities in 2022
remain focused on environmental work in support of permitting,
detailed engineering and other site access upgrades. The approval
of the Environmental Impact Statement (“EIS”) for the project is
expected in the second half of 2022 following which the Company
expects to make a construction decision.
A total of $40 million has been budgeted for
exploration in 2022 with Island Gold continuing to account for the
largest portion of the budget at $22 million, followed by $7
million at Mulatos, $5 million at Young-Davidson and $3 million at
Lynn Lake. This follows a successful 2021 program with Mineral
Reserves more than replaced at all three operations. This drove a
4% increase in Mineral Reserves to 10.3 million ounces of gold with
grades also increasing 5% reflecting higher grade increases at
Island Gold and Mulatos.
The Company's liquidity position remains strong,
ending the first quarter with $124.2 million of cash and cash
equivalents, $21.6 million in equity securities, and no debt.
Additionally, the Company has a $500 million undrawn credit
facility, providing total liquidity of $624.2 million. Combined
with strong ongoing cash flow generation, the Company's high-return
internal growth initiatives are fully funded, with the capacity to
increase production by more than 60% and reduce AISC by over 30% by
2025.
First Quarter 2022 Results
Young-Davidson Financial and Operational
Review
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
51,900 |
|
|
48,000 |
|
Gold
sales (ounces) |
|
51,525 |
|
|
48,022 |
|
Financial Review (in millions) |
|
|
Operating Revenues |
$96.8 |
|
$86.1 |
|
Cost of sales (1) |
$64.6 |
|
$62.0 |
|
Earnings from operations |
$105.4 |
|
$38.1 |
|
Cash provided by operating
activities |
$45.9 |
|
$44.2 |
|
Capital expenditures
(sustaining) (2) |
$10.4 |
|
$9.5 |
|
Capital expenditures (growth)
(2) |
$11.3 |
|
$11.4 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.0 |
|
$1.0 |
|
Mine-site free cash flow
(2) |
$23.2 |
|
($0.4 |
) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,254 |
|
$1,491 |
|
Total cash costs per ounce of gold sold (2) |
$840 |
|
$873 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,044 |
|
$1,075 |
|
Underground Operations |
|
|
Tonnes of ore mined |
|
736,304 |
|
|
701,162 |
|
Tonnes of ore mined per day |
|
8,181 |
|
|
7,791 |
|
Average grade of gold (4) |
|
2.37 |
|
|
2.25 |
|
Metres developed |
|
3,246 |
|
|
3,352 |
|
Mill Operations |
|
|
Tonnes of ore processed |
|
737,728 |
|
|
733,221 |
|
Tonnes of ore processed per day |
|
8,197 |
|
|
8,147 |
|
Average grade of gold (4) |
|
2.38 |
|
|
2.23 |
|
Contained ounces milled |
|
56,470 |
|
|
52,536 |
|
Average recovery rate |
|
90 |
% |
|
91 |
% |
(1) Cost of sales includes mining and
processing costs, royalties and amortization.(2) Refer
to the “Non-GAAP Measures and Additional GAAP Measures” disclosure
at the end of this press release and associated MD&A for a
description and calculation of these measures. (3) For
the purposes of calculating mine-site all-in sustaining costs, the
Company does not include an allocation of corporate and
administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t Au").
Young-Davidson produced 51,900 ounces of gold in
the first quarter of 2022, an 8% increase from the prior year
period reflecting higher tonnes and grades mined and processed.
Underground mining rates continued to perform
extremely well, averaging 8,181 tpd in the quarter, leading to the
third consecutive quarter in which mining rates have exceeded the
targeted rate of 8,000 tpd. Grades mined averaged 2.37 g/t Au,
slightly above annual guidance of between 2.15 and 2.35 g/t Au.
Grades mined are expected to be consistent with annual guidance
through the remainder of the year.
Mill throughput averaged 8,197 tpd in the first
quarter at an average grade of 2.38 g/t Au, consistent with tonnes
and grades mined. Mill recoveries averaged 90% in the quarter, in
line with guidance and the prior year period.
Financial Review
First quarter revenues of $96.8 million were 12%
higher than the prior year period driven by more ounces sold and a
higher realized gold price.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $64.6
million in the first quarter were higher than the prior year
period, due to increased underground mining rates, partially offset
by lower unit mining costs. Underground unit mining costs were CAD
$46 per tonne in the quarter, an improvement from the prior year
driven by economies of scale from higher mining rates.
Total cash costs of $840 per ounce in the first
quarter were 4% lower than the prior year period driven by higher
grades processed and lower mining costs per tonne. Mine-site AISC
of $1,044 per ounce in the first quarter were 3% lower than the
prior year period, consistent with the lower total cash costs.
Capital expenditures in the quarter included
$10.4 million of sustaining capital and $11.3 million of growth
capital, including $8.2 million of payments related to growth
capital projects from 2021. In addition, $1.0 million was invested
in capitalized exploration in the quarter.
Young-Davidson has consistently met or exceeded
expectations since transitioning to the lower mine infrastructure
in mid-2020, driving production higher, and achieving significant
free cash flow growth. This included mine-site free cash flow of
$23.2 million in the first quarter, net of a significant reduction
in working capital.
Island Gold Financial and Operational
Review
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
24,500 |
|
|
42,200 |
|
Gold
sales (ounces) |
|
23,368 |
|
|
39,882 |
|
Financial Review (in millions) |
|
|
Operating Revenues |
$43.7 |
|
$71.5 |
|
Cost of sales (1) |
$24.2 |
|
$29.1 |
|
Earnings from operations |
$18.9 |
|
$41.8 |
|
Cash provided by operating
activities |
$27.4 |
|
$55.5 |
|
Capital expenditures
(sustaining) (2) |
$7.8 |
|
$10.6 |
|
Capital expenditures (growth)
(2) (5) |
$20.5 |
|
$12.3 |
|
Capital expenditures
(capitalized exploration) (2) |
$5.1 |
|
$4.5 |
|
Mine-site free cash flow (2) |
($6.0 |
) |
$101.4 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,036 |
|
$801 |
|
Total cash costs per ounce of gold sold (2) |
$745 |
|
$466 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,083 |
|
$732 |
|
Underground Operations |
|
|
Tonnes of ore mined |
|
102,989 |
|
|
103,276 |
|
Tonnes of ore mined per day ("tpd") |
|
1,144 |
|
|
1,148 |
|
Average grade of gold (4) |
|
8.35 |
|
|
13.29 |
|
Metres developed |
|
1,439 |
|
|
1,951 |
|
Mill Operations |
|
|
Tonnes of ore processed |
|
100,649 |
|
|
109,285 |
|
Tonnes of ore processed per day |
|
1,118 |
|
|
1,214 |
|
Average grade of gold (4) |
|
8.14 |
|
|
13.03 |
|
Contained ounces milled |
|
26,327 |
|
|
45,784 |
|
Average recovery rate |
|
96 |
% |
|
96 |
% |
(1) Cost of sales includes mining and
processing costs, royalties, and amortization.(2) Refer
to the “Non-GAAP Measures and Additional GAAP Measures” disclosure
at the end of this press release and associated MD&A for a
description and calculation of these measures. (3) For
the purposes of calculating mine-site all-in sustaining costs, the
Company does not include an allocation of corporate and
administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t
Au").(5) Includes capital advances of $1.4 million
for the three months ended March 31, 2022 ($2.1 million for the
three months ended March 31, 2021).
Island Gold produced 24,500 ounces in the first
quarter of 2022, a decrease from the prior year period reflecting
lower grades mined and processed, and lower mill throughput.
Consistent with full year guidance, grades are expected to increase
driving production higher through the remainder of the year.
Underground mining rates averaged 1,144 tpd in
the first quarter, with grades averaging 8.35 g/t Au. Grades mined
were lower than annual guidance due to planned mine sequencing and
are expected to increase in the second quarter and through the
remainder of the year, consistent with full year guidance.
Mill throughput averaged 1,118 tpd, 7% below
annual guidance of 1,200 tpd and the prior year period, reflecting
temporary ore handling challenges at surface due to freezing in the
ore bins during January and February. Milling rates improved in
March and are expected to average 1,200 tpd for the year. Mill
recoveries averaged 96% in the quarter, consistent with annual
guidance and the prior year period.
Financial Review
Island Gold generated revenues of $43.7 million
in the first quarter, a 39% decrease compared to the prior year
period, reflecting 41% less ounces sold, partially offset by higher
realized gold prices.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $24.2 million in the
first quarter were 17% lower than the prior year period, reflecting
lower tonnes processed and lower amortization charges. Amortization
expense on a per ounce basis has decreased compared to the prior
year given the increase in Mineral Reserve and Resource inventory
at Island Gold.
Total cash costs of $745 per ounce in the first
quarter were significantly higher than the prior year period, due
to lower grades processed, and higher mining costs. Mine-site AISC
of $1,083 per ounce in the first quarter were 48% higher than in
the prior year reflecting higher total cash costs, and the impact
of lower sales on sustaining capital spending. Both total cash
costs and mine-site AISC are expected to decrease through the rest
of the year reflecting higher grades mined.
Total capital expenditures were $33.4 million in
the first quarter, including $5.1 million of capitalized
exploration. Spending was focused on lateral development,
engineering and early procurement for the Phase III expansion
project, and surface infrastructure. Capital spending is expected
to increase starting in the second quarter reflecting the ramp up
of construction activities following the approval of the Closure
Plan Amendment in March.
Island Gold generated negative mine-site free
cash flow of $6.0 million in the first quarter, inclusive of all
capital spending on the Phase III expansion and exploration. At
current gold prices, Island Gold is expected to largely self
finance the Phase III expansion capital spending in 2022.
Mulatos Financial and Operational
Review
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
22,500 |
|
|
35,600 |
|
Gold
sales (ounces) |
|
23,573 |
|
|
38,578 |
|
Financial Review (in millions) |
|
|
Operating Revenues |
$44.0 |
|
$69.8 |
|
Cost of sales (1) |
$46.7 |
|
$48.2 |
|
(Loss) earnings from
operations |
($4.3 |
) |
$19.8 |
|
Cash (used) provided by
operating activities |
($11.4 |
) |
$9.9 |
|
Capital expenditures
(sustaining) (2) |
$4.3 |
|
$3.5 |
|
Capital expenditures (growth)
(2) (7) |
$21.7 |
|
$15.3 |
|
Mine-site free cash flow
(2) |
($37.4 |
) |
($23.6 |
) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,981 |
|
$1,127 |
|
Total cash costs per ounce of gold sold (2) |
$1,570 |
|
$915 |
|
Mine site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,782 |
|
$1,039 |
|
Open Pit Operations |
|
|
Tonnes of ore mined - open pit (4) |
|
613,813 |
|
|
910,953 |
|
Total waste mined - open pit (6) |
|
1,972,552 |
|
|
2,461,923 |
|
Total tonnes mined - open pit |
|
2,586,365 |
|
|
3,372,876 |
|
Waste-to-ore ratio (operating) |
|
1.60 |
|
|
1.09 |
|
Crushing and Heap Leach Operations |
|
|
Tonnes of ore stacked |
|
1,741,483 |
|
|
1,833,786 |
|
Average grade of gold processed (5) |
|
0.73 |
|
|
0.93 |
|
Contained ounces stacked |
|
40,852 |
|
|
54,723 |
|
Average recovery rate |
|
55 |
% |
|
59 |
% |
Ore
crushed per day (tonnes) - combined |
|
19,300 |
|
|
20,300 |
|
(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) Includes ore stockpiled during the quarter but
excludes ore tonnes mined during the construction period at La
Yaqui Grande.(5) Grams per tonne of gold ("g/t
Au").(6) Total waste mined includes operating waste and
capitalized stripping, but excludes tonnes mined during the
construction period at La Yaqui Grande. (7) Includes a
draw down of capital advances of $1.4 million for the three
months ended March 31, 2022 ($14.7 million of advances for the
three months ended March 31, 2021).
Mulatos produced 22,500 ounces in the first
quarter, lower than the prior year period though consistent with
first half 2022 guidance of between 45,000 and 50,000 ounces.
Initial production from La Yaqui Grande in the third quarter and
higher grades from El Salto are expected drive production
substantially higher in the second half of the year to between
85,000 and 95,000 ounces.
Ore mined in the first quarter decreased
compared to the prior year period, with mining activities within
the main Mulatos pit focused on completing pre-stripping of the El
Salto portion of the pit. With pre-stripping of El Salto nearing
completion, ore mined from the Mulatos pit is expected to increase
through the remainder of the year. Total tonnes mined of 2,586,365
is exclusive of pre-stripping activities at La Yaqui Grande, where
an additional 5.9 million tonnes of waste and 0.2 million tonnes of
ore was mined in the quarter.
Total crusher throughput in the first quarter
averaged 19,300 tpd for a total of 1,741,483 tonnes stacked at a
grade of 0.73 g/t Au. Tonnes stacked in the quarter exceeded tonnes
mined due to the processing of surface stockpiles which comprised
the majority of tonnes stacked in the first quarter. Surface
stockpiles are expected to comprise the majority of ore stacked in
the second quarter, but will decrease substantially in the second
half of the year as mining of higher grade ore from El Salto ramps
up. Combined with the start of production from La Yaqui Grande,
gold production is expected to increase significantly in the second
half of 2022 at substantially lower costs.
Consistent with the second half of 2021, the
increased proportion of stockpiles stacked in the quarter, combined
with stacking on higher lifts of the leach pad, resulted in a
longer than anticipated leach cycle which contributed to a lower
recovery rate of 55%.
Financial Review
Revenues of $44.0 million in the first quarter
were lower than the prior year period driven by fewer ounces sold,
partially offset by higher realized gold prices.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $46.7 million in the
first quarter were lower than in the comparative period, primarily
due to a lower number of ounces sold, which drove lower mining and
processing and amortization charges, partially offset by higher
processing costs related to surface stockpiles. Amortization per
ounce was higher in the quarter given the impact of straight line
depreciation on lower sales in the quarter.
Total cash costs of $1,570 per ounce were higher
than in the prior year period as a result of less tonnes stacked,
and an increasing proportion of surface stockpiles processed which
carry a higher cost per ounce given increased reagent consumption.
The surface stockpiles also include historical inventory costs of
approximately $150 per ounce, which were incurred in previous years
when these tonnes were mined. Mine-site AISC of $1,782 per ounce in
the quarter were higher than in the prior year period, consistent
with the increase in total cash costs, and include sustaining
capital related to the pre-stripping activities at El Salto. Total
cash costs are expected to remain at similar levels in the second
quarter of 2022, but will decrease starting in the second half of
the year with the start of low cost production from La Yaqui
Grande.
Capital spending totaled $26.0 million in the
first quarter, of which $4.3 million was sustaining capital
primarily related to capitalized stripping at El Salto. Growth
capital of $21.7 million related to construction activities at La
Yaqui Grande. Given the significant level of spending on La Yaqui
Grande and a build up of leach pad inventory, Mulatos generated
negative mine-site free cash flow of $37.4 million in the quarter.
With the completion of La Yaqui Grande in the third quarter,
Mulatos is expected to generate significant mine site free cash
flow in the second half of the year.
First Quarter 2022 Development Activities
Island Gold (Ontario,
Canada)
Phase III Expansion Study
On July 14, 2020 the Company reported results of
the positive Phase III Study conducted on its Island Gold mine.
Based on the results of the study, the Company is proceeding with
an expansion of the operation to 2,000 tpd. This follows a detailed
evaluation of several scenarios which demonstrated the shaft
expansion as the best option, having the strongest economics, being
the most efficient and productive, and the best positioned to
capitalize on further growth in Mineral Reserves and Resources. The
Phase III expansion is expected to drive average annual gold
production to 236,000 ounces per year upon completion of the
shaft in 2025, representing a nearly 70% increase from 2021
production. This is also expected to reduce total cash costs to an
average of $403 per ounce and mine-site all-in sustaining costs to
$534 per ounce.
The Phase III Study was based on Mineral
Reserves and Resources at Island Gold as of December 31, 2019 and
does not include the significant growth subsequent to the study.
This includes a 37%, or 1.4 million ounce increase in combined
Mineral Reserves and Resources which now total 5.1 million ounces
of gold. As a result, the Company is working on an updated Phase
III expansion mine plan that will incorporate the significant
growth in high-grade Mineral Reserves and Resources into an
optimized mine plan which is expected to enhance already attractive
economics and the value of the operation. The updated study is
expected to be completed by mid-2022.
In March 2022, the Closure Plan Amendment for
the Island Gold Mine was approved by the Ontario Government. The
filing of the Closure Plan Amendment by the Ontario Government
allows for the commencement of construction activities. A
groundbreaking ceremony was held on site on April 11, 2022, and was
attended by Carol Hughes, Member of Parliament, Greg Rickford,
Ontario Minister of Northern Development, Mines, Natural Resources
and Forestry and Minister of Indigenous Affairs, Todd Smith,
Ontario Minister of Energy, Michael Mantha, Member of Provincial
Parliament, Beverly Nantel, Mayor of Dubreuilville, as well as
other municipal government representatives, Indigenous partners,
and other key stakeholders.
During the first quarter, the Company was
focused on detailed engineering of the shaft and associated
infrastructure, including the hoisting plant and surface civil
works, as well as the paste plant. Contract tendering and awarding
remains ongoing, with significant contracts signed for the shaft
sinking and headworks, shaft site surface works, and steel supply
and fabrication. Second quarter activities will include clearing
and site preparation of the shaft area, with the pre-sink of the
shaft expected to begin in July 2022.
During the first quarter of 2022, the Company
spent $20.5 million on growth capital consisting of surface
infrastructure, capital development, detailed engineering and
permitting activities.
Mulatos District (Sonora,
Mexico)
La Yaqui Grande
On July 28, 2020, the Company reported results
of an internal study completed on its fully permitted La Yaqui
Grande project located in the Mulatos District in Sonora, Mexico.
La Yaqui Grande is located approximately seven kilometres (straight
line) from the existing Mulatos operation and adjacent to the past
producing La Yaqui Phase I operation. As with La Yaqui Phase I, La
Yaqui Grande is being developed with an independent heap leach pad
and crushing circuit.
La Yaqui Grande is expected to produce an
average of 123,000 ounces of gold per year starting in the third
quarter of 2022, and significantly reduce the Mulatos District
mine-site AISC. This is expected to decrease even further in 2023
as higher cost production from the main Mulatos operation is
displaced with lower-cost production from La Yaqui Grande.
Construction activities progressed well in the
first quarter of 2022, with the project construction 90% complete
and on schedule to achieve initial production in the third quarter
of 2022.
First quarter highlights at La Yaqui Grande
included:
- 5.9 million tonnes of waste and 0.2
million tonnes of ore mined during the quarter, with mining rates
averaging 67,000 tpd for the period;
- Primary crusher was commissioned
during the quarter, with the secondary and tertiary crushers on
track for commissioning in the second quarter;
- Agglomeration system substantially
complete;
- Heap leach construction over 90%
complete;
- Pregnant and barren ponds
construction complete;
- Carbon columns and ADR plant
construction 95% complete;
- Lime silos and filter press for the
water treatment plant on site, with concrete works ongoing
- Over 16,000 contained ounces of
gold have been mined to date, with stacking and leaching of ore
expected to start in June
Construction of La Yaqui Grande commenced in the
fourth quarter of 2020. Including $21.7 million spent in the first
quarter of 2022, total spending to date is approximately $131
million (including capital advances). In addition, the Company has
inventoried $1.5 million of mining costs related to ore mined
during the construction period, which will be expensed when gold is
produced.
La Yaqui Grande -
Pit (photo): https://www.globenewswire.com/NewsRoom/AttachmentNg/c1c8b1af-f9f2-45c9-b3a0-3da567e080c5
La Yaqui Grande - Crusher area (photo):
https://www.globenewswire.com/NewsRoom/AttachmentNg/e206c48e-3212-4c90-8e2a-cb541c98e52e
La Yaqui Grande - Crusher and leach pad
area (photo): https://www.globenewswire.com/NewsRoom/AttachmentNg/5c1e073a-5a18-4cc8-9dac-bf273679363d
La Yaqui Grande - Leach
pad (photo): https://www.globenewswire.com/NewsRoom/AttachmentNg/3611eee0-6edb-4407-af66-d368cf998896
Lynn Lake (Manitoba,
Canada)
The Company released a positive Feasibility
Study on the Lynn Lake project in December 2017 outlining average
annual production of 143,000 ounces over a 10 year mine life at
average mine-site AISC of $745 per ounce.
The project economics based on the 2017
Feasibility Study at a $1,500 per ounce gold price include an
after-tax internal rate of return ("IRR") of 21.5% and an after-tax
NPV of $290 million (12.5% IRR at a $1,250 per ounce gold price).
During the second quarter of 2020, the Company filed the
Environmental Impact Statement ("EIS") with the federal government.
Approval of the EIS is expected in the second half of 2022
following which the Company expects to make a construction
decision.
Development spending (excluding exploration) was
$2.6 million in the first quarter of 2022 to support the ongoing
permitting process and engineering.
Kirazlı (Çanakkale, Turkey)
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
Turkey for expropriation and unfair and inequitable treatment,
among other things, with respect to the Kirazlı, Ağı Dağı and
Çamyurt gold development projects in Turkey. The claim was filed
under the Netherlands-Turkey Bilateral Investment Treaty (the
“Treaty”). Alamos Gold Holdings Coöperatief U.A. and Alamos Gold
Holdings B.V. had its claim against the Republic of Turkey
registered on June 7, 2021 with the International Centre for
Settlement of Investment Disputes (World Bank Group).
In its effort to secure the renewal of its
mining licenses, the Company has attempted to work cooperatively
with the Turkish government, has raised with the Turkish government
its obligations under the Treaty, has sought to resolve the dispute
by good faith negotiations, and has made considerable effort to
build support among stakeholders and host communities. The Turkish
government has failed to provide the Company with a reason for the
non-renewal of its licenses.
Bilateral investment treaties are agreements
between countries to assist with the protection of investments. The
Treaty establishes legal protections for investment between Turkey
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 Turkey.
The Company incurred $0.7 million in the first
quarter related ongoing holding costs and legal costs to progress
the Treaty claim, which was expensed.
First Quarter 2022 Exploration Activities
Island Gold (Ontario,
Canada)
Island Gold had another successful year of
exploration in 2021, achieving a significant milestone with its
high-grade Mineral Reserve and Resource increasing to 5.1 million
ounces across all categories, net of mining depletion.
A total of $22 million has been budgeted for
surface and underground exploration at Island Gold in 2022. The
exploration focus remains on defining additional near mine Mineral
Resources across the Island Gold Main Zone (Island Main, West, and
East), as well as advancing and evaluating several regional
targets. This includes 30,000 metres (“m”) of surface directional
drilling, 30,000 m of underground exploration drilling, and 480 m
of underground exploration drift development to extend drill
platforms on the 620, 840, and 980-levels.
A regional exploration program including 6,500 m
of drilling is also budgeted in 2022. The focus will be on
evaluating and advancing exploration targets outside the Island
Gold Deposit on the 15,524-hectare Island Gold property.
Four diamond drill rigs continued operating in
the first quarter focused on the surface directional exploration
program. Three underground regular exploration diamond drills
operated in the quarter.
Surface exploration drilling
A total of 4,086 m of surface directional
drilling was completed in eleven holes during the first quarter.
Surface directional drilling targeted areas peripheral to the
Inferred Mineral Resource block in the Island East area between
1,400 m and 1,750 m below surface with drill hole spacing ranging
from 75 m to 100 m.
Underground exploration drilling
During the first quarter of 2022, a total of
6,714 m of standard underground exploration drilling was completed
in twenty-four holes. The objective of the underground drilling is
to identify new Mineral Resources close to existing Mineral
Resource or Reserve blocks. A total of 145 m of underground
exploration drift development was also completed during the first
quarter of 2022.
Total exploration expenditures during the first
quarter were $5.7 million, of which $5.1 million was
capitalized.
Young-Davidson (Ontario,
Canada)
The 2021 drill program represented the first
significant exploration campaign at Young-Davidson since 2011,
given the focus of the last several years on completing the lower
mine expansion. Through a successful delineation drilling program,
Mineral Reserves were more than replaced, increasing 5% to 3.4
million ounces (43.7 mt grading 2.42 g/t Au) at the end of 2021,
and extending Young-Davidson's Mineral Reserve life to 15
years.
A total $5 million has been budgeted for
exploration at Young-Davidson in 2022. The focus will be following
up on the success in the 2020 and 2021 programs which extended gold
mineralization below existing Mineral Reserves and Resources and
intersected higher grades in the hanging wall and footwall of the
deposit.
The 2022 program includes 21,600 m of
underground exploration drilling, and 500 m of underground
exploration development to extend drill platforms on the 9220,
9095, and 9025-levels. The focus of the underground exploration
drilling program will be to expand Mineral Resources in six target
areas that have been identified within proximity to existing
underground infrastructure.
In addition, 3,500 m of surface drilling is
planned to test near-surface targets across the 5,587 hectare
Young-Davidson Property.
Underground exploration drilling during the
first quarter was focused on four targets with 2,325 m completed in
five holes. Drilling from the 8960-level exploration drill bay
established in the lower mine infrastructure tested to the west and
down-plunge of existing Mineral Reserves and Resources with two
drill holes completed in the first quarter. 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. A second underground drill completed
two holes from the 9710-level, testing along strike to the east of
existing Mineral Reserves and Resources. In addition, one hole was
completed in the 9220 West exploration drift testing down-plunge of
the existing Mineral Reserves and Resources.
A total of 4,424 m of surface exploration
drilling was completed in fourteen holes, testing several
near-surface regional targets.
Exploration spending totaled $2.6 million of
which $1.0 million was capitalized in the first quarter 2022.
Mulatos District (Sonora,
Mexico)
The Company has a large exploration package
covering 28,972 hectares with the majority of past exploration
efforts focused around the Mulatos mine. Exploration continues to
follow up on near-mine opportunities at Puerto del Aire, as well as
several earlier stage prospects throughout the wider district.
During the first quarter of 2022, exploration
activities continued at Puerto del Aire with 314 m of drilling
completed in two drill holes. Drilling at Puerto del Aire in 2021
was successful in establishing a new underground Mineral Reserve at
Mulatos, consisting of 0.4 million ounces of gold (2.8 mt grading
4.67 g/t Au) as at December 31, 2021. The focus in 2022 is on
evaluating opportunities to expand the Mineral Reserve. The
higher-grade ore from Puerto del Aire is expected to be processed
through the existing mill at Mulatos. Ongoing exploration results
will be incorporated into an updated development plan which is
expected to be finalized over the next year.
Drilling also commenced late in the first
quarter at the Carricito project with 73 m completed in the first
hole. At Refugio, 984 m of drilling was completed in four holes
testing extensions to gold mineralization intersected in drilling
completed in 2017. Drilling also continued at the El Halcon targets
with three drill holes completed totaling 1,264 m.
A total of $7 million has been budgeted at
Mulatos for exploration in 2022. This includes 15,000 m of drilling
focused on regional targets including Carricito, and Halcon, Halcon
West, and Refugio.
During the first quarter, the Company incurred
$1.6 million of exploration spending, which was expensed.
Lynn Lake (Manitoba,
Canada)
During the first quarter of 2022, sixteen holes
totaling 4,398 m was completed at the Gordon and Burnt Timber
deposits as well as at the Maynard target.
Planning and targeting is also underway with the
objective of advancing a pipeline of prospective regional
exploration targets in the upcoming field season. This includes
follow-up exploration drilling at Tulune, a new greenfields
discovery in 2021.
A total of $3 million has been budgeted for
exploration at Lynn Lake in 2022. This includes 5,000 m of drilling
focused on continuing to test exploration targets in proximity to
the Gordon and MacLellan deposits with the goal of adding to
Mineral Resources. The exploration program will also further
evaluate the Burnt Timber and Linkwood deposits, including defining
and testing exploration targets at both deposits. The Burnt Timber
and Linkwood deposits contained Inferred Mineral Resources totaling
1.6 million ounces grading 1.1 g/t Au (44 million tonnes) as of
December 31, 2021 and represent potential upside to the 2017
Feasibility Study.
Exploration spending totaled $1.6 million in the
first quarter of which all was capitalized.
Review of First Quarter Financial Results
During the first quarter of 2022, the Company
sold 98,466 ounces of gold for revenues of $184.5 million, a 19%
decrease from the prior year period driven by less ounces sold,
partially offset by higher realized gold prices.
The average realized gold price in the first
quarter was $1,874 per ounce, a 4% increase compared to $1,798 per
ounce realized in the prior year period. The average realized gold
price was slightly below the London PM Fix price for the quarter of
$1,877 per ounce.
Cost of sales were $135.5 million in the first
quarter, 3% lower than the prior year period.
Mining and processing costs were $95.4 million,
3% higher than the prior year period. The increase was primarily
related to higher processing costs at Mulatos related to stockpiled
ore.
Consolidated total cash costs of $992 per ounce
and AISC of $1,360 per ounce in the quarter were both higher
compared to the prior year period due to lower grades mined at
Island Gold and higher processing costs for stockpiled ore at
Mulatos, partially offset by lower unit mining costs and higher
grades at Young-Davidson.
Royalty expense was $2.3 million in the quarter,
lower than the prior year period of $3.1 million due to lower
ounces sold in the period.
Amortization of $37.8 million in the quarter was
lower than the prior year period due to less ounces sold.
Amortization of $384 per ounce was lower than guidance, but is
expected to increase in future quarters as production from El Salto
and La Yaqui Grande increase, which carry a higher amortization per
ounce charge.
During the first quarter, the Company entered
into a binding agreement to sell the Esperanza Gold Project, which
closed in April 2022. In accordance with the Company's accounting
policies, the project is required to be disclosed as held for sale
and recorded at the accounting fair value.
Total proceeds for the project are up to $60.0
million, including $39.0 million of contingent payments. The
determination of the fair value of such contingent consideration
requires the Company to make certain assumptions and estimates in
relation to future events based on the current understanding of the
facts and circumstances. The completion of each milestone and the
related payments are subject to uncertainty.
As a result, the Company incurred an impairment
charge of $38.2 million ($26.7 million after tax) for the three
months ended March 31, 2022. The non-cash impairment charge
reflects the excess of the net carrying value of Esperanza compared
to the accounting fair value of consideration received. Refer to
note 7 of the Company's unaudited condensed interim consolidated
financial statements for the three months ended March 31, 2022 for
further details.
The Company recognized a loss from operations of
$5.7 million in the quarter, a significant decrease from the prior
year period as a result of the non-cash impairment charge on the
sale of Esperanza, as well as less ounces sold in the period.
The Company reported a net loss of $8.5 million
in the quarter, compared to net earnings of $51.2 million in the
prior year period. The decrease in net earnings from the prior year
period is mainly driven by the non-cash impairment charge related
to the sale of Esperanza. On an adjusted basis, earnings in the
first quarter of 2022 were $18.0 million, or $0.05 per share.
Associated Documents
This press release should be read in conjunction
with the Company’s interim consolidated financial statements for
the three-month period ended March 31, 2022 and associated
Management’s Discussion and Analysis (“MD&A”), which are
available from the Company's website, www.alamosgold.com, in the
"Investors" section under "Reports and Financials", and on SEDAR
(www.sedar.com) and EDGAR (www.sec.gov).
Reminder of First Quarter 2022 Results
Conference Call
The Company's senior management will host a
conference call on Thursday, April 28, 2022 at 11:00 am ET to
discuss the first quarter 2022 results. Participants may join the
conference call via webcast or through the following dial-in
numbers:
Toronto and International:Toll free (Canada and the United
States):Participant passcode:Webcast: |
(416) 406-0743(800) 898-39893604114#www.alamosgold.com |
|
|
A playback will be available until May 29, 2022
by dialling (905) 694-9451 or (800) 408-3053 within Canada and the
United States. The passcode is 2079662#. 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 significant
portfolio of development stage projects in Canada, Mexico, Turkey,
and the United States. Alamos employs more than 1,700 people and is
committed to the highest standards of sustainable development. The
Company’s shares are traded on the TSX and NYSE under the symbol
“AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K. ParsonsVice-President, Investor
Relations(416) 368-9932 x 5439
All amounts are in United States dollars, unless otherwise
stated.
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains or incorporates by
reference “forward-looking statements” and “forward-looking
information” as defined under applicable Canadian and U.S.
securities legislation. All statements, other than statements of
historical fact, which address events, results, outcomes or
developments that the Company expects to occur are, or may be
deemed, to be, forward-looking statements. Forward-looking
statements are generally, but not always, identified by the use of
forward-looking terminology such as "expect", "believe",
"anticipate", "intend", "estimate", “potential”, “on track”,
"forecast", "budget", “target”, “outlook”, “continue”, “plan” or
variations of such words and phrases and similar expressions or
statements that certain actions, events or results “may”, “could”,
“would”, “might” or “will” be taken, occur or be achieved or the
negative connotation of such terms.
Such statements include, but may not be limited
to, information as to strategy, plans or future financial or
operating performance, such as the Company’s expansion plans,
project timelines, production plans and expected sustainable
productivity increases, expected increases in mining activities and
corresponding cost efficiencies, expected drilling targets,
expected sustaining costs, expected improvements in cash flows and
margins, expectations of changes in capital expenditures,
forecasted cash shortfalls and the Company’s ability to fund them,
cost estimates, projected exploration results, reserve and resource
estimates, expected production rates and use of the stockpile
inventory, expected recoveries, sufficiency of working capital for
future commitments and other statements that express management’s
expectations or estimates of future plans and performance.
Alamos cautions that forward-looking statements
are necessarily based upon a number of factors and assumptions
that, while considered reasonable by the Company at the time of
making such statements, are inherently subject to significant
business, economic, technical, legal, political and competitive
uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking statements and undue reliance should not be
placed on such statements and information.
Such factors and assumptions underlying the
forward-looking statements in this document include, but are not
limited to: changes to current estimates of mineral reserves and
resources; changes to production estimates (which assume accuracy
of projected ore grade, mining rates, recovery timing and recovery
rate estimates which may be impacted by unscheduled maintenance,;
weather issues, labour and contractor availability and other
operating or technical difficulties); operations may be exposed to
new diseases, epidemics and pandemics, including the effects and
potential effects of the global COVID-19 pandemic; the impact of
the COVID-19 pandemic on the broader market and the trading price
of the Company's shares; provincial and federal orders or mandates
(including with respect to mining operations generally or auxiliary
businesses or services required for the Company’s operations) in
Canada, Mexico, the United States and Turkey; the duration of
regulatory responses to the COVID-19 pandemic; government and the
Company’s attempts to reduce the spread of COVID-19 which may
affect many aspects of the Company's operations including the
ability to transport personnel to and from site, contractor and
supply availability and the ability to sell or deliver gold 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 Turkey by the Company’s wholly-owned
Netherlands subsidiaries, Alamos Gold Holdings Coöperatief U.A, and
Alamos Gold Holdings B.V.); disruptions affecting operations;
availability of and increased costs associated with mining inputs
and labour; delays with the Phase III Expansion Project at the
Island Gold mine; construction delays at the La Yaqui Grande
project; delays in permitting, construction decisions and any
development of the Lynn Lake project; 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
(including tax and employment legislation), controls or regulations
in Canada, Mexico, Turkey, the United States and other
jurisdictions in which the Company does or may carry on business in
the future; increased costs and risks related to the potential
impact of climate change; failure to comply with environmental and
health and safety laws and regulations; disruptions in the
maintenance or provision of required infrastructure and information
technology systems; risk of loss due to sabotage, protests and
other civil disturbances; the impact of global liquidity and credit
availability and the values of assets and liabilities based on
projected future cash flows; risks arising from holding derivative
instruments; and business opportunities that may be pursued by the
Company. The litigation against the Republic of Turkey, described
above, results from the actions of the Turkish government in
respect of the Company’s projects in the Republic of Turkey. Such
litigation is a mitigation effort and may not be effective or
successful. If unsuccessful, the Company’s projects in Turkey may
be subject to resource nationalism and further expropriation; the
Company may lose any remaining value of its assets and gold mining
projects in Turkey and its ability to operate in Turkey. Even if
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 Turkey, or even retaining control of its assets and
gold mining projects in Turkey, 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 Turkey 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 Turkey, and which may
have a negative effect on overall anticipated project values.
Additional risk factors and details with respect
to risk factors affecting 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;
- net cash;
- total cash cost per ounce of gold
sold;
- all-in sustaining cost ("AISC") per
ounce of gold sold;
- mine-site all-in sustaining cost
("Mine-site AISC") per ounce of gold sold;
- sustaining and non-sustaining
capital expenditures; and
- earnings before interest, taxes,
depreciation, and amortization
The Company believes that these measures,
together with measures determined in accordance with IFRS, provide
investors with an improved ability to evaluate the underlying
performance of the Company. Non-GAAP financial measures do not have
any standardized meaning prescribed under IFRS, and therefore they
may not be comparable to similar measures employed by other
companies. The data is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS.
Management's determination of the components of non-GAAP and
additional measures are evaluated on a periodic basis influenced by
new items and transactions, a review of investor uses and new
regulations as applicable. Any changes to the measures are dully
noted and retrospectively applied as applicable.
Adjusted Net Earnings and Adjusted
Earnings per Share
“Adjusted net earnings” and “adjusted earnings
per share” are non-GAAP financial measures with no standard meaning
under IFRS which exclude the following from net earnings:
- Foreign exchange gain (loss)
- Items included in other gain
(loss)
- Certain non-reoccurring items
- Foreign exchange gain (loss)
recorded in deferred tax expense
- The income and mining tax impact of
items included in other gain (loss)
Net earnings have been adjusted, including the
associated tax impact, for the group of costs in “other loss” on
the consolidated statement of comprehensive income. Transactions
within this grouping are: the fair value changes on non-hedged
derivatives; the renunciation of flow-through exploration
expenditures; loss on disposal of assets; severance costs related
to Turkish Projects; and Turkish Projects holding costs and
arbitration costs. The adjusted entries are also impacted for tax
to the extent that the underlying entries are impacted for tax in
the unadjusted net earnings.
The Company uses adjusted net earnings for its
own internal purposes. Management’s internal budgets and forecasts
and public guidance do not reflect the items which have been
excluded from the determination of adjusted net earnings.
Consequently, the presentation of adjusted net earnings enables
shareholders to better understand the underlying operating
performance of the core mining business through the eyes of
management. Management periodically evaluates the components of
adjusted net earnings based on an internal assessment of
performance measures that are useful for evaluating the operating
performance of our business and a review of the non-GAAP measures
used by mining industry analysts and other mining companies.
Adjusted net earnings is intended to provide
additional information only and does not have any standardized
meaning under IFRS and may not be comparable to similar measures
presented by other companies. It should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. The measure is not necessarily indicative
of operating profit or cash flows from operations as determined
under IFRS. The following table reconciles this non-GAAP measure to
the most directly comparable IFRS measure.
(in
millions) |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Net (loss) earnings |
($8.5 |
) |
$51.2 |
|
Adjustments: |
|
|
Impairment charge, net of taxes |
|
26.7 |
|
|
— |
|
Foreign exchange loss |
|
— |
|
|
0.2 |
|
Other loss |
|
7.4 |
|
|
— |
|
Unrealized foreign exchange gain recorded in deferred tax
expense |
|
(5.8 |
) |
|
(2.5 |
) |
Other income tax and mining tax adjustments |
|
(1.8 |
) |
|
0.2 |
|
Adjusted net earnings |
$18.0 |
|
$49.1 |
|
Adjusted earnings per share - basic and diluted |
$0.05 |
|
$0.13 |
|
Cash Flow from Operating Activities
before Changes in Working Capital and Cash Taxes
“Cash flow from operating activities before
changes in working capital and cash taxes” is a non-GAAP
performance measure that could provide an indication of the
Company’s ability to generate cash flows from operations, and is
calculated by adding back the change in working capital and taxes
received to “Cash provided by (used in) operating activities” as
presented on the Company’s consolidated statements of cash flows.
“Cash flow from operating activities before changes in working
capital” is a non-GAAP financial measure with no standard meaning
under IFRS.
The following table reconciles the non-GAAP
measure to the consolidated statements of cash flows.
(in
millions) |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
Cash flow from operating activities |
$46.5 |
$99.3 |
Add: Changes in working
capital and cash taxes |
|
24.4 |
|
20.3 |
Cash flow from operating activities before changes in
working capital and cash taxes |
$70.9 |
$119.6 |
Company-wide Free Cash Flow
“Company-wide free cash flow" is a non-GAAP
performance measure calculated from the consolidated operating cash
flow, less consolidated mineral property, plant and equipment
expenditures. The Company believes this to be a useful indicator of
our ability to operate without reliance on additional borrowing or
usage of existing cash company-wide. Company-wide free cash flow is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other mining
companies. Company-wide free cash flow should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
(in
millions) |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Cash flow from operating activities |
$46.5 |
|
$99.3 |
|
Less: mineral property, plant
and equipment expenditures (1) |
|
(87.3 |
) |
|
(72.6 |
) |
Less:
capital advances |
|
— |
|
|
(16.8 |
) |
Company-wide free cash flow |
($40.8 |
) |
$9.9 |
|
Mine-site Free Cash Flow
"Mine-site free cash flow" is a non-GAAP
financial performance measure calculated as cash flow from
mine-site operating activities, less mineral property, plant and
equipment expenditures. The Company believes this to be a useful
indicator of our ability to operate without reliance on additional
borrowing or usage of existing cash. Mine-site free cash flow is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other mining
companies. Mine-site free cash flow should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
Total Mine-Site Free Cash Flow |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
Cash flow from operating
activities |
$46.5 |
|
$99.3 |
|
Add:
operating cash flow used by non-mine site activity |
|
15.4 |
|
|
10.3 |
|
Cash flow from operating mine-sites |
$61.9 |
|
$109.6 |
|
|
|
|
Mineral property, plant and
equipment expenditure 1 |
$87.3 |
|
$72.6 |
|
Capital advances |
|
— |
|
|
16.8 |
|
Less: capital expenditures
from development projects, and corporate |
|
(5.2 |
) |
|
(4.5 |
) |
Capital expenditure and capital advances from
mine-sites |
$82.1 |
|
$84.9 |
|
|
|
|
Total mine-site free cash flow |
($20.2 |
) |
$24.7 |
|
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
Cash flow from operating
activities |
$45.9 |
|
$44.2 |
|
Mineral
property, plant and equipment expenditure |
|
(22.7 |
) |
|
(21.9 |
) |
Mine-site free cash flow |
$23.2 |
|
$22.3 |
|
Island Gold Mine-Site Free Cash Flow |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
Cash flow from operating
activities |
$27.4 |
|
$55.5 |
|
Mineral property, plant and
equipment expenditure 1 |
|
(32.0 |
) |
|
(27.4 |
) |
Capital
advances |
|
(1.4 |
) |
|
(2.1 |
) |
Mine-site free cash flow |
($6.0 |
) |
$26.0 |
|
Mulatos Mine-Site Free Cash Flow |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
Cash flow from operating
activities |
($11.4 |
) |
$9.9 |
|
Mineral property, plant and
equipment expenditure |
|
(27.4 |
) |
|
(18.8 |
) |
Capital advances |
|
1.4 |
|
|
(14.7 |
) |
Mine-site free cash flow |
($37.4 |
) |
($23.6 |
) |
Net Cash
The Company defines net cash as cash and cash equivalents less
long-term debt.
Total Cash Costs per ounce
Total cash costs per ounce is a non-GAAP term
typically used by gold mining companies to assess the level of
gross margin available to the Company by subtracting these costs
from the unit price realized during the period. This non-GAAP term
is also used to assess the ability of a mining company to generate
cash flow from operations. Total cash costs per ounce includes
mining and processing costs plus applicable royalties, and net of
by-product revenue and net realizable value adjustments. This
metric excludes COVID-19 costs incurred in the period. Total cash
costs per ounce is exclusive of exploration costs.
Total cash costs per ounce is intended to
provide additional information only and does not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other mining companies. It should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. The measure is not
necessarily indicative of cash flow from operations under IFRS or
operating costs presented under IFRS.
All-in Sustaining Costs per ounce and
Mine-site All-in Sustaining Costs
The Company adopted an “all-in sustaining costs
per ounce” non-GAAP performance measure in accordance with the
World Gold Council published in June 2013. The Company believes the
measure more fully defines the total costs associated with
producing gold; however, this performance measure has no
standardized meaning. Accordingly, there may be some variation in
the method of computation of “all-in sustaining costs per ounce” as
determined by the Company compared with other mining companies. In
this context, “all-in sustaining costs per ounce” for the
consolidated Company reflects total mining and processing costs,
corporate and administrative costs, share-based compensation,
exploration costs, sustaining capital, and other operating
costs.
For the purposes of calculating "mine-site
all-in sustaining costs" at the individual mine-sites, the Company
does not include an allocation of corporate and administrative
costs and share-based compensation, as detailed in the
reconciliations below.
Sustaining capital expenditures are expenditures
that do not increase annual gold ounce production at a mine site
and excludes all expenditures at the Company’s development projects
as well as certain expenditures at the Company’s operating sites
that are deemed expansionary in nature. For each mine-site
reconciliation, corporate and administrative costs, and non-site
specific costs are not included in the all-in sustaining cost per
ounce calculation.
All-in sustaining costs per gold ounce is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures presented by other mining companies. It should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.
The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.
Total Cash Costs and All-in Sustaining
Costs per Ounce Reconciliation Tables
The following tables reconciles these non-GAAP
measures to the most directly comparable IFRS measures on a
Company-wide and individual mine-site basis.
Total Cash Costs and
AISC Reconciliation - Company-wide |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
Mining and processing |
$95.4 |
$92.7 |
Royalties |
|
2.3 |
|
3.1 |
Total cash costs |
|
97.7 |
|
95.8 |
Gold
ounces sold |
|
98,466 |
|
126,482 |
Total cash costs per ounce |
$992 |
$757 |
|
|
|
Total cash costs |
$97.7 |
$95.8 |
Corporate and
administrative(1) |
|
6.1 |
|
6.1 |
Sustaining capital
expenditures(2) |
|
22.5 |
|
23.6 |
Share-based compensation |
|
6.3 |
|
2.8 |
Sustaining exploration |
|
0.6 |
|
1.3 |
Accretion of decommissioning
liabilities |
|
0.7 |
|
0.7 |
Total all-in sustaining costs |
$133.9 |
$130.3 |
Gold
ounces sold |
|
98,466 |
|
126,482 |
All-in sustaining costs per ounce |
$1,360 |
$1,030 |
(1) Corporate and administrative
expenses exclude expenses incurred at development
properties.(2) Sustaining capital expenditures are
defined as those expenditures which do not increase annual gold
ounce production at a mine site and exclude all expenditures at
growth projects and certain expenditures at operating sites which
are deemed expansionary in nature. Total sustaining capital for the
period is as follows:
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
Capital expenditures per cash
flow statement |
$87.3 |
|
$72.6 |
|
Less: non-sustaining capital
expenditures at: |
|
|
Young-Davidson |
|
(12.3 |
) |
|
(12.4 |
) |
Island Gold |
|
(24.2 |
) |
|
(15.3 |
) |
Mulatos |
|
(23.1 |
) |
|
(16.8 |
) |
Corporate and other |
|
(5.2 |
) |
|
(4.5 |
) |
Sustaining capital expenditures |
$22.5 |
|
$23.6 |
|
Young-Davidson Total
Cash Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
Mining and processing |
$41.7 |
$40.6 |
Royalties |
|
1.6 |
|
1.3 |
Total cash costs |
$43.3 |
$41.9 |
Gold
ounces sold |
|
51,525 |
|
48,022 |
Total cash costs per ounce |
$840 |
$873 |
|
|
|
Total cash costs |
$43.3 |
$41.9 |
Sustaining capital
expenditures |
|
10.4 |
|
9.5 |
Accretion of decommissioning liabilities |
|
0.1 |
|
0.2 |
Total all-in sustaining costs |
$53.8 |
$51.6 |
Gold
ounces sold |
|
51,525 |
|
48,022 |
Mine-site all-in sustaining costs per ounce |
$1,044 |
$1,075 |
Island Gold Total Cash
Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
Mining and processing |
$16.9 |
$17.2 |
Royalties |
|
0.5 |
|
1.4 |
Total cash costs |
$17.4 |
$18.6 |
Gold
ounces sold |
|
23,368 |
|
39,882 |
Total cash costs per ounce |
$745 |
$466 |
|
|
|
Total cash costs |
$17.4 |
$18.6 |
Sustaining capital
expenditures |
|
7.8 |
|
10.6 |
Accretion of decommissioning liabilities |
|
0.1 |
|
— |
Total all-in sustaining costs |
$25.3 |
$29.2 |
Gold
ounces sold |
|
23,368 |
|
39,882 |
Mine-site all-in sustaining costs per ounce |
$1,083 |
$732 |
Mulatos Total Cash
Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
Mining and processing |
$36.8 |
$34.9 |
Royalties |
|
0.2 |
|
0.4 |
Total cash costs |
$37.0 |
$35.3 |
Gold
ounces sold |
|
23,573 |
|
38,578 |
Total cash costs per ounce |
$1,570 |
$915 |
|
|
|
Total cash costs |
$37.0 |
$35.3 |
Sustaining capital
expenditures |
|
4.3 |
|
3.5 |
Sustaining exploration |
|
0.2 |
|
0.8 |
Accretion of decommissioning liabilities |
|
0.5 |
|
0.5 |
Total all-in sustaining costs |
$42.0 |
$40.1 |
Gold
ounces sold |
|
23,573 |
|
38,578 |
Mine-site all-in sustaining costs per ounce |
$1,782 |
$1,039 |
Earnings Before Interest, Taxes, Depreciation, and
Amortization (“EBITDA”)
EBITDA represents net earnings before interest,
taxes, depreciation, and amortization. EBITDA is an indicator of
the Company’s ability to generate liquidity by producing operating
cash flow to fund working capital needs, service debt obligations,
and fund capital expenditures.
EBITDA does not have any standardized meaning
under IFRS and may not be comparable to similar measures presented
by other mining companies. It should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with IFRS.
The following is a reconciliation of EBITDA to
the consolidated financial statements:
(in
millions) |
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
|
2021 |
Net earnings (loss) |
($8.5 |
) |
$51.2 |
Add back: |
|
|
Impairment charge |
|
38.2 |
|
|
— |
Finance expense |
|
1.2 |
|
|
1.0 |
Amortization |
|
37.8 |
|
|
43.5 |
Deferred income tax expense |
|
(6.5 |
) |
|
18.0 |
Current income tax expense |
|
0.7 |
|
|
5.9 |
EBITDA |
$62.9 |
|
$119.6 |
Additional GAAP Measures
Additional GAAP measures are presented on the
face of the Company’s consolidated statements of comprehensive
income (loss) and are not meant to be a substitute for other
subtotals or totals presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measures. The
following additional GAAP measures are used and are intended to
provide an indication of the Company’s mine and operating
performance:
- Earnings from
operations - represents the amount of earnings before net finance
income/expense, foreign exchange gain/loss, other income/loss, loss
on redemption of senior secured notes and income tax expense
Unaudited Consolidated Statements of
Financial Position, ComprehensiveIncome, and Cash
Flow
ALAMOS GOLD
INC.Consolidated Statements of Financial
Position(Unaudited - stated in millions of United States
dollars)
|
March 31, 2022 |
|
December 31, 2021 |
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$124.2 |
|
|
$172.5 |
|
Equity securities |
|
21.6 |
|
|
|
23.9 |
|
Amounts receivable |
|
27.7 |
|
|
|
31.1 |
|
Income taxes receivable |
|
9.3 |
|
|
|
8.7 |
|
Inventory |
|
213.1 |
|
|
|
199.0 |
|
Other current assets |
|
23.7 |
|
|
|
24.2 |
|
Assets held for sale |
|
54.6 |
|
|
|
Total Current
Assets |
|
474.2 |
|
|
|
459.4 |
|
|
|
|
|
Non-Current
Assets |
|
|
|
Long-term inventory |
|
8.3 |
|
|
|
10.6 |
|
Mineral property, plant and
equipment |
|
3,051.4 |
|
|
|
3,108.5 |
|
Other non-current assets |
|
43.5 |
|
|
|
43.0 |
|
Total Assets |
$3,577.4 |
|
|
$3,621.5 |
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$133.0 |
|
|
$157.4 |
|
Liabilities held for sale |
|
16.3 |
|
|
|
— |
|
Total Current
Liabilities |
|
149.3 |
|
|
|
157.4 |
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
602.0 |
|
|
|
623.2 |
|
Decommissioning
liabilities |
|
103.4 |
|
|
|
102.8 |
|
Other non-current
liabilities |
|
2.5 |
|
|
|
2.5 |
|
Total Liabilities |
|
857.2 |
|
|
|
885.9 |
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,695.0 |
|
|
$3,692.9 |
|
Contributed surplus |
|
88.7 |
|
|
|
89.5 |
|
Accumulated other
comprehensive income |
|
3.5 |
|
|
|
1.9 |
|
Deficit |
|
(1,067.0 |
) |
|
|
(1,048.7 |
) |
Total Equity |
|
2,720.2 |
|
|
|
2,735.6 |
|
Total Liabilities and Equity |
$3,577.4 |
|
|
$3,621.5 |
|
ALAMOS GOLD
INC.Consolidated Statements of Comprehensive
(Loss) Income(Unaudited - stated in millions of United
States dollars, except share and per share amounts)
|
|
For three months ended |
|
|
March 31, |
|
March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
OPERATING
REVENUES |
|
$184.5 |
|
|
$227.4 |
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
Mining and processing |
|
|
95.4 |
|
|
|
92.7 |
|
Royalties |
|
|
2.3 |
|
|
|
3.1 |
|
Amortization |
|
|
37.8 |
|
|
|
43.5 |
|
|
|
|
135.5 |
|
|
|
139.3 |
|
EXPENSES |
|
|
|
|
Exploration |
|
|
4.1 |
|
|
|
2.9 |
|
Corporate and
administrative |
|
|
6.1 |
|
|
|
6.1 |
|
Share-based compensation |
|
|
6.3 |
|
|
|
2.8 |
|
Impairment charge on assets
held for sale |
|
|
38.2 |
|
|
|
— |
|
|
|
|
190.2 |
|
|
|
151.1 |
|
(LOSS) EARNINGS FROM
OPERATIONS |
|
|
(5.7 |
) |
|
|
76.3 |
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
Finance expense |
|
|
(1.2 |
) |
|
|
(1.0 |
) |
Foreign exchange loss |
|
|
— |
|
|
|
(0.2 |
) |
Other loss |
|
|
(7.4 |
) |
|
|
— |
|
(LOSS) EARNINGS FROM
OPERATIONS |
|
($14.3 |
) |
|
$75.1 |
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
Current income tax
expense |
|
|
(0.7 |
) |
|
|
(5.9 |
) |
Deferred income tax recovery
(expense) |
|
|
6.5 |
|
|
|
(18.0 |
) |
NET (LOSS)
EARNINGS |
|
($8.5 |
) |
|
$51.2 |
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
|
|
3.2 |
|
|
|
(1.1 |
) |
Net change in fair value of fuel hedging instruments, net of
taxes |
|
|
0.9 |
|
|
|
0.2 |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
Unrealized (loss) gain on equity securities, net of taxes |
|
|
(2.5 |
) |
|
|
0.2 |
|
Total other
comprehensive (loss) income |
|
$1.6 |
|
|
($0.7 |
) |
COMPREHENSIVE (LOSS)
INCOME |
|
($6.9 |
) |
|
$50.5 |
|
|
|
|
|
|
(LOSS) EARNINGS PER
SHARE |
|
|
|
|
– basic |
|
($0.02 |
) |
|
$0.13 |
|
–
diluted |
|
($0.02 |
) |
|
$0.13 |
|
Weighted average number of
common shares outstanding (000's) |
|
|
|
|
– basic |
|
|
391,913 |
|
|
|
392,776 |
|
– diluted |
|
|
391,913 |
|
|
|
395,958 |
|
ALAMOS GOLD
INC.Consolidated Statements of Cash
Flows(Unaudited - stated in millions of United States
dollars)
|
|
For three months ended |
|
|
March 31, |
|
March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
CASH PROVIDED BY (USED
IN): |
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
Net (loss) earnings for the
period |
|
($8.5 |
) |
|
$51.2 |
|
Adjustments for items not
involving cash: |
|
|
|
|
Amortization |
|
|
37.8 |
|
|
|
43.5 |
|
Impairment charge on assets held for sale |
|
|
38.2 |
|
|
|
— |
|
Foreign exchange loss |
|
|
— |
|
|
|
0.2 |
|
Current income tax expense |
|
|
0.7 |
|
|
|
5.9 |
|
Deferred income tax (recovery) expense |
|
|
(6.5 |
) |
|
|
18.0 |
|
Share-based compensation |
|
|
6.3 |
|
|
|
2.8 |
|
Finance expense |
|
|
1.2 |
|
|
|
1.0 |
|
Other items |
|
|
1.7 |
|
|
|
(3.0 |
) |
Changes in working capital and
taxes paid |
|
|
(24.4 |
) |
|
|
(20.3 |
) |
|
|
|
46.5 |
|
|
|
99.3 |
|
INVESTING
ACTIVITIES |
|
|
|
|
Mineral property, plant and
equipment |
|
|
(87.3 |
) |
|
|
(72.6 |
) |
Capital advances |
|
|
— |
|
|
|
(16.8 |
) |
Proceeds from disposition of
equity securities |
|
|
— |
|
|
|
20.7 |
|
Investment in equity
securities |
|
|
— |
|
|
|
(3.1 |
) |
|
|
|
(87.3 |
) |
|
|
(71.8 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
Dividends paid |
|
|
(8.7 |
) |
|
|
(8.6 |
) |
Proceeds from the exercise of
options |
|
|
0.7 |
|
|
|
— |
|
Repurchase and cancellation of
common shares |
|
|
— |
|
|
|
(1.5 |
) |
|
|
|
(8.0 |
) |
|
|
(10.1 |
) |
Effect of exchange rates on
cash and cash equivalents |
|
|
0.5 |
|
|
|
0.3 |
|
Net (decrease) increase in
cash and cash equivalents |
|
|
(48.3 |
) |
|
|
17.7 |
|
Cash and cash equivalents -
beginning of period |
|
|
172.5 |
|
|
|
220.5 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
|
$124.2 |
|
|
$238.2 |
|
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