Alamos Gold Reports Second Quarter 2021 Results
Alamos Gold Inc. (NYSE: AGI) reported Q2 2021 results with gold production of 114,200 ounces, a 46% year-over-year increase. Young-Davidson and Island Gold performed strongly, with mining rates expected to rise. The company achieved revenues of $195.1 million, a 55% increase, while cash flow from operations was $86.7 million, up 75%. However, a $213.8 million impairment charge was recorded due to the Turkish operations dispute. Alamos ended the quarter with $233.9 million in cash and no debt, continuing capital projects, and aiming for a strong production outlook for the rest of 2021.
- Gold production increased by 46% year-over-year, totaling 114,200 ounces in Q2 2021.
- Revenue reached $195.1 million, a 55% increase from Q2 2020.
- Cash flow from operations rose to $86.7 million, a 75% increase compared to the previous year.
- Young-Davidson and Island Gold continue to exceed production expectations with expected increases in mining rates.
- Strong cash position with $233.9 million in cash and equivalents and no debt.
- Recorded a $213.8 million impairment charge due to ongoing disputes regarding Turkish projects.
- Total cash costs per ounce were $791, above annual guidance primarily due to a strong Canadian dollar.
- A net loss of $172.5 million for the quarter, influenced by the impairment charge.
All amounts are in United States dollars, unless otherwise stated.
TORONTO, July 28, 2021 (GLOBE NEWSWIRE) -- Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its financial results for the quarter ended June 30, 2021.
“Our overall performance through the first half of 2021 has been solid, led by another strong quarter at Young-Davidson which continues to meet or exceed expectations operating from the new lower mine infrastructure. We expect mining rates at Young-Davidson to increase to design capacity in the third quarter driving our consolidated production and free cash flow higher in the second half of the year. Combined with a stronger performance from Mulatos, we remain well positioned to achieve full year guidance,” said John A. McCluskey, President and Chief Executive Officer.
“We had a successful quarter on the exploration front at Young-Davidson and Island Gold with results from both operations highlighting the significant upside potential, in particular at Island Gold where we reported the best hole ever. Our other internal growth initiatives continue to advance, including work on the Phase III expansion at Island Gold, construction of La Yaqui Grande, and permitting at Lynn Lake. All support our strong long term outlook with production potential of approximately 750,000 ounces per year at substantially lower costs by 2025,” Mr. McCluskey added.
Second Quarter 2021
- Production of 114,200 ounces of gold, a
46% increase from the second quarter of 2020, primarily reflecting temporary downtime related to COVID-19 during the prior year period - Young-Davidson produced 45,100 ounces of gold and generated mine-site free cash flow1 of
$18.7 million . Mining rates of 7,504 tonnes per day ("tpd") were in-line with the targeted mining rate of 7,500 tpd, and are expected to increase to the long-term run rate of 8,000 tpd in the third quarter - Island Gold produced 33,200 ounces of gold and generated mine-site free cash flow1 of
$13.7 million , net of growth capital expenditures and capitalized exploration totaling$28.5 million - Sold 107,581 ounces of gold at an average realized price of
$1,814 per ounce for revenues of$195.1 million , a55% increase compared to the second quarter of 2020. Ounces sold were lower than production due to the timing of shipments, with deferred ounces being sold in July - Generated cash flow from operating activities of
$86.7 million ($97.2 million , or$0.25 per share, before changes in working capital1), a75% increase from the prior year period - Free cash flow1 neutral in the quarter, net of
$6.2 million in cash taxes paid in Mexico, higher capital spending mainly related to La Yaqui Grande, and the above noted deferred gold sales. The Company expects stronger free cash flow in the second half of 2021 reflecting higher gold production and sales - Consolidated total cash costs1 of
$791 per ounce, all-in sustaining costs ("AISC")1 of$1,136 per ounce and cost of sales of$1,180 per ounce were higher than annual guidance primarily due to the impact of the stronger than budgeted Canadian dollar, with USD/CAD foreign exchange rate averaging$0.81 :1 relative to the budgeted rate of$0.75 :1 - Filed an investment treaty claim against the Republic of Turkey for expropriation and unfair and inequitable treatment, among other things, with respect to its Turkish projects. As a result, the Company recorded a non-cash, after-tax impairment charge of
$213.8 million in the period, representing the entire carrying value of the Turkish assets - Realized adjusted net earnings1 of
$38.7 million , or$0.10 per share1, which includes adjustments for the non-cash, after-tax impairment charge of the Turkish projects of$213.8 million , unrealized foreign exchange gains of$6.0 million recorded within deferred taxes and foreign exchange, and other losses of$3.4 million - Recorded a net loss of
$172.5 million , or$0.44 per share, inclusive of the after-tax impairment charge of$213.8 million - Ended the quarter with cash and cash equivalents of
$233.9 million and equity securities of$22.4 million . During the quarter, the Company generated$5.1 million in cash on the liquidation of certain equity securities and realized an after-tax gain of$2.7 million (recorded within equity) - Paid a quarterly dividend of
$9.8 million , or US$0.02 5 per share (annualized rate of US$0.10 per share), bringing total dividends distributed through the first half of 2021 to$19.6 million - Announced the best hole drilled to-date at Island Gold, extending high-grade mineralization down-plunge from existing Mineral Resources
- Subsequent to quarter-end, provided an exploration update at Young-Davidson extending gold mineralization below existing Mineral Reserves and Resources and intersecting higher grades in the hanging wall and footwall of the deposit
- Development activities continued to ramp up at La Yaqui Grande, with pre-stripping reaching budgeted rates of over 55,000 tpd. La Yaqui Grande remains on track to achieve commercial production in the third quarter of 2022
- Published the Company’s 2020 Environmental, Social and Corporate Governance (ESG) Report
.(1) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
Highlight Summary
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Financial Results (in millions) | ||||||||||||||||
| Operating revenues | ||||||||||||||||
| Cost of sales (1) | ||||||||||||||||
| (Loss) Earnings from operations | ( | ) | ( | ) | ||||||||||||
| (Loss) Earnings before income taxes | ( | ) | ( | ) | ||||||||||||
| Net (loss) earnings | ( | ) | ( | ) | ( | ) | ||||||||||
| Adjusted net earnings (2) | ||||||||||||||||
| Earnings before interest, depreciation and amortization (2) | ||||||||||||||||
| Cash provided by operations before working capital and cash taxes(2) | ||||||||||||||||
| Cash provided by operating activities | ||||||||||||||||
| Capital expenditures (sustaining) (2) | ||||||||||||||||
| Capital expenditures (growth) (2) (3) | ||||||||||||||||
| Capital expenditures (capitalized exploration) (4) | ||||||||||||||||
| Free cash flow (2) | ( | ) | ( | ) | ( | ) | ||||||||||
| Operating Results | ||||||||||||||||
| Gold production (ounces) | 114,200 | 78,400 | 240,000 | 189,300 | ||||||||||||
| Gold sales (ounces) | 107,581 | 74,605 | 234,063 | 186,459 | ||||||||||||
| Per Ounce Data | ||||||||||||||||
| Average realized gold price | ||||||||||||||||
| Average spot gold price (London PM Fix) | ||||||||||||||||
| Cost of sales per ounce of gold sold (includes amortization) (1) | ||||||||||||||||
| Total cash costs per ounce of gold sold (2) | ||||||||||||||||
| All-in sustaining costs per ounce of gold sold (2) | ||||||||||||||||
| Share Data | ||||||||||||||||
| (Loss) Earnings per share, basic and diluted | ( | ) | ( | ) | ||||||||||||
| Adjusted earnings per share, basic and diluted(2) | ||||||||||||||||
| Weighted average common shares outstanding (basic) (000’s) | 392,759 | 391,076 | 392,762 | 391,208 | ||||||||||||
| Financial Position (in millions) | ||||||||||||||||
| Cash and cash equivalents(5) | ||||||||||||||||
(1) Cost of sales includes mining and processing costs, royalties, COVID-19 costs 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. 2020 growth capital excludes the Island Gold royalty repurchase completed in March 2020 for
(4) Includes capitalized exploration at Island Gold, Young-Davidson and Mulatos.
(5) Comparative cash and cash equivalents balance as at December 31, 2020.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Gold production (ounces) (1) | ||||||||||||
| Young-Davidson | 45,100 | 23,100 | 93,100 | 51,800 | ||||||||
| Island Gold | 33,200 | 19,400 | 75,400 | 58,200 | ||||||||
| Mulatos | 35,900 | 35,900 | 71,500 | 78,500 | ||||||||
| Gold sales (ounces) | ||||||||||||
| Young-Davidson | 45,284 | 22,440 | 93,306 | 51,345 | ||||||||
| Island Gold | 33,632 | 18,560 | 73,514 | 57,687 | ||||||||
| Mulatos | 28,665 | 33,605 | 67,243 | 77,427 | ||||||||
| Cost of sales (in millions)(2) | ||||||||||||
| Young-Davidson | ||||||||||||
| Island Gold | ||||||||||||
| Mulatos | ||||||||||||
| Cost of sales per ounce of gold sold (includes amortization) | ||||||||||||
| Young-Davidson | ||||||||||||
| Island Gold | ||||||||||||
| Mulatos | ||||||||||||
| Total cash costs per ounce of gold sold (3) | ||||||||||||
| Young-Davidson | ||||||||||||
| Island Gold | ||||||||||||
| Mulatos | ||||||||||||
| Mine-site all-in sustaining costs per ounce of gold sold (3),(4) | ||||||||||||
| Young-Davidson | ||||||||||||
| Island Gold | ||||||||||||
| Mulatos | ||||||||||||
| Capital expenditures (sustaining, growth and capitalized exploration) (in millions)(3) | ||||||||||||
| Young-Davidson(5) | ||||||||||||
| Island Gold (6) | ||||||||||||
| Mulatos(7) | ||||||||||||
| Other | ||||||||||||
(1) Production for the three and six months ended June 30, 2020 included nil and 800 ounces, respectively, from El Chanate which transitioned to the reclamation phase of the mine life in 2019. There was no production from El Chanate for the three and six months ended June 30, 2021.
(2) Cost of sales includes mining and processing costs, royalties, COVID-19 costs, and amortization.
(3) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
(4) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses.
(5) Includes capitalized exploration at Young-Davidson of
(6) Includes capitalized exploration at Island Gold of
(7) Includes capitalized exploration at Mulatos of
Environment, Social and Governance Summary Performance
Health and Safety
- Recordable injury frequency rate1 of 2.80 in the quarter and 2.38 year-to-date, a
6% increase from 2.25 in the first half of 2020 - Lost time injury frequency rate1 of 0.08 in the quarter and 0.17 year-to-date, a
21% increase from 0.14 in the first half of 2020 - Performed over 50,000 COVID-19 tests to-date on employees, contractors and visitors as part of an enhanced screening program
During the second quarter of 2021, the recordable injury frequency rate increased with 35 recordable injuries reported up from 21 in the first quarter of 2021. One lost time injury was reported in the quarter, down from three in the first quarter of 2021, resulting in an overall improvement to the Company’s lost time injury frequency rate. 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. Throughout the quarter, the Company continued to advance implementation of its Sustainability Performance Management Framework, which includes standards specific to safety leadership and managing higher-risk activities. The Company’s overarching commitment is to have all employees and contractors return Home Safe Every Day.
The World Health Organization declared COVID-19 a pandemic on March 11, 2020. The Company responded rapidly and proactively and implemented several initiatives to help protect the health and safety of our employees, their families and the communities in which we operate.
Specifically, each mine site activated established crisis management plans and developed site-specific plans that have enabled them to meet and respond to changing conditions associated with COVID-19. The Company has adopted the advice of public health authorities and is adhering to government regulations with respect to COVID-19 in the jurisdictions in which it operates.
The following measures have been instituted at sites to prevent the potential spread of the virus:
- Medical screening for all personnel prior to entry to site for symptoms of COVID-19
- Testing of personnel at all operating sites prior to starting their work rotation
- Vaccinations offered at Island Gold for employees
- Training on proper hand hygiene and social distancing
- Remote work options have been implemented for eligible employees
- Social distancing practices have been implemented for all meetings, huddles and transportation
- Mandatory use of personal protective equipment for employees where social distancing is not practicable
- Rigid camp and site hygiene protocols have been instituted and are being followed
- Elimination of all non-essential business travel
- In addition, since the COVID-19 pandemic began the Company’s teams in Canada, Mexico, and Turkey have donated their time, medical supplies, and funds to help combat the effects and spread of the virus
COVID 19 - Impact on Operations
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 continue to incur additional costs related to testing of personnel, lodging and transportation, which have been included in mining and processing costs. These incremental costs have increased total cash costs globally by approximately
Environment
- Zero significant environmental incidents in the second quarter and year-to-date
- Advanced permitting of the Lynn Lake Project and the Phase III expansion of Island Gold – a project that will significantly increase automation and reduce fleet diesel usage resulting in
35% lower life-of-mine greenhouse gas ("GHG") emissions - Nearing the completion of the power line which will connect the Mulatos Mine to grid power and eliminate the need for site diesel power generation, reducing GHG emissions by
12% annually
Six minor hydrocarbon spills occurred during the second quarter, including one at each of Young-Davidson and 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
- Donated time, medical supplies, food supplies and funds across select operations and projects to help combat the effects and spread of COVID-19 in local communities
- Organized several community health initiatives during the second quarter in collaboration with the Matarachi community, located near the Mulatos mine. These included a COVID-19 vaccination clinic, nutrition program, visual health program, first aid training, and a cancer screening campaign
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 has continued through the COVID-19 pandemic, with appropriate health and safety protocols.
Governance and Disclosure
- Published the Company’s 2020 Environmental, Social and Corporate Governance (ESG) Report which is available on the Company's website: www.alamosgold.com
- Issued the Company’s 2020 Extractive Sector Transparency Measures Act (ESTMA) Report, outlining payments made to governments in Canada and abroad
- Published the Company’s 2020 ESG Summary Tables in July 2021
- Compiled data for the Carbon Disclosure Project’s 2021 Climate Change Questionnaire, which will be submitted in the third quarter of 2021
Alamos maintains the highest standards of corporate governance to ensure that corporate decision-making reflects its values, including the Company’s commitment to sustainable development. During the quarter the Company continued to advance its implementation of the Responsible Gold Mining Principles, developed by the World Gold Council as a framework that sets clear expectations as to what constitutes responsible gold mining.
(1) Frequency rate is calculated as incidents per 200,000 hours worked.
Outlook and Strategy
| 2021 Guidance | ||||||||||
| Young-Davidson | Island Gold | Mulatos | Other (2) | Total | ||||||
| Gold production (000’s ounces) | 190 - 205 | 130 - 145 | 150 - 160 | 470 - 510 | ||||||
| Cost of sales, including amortization (in millions)(4) | — | $540 | ||||||||
| Cost of sales, including amortization ($ per ounce)(4) | — | $1,105 | ||||||||
| Total cash costs ($ per ounce)(1) | — | |||||||||
| All-in sustaining costs ($ per ounce)(1) | ||||||||||
| Mine-site all-in sustaining costs ($ per ounce)(1)(3) | — | |||||||||
| Amortization costs ($ per ounce)(1) | — | $370 | ||||||||
| Capital expenditures (in millions) | ||||||||||
| Sustaining capital(1) | — | |||||||||
| Growth capital(1) | $ | 10 | ||||||||
| Total Sustaining and Growth Capital(1) | $ | 10 | ||||||||
| Capitalized exploration(1) | — | $ | 7 | $34 | ||||||
| Total capital expenditures and capitalized exploration(1) | $ | 17 | ||||||||
(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release and associated MD&A for a description of these measures.
(2) Includes growth capital and capitalized exploration at the Company's development projects (Turkey, Lynn Lake, Esperanza and Quartz Mountain).
(3) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share based compensation expenses to the mine sites.
(4) Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of guidance.
The Company’s objective is to operate a sustainable business model that can support growing returns to all stakeholders over the long-term through growing production, expanding margins, and increasing profitability. This includes a balanced approach to capital allocation focused on generating strong ongoing free cash flow while re-investing in high-return internal growth opportunities and supporting higher returns to shareholders.
The Company continues to deliver on its key objectives and remains well positioned to meet full year guidance with production totaling 240,000 ounces of gold through the first half of 2021. The strong performance was led by Young-Davidson with underground mining rates continuing to meet or exceed expectations. Total cash costs and all-in sustaining costs (“AISC”) in the second quarter and first half of the year were above annual guidance reflecting the impact of the stronger than budgeted Canadian dollar. Full year cost guidance was based on a USD/CAD foreign exchange rate of
Additionally, the Company continues to advance its high-return organic growth initiatives. Construction of the higher grade La Yaqui Grande project remains on track for commercial production in the third quarter of 2022, while development activities on the Phase III expansion at Island Gold continue to ramp up. In parallel, larger exploration programs at Island Gold and Young-Davidson are successfully extending gold mineralization, highlighting the strong potential for Mineral Reserve and Resource growth at both operations. This included the best hole ever drilled at Island Gold with high-grade mineralization extended down-plunge from existing Mineral Resources in Island East over significantly greater widths. The Company expects to continue to generate solid free cash flow while reinvesting in these high return growth initiatives and supporting its higher dividend, which has increased nearly
Gold production in the third quarter is expected to increase to between 115,000 and 125,000 ounces, driven by higher mining rates and grades at Young-Davidson, and increased production at Mulatos. Total cash costs and AISC are expected to remain at similar levels to the second quarter, before decreasing in the fourth quarter.
Production at Young-Davidson is expected to increase by
Island Gold remains well positioned to achieve full year guidance with first half production of 75,400 ounces. As previously guided, grades decreased in the second quarter, and are expected to remain at similar levels in the third quarter. Full year grades are expected to be approximately 10 g/t Au. A total of
The Mulatos District produced 71,500 ounces in the first half of the year. With stronger production expected in the second half of 2021, the operation remains on track to meet full year guidance of between 150,000 to 160,000 ounces. Cerro Pelon, the Mulatos pits, and surface stockpiles will supply all production in 2021. In parallel, the Company continues to advance construction of the high grade La Yaqui Grande project, which remains on track for commercial production in third quarter of 2022. La Yaqui Grande is expected to keep production in the Mulatos District at approximately 150,000 ounces per year at significantly lower costs.
The Company continues to advance permitting of the Lynn Lake project, with approval of its Environmental Impact Statement ("EIS") expected mid-2022. The 2021 capital budget for Lynn Lake is
In April, the Company announced that its Netherlands wholly-owned subsidiaries would proceed with 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 registered with the International Centre for Settlement of Investment Disputes (World Bank Group) under the Netherlands-Turkey Bilateral Investment Treaty on June 7, 2021, and is expected to exceed
The Company's liquidity position remains strong, ending the second quarter with
Second Quarter 2021 Results
Young-Davidson Financial and Operational Review
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Gold production (ounces) | 45,100 | 23,100 | 93,100 | 51,800 | ||||||||||
| Gold sales (ounces) | 45,284 | 22,440 | 93,306 | 51,345 | ||||||||||
| Financial Review (in millions) | ||||||||||||||
| Operating Revenues | ||||||||||||||
| Cost of sales (1) | ||||||||||||||
| Earnings (loss) from operations | ( | ) | ( | ) | ||||||||||
| Cash provided by operating activities | ||||||||||||||
| Capital expenditures (sustaining) (2) | ||||||||||||||
| Capital expenditures (growth) (2) | ||||||||||||||
| Capital expenditures (capitalized exploration) (2) | $— | $— | ||||||||||||
| Mine-site free cash flow (2) | ( | ) | ( | ) | ||||||||||
| Cost of sales, including amortization per ounce of gold sold (1) | ||||||||||||||
| Total cash costs per ounce of gold sold (2) | ||||||||||||||
| Mine-site all-in sustaining costs per ounce of gold sold (2),(3) | ||||||||||||||
| Underground Operations | ||||||||||||||
| Tonnes of ore mined | 682,857 | 244,382 | 1,384,019 | 634,749 | ||||||||||
| Tonnes of ore mined per day | 7,504 | 2,686 | 7,647 | 3,488 | ||||||||||
| Average grade of gold (4) | 2.22 | 2.50 | 2.23 | 2.30 | ||||||||||
| Metres developed | 2,868 | 2,894 | 6,220 | 6,095 | ||||||||||
| Mill Operations | ||||||||||||||
| Tonnes of ore processed | 688,127 | 395,289 | 1,421,348 | 860,033 | ||||||||||
| Tonnes of ore processed per day | 7,562 | 4,344 | 7,853 | 4,725 | ||||||||||
| Average grade of gold (4) | 2.22 | 1.85 | 2.22 | 1.89 | ||||||||||
| Contained ounces milled | 49,134 | 23,511 | 101,670 | 52,361 | ||||||||||
| Average recovery rate | 92 | % | 93 | % | 92 | % | 92 | % | ||||||
(1) Cost of sales includes mining and processing costs, royalties and amortization.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
(3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t Au").
Young-Davidson produced 45,100 ounces of gold in the second quarter of 2021, a significant increase from the prior year period due to the shutdown of the Northgate shaft to complete the lower mine expansion in the second quarter of 2020. First half production of 93,100 ounces was also significantly higher than the comparable period in the prior year for similar reasons.
Underground mining rates have met or exceeded targeted rates since the completion of the lower mine expansion in July 2020. Mining rates averaged 7,504 tpd in the second quarter and 7,647 tpd for the first half of 2021, meeting and exceeding the first half target of 7,500 tpd, respectively. With an additional mining horizon being added, underground mining rates are expected to increase to the long-term rate of 8,000 tpd during the third quarter.
Average mined grades of 2.22 g/t Au in the quarter were at the lower end of the range for full year guidance due to mine sequencing. Grades mined are expected to increase through the remainder of the year with the highest grades being in the fourth quarter. Full year grades are expected to average close to Young-Davidson's Mineral Reserve grade. Mill throughput averaged 7,562 tpd in the second quarter, consistent with tonnes mined. Mill recoveries averaged
Young-Davidson remains well positioned to achieve full year guidance with higher mining rates and grades expected to drive production higher and costs lower in the second half of 2021. This is expected to contribute stronger mine-site free cash flow for the remainder of 2021 assuming an
Financial Review
Second quarter revenues of
Cost of sales (which includes mining and processing costs, royalties, and amortization expense) of
Total cash costs of
Capital expenditures in the quarter included
Young-Davidson has consistently met or exceeded expectations since transitioning to the new lower mine infrastructure, driving strong free cash flow growth. This included mine-site free cash flow of
Island Gold Financial and Operational Review
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Gold production (ounces) | 33,200 | 19,400 | 75,400 | 58,200 | ||||||||
| Gold sales (ounces) | 33,632 | 18,560 | 73,514 | 57,687 | ||||||||
| Financial Review (in millions) | ||||||||||||
| Operating Revenues | ||||||||||||
| Cost of sales (1) | ||||||||||||
| Earnings from operations | ||||||||||||
| Cash provided by operating activities | ||||||||||||
| Capital expenditures (sustaining) (2) | ||||||||||||
| Capital expenditures (growth) (2) | ||||||||||||
| Capital expenditures (capitalized exploration) (2) | ||||||||||||
| Capital advances | $— | $— | ||||||||||
| Mine-site free cash flow (2) | ||||||||||||
| Cost of sales, including amortization per ounce of gold sold (1) | ||||||||||||
| Total cash costs per ounce of gold sold (2) | ||||||||||||
| Mine-site all-in sustaining costs per ounce of gold sold (2),(3) | ||||||||||||
| Underground Operations | ||||||||||||
| Tonnes of ore mined | 117,673 | 74,485 | 220,950 | 187,366 | ||||||||
| Tonnes of ore mined per day ("tpd") | 1,293 | 819 | 1,221 | 1,029 | ||||||||
| Average grade of gold (4) | 8.52 | 7.28 | 10.75 | 9.93 | ||||||||
| Metres developed | 1,907 | 931 | 3,858 | 2,883 | ||||||||
| Mill Operations | ||||||||||||
| Tonnes of ore processed | 111,898 | 73,708 | 221,183 | 179,635 | ||||||||
| Tonnes of ore processed per day | 1,230 | 810 | 1,222 | 987 | ||||||||
| Average grade of gold (4) | 8.85 | 8.32 | 10.91 | 10.33 | ||||||||
| Contained ounces milled | 31,835 | 19,714 | 77,619 | 59,659 | ||||||||
| Average recovery rate | 97 | % | 96 | % | 97 | % | 97 | % | ||||
(1) Cost of sales includes mining and processing costs, royalties, COVID-19 costs and amortization.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
(3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t Au").
Island Gold produced 33,200 ounces in the second quarter of 2021, a
Underground mining rates averaged a record 1,293 tpd in the second quarter, a
Mill throughput averaged a record 1,230 tpd in the second quarter, and 1,222 tpd during first half of the year, both in line with full year guidance and current permitted levels. Excess ore mined during the period was stockpiled for future processing. Mill recoveries averaged
Financial Review
Island Gold generated revenues of
Cost of sales (includes mining and processing costs, royalties and amortization expense) of
Total cash costs of
Total capital expenditures were
Island Gold generated mine-site free cash flow of
Mulatos Financial and Operational Review
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Gold production (ounces) | 35,900 | 35,900 | 71,500 | 78,500 | ||||||||||
| Gold sales (ounces) | 28,665 | 33,605 | 67,243 | 77,427 | ||||||||||
| Financial Review (in millions) | ||||||||||||||
| Operating Revenues | ||||||||||||||
| Cost of sales (1) | ||||||||||||||
| Earnings from operations | ||||||||||||||
| Cash provided by operating activities | ||||||||||||||
| Capital expenditures (sustaining) (2) | ||||||||||||||
| Capital expenditures (growth) (2) | ||||||||||||||
| Capital expenditures (capitalized exploration) (2) | ||||||||||||||
| Capital advances | $— | $— | ||||||||||||
| Mine-site free cash flow (2) | ( | ) | ( | ) | ||||||||||
| Cost of sales, including amortization per ounce of gold sold (1) | ||||||||||||||
| Total cash costs per ounce of gold sold (2) | ||||||||||||||
| Mine site all-in sustaining costs per ounce of gold sold (2),(3) | ||||||||||||||
| Open Pit Operations | ||||||||||||||
| Tonnes of ore mined - open pit (4) | 800,137 | 1,132,423 | 1,711,090 | 3,050,887 | ||||||||||
| Total waste mined - open pit (6) | 2,426,047 | 1,151,851 | 4,887,970 | 3,490,768 | ||||||||||
| Total tonnes mined - open pit | 3,226,184 | 2,284,275 | 6,599,060 | 6,541,655 | ||||||||||
| Waste-to-ore ratio (operating) | 2.03 | 0.81 | 1.53 | 0.67 | ||||||||||
| Crushing and Heap Leach Operations | ||||||||||||||
| Tonnes of ore stacked | 1,899,338 | 1,410,888 | 3,733,124 | 3,444,000 | ||||||||||
| Average grade of gold processed (5) | 1.11 | 1.41 | 1.02 | 1.32 | ||||||||||
| Contained ounces stacked | 67,697 | 64,111 | 122,420 | 146,044 | ||||||||||
| Average recovery rate | 53 | % | 56 | % | 58 | % | 54 | % | ||||||
| Ore crushed per day (tonnes) - combined | 20,900 | 15,500 | 20,600 | 18,923 | ||||||||||
(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.
(5) Grams per tonne of gold ("g/t Au").
(6) Total waste mined includes operating waste and capitalized stripping.
Mulatos produced 35,900 ounces in the second quarter, in line with the prior year quarter, reflecting higher tonnes stacked on the leach pad, offset by lower grades mined and stacked. For the first half of 2021, Mulatos produced 71,500 ounces, a
Tonnes of ore mined in the second quarter decreased compared to the prior year period, with mining activities within the main Mulatos pit focused on pre-stripping the El Salto portion of the pit and increased mining rates within the Cerro Pelon pit. Total tonnes mined is exclusive of pre-stripping activities at La Yaqui Grande, where an additional 5.1 million tonnes of waste was mined in the quarter.
Total crusher throughput in the second quarter averaged 20,900 tpd for a total of 1,899,338 tonnes stacked at a grade of 1.11 g/t Au, both consistent with annual guidance. Tonnes stacked in the quarter exceeded tonnes mined due to the processing of lower recovery surface stockpiles, which were mined in previous years. Grades stacked were
Financial Review
Revenues of
Cost of sales (includes mining and processing costs, royalties and amortization expense) of
Capital spending totaled
Mulatos generated mine-site free cash flow of
Second Quarter 2021 Development Activities
Island Gold (Ontario, Canada)
Phase III Expansion Study
On July 14, 2020 the Company reported results of the positive Phase III expansion study conducted on its Island Gold mine. Based on the results of the study, the Company is proceeding with an expansion of the operation to 2,000 tpd. This follows a detailed evaluation of several scenarios which demonstrated the shaft expansion as the best option, having the strongest economics, being the most efficient and productive, and the best positioned to capitalize on further growth in Mineral Reserves and Resources. The Phase III expansion is expected to drive average annual gold production to 236,000 ounces per year starting in 2025 upon completion of the shaft, representing a
The Phase III expansion study was based on Mineral Reserves and Resources at Island Gold as of December 31, 2019 and does not include the significant growth over the past year as outlined in the 2020 year end Mineral Reserve and Resource statement. Incorporating this growth is expected to improve already attractive economics. This growth included an
The Company is currently focused on permitting and detailed engineering of the shaft and associated infrastructure, including the hoisting plant and surface civil works. Project tendering and contract awarding remains ongoing, with procurement of long lead time items underway. Phase III permitting is anticipated to be completed in 2022 with the pre-sink for the shaft expected to begin in mid-2022.
During the second quarter of 2021, the Company spent
Mulatos District (Sonora, Mexico)
La Yaqui Grande
On July 28, 2020, the Company reported results of an internal study completed on its fully permitted La Yaqui Grande project located in the Mulatos District in Sonora, Mexico. La Yaqui Grande is located approximately 7 kilometres (straight line) from the existing Mulatos operation and adjacent to the past producing La Yaqui Phase I operation. As with La Yaqui Phase I, La Yaqui Grande is being developed with an independent heap leach pad and crushing circuit.
La Yaqui Grande is expected to produce an average of 123,000 ounces of gold per year starting in the third quarter of 2022 at mine-site all-in sustaining costs of
Construction activities continued to ramp up in the second quarter of 2021 with the project on track to achieve commercial production in the third quarter of 2022. Capital spending increased to
Second quarter highlights at La Yaqui Grande included:
- Safely advanced construction activities with approximately 800 employees and contractors on rotation and more than 1,000,000 hours worked in the first half of 2021 with no lost time injuries
- Over five million tonnes of waste mined with mining rates increasing to average over 56,000 tpd in the quarter. Mining rates are expected to increase to over 60,000 tpd in the second half of 2021
- Crusher area concrete poured and all major crushing equipment has been received at site
- Leach pad construction over
60% complete, access road from the pit to the leach pad area complete facilitating waste to be used in construction of the pad - Installation of liners in the pregnant and barren solution ponds underway
- Initiated procurement on long lead items for the water treatment plant
La Yaqui Grande Heap Leach Facility
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/336d9431-5ee1-47d5-916d-fbc652d05553
La Yaqui Grande – Open Pit Pre-stripping
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/8f5a63b0-01ce-423c-8211-60e3fcac76da
Lynn Lake (Manitoba, Canada)
The Company released a positive Feasibility Study on the Lynn Lake project in December 2017 outlining average annual production of 143,000 ounces over a 10 year mine life at average mine-site all-in sustaining costs of
The project economics based on the 2017 Feasibility Study at a
Development spending (excluding exploration) was
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 or a timeline for renewal of its licenses.
Alamos has had an active presence in Turkey since 2010. Over that time frame, the Company’s Turkish operations have met all legal and regulatory requirements, complied with best practices relating to sustainable development including meeting the highest environmental and social management standards, created hundreds of jobs, and developed trusting relationships with the local communities. Alamos and the Subsidiaries have invested over
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.
Alamos and the Subsidiaries are being represented by the leading Canadian law firm Torys LLP, with a team that includes John Terry and former Canadian Supreme Court Justice, the Hon. Frank Iacobucci. The Company is also being supported by its strategic advisor John Baird, former Canadian Minister of Foreign Affairs and Senior Advisor to Bennett Jones LLP.
As a result, the Company incurred an after-tax impairment charge of
In addition, the Company incurred approximately
Second Quarter 2021 Exploration Activities
Island Gold (Ontario, Canada)
The 2021 exploration drilling program is focused on expanding high-grade mineralization in the down-plunge and lateral extensions of the Island Gold deposit with the objective of adding new near-mine Mineral Resources across the two kilometre long Island Gold deposit. The Company continued its strong track record of exploration success and Mineral Reserve and Resource growth in 2020, with an
Surface diamond drilling programs continued with four drill rigs operating in the second quarter. This included three surface directional rigs focused on mine exploration, and one focused on testing regional exploration targets. One underground exploration diamond drill operated at the beginning of the quarter and two additional drill rigs were added in May to focus on underground directional drilling. A total of 4,654 m of surface directional drilling, 4,132 m of surface regular drilling, 2,656 m of underground directional drilling and 2,610 m of standard underground exploration drilling was completed in the second quarter of 2021.
Surface exploration drilling
A total of 4,654 m of surface directional drilling was completed in seven holes during the second quarter as part of the surface directional drilling program. Directional drilling targeted areas peripheral to the Inferred Mineral Resource blocks below the 1,000 m level, with drill hole spacing ranging from 75 m to 100 m. The area that was targeted by the surface directional drill program extends approximately 2,000 m in strike length between the 1,000 m and 1,500 m elevation below surface. A total of 4,132 m of regional diamond drilling program was completed in seven holes within the quarter. The drill rig was transferred to the surface directional program in June. Drilling for the regional program will resume in the third quarter.
Previously reported (June 15, 2021) highlights from the second quarter surface exploration drilling program in Island East (E1E-Zone) include:
- 71.21 g/t Au (39.24 g/t cut) over 21.33 m (MH25-08); and
- 34.87 g/t Au (34.87 g/t cut) over 5.98 m (MH25-07).
Drillhole MH25-08 (71.21 g/t Au (39.24 g/t cut) over 21.33 m) intersected significantly wider, high-grade mineralization 45 m and 80 m from previously reported drillholes MH25-04 (28.97 g/t Au (27.96 g/t cut) over 21.76 m) and MH25-05 (54.18 g/t Au (33.12 g/t cut) over 6.54 m), respectively.
In addition, drillhole MH25-08 extended high-grade mineralization 20 m east of the existing Inferred Mineral Resource block which contained 1,309,700 ounces, grading 18.26 g/t Au (2.23 million tonnes) as of December 31, 2020. Using the cut weighted gold grade for metal factor calculation, drillhole MH25-08 (71.21 g/t Au (39.24 g/t cut) over 21.33 m) is the best hole drilled to date at Island Gold in terms of gold content for a drill hole intersect. Drillhole MH25-07 (34.87 g/t Au (34.87 g/t cut) over 5.98 m) also further extended high-grade mineralization at Island East, intersecting high-grade mineralization 60 m above MH25-04, and 40 m from the nearest Inferred Mineral Resource block.
Underground exploration drilling
During the second quarter of 2021, 2,656 m of underground directional drilling was completed in six holes from the 620 and 740 levels. A total of 2,610 m of standard underground exploration drilling was completed in 15 holes from the 620, 740 and 840 levels. The objective of the underground drilling is to identify new Mineral Resources close to existing Mineral Resource or Reserve blocks. A total of 103 m of underground exploration drift development was completed on the 400, 490 and 790 levels during the second quarter of 2021.
Previously reported (June 15, 2021) highlights from the second quarter underground exploration drilling program in Island East and West (E1E-Zone) include:
Island East:
- 8.88 g/t Au (8.88 g/t cut) over 8.45 m (840-584-03); and
- 16.75 g/t Au (16.75 g/t cut) over 2.64 m (840-590-10).
Island West:
- 31.58 g/t Au (28.74 g/t cut) over 2.43 m (740-471-41).
Total exploration expenditures during the second quarter were
Young-Davidson (Ontario, Canada)
A total of
Since commencing underground exploration drilling in 2020, the program has been successful in extending syenite-hosted gold mineralization 220 m below the previous Mineral Resource (year-end 2019), contributing to an increase in Inferred Mineral Resources to 0.2 million ounces in the year-end 2020 Mineral Reserve and Resource update. Exploration drilling in 2021 has further extended syenite-hosted gold mineralization another 150 m below existing Mineral Resources and Reserves (YMEX21-8960-021).
High-grade gold mineralization was also intersected in structures both within the hanging wall ultramafic-mafic stratigraphy, and within the footwall sediments. Further drilling will be completed to evaluate the geometry and continuity of the mineralized structures. These initial exploration results outside of the Young-Davidson syenite highlight the significant near-mine exploration potential at Young-Davidson.
Previously reported (July 12, 2021) highlights from the 2020 and 2021 underground exploration drilling program at Young-Davidson include:
- 5.32 g/t Au (3.35 g/t cut) over 39.20 m (34.57 m true width) including 21.96 g/t Au (9.78 g/t cut) over 6.20 m (5.47 m true width) (YMEX20-8960-008)1;
- 5.42 g/t Au over 12.75 m (11.25 m true width) including 32.30 g/t Au over 0.65 m (0.57 m true width) (YMEX21-8960-016);
- 4.36 g/t Au over 9.00 m (YMEX21-8960-021);
- 5.79 g/t Au over 13.70 m including 24.14 g/t Au over 1.85m (YMEX20-8960-014); and
- 8.32 g/t Au over 6.30 m (3.84 m true width) including 22.50 g/t Au over 1.20 m (0.73 m true width) (YMEX20-8960-011)1.
1 Drillhole completed in 2020 and included in year-end 2020 Mineral Reserves and Mineral Resources for Young-Davidson.
Drillhole YMEX20-8960-008 intersected 5.32 g/t Au (3.35 g/t cut) over 39.20 m (34.57 m true width) including 21.96 g/t Au (9.78 g/t cut) over 6.20 m (5.47 m true width) within syenite. The syenite remains open to the northwest and southeast, as well as down-dip, and within the 90 m gap above this intersection and below the Mineral Reserve and Mineral Resource above.
Drillhole YMEX20-8960-014 intersected a high-grade structure 200 m south of hanging wall contact of the syenite within ultramafic-mafic lithologies beyond the limits of any previous drilling. This structure returned 5.79 g/t over 13.70 m including 24.14 g/t Au over 1.85m.
Drillhole YMEX21-8960-016 intersected 5.42 g/t Au over 12.75 m (11.25 m true width) including 32.30 g/t Au over 0.65m (0.57 m true width) within syenite. Mineralization within the syenite remains open in this area to the southeast and down-dip.
Drillhole YMEX20-8960-011 intersected 8.32 g/t Au over 6.30 m (3.84 m true width), including 22.5 g/t over 1.20 m (0.73 m true width) in a shear zone developed within the footwall sediments, 100 m from the contact with the syenite.
Exploration spending totaled
Mulatos District (Sonora, Mexico)
The Company has a large exploration package covering 28,972 hectares with the majority of past exploration efforts focused around the Mulatos mine. Exploration has moved beyond the main Mulatos pit area and is focused on earlier stage prospects throughout the wider district.
During the second quarter of 2021, exploration activities were focused on the near-mine, Puerto del Aire trend with 2,640 m of drilling completed in eleven drill holes. Regional targets at Carricito and Los Ciegos were also tested with nine holes completed totaling 2,428 m. Exploration activities continued on the Los Venados property, pursuant to an option agreement with Aloro Mining, with sixteen drill holes completed in the quarter for a total of 1,822 m, and surface mapping and sampling is ongoing. A restart of drilling in the El Halcon area completed six drillholes for 966 m. During the second quarter, the Company incurred
Lynn Lake (Manitoba, Canada)
In the second quarter of 2021, 9,396 m of drilling was completed in forty-four holes at MacLellan, Gordon, Burnt Timber, and on two regional targets. The 2021 summer field season also commenced, with the focus on continuing to advance a pipeline of prospective regional exploration targets. Exploration spending totaled
Review of Second Quarter Financial Results
During the second quarter of 2021, the Company sold 107,581 ounces of gold for revenue of
The average realized gold price in the second quarter was
Cost of sales were
Mining and processing costs were
Consolidated total cash costs of
Royalty expense was
Amortization of
Impairment charge
In accordance with the Company’s accounting policy, assets are tested for impairment when events or changes in circumstances suggest that the carrying amount may not be recoverable. The continued failure by the Republic of Turkey to renew the mining licenses since their expiry, and the continued failure of discussions with the Republic of Turkey to date to resolve the situation, has resulted in the decision to proceed with a bilateral investment treaty claim. The Company has concluded that an impairment trigger for accounting purposes existed in the second quarter.
The recoverable amount relating to mineral properties has been determined as nil, based on both the Fair Value Less Cost of Disposal (“FVLCD”) and Value in Use (“VIU”) methods. The FVLCD is considered to be nil on the basis that no other market participant would likely be able to progress the Project in the face of the Treaty claim and the current state of the Company’s mining licenses. A market approach was used in estimating the FVLCD as an income approach would not be considered to provide a reliable estimate of fair value. The VIU of the Project is also considered to be nil due to the current probability of resolving the dispute with the Republic of Turkey, and therefore the likelihood of the Project being developed, being now considered to be remote, and therefore no future positive cash flows can be expected to be generated.
As a result, the Company incurred an impairment charge of
The Company recognized a loss from operations of
The Company reported a net loss of
Associated Documents
This press release should be read in conjunction with the Company’s interim consolidated financial statements for the three-month period ended June 30, 2021 and associated Management’s Discussion and Analysis (“MD&A”), which are available from the Company's website, www.alamosgold.com, in the "Investors" section under "Reports and Financials", and on SEDAR (www.sedar.com) and EDGAR (www.sec.gov).
Reminder of Second Quarter 2021 Results Conference Call
The Company's senior management will host a conference call on Thursday, July 29, 2021 at 10:00 am ET to discuss the second quarter 2021 results. Participants may join the conference call via webcast or through the following dial-in numbers:
| Toronto and International: | (416) 340-2217 | |
| Toll free (Canada and the United States): | (800) 806-5484 | |
| Participant passcode: | 3079443# | |
| Webcast: | www.alamosgold.com |
A playback will be available until August 29, 2021 by dialling (905) 694-9451 or (800) 408-3053 within Canada and the United States. The pass code is 7317600#. The webcast will be archived at www.alamosgold.com.
Qualified Persons
Chris Bostwick, FAusIMM, Alamos’ Vice President, Technical Services, who is a qualified person within the meaning of National Instrument 43-101 ("Qualified Person"), has reviewed and approved the scientific and technical information contained in this press release.
About Alamos
Alamos is a Canadian-based intermediate gold producer with diversified production from three operating mines in North America. This includes the Young-Davidson and Island Gold mines in northern Ontario, Canada and the Mulatos mine in Sonora State, Mexico. Additionally, the Company has a significant portfolio of development stage projects in Canada, Mexico, Turkey, and the United States. Alamos employs more than 1,700 people and is committed to the highest standards of sustainable development. The Company’s shares are traded on the TSX and NYSE under the symbol “AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
| Scott K. Parsons | |
| Vice-President, Investor Relations | |
| (416) 368-9932 x 5439 |
The TSX and NYSE have not reviewed and do not accept responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements
This press release contains or incorporates by reference “forward-looking statements” and “forward-looking information” as defined under applicable Canadian and U.S. securities legislation. All statements, other than statements of historical fact, which address events, results, outcomes or developments that the Company expects to occur are, or may be deemed, to be, forward-looking statements. Forward-looking statements are generally, but not always, identified by the use of forward-looking terminology such as "expect", "believe", "anticipate", "intend", "estimate", "forecast", "budget", “target”, “outlook”, “continue”, “plan” or variations of such words and phrases and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved or the negative connotation of such terms.
Such statements include information as to strategy, plans or future financial or operating performance, such as the Company’s expansion plans, project timelines, production plans and expected sustainable productivity increases, expected increases in mining activities and corresponding cost efficiencies, expected drilling targets, expected sustaining costs, expected improvements in cash flows and margins, expectations of changes in capital expenditures, forecasted cash shortfalls and the Company’s ability to fund them, cost estimates, projected exploration results, reserve and resource estimates, expected production rates and use of the stockpile inventory, expected recoveries, sufficiency of working capital for future commitments and other statements that express management’s expectations or estimates of future 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, legal, political and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements.
Such factors and assumptions underlying the forward-looking statements in this document include, but are not limited to: changes to current estimates of mineral reserves and resources; changes to production estimates (which assume accuracy of projected ore grade, mining rates, recovery timing and recovery rate estimates which may be impacted by unscheduled maintenance; labour and contractor availability and other operating or technical difficulties); operations may be exposed to new diseases, epidemics and pandemics, including the effects and potential effects of the global COVID-19 widespread pandemic; the impact of the COVID-19 pandemic on the broader market and the trading price of the Company's shares; provincial and federal orders or mandates (including with respect to mining operations generally or auxiliary businesses or services required for our operations) in Canada, Mexico, the United States and Turkey; the duration of regulatory responses to the COVID-19 pandemic; governments and the Company’s attempts to reduce the spread of COVID-19 which may affect many aspects of the Company's operations including the ability to transport personnel to and from site, contractor and supply availability and the ability to sell or deliver gold dore bars; fluctuations in the price of gold or certain other commodities such as, diesel fuel, natural gas, and electricity; changes in foreign exchange rates (particularly the Canadian Dollar, Mexican Peso, U.S. Dollar and Turkish Lira); the impact of inflation; changes in 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; expansion delays with the Phase III Expansion Project at the Island Gold mine; construction delays at La Yaqui Grande project; inherent risks associated with mining and mineral processing; the risk that the Company’s mines may not perform as planned; uncertainty with the Company’s ability to secure additional capital to execute its business plans; the speculative nature of mineral exploration and development, including the risks of obtaining and maintaining necessary licenses and permits, including the necessary licenses, permits, authorizations and/or approvals from the appropriate regulatory authorities for the Company’s development stage and operating assets; labour and contractor availability (and being able to secure the same on favourable terms); contests over title to properties; expropriation or nationalization of property; inherent risks and hazards associated with mining including environmental hazards, industrial 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, including renewal of the requisite operating licenses or permits, or even retaining control of its assets and gold mining projects in Turkey can only result from agreement with the Turkish government. The litigation 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 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 40-F/Annual Information Form for the year ended December 31, 2020 under the heading “Risk Factors”, which is available on the SEDAR website at www.sedar.com or on EDGAR at www.sec.gov. The foregoing should be reviewed in conjunction with the information found in this 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
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. The terms "Mineral Reserve", "Proven Mineral Reserve" and "Probable Mineral Reserve" are Canadian mining terms as defined in accordance with NI 43-101 and the CIM Standards. Investors are cautioned not to assume that all or any part of mineral deposits in these categories will ever be converted into reserves. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in very limited circumstances. Investors are cautioned not to assume that all or any part of an Inferred Mineral Resource exists or is economically or legally mineable. Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations.
International Financial Reporting Standards: The condensed 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
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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net (loss) earnings | ( | ) | ( | ) | ( | ) | ||||||||||
| Adjustments: | ||||||||||||||||
| Impairment charge, net of taxes | 213.8 | — | 213.8 | — | ||||||||||||
| COVID-19 costs | — | 6.5 | — | 6.5 | ||||||||||||
| Foreign exchange (gain) loss | (0.5 | ) | (0.2 | ) | (0.3 | ) | 4.9 | |||||||||
| Other loss | 3.7 | 5.1 | 3.7 | 4.9 | ||||||||||||
| Unrealized foreign exchange (gain) loss recorded in deferred tax expense | (5.5 | ) | (10.1 | ) | (8.0 | ) | 26.7 | |||||||||
| Other income tax and mining tax adjustments | (0.3 | ) | (3.2 | ) | (0.1 | ) | (3.2 | ) | ||||||||
| Adjusted net earnings | ||||||||||||||||
| Adjusted earnings per share - basic and diluted | ||||||||||||||||
Cash Flow from Operating Activities before Changes in Working Capital and Cash Taxes
“Cash flow from operating activities before changes in working capital and cash taxes” is a non-GAAP performance measure that could provide an indication of the Company’s ability to generate cash flows from operations, and is calculated by adding back the change in working capital and taxes received to “Cash provided by (used in) operating activities” as presented on the Company’s consolidated statements of cash flows. “Cash flow from operating activities before changes in working capital” is a non-GAAP financial measure with no standard meaning under IFRS.
The following table reconciles the non-GAAP measure to the consolidated statements of cash flows.
| (in millions) | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| Cash flow from operating activities | |||||||||||||
| Add: Changes in working capital and cash taxes | 10.5 | (4.9 | ) | 30.8 | 20.2 | ||||||||
| Cash flow from operating activities before changes in working capital and cash taxes | |||||||||||||
Company-wide Free Cash Flow
“Company-wide free cash flow" is a non-GAAP performance measure calculated from the consolidated operating cash flow, less consolidated mineral property, plant and equipment expenditures. The Company believes this to be a useful indicator of our ability to operate without reliance on additional borrowing or usage of existing cash company-wide. Company-wide free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other mining companies. Company-wide free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
| (in millions) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Cash flow from operating activities | ||||||||||||||||
| Less: mineral property, plant and equipment expenditures (1) | (83.5 | ) | (54.6 | ) | (156.1 | ) | (117.9 | ) | ||||||||
| Less: capital advances | (3.4 | ) | — | (20.2 | ) | — | ||||||||||
| Company-wide free cash flow | ( | ) | ( | ) | ( | ( | ) | |||||||||
(1) Mineral property, plant and equipment expenditures exclude the Island Gold royalty repurchase of
Mine-site Free Cash Flow
"Mine-site free cash flow" is a non-GAAP financial performance measure calculated as cash flow from mine-site operating activities, less mineral property, plant and equipment expenditures. The Company believes this to be a useful indicator of our ability to operate without reliance on additional borrowing or usage of existing cash. Mine-site free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other mining companies. Mine-site free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
| Total Mine-Site Free Cash Flow | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (in millions) | ||||||||||||||||
| Cash flow from operating activities | ||||||||||||||||
| Add: operating cash flow used by non-mine site activity | 13.8 | 6.4 | 24.1 | 21.1 | ||||||||||||
| Cash flow from operating mine-sites | $100.5 | $56.0 | $210.1 | $127.3 | ||||||||||||
| Mineral property, plant and equipment expenditure 1 | ||||||||||||||||
| Capital advances | 3.4 | — | 20.2 | — | ||||||||||||
| Less: capital expenditures from development projects, and corporate | (6.5 | ) | (4.0 | ) | (11.0 | ) | (10.8 | ) | ||||||||
| Capital expenditure and capital advances from mine-sites | $80.4 | $50.6 | $165.3 | $107.1 | ||||||||||||
| Total mine-site free cash flow | $20.1 | $5.4 | $44.8 | $20.2 | ||||||||||||
(1) Excludes a royalty repurchase of
| Young-Davidson Mine-Site Free Cash Flow | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (in millions) | ||||||||||||||||
| Cash flow from operating activities | ||||||||||||||||
| Mineral property, plant and equipment expenditure | (19.6 | ) | (29.6 | ) | (41.5 | ) | (56.6 | ) | ||||||||
| Mine-site free cash flow | ( | ) | ( | ) | ||||||||||||
| Island Gold Mine-Site Free Cash Flow | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (in millions) | ||||||||||||||||
| Cash flow from operating activities | ||||||||||||||||
| Mineral property, plant and equipment expenditure 1 | (28.5 | ) | (15.9 | ) | (55.9 | ) | (38.0 | ) | ||||||||
| Capital advances | (0.7 | ) | — | (2.8 | ) | — | ||||||||||
| Mine-site free cash flow | ||||||||||||||||
(1) Excludes a royalty repurchase of
| Mulatos Mine-Site Free Cash Flow | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (in millions) | ||||||||||||||||
| Cash flow from operating activities | ||||||||||||||||
| Mineral property, plant and equipment expenditure | (28.9 | ) | (5.1 | ) | (47.7 | ) | (12.5 | ) | ||||||||
| Capital advances | (2.7 | ) | — | (17.4 | ) | — | ||||||||||
| Mine-site free cash flow | ( | ) | ( | ) | ||||||||||||
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 June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (in millions, except ounces and per ounce figures) | ||||||||||||
| Mining and processing | ||||||||||||
| Royalties | 3.0 | 1.7 | 6.1 | 4.1 | ||||||||
| Total cash costs | 85.1 | 69.6 | 180.9 | 154.5 | ||||||||
| Gold ounces sold | 107,581 | 74,605 | 234,063 | 186,459 | ||||||||
| Total cash costs per ounce | $791 | $933 | $773 | $829 | ||||||||
| Total cash costs | ||||||||||||
| Corporate and administrative(1) | 6.3 | 4.1 | 12.4 | 10.3 | ||||||||
| Sustaining capital expenditures(2) | 26.7 | 14.4 | 50.3 | 31.9 | ||||||||
| Share-based compensation | 2.3 | 5.6 | 5.1 | 7.8 | ||||||||
| Sustaining exploration | 1.2 | 1.0 | 2.5 | 2.5 | ||||||||
| Accretion of decommissioning liabilities | 0.6 | 0.5 | 1.3 | 1.2 | ||||||||
| Total all-in sustaining costs | ||||||||||||
| Gold ounces sold | 107,581 | 74,605 | 234,063 | 186,459 | ||||||||
| All-in sustaining costs per ounce | $1,136 | $1,276 | $1,079 | $1,117 | ||||||||
(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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (in millions) | ||||||||||||||||
| Capital expenditures per cash flow statement | ||||||||||||||||
| Less: non-sustaining capital expenditures at: | ||||||||||||||||
| Young-Davidson | (9.8 | ) | (24.1 | ) | (22.2 | ) | (46.9 | ) | ||||||||
| Island Gold | (17.5 | ) | (10.7 | ) | (34.3 | ) | (24.3 | ) | ||||||||
| Mulatos | (23.0 | ) | (1.4 | ) | (38.3 | ) | (4.0 | ) | ||||||||
| Corporate and other | (6.5 | ) | (4.0 | ) | (11.0 | ) | (10.8 | ) | ||||||||
| Sustaining capital expenditures | ||||||||||||||||
| Young-Davidson Total Cash Costs and Mine-site AISC Reconciliation | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (in millions, except ounces and per ounce figures) | ||||||||||||
| Mining and processing | ||||||||||||
| Royalties | 1.5 | 0.7 | 2.8 | 1.5 | ||||||||
| Total cash costs | ||||||||||||
| Gold ounces sold | 45,284 | 22,440 | 93,306 | 51,345 | ||||||||
| Total cash costs per ounce | $941 | $1,564 | $906 | $1,299 | ||||||||
| Total cash costs | ||||||||||||
| Sustaining capital expenditures | 9.8 | 5.5 | 19.3 | 9.7 | ||||||||
| Accretion of decommissioning liabilities | — | — | 0.2 | 0.1 | ||||||||
| Total all-in sustaining costs | ||||||||||||
| Gold ounces sold | 45,284 | 22,440 | 93,306 | 51,345 | ||||||||
| Mine-site all-in sustaining costs per ounce | $1,157 | $1,809 | $1,115 | $1,490 | ||||||||
| Island Gold Total Cash Costs and Mine-site AISC Reconciliation | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (in millions, except ounces and per ounce figures) | ||||||||||||
| Mining and processing | ||||||||||||
| Royalties | 1.3 | 0.7 | 2.7 | 2.0 | ||||||||
| Total cash costs | ||||||||||||
| Gold ounces sold | 33,632 | 18,560 | 73,514 | 57,687 | ||||||||
| Total cash costs per ounce | $502 | $501 | $483 | $468 | ||||||||
| Total cash costs | ||||||||||||
| Sustaining capital expenditures | 11.0 | 5.2 | 21.6 | 13.7 | ||||||||
| Total all-in sustaining costs | ||||||||||||
| Gold ounces sold | 33,632 | 18,560 | 73,514 | 57,687 | ||||||||
| Mine-site all-in sustaining costs per ounce | $830 | $781 | $777 | $706 | ||||||||
| Mulatos Total Cash Costs and Mine-site AISC Reconciliation | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (in millions, except ounces and per ounce figures) | ||||||||||||
| Mining and processing | ||||||||||||
| Royalties | 0.2 | 0.3 | 0.6 | 0.6 | ||||||||
| Total cash costs | ||||||||||||
| Gold ounces sold | 28,665 | 33,605 | 67,243 | 77,427 | ||||||||
| Total cash costs per ounce | $893 | $750 | $906 | $785 | ||||||||
| Total cash costs | ||||||||||||
| Sustaining capital expenditures | 5.9 | 3.7 | 9.4 | 8.5 | ||||||||
| Sustaining exploration | 0.7 | 0.5 | 1.5 | 1.5 | ||||||||
| Accretion of decommissioning liabilities | 0.6 | 0.5 | 1.1 | 1.1 | ||||||||
| Total all-in sustaining costs | ||||||||||||
| Gold ounces sold | 28,665 | 33,605 | 67,243 | 77,427 | ||||||||
| Mine-site all-in sustaining costs per ounce | $1,144 | $890 | $1,084 | $929 | ||||||||
Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”)
EBITDA represents net earnings before impairment charges, interest, taxes, depreciation, and amortization. EBITDA is an indicator of the Company’s ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures.
EBITDA does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The following is a reconciliation of EBITDA to the consolidated financial statements:
| (in millions) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net (loss) earnings | ( | ) | ( | ) | ( | ) | ||||||||||
| Add back: | ||||||||||||||||
| Impairment charge | 224.3 | — | 224.3 | — | ||||||||||||
| COVID-19 costs | — | 6.5 | — | 6.5 | ||||||||||||
| Finance expense | 1.0 | 1.2 | 2.0 | 2.0 | ||||||||||||
| Amortization | 41.8 | 27.2 | 85.3 | 62.6 | ||||||||||||
| Deferred income tax (recovery) expense | (2.9 | ) | (14.8 | ) | 15.1 | 38.3 | ||||||||||
| Current income tax expense | 2.7 | 9.1 | 8.6 | 8.8 | ||||||||||||
| EBITDA | ||||||||||||||||
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, Comprehensive
Income, and Cash Flow
ALAMOS GOLD INC.
Consolidated Statements of Financial Position
(Unaudited - stated in millions of United States dollars)
| June 30, 2021 | December 31, 2020 | ||||||||
| A S S E T S | |||||||||
| Current Assets | |||||||||
| Cash and cash equivalents | |||||||||
| Equity securities | 22.4 | 43.7 | |||||||
| Amounts receivable | 31.9 | 34.7 | |||||||
| Inventory | 173.4 | 148.5 | |||||||
| Other current assets | 32.4 | 26.0 | |||||||
| Total Current Assets | 494.0 | 473.4 | |||||||
| Non-Current Assets | |||||||||
| Long-term inventory | 14.1 | 17.9 | |||||||
| Mineral property, plant and equipment | 2,961.6 | 3,101.3 | |||||||
| Other non-current assets | 44.2 | 43.9 | |||||||
| Total Assets | $3,513.9 | $3,636.5 | |||||||
| L I A B I L I T I E S | |||||||||
| Current Liabilities | |||||||||
| Accounts payable and accrued liabilities | |||||||||
| Income taxes payable | — | 15.5 | |||||||
| Total Current Liabilities | 149.8 | 146.9 | |||||||
| Non-Current Liabilities | |||||||||
| Deferred income taxes | 574.6 | 559.9 | |||||||
| Decommissioning liabilities | 75.4 | 75.2 | |||||||
| Other non-current liabilities | 3.1 | 3.0 | |||||||
| Total Liabilities | 802.9 | 785.0 | |||||||
| E Q U I T Y | |||||||||
| Share capital | |||||||||
| Contributed surplus | 89.5 | 88.5 | |||||||
| Accumulated other comprehensive income | 4.4 | 18.2 | |||||||
| Deficit | (1,086.6 | ) | (958.1 | ) | |||||
| Total Equity | 2,711.0 | 2,851.5 | |||||||
| Total Liabilities and Equity | $3,513.9 | $3,636.5 | |||||||
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 | For six months ended | ||||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| OPERATING REVENUES | |||||||||||||||||||
| COST OF SALES | |||||||||||||||||||
| Mining and processing | 82.1 | 67.9 | 174.8 | 150.4 | |||||||||||||||
| Royalties | 3.0 | 1.7 | 6.1 | 4.1 | |||||||||||||||
| COVID-19 costs | — | 6.5 | — | 6.5 | |||||||||||||||
| Amortization | 41.8 | 27.2 | 85.3 | 62.6 | |||||||||||||||
| 126.9 | 103.3 | 266.2 | 223.6 | ||||||||||||||||
| EXPENSES | |||||||||||||||||||
| Exploration | 3.8 | 1.1 | 6.7 | 3.1 | |||||||||||||||
| Corporate and administrative | 6.3 | 4.1 | 12.4 | 10.3 | |||||||||||||||
| Share-based compensation | 2.3 | 5.6 | 5.1 | 7.8 | |||||||||||||||
| Impairment charge | 224.3 | — | — | ||||||||||||||||
| 363.6 | 114.1 | 514.7 | 244.8 | ||||||||||||||||
| EARNINGS FROM OPERATIONS | (168.5 | ) | 12.1 | (92.2 | ) | 58.3 | |||||||||||||
| OTHER EXPENSES | |||||||||||||||||||
| Finance expense | (1.0 | ) | (1.2 | ) | (2.0 | ) | (2.0 | ) | |||||||||||
| Foreign exchange gain (loss) | 0.5 | 0.2 | 0.3 | (4.9 | ) | ||||||||||||||
| Other loss | (3.7 | ) | (5.1 | ) | (3.7 | ) | (4.9 | ) | |||||||||||
| (LOSS) EARNINGS FROM OPERATIONS | ($172.7 | ) | $6.0 | ($97.6 | ) | $46.5 | |||||||||||||
| INCOME TAXES | |||||||||||||||||||
| Current income tax expense | (2.7 | ) | (9.1 | ) | (8.6 | ) | (8.8 | ) | |||||||||||
| Deferred income tax recovery (expense) | 2.9 | 14.8 | (15.1 | ) | (38.3 | ) | |||||||||||||
| NET (LOSS) EARNINGS | ($172.5 | ) | $11.7 | ($121.3 | ) | ($0.6 | ) | ||||||||||||
| Items that may be subsequently reclassified to net earnings: | |||||||||||||||||||
| Net change in fair value of currency hedging instruments, net of taxes | (0.6 | ) | 6.3 | (1.7 | ) | (5.1 | ) | ||||||||||||
| Net change in fair value of fuel hedging instruments, net of taxes | 0.2 | 0.3 | 0.4 | (0.5 | ) | ||||||||||||||
| Items that will not be reclassified to net earnings: | |||||||||||||||||||
| Unrealized (loss) gain on equity securities, net of taxes | (0.7 | ) | 12.2 | (0.5 | ) | 6.2 | |||||||||||||
| Total other comprehensive (loss) income | ($1.1 | ) | $18.8 | ($1.8 | ) | $0.6 | |||||||||||||
| COMPREHENSIVE (LOSS) INCOME | ($173.6 | ) | $30.5 | ($123.1 | ) | $0.0 | |||||||||||||
| (LOSS) EARNINGS PER SHARE | |||||||||||||||||||
| – basic | ($0.44 | ) | $0.03 | ($0.31 | ) | $0.00 | |||||||||||||
| – diluted | ($0.44 | ) | $0.03 | ($0.31 | ) | $0.00 | |||||||||||||
| Weighted average number of common shares outstanding (000's) | |||||||||||||||||||
| – basic | 392,759 | 391,076 | 392,762 | 391,208 | |||||||||||||||
| – diluted | 392,759 | 394,897 | 392,762 | 391,208 | |||||||||||||||
ALAMOS GOLD INC.
Consolidated Statements of Cash Flows
(Unaudited - stated in millions of United States dollars)
| For three months ended | For six months ended | ||||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| CASH PROVIDED BY (USED IN): | |||||||||||||||||||
| OPERATING ACTIVITIES | |||||||||||||||||||
| Net (loss) earnings for the period | ( | ) | ( | ) | ($ | 0.6 | ) | ||||||||||||
| Adjustments for items not involving cash: | |||||||||||||||||||
| Amortization | 41.8 | 28.3 | 85.3 | 63.7 | |||||||||||||||
| Impairment charge | 224.3 | — | 224.3 | — | |||||||||||||||
| Foreign exchange (gain) loss | (0.5 | ) | (0.2 | ) | (0.3 | ) | 4.9 | ||||||||||||
| Current income tax expense | 2.7 | 9.1 | 8.6 | 8.8 | |||||||||||||||
| Deferred income tax (recovery) expense | (2.9 | ) | (14.8 | ) | 15.1 | 38.3 | |||||||||||||
| Share-based compensation | 2.3 | 5.6 | 5.1 | 7.8 | |||||||||||||||
| Finance expense | 1.0 | 1.2 | 2.0 | 2.0 | |||||||||||||||
| Other items | 1.0 | 3.8 | (2.0 | ) | 1.5 | ||||||||||||||
| Changes in working capital and taxes paid | (10.5 | ) | 4.9 | (30.8 | ) | (20.2 | ) | ||||||||||||
| 86.7 | 49.6 | 186.0 | 106.2 | ||||||||||||||||
| INVESTING ACTIVITIES | |||||||||||||||||||
| Mineral property, plant and equipment | (83.5 | ) | (54.6 | ) | (156.1 | ) | (117.9 | ) | |||||||||||
| Capital advances | (3.4 | ) | — | (20.2 | ) | — | |||||||||||||
| Repurchase of Island Gold royalty | — | — | — | (54.8 | ) | ||||||||||||||
| Proceeds from disposition of equity securities | 5.1 | — | 25.8 | — | |||||||||||||||
| Investment in equity securities | (1.2 | ) | (2.3 | ) | (4.3 | ) | (2.3 | ) | |||||||||||
| (83.0 | ) | (56.9 | ) | (154.8 | ) | (175.0 | ) | ||||||||||||
| FINANCING ACTIVITIES | |||||||||||||||||||
| Proceeds from draw down of credit facility | — | — | — | 100.0 | |||||||||||||||
| Repayment of equipment financing obligations | (0.1 | ) | (0.1 | ) | (0.1 | ) | (0.3 | ) | |||||||||||
| Interest paid | — | (0.8 | ) | — | (0.8 | ) | |||||||||||||
| Repurchase and cancellation of common shares | — | (2.6 | ) | (1.5 | ) | (5.5 | ) | ||||||||||||
| Proceeds from the exercise of options | 0.2 | 2.4 | 0.2 | 6.3 | |||||||||||||||
| Dividends paid | (8.6 | ) | (5.5 | ) | (17.2 | ) | (11.1 | ) | |||||||||||
| (8.5 | ) | (6.6 | ) | (18.6 | ) | 88.6 | |||||||||||||
| Effect of exchange rates on cash and cash equivalents | 0.5 | 0.5 | 0.8 | (1.3 | ) | ||||||||||||||
| Net (decrease) increase in cash and cash equivalents | (4.3 | ) | (13.4 | ) | 13.4 | 18.5 | |||||||||||||
| Cash and cash equivalents - beginning of period | 238.2 | 214.7 | 220.5 | 182.8 | |||||||||||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $233.9 | $201.3 | $233.9 | $201.3 | |||||||||||||||
FAQ
What were Alamos Gold's Q2 2021 production results?
What revenue did Alamos Gold report for Q2 2021?
What is the cash position of Alamos Gold as of Q2 2021?
What impairment charge did Alamos Gold incur in Q2 2021?
How did the Canadian dollar affect Alamos Gold's costs?
