Follow Us! Like Our Page!

Alamos Gold Achieves Increased 2023 Guidance with Record Annual Production and Provides Three-Year Production and Operating Guidance

Press Release

Jan. 10, 2024

Production guidance increased for 2024; low-cost growth expected to drive 7% increase in production and 11% decrease in all-in sustaining costs over the next three years supporting strong ongoing free cash flow

TORONTO — Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported fourth quarter and annual 2023 production. The Company also provided updated three-year production and operating guidance.

“We finished 2023 with another strong quarter, achieving the top end of our increased annual guidance with record production of 529,300 ounces of gold. This represented a 15% increase from 2022, at lower costs, driving a record financial performance and strong free cash flow, all while continuing to invest in high-return, low-cost growth,” said John A. McCluskey, President and Chief Executive Officer.

“We expect this strong performance to continue with growing production and declining costs over the next several years. Mulatos continues to outperform, supporting an increase in our 2024 production guidance. The Phase 3+ Expansion at Island Gold remains on track to deliver further production growth, decreasing costs, and substantial free cash flow growth into 2026 and beyond. We are advancing our other growth initiatives with the development plan for PDA expected to be completed later this quarter, outlining additional production upside as early as 2026, and with Lynn Lake to provide further low-cost production growth as early as 2027. We have also increased our exploration budget to the highest level in our history reflecting the ongoing success and significant upside we see across our asset base,” Mr. McCluskey added.

Fourth Quarter and Full Year 2023 Operating Results

Q4 2023 Q4 2022 2023 2022 2023 Guidance
Gold production (ounces)
Young-Davidson 49,800 44,600 185,100 192,200 185,000 – 200,000
Island Gold 31,600 40,500 131,400 133,700 120,000 – 135,000
Mulatos District 48,100 49,100 212,800 134,500 175,000 – 185,000
Total gold production – Original guidance 480,000 – 520,000
Total gold production – Revised guidance 129,500 134,200 529,300 460,400 515,000 – 530,000
  • Record annual production; met top end of increased production guidance: produced a record 529,300 ounces, achieving the top end of revised guidance which had been increased 5% in October 2023. This included a strong finish to the year from all three operations with fourth quarter production of 129,500 ounces. Full year production increased 15% from 2022 driven by low-cost growth from La Yaqui Grande
  • Costs expected to meet 2023 guidance: total cash costs and all-in sustaining costs (“AISC”) for 2023 have not been finalized but are expected to be consistent with full year guidance. As previously guided, AISC are expected to be above full year guidance in the fourth quarter, but in-line with guidance on a full year basis
  • Record financial performance: sold 129,005 ounces of gold in the fourth quarter at an average realized price of $1,973 per ounce for revenues of $255 million. Full year sales totaled 526,257 ounces of gold at an average realized price of $1,944 per ounce for record revenues of $1.0 billion
  • Growing cash position: ended the year with approximately $225 million of cash and cash equivalents, up from $130 million at the end of 2022 reflecting strong free cash flow generation through the year. The Company remains debt-free

Three Year Guidance Overview: Operating Mines 1

2024 2025 2026
Current Previous Current Previous Current
Total Gold Production (000 oz) 485 – 525 470 – 510 470 – 510 470 – 510 520 – 560
Total Cash Costs (1) ($/oz) $825 – 875 $675 – 775 $700 – 800 $650 – 750 $675 – 775
All-in Sustaining Costs (1),(2) ($/oz) $1,125 – 1,175 $975 – 1,075 $1,050 – 1,150 $950 – 1,050 $975 – 1,075
Total sustaining & growth capital (1),(3)
(Operating mines; ex. Exploration, Lynn Lake & PDA; $ millions)
$325 – 365 $290 – 330 $310 – 350 $290 – 330 $175 – 200

(1) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description of these measures.
(2) All-in sustaining cost guidance for 2025 and 2026 includes the same assumptions for G&A and stock based compensation as included in 2024.
(3) Sustaining and growth capital guidance is for producing mines and excludes capital for Lynn Lake, PDA, other development projects, and capitalized exploration.

  • 2024 production guidance increased; 7% growth expected by 2026: production guidance increased to between 485,000 and 525,000 ounces in 2024, a 3% increase from previous guidance issued in January 2023 driven by increased production from the Mulatos District through residual leaching of the main leach pad. Production is expected to increase 7% by 2026 reflecting low-cost production growth from Island Gold with the completion of the Phase 3+ Expansion
  • PDA to provide additional upside potential in 2026 with further growth potential in 2027 through Lynn Lake: three-year guidance excludes the higher-grade Puerto Del Aire (“PDA”) project, which represents potential production upside at Mulatos as early as 2026. This upside is expected to be outlined in a development plan for PDA to be completed in the first quarter of 2024, which will incorporate ongoing exploration success in 2023. Looking beyond 2026, the Lynn Lake project is expected to support further potential growth with first production as early as the second half of 2027
  • Total cash costs and AISC per ounce expected to remain flat in 2024 and decrease 15% and 11%, respectively, by 2026:
    • Total cash costs of $825 and $875 per ounce in 2024 are expected to be consistent with 2023, and decrease 15% by 2026 to $675 to $775 per ounce: costs are expected to decrease steadily into 2025 and 2026 reflecting the end of higher-cost residual leaching at Mulatos and low-cost production growth from Island Gold
    • Cost guidance for 2024 has increased from previous guidance primarily reflecting higher than previously guided production from the Mulatos District, the stronger Mexican Peso, as well as ongoing inflation
    • The additional production from Mulatos is expected to come through residual leaching which carries higher reported costs, though is expected to provide strong free cash flow with the majority of these costs previously incurred. Excluding this impact and the stronger Mexican peso, total cash costs increased approximately 5% relative to previous guidance with the main driver being inflation
    • AISC expected to be between $1,125 to $1,175 per ounce in 2024, and decrease 11% by 2026 to $975 to $1,075 per ounce: consistent with total cash costs, the end of residual leaching at Mulatos and low-cost production growth from Island Gold is expected to drive a significant decrease in costs into 2025 and 2026
  • Capital spending expected to decrease 46% by 2026 at existing operations: total capital (excluding capitalized exploration) is expected to range between $350 to $390 million in 2024, an increase from 2023 reflecting inflation, as well as higher spending at Island Gold and Lynn Lake. This includes $325 to $365 million of capital at producing mines (excluding PDA and Lynn Lake). Capital spending for producing mines is expected to decrease slightly into 2025, followed by a substantial reduction in 2026 to $175 to $200 million reflecting the completion of the Phase 3+ Expansion. The total capital budget for 2024 includes:
    • Sustaining capital guidance of $93 to $105 million: down from 2023 and expected to increase slightly in 2025 and 2026
    • Growth capital guidance for producing mines of $232 to $260 million: up from 2023 reflecting higher growth capital at Young-Davidson and Island Gold. Growth capital is expected to decrease by nearly 70% in 2026 with the completion of the Phase 3+ Expansion
  • Exploration budget of $62 million: up from expected spending of approximately $50 million in 2023. This represents the largest exploration budget in the history of the Company with expanded budgets across all key assets following up on broad based exploration success in 2023. This success was most notable at Island Gold and the Mulatos District with both assets expected to account for approximately 60% of the total budget in 2024
  • Strong ongoing free cash flow while funding low-cost growth: the Company expects to continue generating strong ongoing free cash flow at current gold prices while funding the Phase 3+ Expansion at Island Gold. Free cash flow generation from existing operations is expected to increase substantially in 2026 following the completion of the Phase 3+ Expansion, reflecting higher production, lower costs, and lower capital spending

(1 ) Guidance statements in this release are forward-looking information. See the Assumptions and Sensitives section of this release along with the cautionary note at the end of this release.

Upcoming 2024 catalysts

  • PDA development plan: Q1 2024
  • 2023 year-end Mineral Reserve and Resource update: February 2024
  • Island Gold and Mulatos exploration updates: ongoing
  • Burnt Timber and Linkwood study (satellite deposits to Lynn Lake): Q4 2024

2024 Guidance

2024 Guidance 2023 Guidance
Young-Davidson Island Gold Mulatos District Lynn Lake Total Total
Gold production (000 oz) 180 – 195 145 – 160 160 – 170 485 – 525 529 (actual)
Cost of sales, including  amortization ($ millions)(2) $ 620 $ 625
Cost of sales, including  amortization ($/oz) (2) $ 1,225 $ 1,250
Total cash costs ($/oz) (1) $950 – 1,000 $550 – 600 $925 – 975 $825 – 875 $825 – 875
All-in sustaining costs ($/oz) (1) $1,125 – 1,175 $1,125 – 1,175
Mine-site all-in sustaining costs ($/oz) (1)(3) $1,175 – 1,225 $875 – 925 $1,000 – 1,050
Capital expenditures ($ millions)
Sustaining capital(1) $40 – 45 $50 – 55 $3 – 5 $93 – 105 $105 – 115
Growth capital(1) $20 – 25 $210 – 230 $2 – 5 $232 – 260 $175 – 205
Total Sustaining and Growth Capital (1) – producing mines ($ millions) $60 – 70 $260 – 285 $5 – 10 $325 – 365 $280 – 320
Growth capital – development projects ($ millions) $25 $ 25 $ 12
Capitalized exploration(1) ($ millions) $10 $13 $9 $9 $ 41 $ 25
Total capital expenditures and capitalized exploration ( 1) ($ millions) $70 – 80 $273 – 298 $14 – 19 $ 34 $391 – 431 $317 – 357

(1)  Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description of these measures.
(2)  Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of total cash cost guidance.
(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.

Gold production in 2024 is expected to range between 485,000 and 525,000 ounces, a 3% increase from the previous three-year guidance provided in January 2023 (based on the mid-point). The increase is driven by higher expected production from the Mulatos District through residual leaching of the Mulatos leach pad, in addition to ongoing production from La Yaqui Grande. Production is expected to be slightly higher during the first half of 2024 with the recovery of ounces through residual leaching at Mulatos expected to decline through the year.

Total cash costs and AISC are expected to be consistent with 2023. Costs are expected to be towards the upper end of guidance to start the year and trend lower through the year reflecting declining rates of production from residual leaching at Mulatos.

AISC guidance has increased 12% relative to previous guidance (based on the mid-point) with the majority related to the increase in production from the Mulatos District through residual leaching, the stronger Mexican peso, as well as inflation, partly offset by lower sustaining capital.

The main driver of the increase in AISC is higher costs at the Mulatos District. La Yaqui Grande is expected to supply approximately 75% of Mulatos District production at a similar low-cost structure as 2023. The remaining production is expected to come from residual leaching of the main Mulatos leach pad which carries higher reported AISC of approximately $1,850 per ounce. The majority of these costs were previously incurred and recorded in inventory. The cash component to recover these ounces in 2024 is expected to be approximately $800 per ounce providing stronger free cash flow than implied by the higher reportable costs.

Additionally, the stronger Mexican Peso of 17:1 (MXN:USD), compared to 20:1 in previous guidance, increased costs by approximately $20 per ounce. The other key component of the increase in costs is inflation of 4% company-wide, with the largest driver being ongoing labour inflation, particularly in Canada.

Figure – 1

 

 

( 1 ) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description of these measures.
(2) Total consolidated all-in sustaining costs include corporate and administrative and share based compensation expenses.

Capital spending is expected to increase from 2023 reflecting inflation, higher capital at Island Gold and Lynn Lake, and an increased capitalized exploration budget. The largest driver of the increase in capital at Island Gold is for a planned tailings lift to be completed in 2024, as well as increased underground development costs, reflecting labour and cost inflation. Capital spending on the Lynn Lake project is expected to more than double the amount spent in 2023. Spending at Lynn Lake will be focused on upgrades to site access and infrastructure, including early work on the power line upgrade, in advance of a construction decision anticipated in 2025. Capital spending is expected to be balanced between the first and second half of the year.

Given the strong profitability of the Mulatos operation in 2023, the Company expects to pay significantly higher cash tax payments in Mexico in 2024, which includes the 2023 year-end tax payment due in the first quarter. Combined with an expected decrease in costs through the year, the Company expects stronger free cash flow starting in the second quarter of 2024.

2024 – 2026 Guidance: Operating Mines

2024 2025 2026
Current Previous Current Previous Current
Gold Production (000 oz)
Young-Davidson 180 – 195 185 – 200 180 – 195 185 – 200 180 – 195
Island Gold 145 – 160 145 – 160 170 – 185 175 – 190 220 – 235
Mulatos District 160 – 170 140 – 150 120 – 130 110 – 120 120 – 130
Total Gold Production (000 oz) 485 – 525 470 – 510 470 – 510 470 – 510 520 – 560
Total Cash Costs (1) ($/oz) $825 – 875 $675 – 775 $700 – 800 $650 – 750 $675 – 775
All-in Sustaining Costs (1),(2) ($/oz) $1,125 – 1,175 $975 – 1,075 $1,050 – 1,150 $950 – 1,050 $975 – 1,075
Sustaining capital (1),(3) ($ millions) $93 – 105 $105 – 115 $115 – 125 $105 – 115 $105 – 115
Growth capital (1), (3) ($ millions) $232 – 260 $185 – 215 $195 – 225 $185 – 215 $70 – 85
Total sustaining & growth capital (1),(3) (Operating mines; ex. Exploration)  ($ millions) $325 – 365 $290 – 330 $310 – 350 $290 – 330 $175 – 200

(1) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description of these measures.
(2) All-in sustaining cost guidance for 2025 and 2026 includes the same assumptions for G&A and stock based compensation as included in 2024.
(3) Sustaining and growth capital guidance is for producing mines and excludes capital for Lynn Lake and other development projects, and capitalized exploration.

Consistent with previous guidance, gold production is expected to decrease slightly in 2025 reflecting the end of residual leaching at the main Mulatos leach pad, partly offset by further low-cost growth from Island Gold. The completion of the Phase 3+ Expansion at Island Gold is expected to drive production approximately 10% higher into 2026, from 2025.

Production guidance for 2026 excludes any production from the higher-grade PDA project which represents an excellent opportunity for additional production within the Mulatos District. A development plan outlining this upside potential at PDA is expected to be completed during the first quarter of 2024. Looking into 2027 and beyond, the Lynn Lake project represents further growth potential as detailed in the 2023 Feasibility Study which outlined another long-life, low-cost asset in Canada, with attractive economics and significant exploration upside.

Total cash costs and AISC in 2025 are expected to decrease 12% and 4%, respectively, from 2024. This is expected to be driven by low-cost growth from Island Gold, and the end of higher-cost residual leaching at Mulatos. A further increase in low-cost production at Island Gold is expected to drive costs lower into 2026, representing a 15% decrease in total cash costs, and 11% decrease in AISC, relative to 2024.

Capital spending at existing operations (excluding PDA and Lynn Lake) is expected to decrease 4% in 2025, reflecting lower capital at Mulatos and Island Gold. The increase in capital relative to previous guidance is primarily driven by inflation. A more substantial decrease in capital is expected in 2026 with the completion of the Phase 3+ Expansion at Island Gold. Sustaining capital spending at existing operations is expected to increase slightly in 2025 and 2026.

Figure – 2

( 1) Production and AISC are based on mid-point of guidance.
(2) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description of these measures.
(3) Total consolidated all-in sustaining costs include corporate and administrative and share based compensation expenses.

Young-Davidson

Guidance
Young-Davidson Q3 YTD 2023 Q4 2023 2023A 2023E ( 3 ) 2024E 2025E 2026E
Gold Production (000 oz) 135 50 185 185 – 200 180 – 195 180 – 195 180 – 195
Previous Guidance (000 oz) 185 – 200 185 – 200
Total Cash Costs (1) ($/oz) $945 $900 – 950 $950 – 1,000
Mine-site AISC (1),(2) ($/oz) $1,207 $1,175 – 1,225 $1,175 – 1,225
Tonnes of ore processed (tpd) 7,888 7,877 7,885 8,000 8,000
Grade processed (g/t Au) 2.14 2.38 2.20 2.15 – 2.35 2.15 – 2.30
Average recovery rate (%) 90% 91% 91% 90 – 92% 90 – 92%
Sustaining capital (1) ($ millions) $35 $50 – 55 $40 – 45
Growth capital (1) ($ millions) $4 $5 – 10 $20 – 25
Total sustaining & growth capital (1) (ex. exploration) ($ millions) $39 $55 – 65 $60 – 70
Capitalized exploration (1) ($ millions) $4 $ 5 $ 10

(1) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release and the Q3 2023 MD&A for a description and calculation of these measures.
(2) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share based compensation expenses to the mine sites.
(3) Refers to 2023 guidance announced on January 12, 2023.

Gold production at Young-Davidson is expected to remain consistent with 2023 over the next three years reflecting similar grades and mining and processing rates.

Grades mined and processed are expected to range between 2.15 and 2.30 grams per tonne of gold (“g/t Au”) in 2024 and remain at similar levels through 2026. Grades mined are expected to increase in 2027 and beyond and average closer to Mineral Reserve grade, as YD West becomes more of a significant contributor to production.

Total cash costs are expected to increase approximately 5% from 2023 guidance reflecting ongoing cost inflation with the largest driver being labour inflation in Northern Ontario. Mine-site AISC are expected to be consistent with 2023 with the increase in total cash costs offset by lower sustaining capital. Mine-site AISC are expected to increase in 2025 and 2026 reflecting slightly higher sustaining capital.

Capital spending in 2024 (excluding exploration) is expected to range between $60 and $70 million. This is up from 2023 reflecting inflation and higher growth capital, partly offset by lower sustaining capital. The largest component of the increase in growth capital is for an expansion of the water treatment plant at the operation. Capital spending is expected to remain at similar levels in 2025 and 2026.

Young-Davidson remains on track to generate more than $100 million of free cash flow for the third consecutive year in 2023. At current gold prices, the operation is well positioned to generate similar free cash flow in 2024 and over the long term given its 15-year Mineral Reserve life.

Island Gold

Guidance
Island Gold Q3 YTD 2023 Q4 2023 2023A 2023E ( 3 ) 2024E 2025E 2026E
Gold Production (000 oz) 100 32 131 120 – 135 145 – 160 170 – 185 220 – 235
Previous Guidance (000 oz) 145 – 160 175 – 190
Total Cash Costs (1) ($/oz) $636 $600 – 650 $550 – 600
Mine-site AISC (1),(2) ($/oz) $980 $950 – 1,000 $875 – 925
Tonnes of ore processed (tpd) 1,182 1,265 1,203 1,200 1,200
Grade processed (g/t Au) 9.74 8.82 9.48 8.6 – 10.2 9.3 – 13.3
Average recovery rate (%) 97% 98% 97% 96 – 97% 96 – 97%
Sustaining capital (1) ($ millions) $33 $45 – 50 $50 – 55
Growth capital (1) ($ millions) $118 $165 – 185 $210 – 230
Total sustaining & growth capital (1) (ex. Exploration) ($ millions) $151 $210 – 235 $260 – 285
Capitalized exploration (1)  ($ millions) $8 $ 11 $ 13

(1) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release and the Q3 2023 MD&A for a description and calculation of these measures.
(2) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share based compensation expenses to the mine sites.
(3) Refers to 2023 guidance announced on January 12, 2023.

Production guidance for Island Gold in 2024 is consistent with previous guidance and represents a 16% increase from 2023 production, reflecting higher grades. Grades are expected to increase further into 2025 and combined with higher mining and processing rates towards the latter part of the year, this is expected to drive an additional 16% increase in production. Following the completion of the Phase 3+ Expansion in 2026, mining rates are expected to begin ramping up towards 2,400 tpd contributing to a further 28% increase in production. As outlined in the Phase 3+ Study, production rates are expected to increase to average 287,000 ounces per year in 2027 and beyond.

Total cash costs and mine-site AISC are expected to decrease 8% from 2023 reflecting higher grades, partly offset by ongoing cost inflation, particularly labour in Northern Ontario. Costs are expected to decrease further into 2025 and 2026 reflecting higher grades in 2025, and higher mining rates and productivity improvements with the completion of the Phase 3+ Expansion in 2026.

Capital spending at Island Gold (excluding exploration) is expected to be between $260 and $285 million in 2024. This is up from 2023 reflecting the timing of capital spending, with some capital on the Phase 3+ Expansion expected to be spent late in 2023 deferred into 2024, additional capital for a planned tailings dam lift, as well as cost and labour inflation. Construction activities in 2024 will be focused on the shaft sinking, which began in December 2023, and the start of work on the paste plant and mill expansion. Capital spending is expected to remain at similar levels in 2025 and decrease substantially in 2026 with the Phase 3+ Expansion on schedule to be completed during the first half of 2026.

Mulatos District

Guidance
Mulatos District Q3 YTD 2023 Q4 2023 2023A 2023E ( 3 ) 2024E 2025E 2026E
Gold Production (000 oz) 165 48 213 175 – 185 160 – 170 120 – 130 120 – 130
Previous Guidance (000 oz) 140 – 150 110 – 120
Total Cash Costs ( 1 ) ($/oz) $861 $900 – 950 $925 – 975
Mine-site AISC ( 1 ) , ( 2) ($/oz) $948 $950 – 1,000 $1,000 – 1,050
Tonnes of ore stacked – La Yaqui Grande (tpd) 10,900 10,370 10,784 10,000 10,000
Grades stacked – La Yaqui Grande (g/t Au) 1.52 1.64 1.55 1.15 – 1.45 0.90 – 1.50
Recovery ratio (%) 82% 70% 78%  80 – 85% 80 – 90%
Tonnes of ore stacked – Mulatos crusher (tpd) ( 4 ) 13,700 8,097 12,260 15,000 – 17,000
Grades stacked – Mulatos (g/t Au) 1.17 2.19 1.34 0.8 – 1.0
Recovery ratio (%) 32% 27% 31% 50 – 55%
Sustaining capital ( 1 ) ($ millions) $10 $ 10 $3 – 5
Growth capital ( 1 ) ($ millions) $6 $5 – 10 $2 – 5
Total sustaining & growth capital ( 1 (ex. exploration) ($ millions) $16 $15 – 20 $5 – 10
Capitalized exploration ( 1 ) ($ millions) $6 $ 4 $ 9

(1) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release and the Q3 2023 MD&A for a description and calculation of these measures.
(2) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share based compensation expenses to the mine sites.
(3) Refers to 2023 guidance announced on January 12, 2023.

Combined gold production from the Mulatos District is expected to be between 160,000 and 170,000 ounces in 2024, a 14% increase from previous guidance (based on the mid-point). The higher production is expected to come from residual leaching of the main Mulatos leach pad which carries higher reported costs; however, is very profitable from a cash flow perspective with the majority of these costs previously incurred and recorded in inventory.

La Yaqui Grande is expected to provide approximately 75% of Mulatos District production in 2024. The remaining production is expected to come from residual leaching of the Mulatos leach pad with mining in the main Mulatos pit having ended in July 2023, and stacking of stockpiled ore on the pad concluding in December 2023. Production is expected to be weighted towards the first half of the year and decline through the year. This reflects higher grades at La Yaqui Grande during the first half of the year, and declining rates of production through residual leaching.

Total cash costs and mine-site AISC in 2024 are expected to be similar to 2023, though higher than what was incorporated into previous guidance reflecting the increase in production expected from residual leaching. The ounces recovered through residual leaching are expected to carry a reported mine-site AISC of approximately $1,850 per ounce with the majority of these costs having been previously incurred and sitting in inventory. The cash component to be spent to recover these ounces in 2024 is expected to be approximately $800 per ounce, providing significant free cash flow. Total cash costs and AISC are expected to increase slightly through the year driven primarily by the grade sequence at La Yaqui Grande.

Production guidance for 2025 was also increased to between 120,000 and 130,000 ounces reflecting slightly higher grades from La Yaqui Grande compared to previous guidance. Production is expected to decrease relative to 2024 with no production currently anticipated from residual leaching of the main Mulatos leach pad beyond 2024.

Production is expected to remain at similar levels in 2026 with guidance based on La Yaqui Grande only. Guidance for 2026 excludes the higher-grade PDA project which represents an excellent opportunity for additional production within the Mulatos District. A development plan outlining this upside potential at PDA is expected to be completed during the first quarter of 2024.

Capital spending is expected to total $5 to $10 million in 2024, down from 2023 with no major capital projects remaining at La Yaqui Grande. Capital spending is expected to remain at similar levels in 2025 and 2026, excluding PDA. Additional details on the PDA development plan are expected to be published in the first quarter of 2024.

2024 Global Operating and Development Capital Budget

2024 Guidance 2023 Guidance
Sustaining Capital (1) Growth Capital (1) Total Total
Operating Mines ($ millions)
Young-Davidson $40 – 45 $20 – 25 $60 – 70 $55 – 65
Island Gold $50 – 55 $210 – 230 $260 – 285 $210 – 235
Mulatos District $3 – 5 $2 – 5 $5 – 10 $15 – 20
Total – Operating Mines $93 – 105 $232 – 260 $325 – 365 $280 – 320
Development Projects ($ millions)
Lynn Lake $25 $ 25 $ 12
Total – Development Projects $ 25 $ 25 $ 12
Capitalized Exploration (1) ($ millions)
Young-Davidson $10 $ 10 $ 5
Island Gold $13 $ 13 $ 11
Mulatos District $9 $ 9 $ 4
Lynn Lake $9 $ 9 $ 5
Total – Capitalized Exploration (1) $ 41 $ 41 $ 25
Total Consolidated Budget ($ millions) $93 – 105 $298 – 326 $391 – 431 $317 – 357

(1) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description and calculation of these measures.

2024 Capital Budget for Lynn Lake

Capital spending on the Lynn Lake project, excluding exploration, is expected to total $25 million. This is up from 2023 reflecting planned upgrades to the site access and infrastructure. With approval of the Environmental Impact Statement and Provincial licenses received in March 2023, and the positive Feasibility Study completed in August 2023, the focus in 2024 will be on further de-risking and advancing the project ahead of an anticipated construction decision in 2025. This includes finishing detailed engineering, which is 75% complete, upgrading road access, and early work on the power line upgrade.

The majority of the $25 million capital budget in 2024 is spending included as initial capital in the 2023 Feasibility Study. Additionally, $9 million has been budgeted for exploration at Lynn Lake for a total capital budget of $34 million.

2024 Exploration Budget

The global exploration budget for 2024 is $62 million, a 24% increase from expected spending of $50 million in 2023. The increase reflects expanded budgets across all key assets following up on broad based exploration success in 2023. Island Gold and the Mulatos District account for approximately 60% of the total budget with $19 million planned for each asset. This is followed by $12 million at Young-Davidson, $9 million at Lynn Lake and $2 million at Golden Arrow. Approximately $41 million, or 66% of the 2024 budget will be capitalized.

Island Gold

A total of $19 million has been budgeted for exploration at Island Gold in 2024, up from $14 million in 2023 with both a larger near mine and regional exploration program.

The 2024 exploration program will follow up on a successful 2023 program with high-grade gold mineralization extended laterally to the West and East as well as within multiple structures within the hanging wall and footwall (see press release dated November 9, 2023). With the deposit open laterally and at depth, this ongoing exploration success highlights the significant potential for further growth in Mineral Reserves and Resources.

Consistent with the 2023 program, the majority of the 2024 mine exploration program will be comprised of underground drilling with 41,000 metres (“m”) planned. The focus will be the definition of new Mineral Reserves and Resources in proximity to existing production horizons and infrastructure, as well as the conversion of the large existing Mineral Resource base to Reserves. This includes drilling across the strike extent of main Island Gold Deposit (E1E and C-Zones), as well as within a growing number of newly defined hanging-wall and footwall zones. These potential high-grade Mineral Reserve and Resource additions would be low cost to develop and could be incorporated into the mine plan and mined within the next several years providing increased operational flexibility, and further increasing the value of the operation.

Additionally, 12,500 m of surface exploration drilling has been budgeted targeting 1) high potential areas within the Island West, Main and East ore shoots, 2) the up-plunge extension of the Island West ore shoot, and 3) evaluating the potential for high-grade mineralized hanging wall structures near surface.

To support the underground exploration drilling program, 460 m of underground exploration drift development is planned to extend drill platforms on the 850, 945, and 1025-levels. In addition to the exploration budget, 32,000 m of underground delineation drilling has been planned and included in sustaining capital for Island Gold which will be focused on the conversion of the large Mineral Resource base to Mineral Reserves.

The regional exploration program has also been expanded to 10,000 m, up from 7,500 m in 2023. The 2024 program will follow up on high-grade mineralization intersected at the Pine-Breccia and 88-60 targets, located 4 kilometres (“km”) and 7 km, respectively, from the Island Gold mine. Drilling will also be completed in proximity to the past-producing Cline and Edwards mines, as well as at the Island Gold North Shear target. A comprehensive data compilation project will also commence across the broader 40,000 hectare Manitou land package that was acquired in 2023 in support of future exploration targeting.

Mulatos District

A total of $19 million has been budgeted at Mulatos for exploration in 2024, similar to expected spending in 2023. The near-mine and regional drilling program is expected to total 55,000 m. This includes 27,000 m of surface exploration drilling at PDA and the surrounding area. This drilling will follow up on another successful year of exploration at PDA with high-grade mineralization expanded in multiple directions beyond Mineral Reserves and Resources at the higher-grade underground deposit.

Given the ongoing growth of the PDA deposit, other higher-grade sulphide opportunities will be targeted within the Mulatos District in 2024. This includes an initial 2,000 m of follow up drilling at the previously mined Cerro Pelon deposit where high-grade mineralization was intersected north of the mined-out open pit in 2015. This included 14.47 g/t Au over 50.30 m (15PEL012) and 9.65 g/t Au over 34.60 m (15PEL020).

Within the regional exploration program, 26,000 m has been budgeted. Nearly half will be focused on the Capulin target located 4 km from the Mulatos pit where significant, wide intervals of oxide and sulphide gold mineralization were intersected in 2023. This included the previously reported 2.01 g/t Au over 82.45 m core length (23REF012), and 2.73 g/t Au over 120.85 m core length, including 9.31 g/t Au over 29.05 m (23REF022). The remainder of the regional program will be focused on drilling at other high priority targets, including Cerro Pelon West and South.

Young-Davidson

A total of $12 million has been budgeted for exploration at Young-Davidson in 2024, up from $8 million in 2023. This includes 21,600 m of underground exploration drilling, and 1,070 m of underground exploration development to extend drill platforms on multiple levels.

The majority of the underground exploration drilling program will be focused on extending mineralization within the Young-Davidson syenite, which hosts the majority of Mineral Reserves and Resources. Drilling will also test the hanging wall and footwall of the deposit where higher grades have been previously intersected.

Young-Davidson has a 15-year Mineral Reserve life as of the end of 2022 and has maintained at least a 13-year Mineral Reserve life since 2011 reflecting ongoing exploration success. With the deposit open at depth and to the west, there is excellent potential for this track record to continue.

The regional program has been expanded with 7,000 m of surface drilling planned in 2024, up from 5,000 m in 2023. The focus will be on testing multiple near-surface targets across the 5,900 hectare Young-Davidson Property that could potentially provide supplemental mill feed.

Additionally, $2 million is budgeted at Golden Arrow with 5,000 m of drilling planned. The focus of the drilling will be the conversion of existing Mineral Resources into Reserves, and testing near-deposit and early stage exploration targets across the property. Geotechnical and condemnation drilling will also be conducted as part of a development plan for the project. The Golden Arrow deposit is located 95 km from the Young-Davidson mill and is being evaluated as a source of supplemental mill feed.

Lynn Lake

A total of $9 million has been budgeted for exploration at the Lynn Lake project in 2024, up from $5 million in 2023. This includes 15,500 m of drilling focused on the conversion of Mineral Resources to Mineral Reserves at the Burnt Timber and Linkwood deposits, and to evaluate the potential for Mineral Resources at Maynard, an advanced stage greenfield target.

Burnt Timber and Linkwood contain Inferred Mineral Resources totaling 1.6 million ounces grading 1.1 g/t Au (44 million tonnes) as of December 31, 2022. The Company sees excellent potential for this to be converted into a smaller, higher quality Mineral Reserve which could be incorporated into the Lynn Lake project given its proximity to the planned mill. This represents potential production and economic upside to the Feasibility Study completed on Lynn Lake in August 2023.

Burnt Timber and Linkwood are accessible by an all-season gravel road from Highway 397, 24 km and 28 km from the proposed MacLellan mill, respectively. The Maynard target is located 5 km northwest of the Linkwood deposit, 1 km from the all-season gravel road, and 20 km from the proposed MacLellan mill.

The Company will also continue evaluating and advancing a pipeline of prospective exploration targets within the 58,000-hectare Lynn Lake Property in 2024.

Assumptions and Sensitivities

Assumptions & Expenses 2024
Gold price $/oz $1,800
Canadian dollar USD/CAD $0.75:1
Mexican peso MXN/USD 17.0:1
Amortization $/oz $375
General & Administrative(1) $ millions $28

( 1 ) Excludes stock-based compensation.

The 2024 to 2026 production forecast, operating cost and capital estimates are based on a gold price assumption of $1,800 per ounce, a USD/CAD foreign exchange rate of $0.75:1 and MXN/USD foreign exchange rate of 17.0:1. Cost assumptions for 2025 and 2026 are based on 2024 input costs and have not been increased to reflect potential inflation in those years. These estimates may be updated in the future to reflect inflation beyond what is currently forecast for 2024.

Amortization expense in 2024 is expected to total approximately $375 per ounce, consistent with 2023 amortization. General and administrative expenses in 2024 are expected to total $28 million (excluding stock-based compensation), consistent with 2023 spending.

Sensitivities 2024 Operating Sites Local Currency Exposure Change Free Cash Flow Sensitivity (1)
Gold price $1,800 $100 ~$50 million
USD/CAD $0.75:1 95% $0.05 ~$30 – 35 million
MXN/USD 17.0:1 40% 1.00 ~$3 – 4 million

(1) Free cash flow sensitivities include the impact of foreign exchange and short-term gold hedging arrangements noted below.

Current foreign exchange and gold hedging commitments

The Company has entered into the following foreign exchange and short-term hedging arrangements to date:

  • Canadian dollar: approximately 55% of Canadian dollar-denominated operating and capital costs for 2024 have been hedged, ensuring a maximum USD/CAD foreign exchange rate of $0.75:1 and allowing the Company to participate in weakness in the USD/CAD down to an average rate of $0.70:1 (if the USD/CAD rate weakens beyond $0.70:1, the average rate increases to $0.72:1).
  • Mexican peso: approximately 17% of Mexican peso-denominated operating and capital costs in 2024 have been hedged, ensuring a minimum MXN/USD foreign exchange rate of 18.0:1 and allowing the Company to participate in weakness in the MXN/USD up to an average rate of 19.8:1.
  • Gold collar contracts: The Company also periodically enters into short term gold hedging arrangements. Currently, the Company has hedged 69,750 ounces in 2024, ensuring an average minimum gold price of $1,926 per ounce and participation up to an average gold price of $2,356 per ounce. This represents approximately 14% of 2024 production (based on mid-point of guidance).

Qualified Persons

Chris Bostwick, Alamos’ Senior Vice President, Technical Services, who is a qualified person within the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects, has reviewed and approved the scientific and technical information contained in this press release.

About Alamos

Alamos is a Canadian-based intermediate gold producer with diversified production from three operating mines in North America. This includes the Young-Davidson and Island Gold mines in northern Ontario, Canada and the Mulatos mine in Sonora State, Mexico. Additionally, the Company has a strong portfolio of growth projects, including the Phase 3+ Expansion at Island Gold, and the Lynn Lake project in Manitoba, Canada. Alamos employs more than 1,900 people and is committed to the highest standards of sustainable development. The Company’s shares are traded on the TSX and NYSE under the symbol “AGI”.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Scott K. Parsons
Senior Vice President, Investor Relations
(416) 368-9932 x 5439

IBF4

Loading

NationTalk Partners & Sponsors Learn More