Alamos Gold Provides Updated Three-Year Production, Operating and Capital Guidance
Press Release
September 12, 2024
TORONTO, Sept. 12, 2024 — Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today provided updated three-year production and operating guidance incorporating the recently completed acquisition of the Magino mine, as well as increased 2024 production guidance for the Mulatos District. Capital guidance has also been updated to include the development of the Puerto Del Aire (“PDA”) project and a revised initial capital estimate for the Phase 3+ Expansion at Island Gold.
Consolidated 2024 production guidance for existing operations (pre-Magino acquisition) has increased 4% reflecting the outperformance of La Yaqui Grande, while 2025 and 2026 production guidance (excluding Magino) remains unchanged from previous guidance issued in January 2024. Consolidated cost guidance for existing operations remains largely unchanged with a slight increase in 2024 cost guidance and no changes across 2025 and 2026.
The inclusion of Magino contributed to a 13% increase in consolidated production guidance in 2024, and more than 20% increase in both 2025 and 2026, enhancing the Company’s strong growth profile. All-in sustaining cost (“AISC”) guidance has increased 11% on average across the three years reflecting Magino’s relatively higher costs. Company-wide AISC is expected to remain well below industry average and continue decreasing over the longer-term driven by low-cost production growth at Island Gold, and continued improvements at the Magino operation.
“The addition of Magino has enhanced our already strong growth profile, and its integration with Island Gold is expected to drive significant synergies and open up longer-term opportunities. Our near-term rate of production has increased by more than 20%. Longer-term we have the capacity to grow company-wide production to approximately 900,000 ounces per year, with further upside potential through future expansions of the Island Gold District,” said John A. McCluskey, President and Chief Executive Officer. “Our costs remain well below the industry average and are expected to decrease significantly over the next several years as we deliver on our low-cost growth initiatives. Through growing production and declining costs, we expect to deliver substantial free cash flow growth in the years ahead.”
Three Year Guidance Overview: Operating Mines
| 2024 | 2025 | 2026 | ||||
| Current | Previous(1) | Current | Previous(1) | Current | Previous(1) | |
| Gold Production – ex Magino (000 oz) | 510 – 540 | 485 – 525 | 470 – 510 | 470 – 510 | 520 – 560 | 520 – 560 |
| Consolidated Gold Production (000 oz) | 550 – 590 | 485 – 525 | 575 – 625 | 470 – 510 | 630 – 680 | 520 – 560 |
| Total Cash Costs(2) – ex Magino ($/oz) | $840 – 890 | $825 – 875 | $700 – 800 | $700 – 800 | $675 – 775 | $675 – 775 |
| Consolidated Total Cash Costs ($/oz) | $890 – 940 | $825 – 875 | $775 – 875 | $700 – 800 | $750 – 850 | $675 – 775 |
| All-in Sustaining Costs(2),(3) – ex Magino ($/oz) | $1,150 -1,200 | $1,125 – 1,175 | $1,050 – 1,150 | $1,050 – 1,150 | $975 – 1,075 | $975 – 1,075 |
| Consolidated All-in Sustaining Costs(2),(3) ($/oz) | $1,250 – 1,300 | $1,125 – $1,175 | $1,175 – 1,275 | $1,050 – 1,150 | $1,100 – 1,200 | $975 – 1,075 |
(1) Previous guidance was issued on January 10, 2024 and related to Young-Davidson, Island Gold and Mulatos District only.
(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) All-in sustaining cost guidance for 2025 and 2026 includes similar assumptions for G&A and stock based compensation as included in 2024.
- 2024 production guidance increased 13%: to between 550,000 and 590,000 ounces. This reflects increased production guidance from the Mulatos District driven by the outperformance of La Yaqui Grande (relative to previous guidance issued in January 2024), and the inclusion of Magino. Production from Magino has been included post completion of the Argonaut Gold acquisition on July 12, 2024, representing slightly less than half a year of production
- 2025 and 2026 production guidance increased by over 20%: reflecting the inclusion of Magino for full years and the operation at planned capacity. This includes a 22% increase in 2025 production guidance, and 21% increase in 2026 guidance to between 630,000 and 680,000 ounces. This represents 30% production growth relative to the mid-point of previous 2024 guidance issued at the start of the year
- Longer-term production potential of 900,000+ oz per year: through the development of PDA, with initial production expected mid-2027, and growth from Lynn Lake with first production as early as the second half of 2027. An evaluation of a longer-term expansion of the Magino mill to 15,000 to 20,000 tonnes per day (“tpd”) is also underway which could support additional growth bringing production closer to one million ounces per year
- AISC guidance increased 11% on average between 2024 and 2026: reflecting the inclusion of relatively higher cost Magino production. Costs remain well below the industry average with steady improvements expected through 2026 driven by low-cost production growth
- Declining cost profile with AISC expected to decrease 10% by 2026 compared to 2024: AISC is expected to decrease to between $1,100 and $1,200 per ounce in 2026 driven by low-cost growth at Island Gold and improving costs at Magino. Beyond 2026, AISC is expected to decrease below $1,100 per ounce, reflecting additional low-cost growth from Island Gold and Lynn Lake
Three Year Guidance Overview: Capital
| 2024 | 2025 | 2026 | ||||
| ($ millions) | Current | Previous(2) | Current | Previous(2) | Current | Previous(2) |
| Sustaining & Growth Capital (operating mines, ex. Exploration & Lynn Lake)(1) | $325 – 365 | $325 – 365 | $310 – 350 | $310 – 350 | $175 – 200 | $175 – 200 |
| Addition of PDA | – | $20 | $90 – 95 | |||
| Addition of Magino | $35 – 40 | $55 – 60 | $55 – 60 | |||
| Changes to Phase 3+ Expansion | ($30) | $40 – 45 | $25 – 35 | |||
| Total Capital (operating mines, ex. Exploration & Lynn Lake)(1) | $330 – 375 | $325 – 365 | $425 – 475 | $310 – 350 | $345 – 390 | $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) Previous guidance was issued on January 10, 2024 and related to Young-Davidson, Island Gold and Mulatos District only.
- Capital spending increased in 2025 and 2026 reflecting inclusion of Magino, PDA development, and updated Phase 3+ Expansion capital:
- The main driver of the increase in capital spending over the next three years is the inclusion of growth and sustaining capital for the newly acquired Magino operation, as well as growth capital for the development of PDA. Both are in support of high-return, lower-risk organic growth initiatives
- 2024 capital guidance range was increased slightly to between $330 and $375 million (excluding capitalized exploration), reflecting the inclusion of Magino from July 2024 onward, largely offset by a reduction at Island Gold with the mill expansion and tailings lifts no longer required with the Magino acquisition
- 2025 and 2026 capital guidance was revised to include:
- initial capital for the high-return, PDA project as per the recently announced development plan (see September 4, 2024 press release)
- the inclusion of Magino growth and sustaining capital for the normal course operation, as well as for the completion of the mill optimization and other projects that were deferred by the previous operator
- additional capital for the completion of the Phase 3+ Expansion
- Phase 3+ Expansion initial capital has been increased by approximately $40 million with expected completion on track for the first half of 2026. This represents a 5% increase from the initial capital estimate of $756 million provided in the first half of 2022. Updated capital is now expected to total $796 million, with $415 million remaining to be spent as of June 30, 2024. The increase was driven by ongoing inflationary pressures since 2022, and scope changes to the project, partly offset by synergies from the Magino acquisition and the weaker Canadian dollar
- Strong ongoing free cash flow while funding high-return growth initiatives: the Company generated $131 million in free cash flow in the first half of 2024 and expects to continue generating strong free cash flow at current gold prices while funding the Phase 3+ Expansion at Island Gold, and development of PDA. The completion of Phase 3+ Expansion in 2026 and PDA development in 2027 are expected to drive growing free cash flow generation through higher production, lower costs, and lower capital spending
Guidance statements in this release are forward-looking information. See the Assumptions section of this release along with the cautionary note at the end of this release.
Upcoming catalysts
- Burnt Timber and Linkwood study (satellite deposits to Lynn Lake): Q4 2024
- 2024 year-end Mineral Reserve and Resource update: February 2025
- Island Gold District Life of Mine Plan: mid-2025
- Island Gold District Expansion Study: Q4 2025
- Island Gold District, Mulatos District & Young-Davidson exploration updates: ongoing
2024 Guidance
| 2024 Guidance | |||||||||||||
| Young- Davidson |
Island Gold |
Magino Mine(1) |
Mulatos District |
Lynn Lake |
Total Current |
Total Previous (2) |
|||||||
| Gold production (000 oz) | 180 – 190 | 145 – 155 | 40 – 50 | 185 – 195 | 550 – 590 | 485 – 525 | |||||||
| Total cash costs(3) ($/oz) | $1,000 – 1,050 | $550 – 600 | $1,450 – 1,550 975 | $925 – 975 | – | $890 – 940 | $825 – 875 | ||||||
| All-in sustaining costs(3) ($/oz) | $1,250 – 1,300 | $1,125 – 1,175 | |||||||||||
| Mine-site all-in sustaining costs(3)(4) ($/oz) | $1,225 – 1,275 | $875 – 925 | $2,250 – 2,350 | $1,000 – 1,050 | – | ||||||||
| Capital expenditures ($ millions) | |||||||||||||
| Sustaining capital(3) | $40 – 45 | $50 – 55 | $35 – 40 | $3 – 5 | – | $128 – 145 | $93 – 105 | ||||||
| Growth capital(3) | $20 – 25 | $180 – 200 | – | $2 – 5 | – | $202 – 230 | $232 – 260 | ||||||
| Total Sustaining and Growth Capital(3) – producing mines ($ millions) | $60 – 70 | $230 – 255 | $35 – 40 | $5 – 10 | – | $330 – 375 | $325 – 365 | ||||||
| Growth capital(3) – development projects ($ millions) | $25 | $25 | $25 | ||||||||||
| Capitalized exploration(3) ($ millions) | $10 | $13 | $2 | $9 | $9 | $43 | $41 | ||||||
| Total capital expenditures and capitalized exploration(3) ($ millions) | $70 – 80 | $243 – 268 | $37 – 42 | $14 – 19 | $34 | $398 – 443 | $391 – 431 | ||||||
(1) The guidance for the Magino Mine is for Alamos’ ownership period from July 12, 2024 to December 31, 2024.
(2) Previous guidance was issued on January 10, 2024 and related to Young-Davidson, Island Gold and Mulatos District only.
(3) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description of these measures.
(4) 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 550,000 and 590,000 ounces, a 13% increase from the guidance provided in January 2024 (based on mid-point). The increase is driven by the incorporation of the Magino mine, as well as increased guidance from the Mulatos District.
With the closing of the Argonaut Gold acquisition on July 12, 2024, less than half a year of production from Magino is being incorporated into 2024 estimates. Magino is expected to produce 40,000 to 50,000 ounces in the second half of 2024. As previously outlined, the third quarter is expected to be impacted by downtime to implement various improvements to the crushing and conveying circuit. Combined with the partial reporting period, third quarter Magino production is expected to be slightly less than the second quarter. Production rates at Magino are expected to improve in the fourth quarter and into 2025 reflecting various improvements to the Magino mill that are being implemented in the third quarter.
Reflecting the strong outperformance of La Yaqui Grande during the first half of the year, Mulatos District production guidance has been increased by 15% to between 185,000 and 195,000 ounces.
AISC guidance has increased 11% relative to previous guidance (based on the mid-point) with nearly all of the increase attributable to the inclusion of relatively higher cost production from Magino during the ramp up of the operation.
Young-Davidson’s AISC guidance was increased by 4% to reflect higher realized costs during the first quarter which had been impacted by temporary downtime to replace head ropes in the Northgate shaft. Young-Davidson’s costs decreased significantly in the second quarter and are expected to continue to improve in the second half of the year. Additionally, the increase in the Company’s share price during the year resulted in a revaluation of previously issued stock based compensation which contributed to approximately $10 per ounce increase in AISC guidance.
Capital guidance for 2024 has increased by 2% relative to previous guidance. The increase reflects the inclusion of Magino, largely offset by capital savings at Island Gold through the integration of the two operations. With ore from Island Gold to be processed at lower operating costs through the larger Magino mill starting early 2025, the Island Gold mill expansion and tailings lift previously planned for 2024 are no longer required.
Capital spending at Magino during the second half of 2024 will be comprised of capitalized stripping and equipment leases, as well as ongoing work on the mill optimization.
2024 – 2026 Guidance: Operating Mines
| 2024 | 2025 | 2026 | ||||
| Current | Previous(1) | Current | Previous(1) | Current | Previous(1) | |
| Gold Production (000 oz) | ||||||
| Young-Davidson | 180 – 190 | 180 – 195 | 180 – 195 | 180 – 195 | 180 – 195 | 180 – 195 |
| Island Gold District(2) | 145 – 155 | 145 – 160 | 275 – 300 | 170 – 185(1) | 330 – 355 | 220 – 235(1) |
| Magino Mine(2) | 40 – 50 | n/a | n/a | n/a | ||
| Mulatos District | 185 – 195 | 160 – 170 | 120 – 130 | 120 – 130 | 120 – 130 | 120 – 130 |
| Total Gold Production (000 oz) | 550 – 590 | 485 – 525 | 575 – 625 | 470 – 510 | 630 – 680 | 520 – 560 |
| Total Cash Costs(3) ($/oz) | $890 – 940 | $825 – 875 | $775 – 875 | $700 – 800 | $750 – 850 | $675 – 775 |
| All-in Sustaining Costs(3),(4) ($/oz) | $1,250 – 1,300 | $1,125 – 1,175 | $1,175 – 1,275 | $1,050 – 1,150 | $1,100 – 1,200 | $975 – 1,075 |
| Sustaining capital(3),(5) ($ millions) | $128 – 145 | $93 – 105 | $145 – 160 | $115 – 125 | $135 – 150 | $105 – 115 |
| Growth capital(3),(5) ($ millions) | $202 – 230 | $232 – 260 | $280 – 315 | $195 – 225 | $210 – 240 | $70 – 85 |
| Total sustaining & growth capital(3),(5) (Operating mines; ex. Exploration) ($ millions) |
$330 – 375 | $325 – 365 | $425 – 475 | $310 – 350 | $345 – 390 | $175 – 200 |
(1) Previous guidance was issued on January 10, 2024 and related to Young-Davidson, Island Gold and Mulatos District only.
(2) 2024 production and cost estimates are for the Island Gold Mine, for 2025 and 2026 the Island Gold District includes both the Island Gold and Magino mines.
(3) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description of these measures.
(4) All-in sustaining cost guidance for 2025 and 2026 includes similar assumptions for G&A and stock based compensation as included in 2024.
(5) Sustaining and growth capital guidance is for producing mines and PDA development, but excludes capital for Lynn Lake and capitalized exploration.
Production guidance for 2025 has increased 22% relative to previous guidance reflecting a full year of production from Magino, at higher milling rates. Starting in 2025, production and costs from Magino will be reported as part of the Island Gold District with both operations to be integrated and utilizing one centralized mill and tailings facility. Milling rates at the Magino mill are expected to increase to design rates of 10,000 tonnes per day (“tpd”) within the fourth quarter of 2024, with a further increase to an optimized rate of 11,200 tonnes per day expected early in 2025.
At that point, the Island Gold mill will be shut down and Island Gold ore will be processed through the Magino mill at significantly lower processing costs. An expansion of the mill to 12,400 tpd is expected to be completed in 2026 and coincide with the completion of the Phase 3+ Expansion. This is expected to accommodate 10,000 tpd of ore from Magino and 2,400 tpd from Island Gold.
Production guidance for 2026 has increased 21% to between 630,000 and 680,000 ounces. This represents a 30% increase from previous guidance for 2024 reflecting the inclusion of Magino, as well as the completion of the Phase 3+ Expansion at Island Gold. There are no changes to 2025 and 2026 guidance for the Company’s other operations compared to previous guidance.
This growth is expected to continue into 2027 driven by a full year of production following the completion of the Phase 3+ Expansion, as well as initial production from PDA in the second half of the year. The Lynn Lake project represents further growth potential with initial production as early as the latter part of 2027.
AISC guidance for 2025 and 2026 has increased 11% and 12%, respectively, relative to previous guidance. Consistent with 2024, this reflects the inclusion of relatively higher-cost production from Magino. AISC is expected to decrease to between $1,100 and $1,200 per ounce in 2026, a 10% decrease from 2024 driven by low-cost growth at Island Gold, and improving costs at Magino. This trend is expected to continue beyond 2026 with AISC expected to decrease below $1,100 per ounce reflecting additional low-cost growth from Island Gold and Lynn Lake.
Capital spending in 2025 and 2026 was revised higher from the previous guidance to reflect:
- capital for the construction of the high-return PDA project, as outlined in the development plan announced on September 4, 2024
- the inclusion of Magino and associated capital for tailings, equipment leases, normal-course maintenance, as well as projects that were deferred by the previous operator, including the construction of a truck shop and fish habitat
- capital to connect Magino to the electric grid by 2026. This is expected to drive significant operating cost savings with power to Magino currently generated by a Compressed Natural Gas (“CNG”) plant
- a 5% increase in capital to complete the Phase 3+ Expansion reflecting ongoing inflation since the first half of 2022, and scope changes. This was largely offset by synergies through the integration of Magino and Island Gold, as well as the weaker Canadian dollar
(1) Production and AISC are based on mid-point of guidance; previous guidance was issued on January 10, 2024 and related to Young-Davidson, Island Gold and Mulatos District only.
(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.
Updated Phase 3+ Expansion Capital
The Phase 3+ Expansion initial capital estimate has been updated to reflect inflation and scope changes since the Phase 3+ Expansion Study was completed in the first half of 2022, as well as synergies from the acquisition of Magino.
Initial capital for the Phase 3+ Expansion has been increased by approximately $40 million to the expected completion of the expansion in 2026. Initial capital is now expected to total $796 million, a 5% increase from the initial capital estimate of $756 million provided in the first half of 2022.
The increase was driven by ongoing inflationary pressures since 2022, and scope changes to the project, partly offset by synergies from the Magino acquisition, and the weaker Canadian dollar. The key changes within the updated capital estimate are as follows:
- Magino mill expansion: $40 million increase for the expansion of the Magino mill to 12,400 tpd by 2026. This will accommodate ore from both Magino and the increased production from Island Gold following the completion of the Phase 3+ Expansion
- Inflation: $90 million increase in capital driven by more than two years of labour and material inflation representing a 12% increase on the total capital spend between 2022 and 2026. Since the Phase 3+ Expansion Study was completed in the first half of 2022, company-wide inflation has averaged 5% per year
- Scope changes: $30 million increase reflecting the following changes to the project:
- Relocation of crushing facility from surface to underground. This will further optimize the flow of ore handling from the underground to the mill, and reduce required maintenance of the hoisting plant
- Construction of a larger and modern administrative building at the shaft site, replacing the existing buildings located near the soon-to-be decommissioned Island Gold mill
- Construction of a new haul road from the underground portal at Island Gold to the Magino mill, allowing ore to be transported to the larger Magino mill for processing starting early 2025
- Synergies: $90 million decrease in capital with the mill expansion at Island Gold no longer required. Ore from Island Gold is expected to be processed through the significantly larger Magino mill starting in 2025
- Weaker Canadian dollar: $30 million decrease in capital based on updated USD/CAD assumption of $0.75:1 to reflect more current exchanges rates. The initial capital estimate prepared in 2022 was based on a USD/CAD exchange rate of $0.78:1
In addition to the initial capital savings to be realized through the cancellation of the Island Gold mill expansion, the Company expects to benefit from additional life of mine capital savings with no further expansions of the Island Gold tailings facility required. The operation is also expected to realize approximately $25 million per year of operating cost savings through the integration of the two operations and use of the significantly larger and more productive Magino mill to process Island Gold ore.
As of June 30, 2024, $381 million had been spent on the Phase 3+ Expansion, representing 48% of the updated initial capital estimate. The Phase 3+ Expansion remains on track for completion in the first half of 2026 with total remaining initial capital expected to be $415 million.
Assumptions
The 2024 to 2026 production forecast, operating cost and capital estimates remain based on a USD/CAD foreign exchange rate of $0.75:1 and MXN/USD foreign exchange rate of 17:1, with the exception of PDA capital which is based on a foreign exchange rate of 18:1. 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.
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 operations in North America. This includes the Young-Davidson mine and Island Gold District in northern Ontario, Canada, and the Mulatos District 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 2,400 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, Corporate Development & Investor Relations
(416) 368-9932 x 5439
Khalid Elhaj
Vice President, Business Development & Investor Relations
(416) 368-9932 x 5427
ir@alamosgold.com
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