“With another strong quarterly performance, we are on pace for a record year both operationally and financially. Production of 135,400 ounces was above our quarterly guidance, putting us on track to set a new record for annual production. Given the strong year-to-date performance, we are raising our full year production guidance by 5% to a range of 515,000 to 530,000 ounces. With total cash costs and all-in sustaining costs below the mid-point of guidance in the quarter and year-to-date, we are also on track to achieve full year cost guidance,” said
“This contributed to another solid quarter financially with
Third Quarter 2023
- Produced 135,400 ounces of gold, exceeding quarterly guidance of 120,000 to 130,000 ounces, reflecting strong performances from the
Mulatos District and Island Gold - The Company is raising its annual production guidance to a range of 515,000 to 530,000 ounces, a 5% increase from original guidance (based on the mid-point), driven by the strong outperformance from the
Mulatos District . With year-to-date production of 399,800 ounces, the Company is on pace for record annual production in 2023 The Mulatos District produced 53,900 ounces in the third quarter and 164,700 ounces year-to-date, nearly double the prior year period reflecting another solid performance from LaYaqui Grande . The higher margin ounces from LaYaqui Grande drove mine-site free cash flow of$30.9 million , bringing the year-to-date total to$114.7 million - Island Gold produced 36,400 ounces, a 19% increase compared to the second quarter of 2023, reflecting both higher grades and throughput. The Phase 3+ Expansion is progressing well with construction of the headframe largely complete and shaft sinking on track to begin by year end
- Sold 132,633 ounces of gold at an average realized price of
$1,932 per ounce, for quarterly revenues of$256.2 million . The average realized gold price was$4 per ounce above the London PM fix - Total cash costs1 of
$835 per ounce were at the low end of annual guidance and AISC1 of$1,121 per ounce were below the low end of guidance, driven by LaYaqui Grande and Island Gold and timing of sustaining capital expenditures. The Company remains on track to achieve full year cost guidance with total cash costs and AISC both below the mid-point of guidance year-to-date - Realized adjusted net earnings1 of
$54.5 million , or$0.14 per share. Adjusted net earnings includes adjustments for net unrealized foreign exchange losses recorded within both deferred taxes and foreign exchange of$11.9 million , and other losses totaling$3.2 million . Reported net earnings were$39.4 million , or$0.10 per share - Free cash flow1 of
$37.3 million in the third quarter, and$109.4 million year-to-date, a substantial increase from 2022 reflecting the strong operating performance and margin expansion. The Company expects to continue generating significant ongoing free cash flow over the next several years while funding the Phase 3+ Expansion at Island Gold - Generated cash flow from operating activities of
$112.5 million ($133.2 million , or$0.34 per share, before changes in working capital1) - Paid a quarterly dividend of
$9.9 million , or$0.025 per share (annualized rate of$0.10 per share) - Cash and cash equivalents increased to
$215.9 million , up 14% from the end of the second quarter, and 66% from the start of the year, reflecting strong free cash flow generation. The Company remains debt free - Completed an updated Feasibility Study on the
Lynn Lake project outlining a larger, longer-life, low-cost operation with attractive economics and significant exploration upside.Lynn Lake is expected to produce an average of 176,000 ounces of gold per year at mine-site AISC of$699 per ounce over its initial 10 years - Provided an exploration update at Mulatos, further expanding high-grade mineralization beyond Mineral Reserves and Resources at Puerto Del Aire ("PDA") and intersecting additional wide intervals of significant gold mineralization at the Capulin regional target. A development plan incorporating the growth in Mineral Reserves at PDA is expected to be completed towards the end of 2023
(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 | Nine Months Ended | |||||
2023 | 2022 | 2023 | 2022 | |||
Financial Results (in millions) | ||||||
Operating revenues | ||||||
Cost of sales (1) | ||||||
Earnings from operations | ||||||
Earnings before income taxes | ||||||
Net earnings (loss) | ( | ) | ( | ) | ||
Adjusted net earnings (2) | ||||||
Earnings before interest, taxes, depreciation and amortization (2) | ||||||
Cash provided by operations before working capital and taxes paid (2) | ||||||
Cash provided by operating activities | ||||||
Capital expenditures (sustaining) (2) | ||||||
Capital expenditures (growth) (2) (3) | ||||||
Capital expenditures (capitalized exploration) | ||||||
Free cash flow (2) | ( | ) | ||||
Operating Results | ||||||
Gold production (ounces) | 135,400 | 123,400 | 399,800 | 326,200 | ||
Gold sales (ounces) | 132,633 | 122,780 | 397,253 | 323,410 | ||
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 | ||||||
Earnings (loss) per share, basic and diluted | ( | ) | ||||
Adjusted earnings per share, basic (2) | ||||||
Weighted average common shares outstanding (basic) (000’s) | 396,117 | 391,794 | 395,149 | 391,882 | ||
Financial Position (in millions) | ||||||
Cash and cash equivalents (4) |
(1) | Cost of sales includes mining and processing costs, royalties, and amortization expense. |
(2) | Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures. |
(3) | Includes growth capital from operating sites. |
(4) | Comparative cash and cash equivalents balance as at |
Three Months Ended | Nine Months Ended | |||
2023 | 2022 | 2023 | 2022 | |
Gold production (ounces) | ||||
45,100 | 49,300 | 135,300 | 147,600 | |
Island Gold | 36,400 | 31,400 | 99,800 | 93,200 |
53,900 | 42,700 | 164,700 | 85,400 | |
Gold sales (ounces) | ||||
45,498 | 49,218 | 134,744 | 147,405 | |
Island Gold | 35,255 | 31,342 | 97,165 | 91,507 |
51,880 | 42,220 | 165,344 | 84,498 | |
Cost of sales (in millions) (1) | ||||
Island Gold | ||||
Cost of sales per ounce of gold sold (includes amortization) (1) | ||||
Island Gold | ||||
Total cash costs per ounce of gold sold (2) | ||||
Island Gold | ||||
Mine-site all-in sustaining costs per ounce of gold sold (2),(3) | ||||
Island Gold | ||||
Capital expenditures (sustaining, growth, and capitalized exploration) (in millions)(2) | ||||
Island Gold (5) | ||||
Other |
(1) | Cost of sales includes mining and processing costs, royalties, and amortization expense. |
(2) | Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures. |
(3) | For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses. |
(4) | Includes capitalized exploration at |
(5) | Includes capitalized exploration at Island Gold of |
(6) | Includes capitalized exploration at |
(7) | |
Environment, Social and Governance Summary Performance
Health and Safety
- Total recordable injury frequency rate1 ("TRIFR") of 1.84 in the third quarter, an increase from 1.23 in the second quarter of 2023
- Lost time injury frequency rate1 ("LTIFR") of 0.09, consistent with the second quarter of 2023
- Year-to-date TRIFR of 1.40 and LTIFR of 0.06, a reduction of 19% and nil, respectively, from 2022
During the third quarter of 2023, the TRIFR increased with 21 recordable injuries, as compared to 13 in the prior quarter. Unfortunately, a second lost time injury occurred at the Mulatos operation involving the same exploration drilling contractor as the prior quarter. Additional training has been provided to the contractor.
Alamos strives to maintain a safe, healthy working environment for all, with a strong safety culture where everyone is continually reminded of the importance of keeping themselves and their colleagues healthy and injury-free. The Company’s overarching commitment is to have all employees and contractors return Home Safe Every Day.
Environment
- Zero significant environmental incidents and zero reportable spills in the third quarter and year-to-date
- Completed site visits at all three operating sites to assess compliance with internal Environmental Standards. Positive improvements were noted at all sites with action plans currently being implemented to meet remaining requirements
The Company is committed to preserving the long-term health and viability of the natural environment that surrounds its operations and projects. This includes investing in new initiatives to reduce our environmental footprint with the goal of minimizing the environmental impacts of our activities and offsetting any impacts that cannot be fully mitigated or rehabilitated.
Community
Ongoing donations, medical support and infrastructure investments were provided to local communities, including:
- Construction of a north access road in the Matarachi village, near the
Mulatos Mine , to improve vehicle and pedestrian access around the community during the rainy season - A shared Company-community effort to introduce beekeeping, or apiculture, in Matarachi as a rural development opportunity. This initiative included the provision of training, hives, tools, and protective equipment for all participants. In total 12 apiaries consisting of 60 hives were introduced and involved the participation of nine families, one school and both the Mulatos and La
Yaqui Grande mines - Visual health clinics for Matarachi residents, the third campaign in the last five years, benefiting nearly 300 people with prescription eyewear
- Construction of a columbarium for the township of
Dubreuilville - Supporting various community events in the Algoma district such as the annual
Wawa Music Festival , annualWawa Salmon Derby , the Lady Dunn Health Center Foundation’s High Tea, and several charity golf tournaments - Contributions to the
Young Mining Professionals Scholarship Fund to support students enrolled in mining-related programs at Canadian post-secondary institutions - Fundraising and participation in the Great Cycle Challenge to support
SickKids Hospital by raising funds and awareness towards fighting kids’ cancer
The Company also participated in several local job fairs across
The Company believes that excellence in sustainability provides a net benefit to all stakeholders. The Company continues to engage with local communities to understand local challenges and priorities. Ongoing investments in local infrastructure, health care, education, cultural and community programs remain a focus of the Company.
Governance and Disclosure
- Completed the Company’s annual response to the CDP (formerly
Carbon Disclosure Project ) Climate Change Questionnaire - Published the fourth edition of the Company's annual Women in Mining Newsletter, featuring interviews and stories from women across the Company that have contributed to Alamos’ success
- Advanced preparation of the Company’s 2022 Environmental, Social and Governance (ESG) Report, to be published in Q4 2023
- Hosted Alamos’ second Sustainability Summit in
Toronto for health & safety, environmental and community leaders across all operations and projects. The annual Summit is designed to facilitate collaboration, share ideas, and make plans to improve the Company’s Sustainability Performance Management Framework and adoption of the Responsible Gold Mining Principles
The Company maintains the highest standards of corporate governance to ensure that corporate decision-making reflects its values, including the Company’s commitment to sustainable development. During the quarter, the Company continued to advance its implementation of the Responsible Gold Mining Principles, developed by the
(1) Frequency rate is calculated as incidents per 200,000 hours worked.
Outlook and Strategy
2023 Guidance | |||||||||
Island Gold | Mulatos | Total | |||||||
Gold production (000’s ounces) | |||||||||
Revised guidance | 515 - 530 | ||||||||
Original guidance | 185 - 200 | 120 - 135 | 175 - 185 | 480 - 520 | |||||
Cost of sales, including amortization (in millions)(3) | $625 | ||||||||
Cost of sales, including amortization ($ per ounce)(3) | $1,250 | ||||||||
Total cash costs ($ per ounce)(1) | — | ||||||||
All-in sustaining costs ($ per ounce)(1) | |||||||||
Mine-site all-in sustaining costs ($ per ounce)(1)(2) | — | ||||||||
Capital expenditures (in millions) | |||||||||
Sustaining capital(1) | — | ||||||||
Growth capital(1) | |||||||||
$12 | |||||||||
Capitalized exploration(1) | $25 | ||||||||
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) | For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share based compensation expenses to the mine sites. |
(3) | Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of total cash cost guidance. |
The Company’s objective is to operate a sustainable business model that supports growing returns to all stakeholders over the long-term, through growing production, expanding margins, and increasing profitability. This includes a balanced approach to capital allocation focused on generating strong ongoing free cash flow while re-investing in high-return internal growth opportunities and supporting higher returns to shareholders.
With another strong quarterly performance, the Company continues to successfully execute on this strategy on all fronts. Production of 135,400 ounces exceeded third quarter guidance, while costs remained near the low end of annual guidance. This was driven by a solid quarter from Island Gold and another exceptional quarter from La
Given the strong year-to-date performance, full year production guidance has been increased to a range of 515,000 to 530,000 ounces. This marks a 5% increase from original 2023 guidance (based on the mid-point) driven by the solid outperformance from the
Fourth quarter production is expected to be between 115,000 and 130,000 ounces with AISC expected to be slightly above the top end of annual guidance, reflecting higher sustaining capital and lower grades mined at La
Financially, it was another solid quarter with free cash flow of
The Phase 3+ Expansion at Island Gold is progressing well with construction of the hoist house complete, and the headframe nearing completion, putting the start of shaft sinking on track to begin towards the end of this year. In August, an updated Feasibility Study was released on the
At PDA, step-out drilling continues to extend high-grade mineralization beyond Mineral Reserves and Resources supporting the expected ongoing growth of the deposit. This growth will be incorporated into a development plan which is expected to be completed towards the end of this year and will outline a significant mine life extension at the
Island Gold performed well in the third quarter with higher mining rates and grades driving a 19% increase in production from the second quarter. With year-to-date production of 99,800 ounces, the operation is well positioned to meet full year production guidance. As outlined in the Phase 3+ Expansion study released in
Combined gold production from the
Capital spending, including capitalized exploration, totaled
The global exploration budget for 2023 is consistent with spending in 2022.
The Company's liquidity position continues to strengthen with cash and cash equivalents increasing to
Third Quarter 2023 results
Young-Davidson Financial and Operational Review
Three Months Ended | Nine Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Gold production (ounces) | 45,100 | 49,300 | 135,300 | 147,600 | ||||
Gold sales (ounces) | 45,498 | 49,218 | 134,744 | 147,405 | ||||
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) | ||||||||
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 | 733,413 | 644,000 | 2,190,418 | 2,122,820 | ||||
Tonnes of ore mined per day | 7,972 | 7,000 | 8,024 | 7,776 | ||||
Average grade of gold (4) | 2.06 | 2.28 | 2.14 | 2.29 | ||||
Metres developed | 2,108 | 2,589 | 7,041 | 8,933 | ||||
Mill Operations | ||||||||
Tonnes of ore processed | 754,705 | 719,050 | 2,153,377 | 2,161,792 | ||||
Tonnes of ore processed per day | 8,203 | 7,816 | 7,888 | 7,919 | ||||
Average grade of gold (4) | 2.08 | 2.31 | 2.14 | 2.31 | ||||
Contained ounces milled | 50,393 | 53,290 | 148,380 | 160,734 | ||||
Average recovery rate | 90 | % | 92 | % | 90 | % | 91 | % |
(1) | Cost of sales includes mining and processing costs, royalties and amortization. |
(2) | Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures. |
(3) | For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses. |
(4) | Grams per tonne of gold ("g/t Au"). |
Operational review
Milling rates increased to average 8,203 tpd in the third quarter, a new record for the operation. Milling rates exceeded mining rates with surface stockpiles supplementing mill feed. Grades processed averaged 2.08 g/t Au in the quarter and 2.14 g/t Au year-to-date, the latter consistent with the low end of annual guidance. Mill recoveries averaged 90% in the quarter, in line with guidance.
Financial Review
Third quarter revenues of
Cost of sales of
Total cash costs were
Capital expenditures in the quarter included
Island Gold Financial and Operational Review
Three Months Ended | Nine Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Gold production (ounces) | 36,400 | 31,400 | 99,800 | 93,200 | ||||
Gold sales (ounces) | 35,255 | 31,342 | 97,165 | 91,507 | ||||
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) | ||||||||
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 | 113,682 | 104,565 | 322,646 | 319,757 | ||||
Tonnes of ore mined per day ("tpd") | 1,236 | 1,137 | 1,182 | 1,171 | ||||
Average grade of gold (4) | 9.94 | 9.67 | 9.59 | 9.37 | ||||
Metres developed | 2,063 | 1,664 | 6,301 | 5,005 | ||||
Mill Operations | ||||||||
Tonnes of ore processed | 113,061 | 121,571 | 322,568 | 336,668 | ||||
Tonnes of ore processed per day | 1,229 | 1,321 | 1,182 | 1,233 | ||||
Average grade of gold (4) | 10.11 | 9.38 | 9.74 | 9.25 | ||||
Contained ounces milled | 36,767 | 36,661 | 101,029 | 100,119 | ||||
Average recovery rate | 97 | % | 93 | % | 97 | % | 95 | % |
(1) | Cost of sales includes mining and processing costs, royalties, and amortization. |
(2) | Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures. |
(3) | For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses. |
(4) | Grams per tonne of gold ("g/t Au"). |
Operational review
Island Gold produced 36,400 ounces in the third quarter of 2023, a 16% increase from the prior year period, reflecting higher grades mined and processed, partially offset by lower tonnes milled. For the first nine months of 2023, Island Gold produced 99,800 ounces, a 7% increase from the prior year period. With the solid year-to-date performance, Island Gold remains on track to achieve full year production guidance.
Underground mining rates averaged 1,236 tpd in the third quarter, exceeding annual guidance and an increase of 12% from the second quarter. Grades mined averaged 9.94 g/t Au in the quarter, and 9.59 g/t Au through the first nine months of the year, both consistent with annual guidance.
Mill throughput averaged 1,229 tpd for the quarter. Milling throughput was lower than the prior year period, as the third quarter of 2022 included processing of approximately 10,000 tonnes of Island Gold stockpiled ore at the
Financial Review
Revenues of
Cost of sales of
Total cash costs of
Total capital expenditures were
Mine-site free cash flow was negative
Mulatos District Financial and Operational Review
Three Months Ended | Nine Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Gold production (ounces) | 53,900 | 42,700 | 164,700 | 85,400 | ||||
Gold sales (ounces) | 51,880 | 42,220 | 165,344 | 84,498 | ||||
Financial Review (in millions) | ||||||||
Operating Revenues | ||||||||
Cost of sales (1) | ||||||||
Earnings (loss) from operations | ( | ) | ( | ) | ||||
Cash provided (used) 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) | ||||||||
Open Pit Operations | ||||||||
Tonnes of ore mined - open pit (4) | 918,053 | 739,594 | 2,947,113 | 1,236,413 | ||||
Total waste mined - open pit (6) | 5,715,419 | 5,327,341 | 17,150,171 | 17,469,454 | ||||
Total tonnes mined - open pit | 6,633,472 | 6,066,935 | 20,097,284 | 18,705,867 | ||||
Waste-to-ore ratio (operating) | 5.00 | 5.00 | 5.00 | 5.00 | ||||
Crushing and Heap Leach Operations | ||||||||
Tonnes of ore stacked | 948,451 | 794,127 | 2,982,018 | 1,127,108 | ||||
Average grade of gold processed (5) | 1.50 | 1.23 | 1.52 | 1.33 | ||||
Contained ounces stacked | 45,722 | 31,362 | 146,196 | 48,133 | ||||
Average recovery rate | 84 | % | 81 | % | 82 | % | 63 | % |
Ore crushed per day (tonnes) | 10,300 | 8,700 | 10,900 | 6,159 | ||||
Open Pit Operations | ||||||||
Tonnes of ore mined - open pit (4) | 80,868 | 795,339 | 2,250,380 | 2,600,777 | ||||
Total waste mined - open pit (6) | 130,519 | 1,573,334 | 1,309,034 | 5,237,360 | ||||
Total tonnes mined - open pit | 211,387 | 2,332,673 | 3,559,415 | 7,838,137 | ||||
Waste-to-ore ratio (operating) | 1.61 | 2.07 | 0.58 | 1.63 | ||||
Crushing and Heap Leach Operations | ||||||||
Tonnes of ore stacked | 1,083,017 | 1,274,662 | 3,729,738 | 4,542,916 | ||||
Average grade of gold processed (5) | 1.55 | 0.75 | 1.17 | 0.72 | ||||
Contained ounces stacked | 53,923 | 30,916 | 140,375 | 104,965 | ||||
Average recovery rate | 29 | % | 56 | % | 32 | % | 52 | % |
Ore crushed per day (tonnes) | 11,800 | 14,000 | 13,700 | 16,600 |
(1) | Cost of sales includes mining and processing costs, royalties, and amortization expense. |
(2) | Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures. |
(3) | For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses. |
(4) | Includes ore stockpiled during the quarter. |
(5) | Grams per tonne of gold ("g/t Au"). |
(6) | Total waste mined includes operating waste and capitalized stripping. |
Mulatos District Operational Review
For the first nine months of 2023, the
La Yaqui Grande Operational Review
La
Mulatos Operational Review
Mulatos produced 15,600 ounces in the third quarter, 10% lower than the second quarter of 2023, reflecting completion of mining from the El Salto portion of the pit in July. Total crusher throughput averaged 11,800 tpd, with a total of 1,083,017 tonnes stacked, with grades averaging 1.55 g/t Au. The majority of tonnes stacked in the quarter were from stockpiled ore which will continue to be stacked at declining rates until the stockpiles are depleted in the fourth quarter. The operation is expected to benefit from ongoing gold production at decreasing rates into 2024 through residual leaching of the leach pad.
Financial Review (
Revenues of
Cost of sales of
Total cash costs for the
Capital expenditures totaled
Third Quarter 2023 Development Activities
Island Gold (
Phase 3+ Expansion
On
The Phase 3+ Expansion to 2,400 tpd from the current rate of 1,200 tpd will involve various infrastructure investments. These include the installation of a shaft, paste plant, expansion of the mill as well as accelerated development to support the higher mining rates. Following the completion of the expansion in 2026, the operation will transition from trucking ore and waste up the ramp to skipping ore and waste to surface through the new shaft infrastructure, driving production higher and costs significantly lower.
Construction continued through the third quarter of 2023, with shaft site surface infrastructure nearing completion in advance of shaft sinking, which is expected to commence by the end of the year. Further details on progress to the end of the third quarter are summarized below:
- Construction of the shaft area substation substantially complete and connected to the Island Gold substation
- Headframe construction substantially complete
Galloway outfitting over 50% complete- Pre-commissioning tests on the e-house electrical systems commenced
- Earthworks for propane storage facility completed
- Warehouse building construction underway
Paste plant detailed engineering 70% complete and expected to be substantially complete by year end; issuance of long lead time equipment procurement packages is ongoing- Mill expansion basic engineering 77% complete and expected to be completed by year end, with overall engineering being 30% complete; issuance of long lead time equipment procurement packages is ongoing
- Lateral development to support higher mining rates with the Phase 3+ Expansion ongoing
During the third quarter of 2023, the Company spent
(in US$M) Growth capital (including indirects and contingency) | P3+ 2400 Study1 | Spent to date2 | Committed to date | % of Spent & Committed | |
229 | 118 | 83 | 88 | % | |
Mill Expansion | 76 | 3 | 1 | 5 | % |
Paste Plant | 52 | 1 | 1 | 4 | % |
Power Upgrade | 24 | 4 | 6 | 42 | % |
16 | — | — | — | ||
General Indirect Costs | 64 | 27 | 6 | 52 | % |
Contingency3 | 55 | — | |||
48 | % | ||||
Underground Equipment & Infrastructure | 79 | 26 | — | 33 | % |
162 | 64 | — | 40 | % | |
45 | % |
1. | Phase 3+ 2400 Study is as of |
2. | Amount spent to date accounted for on an accrual basis, including working capital movements. |
3. | Contingency has been allocated to the various areas. |
Growth capital spending at Island Gold on the Phase 3+ Expansion is expected to be between
Shaft site area -
In
On
2023 Study Highlights:
Higher production: average annual gold production of 207,000 ounces over the first five years and 176,000 ounces over the initial 10 years
- The 10-year average represents a 23% increase over the annual average of 143,000 ounces in the 2017 Study
Low-cost profile: average mine-site all-in sustaining costs of
- Average mine-site all-in sustaining costs decreased 6% from the 2017 Study over the initial 10-years with economies of scale provided by the larger operation, and higher average grades, more than offsetting cost inflation
Larger, longer-life operation supported by 44% larger Mineral Reserve with further upside potential
- 44% larger Mineral Reserve totaling 2.3 million ounces grading 1.52 g/t Au (47.6 million tonnes ("mt"))
- 17-year mine life, up from 10 years in the 2017 Study
- Life of mine production of 2.2 million ounces, a 46% increase from 1.5 million ounces reported in 2017
Modest increase in capital intensity with larger operation and 46% increase in life of mine production partly offsetting inflation
- Initial capital of
$632 million , and life of mine capital including sustaining capital and reclamation of$832 million , increased from the 2017 Study reflecting inflation and scope changes with the larger operation and Mineral Reserve - Total life of mine capital of
$381 per ounce increased 17% from$325 per ounce in the 2017 Study with the larger Mineral Reserve and economies of scale partly offsetting the significant industry-wide capital inflation experienced since 2017
Project de-risked given advanced level of engineering, additional geotechnical work, and EIS approval
- Detailed engineering 55% complete; basic engineering 100% complete as of
August 2023 - EIS approval and Provincial licenses received in
March 2023 with requirements outlined through the permitting process incorporated into the 2023 Study - Extensive geotechnical drilling, test pits, and ground penetrating radar employed across the project area including the mill, open pits and tailings locations providing higher degree of confidence around required earthworks, tailings design and mine plan
Attractive economics with significant long-term exploration upside potential
- After-tax net present value (“NPV”) (5%) of
$428 million (base case gold price assumption of$1,675 per ounce and USD/CAD foreign exchange rate of$0 .75:1) - After-tax internal rate of return (“IRR”) of 17%
- After-tax NPV (5%) of
$670 million , and an after-tax IRR of 22%, at current gold prices of approximately$1,950 per ounce - Payback of less than four years at the base case gold price of
$1,675 per ounce and less than three years at a$1,950 per ounce gold prices
Significant near-mine and regional exploration upside potential
- The
Lynn Lake project encompasses most of the east-trending, 125 km long,Lynn Lake Greenstone Belt in northwesternManitoba , with a total of 58,000 hectares of mineral tenure, representing significant exploration potential, including:- Gordon deposit: higher-grade gold mineralization extended outside of Mineral Reserves and Resources in the northeastern extent of the planned Gordon pit, in an area modeled as waste in the 2023 Study
- Burnt Timber and Linkwood: potential for smaller, higher-grade Mineral Resource that could be trucked and processed at the planned MacLellan mill later in the mine life
- Regional targets: extensive pipeline of highly prospective exploration targets at various stages of exploration across the
Lynn Lake greenstone belt. This includes the Maynard and Tulune targets where ongoing drilling continues to intersect gold mineralization. Both targets are within trucking distance of the MacLellan mill
- 18% decrease in GHG emissions per ounce from the 2017 Study reflecting the incorporation of electric shovels and drills at MacLellan, and productivity improvements with the larger operation
- 58% lower emissions per ounce produced than the industry average. The project will be connected to Manitoba’s electric grid, of which nearly all electricity is produced from clean, renewable power, supporting the company-wide target of a 30% reduction in absolute GHG emissions by 2030
Fully funded growth
- As outlined previously, the Company does not anticipate spending any significant capital on developing the
Lynn Lake project until the Phase 3+ Expansion at Island Gold is well advanced - With
$215.9 million of cash as ofSeptember 30, 2023 , no debt, strong ongoing free cash flow generation, and significant free cash flow growth expected from Island Gold in 2026 and beyond, the Company is well positioned to fund development ofLynn Lake internally
Development spending (excluding exploration) was
Kirazlı (Çanakkale, Türkiye)
On
On
Bilateral investment treaties are agreements between countries to assist with the protection of investments. The Treaty establishes legal protections for investment between Türkiye and
The Company incurred
Third Quarter 2023 Exploration Activities
Island Gold (
A total of
The underground exploration drilling program was expanded from 27,500 metres ("m") in 2022 to 45,000 m in 2023. The program is focused on defining new Mineral Reserves and Resources in proximity to existing production horizons and infrastructure including along strike, and in the hanging-wall and footwall. These potential high-grade Mineral Reserve and Resource additions would be low cost to develop and could be incorporated into the mine plan and mined within the next several years, further increasing the value of the operation. To support the underground exploration drilling program, 444 m of underground exploration drift development is planned to extend drill platforms on the 490, 790, 945, and 980-levels. In addition to the exploration budget, 36,000 m of underground delineation drilling has been planned and included in sustaining capital for Island Gold.
A regional exploration program including 7,500 m of drilling is also budgeted in 2023. The focus of the program is on evaluating and advancing exploration targets outside the Island Gold Deposit on the 55,300 ha Island Gold property. A total of 4,802 m of surface regional drilling in 16 holes was completed in the third quarter. Regional drilling has focused on the Pine-Breccia and
A total of 6,323 m of underground exploration drilling in 32 holes was also completed in the third quarter. The objective of the underground drilling is to identify new Mineral Resources close to existing Mineral Resource or Reserve blocks. In addition to underground exploration drilling, a total of 14,328 m of underground delineation drilling was completed in 76 holes, focused on infill drilling to convert Mineral Resources to Mineral Reserves. Year-to-date, 127 holes totaling 29,732 m have been completed as part of the underground exploration program, and 121 holes totaling 22,155 m as part of the underground delineation drilling program. A total of 99 m of underground exploration drift development was also completed during the third quarter.
Total exploration expenditures during the third quarter were
A total of
The focus of the underground exploration drilling program is to expand Mineral Reserves and Resources in five target areas in proximity to existing underground infrastructure. This includes targeting additional gold mineralization within the syenite which hosts the majority of Mineral Reserves and Resources, as well as within the hanging wall and footwall of the deposit where higher grades have been previously intersected.
During the third quarter of 2023, two underground exploration drills completed 6,184 m in 17 holes from the 9220 West exploration drift and the 9025 East Footwall. Drilling is targeting syenite-hosted mineralization as well as continuing to test mineralization in the footwall sediments and in the hanging wall mafic-ultramafic stratigraphy. During the first nine months of 2023, a total of 17,880 m was completed in 44 holes.
In addition, 5,000 m of surface drilling was budgeted to test near-surface targets across the 5,720 ha
Total exploration expenditures during the third quarter were
During the third quarter of 2023, exploration activities continued at PDA and the near-mine area with 3,271 m of drilling completed in 42 holes. Additionally, an eight hole, 2,230 m geotechnical drilling program was completed to support development of PDA. Exploration drilling at PDA has been successful with Mineral Reserves increasing 70% in 2022 to 728,000 ounces (4.7mt grading 4.84 g/t Au) with grades also increasing 4%. Ongoing exploration success and results from the geotechnical drilling program will be incorporated into an updated development plan which is expected to be completed towards the end of 2023.
The regional program totaled 10,049 m of drilling completed in 31 holes in the third quarter. This included 6,319 m completed in 17 holes at the Capulin target, and 3,840 m completed in 13 drill holes at Cerro Pelon West.
As announced in the
PDA
- Additional high-grade gold mineralization extended beyond Mineral Reserves and Resources at PDA. This is expected to support further growth in the size of the deposit following a 71% increase in combined Mineral Reserves and Resources in 2022 to a total of 1.0 million ounces. An expanded drill program is ongoing with the deposit open in multiple directions. All reported composite widths are estimated true width of the mineralized zones.
- 41.46 g/t Au (18.87 g/t cut) over 7.05 m (23MUL122)
- 18.32 g/t Au (15.13 g/t cut) over 9.50 m (23MUL120)
- 13.62 g/t Au (13.62 g/t cut) over 9.45 m (23MUL120)
- 85.80 g/t Au (40.00 g/t cut) over 1.20 m (23MUL165)
- 5.58 g/t Au (5.58 g/t cut) over 17.60 m (23MUL165); and
- 10.42 g/t Au (10.42 g/t cut) over 6.00 m (23MUL139)
Capulin Target
- Step-out drilling continues to intersect wide, significant intervals of oxide and sulphide gold mineralization within a breccia adjacent to the Capulin Fault. This includes the best hole drilled to date at Capulin (23REF022), a 25 m step out from the previously reported initial hole drilled in this area 23REF012 (2.01 g/t Au over 82.45 m core length, including 4.81 g/t Au over 16.40 m and 5.38 g/t Au over 12.35 m). Drilling continues to test the geometry of the breccia unit and the extent of the gold mineralization, as well as targets across the broader Capulin area.
- 2.73 g/t Au over 120.85 m core length, including 9.31 g/t Au over 29.05 m (23REF022)
Note: Drillhole composite gold grades reported as “cut” at PDA may include higher grade samples which have been cut to 40 g/t Au. Drillhole composite gold grades reported at Capulin as uncut.
During the third quarter, exploration spending at Mulatos totaled
A total of
The 2023 drilling campaign was completed by the end of the second quarter comprising 7,979 m of drilling in 29 holes. Geological mapping, sampling and hand trenches with channel sampling was conducted in the third quarter, focused on the Tulune, Maynard, and
On
- Gordon Gold Deposit: gold mineralization extended outside of Mineral Reserves and Resources in the northeastern extent of the planned Gordon pit, in an area modeled as waste in the 2023 Study.
- 11.19 g/t Au over 10.40 metres (“m”) (5.87 m true width) (22GDX082)
- 2.51 g/t Au over 25.10 m (17.30 m true width) (22GDX081); and
- 2.86 g/t Au over 10.59 m (7.74 m true width), and 4.72 g/t Au over 5.35 m (3.55 m true width) (22GDX080)
- Maynard Regional Target: significant gold mineralization extended over a 700 m strike length and to a depth of 280 m. Maynard is located in proximity to the Burnt Timber and Linkwood deposits and 1 km from an all-season road, representing a high-priority target as a potential satellite deposit within trucking distance of the MacLellan mill. To date, all 16 holes drilled within the Maynard target have intersected gold mineralization1.
- 5.87 g/t Au over 11.88 m, including 13.81 g/t Au over 2.80 m, and 20.29 g/t Au over 1.22 m (23LLX066)
- 1.01 g/t Au over 56.90 m, including 6.09 g/t Au over 2.50 m (22LLX031)
- 2.63 g/t Au over 13.00 m, including 39.70 g/t Au over 0.73 m, and 0.80 g/t Au over 16.00 m, and 0.58 g/t Au over 23.15 m (22LLX027);
- 0.68 g/t Au over 40.13 m (22LLX028); and
- 1.09 g/t Au over 23.75 m, including 4.72 g/t over 4.01 m (22LLX030).
- Tulune Regional Target: additional drilling has extended broad zones of near surface gold mineralization over a 1.5 km strike length, including a 350 m step out hole to the east. Tulune is a greenfields discovery made in 2020, and is located between the Gordon and MacLellan deposits. All 29 holes drilled within the felsic intrusive at the Tulune target to date have intersected gold mineralization1.
- 1.12 g/t Au over 23.00 m (22LLX059)
- 1.08 g/t Au over 16.10 m, including 34.30 g/t Au over 0.30 m (22LLX054); and
- 0.75 g/t Au over 21.90 m (22LLX060)
- Burnt Timber and Linkwood Gold Deposits: an updated deposit-scale geological model has been completed for both deposits, demonstrating excellent potential for a smaller, higher-grade Mineral Resource that could provide additional ore to the MacLellan mill. The deposits contained Inferred Mineral Resources totaling 1.6 million ounces grading 1.1 g/t Au (44.4 mt) as of
December 31, 2022 . The Burnt Timber and Linkwood deposits are connected by an existing all-season road to the planned MacLellan site and mill, representing further upside potential to the upcoming 2023 Study.
1Gold grades reported as uncut, composite intervals reported as core length, true width is unknown at this time.
Exploration spending totaled
Review of Third Quarter Financial Results
During the third quarter of 2023, the Company sold 132,633 ounces of gold for operating revenues of
Cost of sales (which includes mining and processing costs, royalties, and amortization expense) were
Mining and processing costs were
Total cash costs of
Royalty expense was
Amortization of
The Company recognized earnings from operations of
The Company reported net earnings of
(1) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
Associated Documents
This press release should be read in conjunction with the Company’s interim consolidated financial statements for the three-month period ended
Reminder of Third Quarter 2023 Results Conference Call
The Company's senior management will host a conference call on
(416) 340-2217 | |
Toll free ( | (800) 898-3989 |
Participant passcode: | 3694467# |
Webcast: | www.alamosgold.com |
A playback will be available until
Qualified Persons
About Alamos
Alamos is a Canadian-based intermediate gold producer with diversified production from three operating mines in
FOR FURTHER INFORMATION, PLEASE CONTACT:
Senior Vice-President, Investor Relations | |
(416) 368-9932 x 5439 |
All amounts are in
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
Such statements include, but may not be limited to, guidance and expectations pertaining to: free cash flow, mine-site free cash flow, gold production, total cash costs, all-in sustaining costs, mine-site all-in sustaining costs, capital expenditures, total sustaining and growth capital, capitalized exploration; achieving 2023 annual guidance; increases to production, value of operation and decreases to costs resulting from intended completion of the Phase 3+ Expansion at Island Gold; intended infrastructure investments in, method of funding for, and timing of the completion of, the Phase 3+ Expansion; the expectation that the
Alamos cautions that forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by the Company at the time of making such statements, are inherently subject to significant business, economic, technical, legal, political and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information.
Risk factors that may affect Alamos’ ability to achieve the expectations set forth in the forward-looking statements in this press release include, but are not limited to: changes to current estimates of mineral reserves and resources; changes to production estimates (which assume accuracy of projected ore grade, mining rates, recovery timing and recovery rate estimates which may be impacted by unscheduled maintenance, weather issues, labour and contractor availability and other operating or technical difficulties); operations may be exposed to new diseases, epidemics and pandemics, including any ongoing effects and potential further effects of COVID-19; the impact of COVID-19 or any other new illness, epidemic or pandemic on the broader market and the trading price of the Company's shares; provincial and federal orders or mandates (including with respect to mining operations generally or auxiliary businesses or services required for the Company’s operations) in
Additional risk factors and details with respect to risk factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements contained in this press release are set out in the Company's latest 40-F/Annual Information Form and Management’s Discussion and Analysis, each under the heading “Risk Factors”, which are available on the SEDAR+ website at www.sedarplus.ca or on EDGAR at www.sec.gov. The foregoing should be reviewed in conjunction with the information, risk factors and assumptions found in this press release.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
Cautionary Note to U.S. Investors Concerning Measured, Indicated and Inferred Resources
Measured, Indicated and Inferred Resources: All resource and reserve estimates included in this press release or documents referenced in this press release have been prepared in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and the
Investors are cautioned that while the above terms are “substantially similar” to CIM Definitions, there are differences in the definitions under Regulation S-K 1300 and the CIM Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as “proven mineral reserves”, “probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the same had the Company prepared the mineral reserve or mineral resource estimates under the standards adopted under Regulation S-K 1300. U.S. investors are also cautioned that while the
International Financial Reporting Standards: The condensed interim consolidated financial statements of the Company have been prepared by management in accordance with International Financial Reporting Standard 34, Interim Financial Reporting, as issued by the
Non-GAAP Measures and Additional GAAP Measures
The Company has included certain non-GAAP financial measures to supplement its Consolidated Financial Statements, which are presented in accordance with IFRS, including the following:
- adjusted net earnings and adjusted earnings per share;
- cash flow from operating activities before changes in working capital and taxes received;
- company-wide free cash flow;
- total mine-site free cash flow;
- mine-site free cash flow;
- total cash cost per ounce of gold sold;
- AISC per ounce of gold sold;
- mine-site all-in sustaining cost ("Mine-site AISC") per ounce of gold sold;
- sustaining and non-sustaining capital expenditures; and
- earnings before interest, taxes, depreciation, and amortization ("EBITDA")
The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Management's determination of the components of non-GAAP and additional measures are evaluated on a periodic basis influenced by new items and transactions, a review of investor uses and new regulations as applicable. Any changes to the measures are dully noted and retrospectively applied as applicable.
Adjusted Net Earnings and Adjusted Earnings per Share
“Adjusted net earnings” and “adjusted earnings per share” are non-GAAP financial measures with no standard meaning under IFRS which exclude the following from net earnings (loss):
- Foreign exchange gain
- Items included in other (loss) gain
- Certain non-recurring items
- Foreign exchange (loss) gain recorded in deferred tax expense
- The income and mining tax impact of items included in other (loss) gain
Net earnings (loss) have been adjusted, including the associated tax impact, for the group of costs in “other (loss) gain” 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; and Turkish Projects holding costs and arbitration costs. The adjusted entries are also impacted for tax to the extent that the underlying entries are impacted for tax in the unadjusted net earnings (loss).
The Company uses adjusted net earnings for its own internal purposes. Management’s internal budgets and forecasts and public guidance do not reflect the items which have been excluded from the determination of adjusted net earnings. Consequently, the presentation of adjusted net earnings enables shareholders to better understand the underlying operating performance of the core mining business through the eyes of management. Management periodically evaluates the components of adjusted net earnings based on an internal assessment of performance measures that are useful for evaluating the operating performance of our business and a review of the non-GAAP measures used by mining industry analysts and other mining companies.
Adjusted net earnings is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of operating profit or cash flows from operations as determined under IFRS. The following table reconciles this non-GAAP measure to the most directly comparable IFRS measure.
(in millions) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Net earnings (loss) | ( | ) | ( | ) | ||||
Adjustments: | ||||||||
Inventory net realizable value adjustment, net of taxes | — | 7.7 | — | 22.4 | ||||
Impairment charge, net of taxes | — | — | — | 26.7 | ||||
Foreign exchange gain | (0.5 | ) | (1.5 | ) | (1.6 | ) | (1.9 | ) |
Other loss (gain) | 4.3 | (3.5 | ) | 2.6 | (1.5 | ) | ||
Unrealized foreign exchange loss (gain) recorded in deferred tax expense | 12.4 | 24.5 | (4.0 | ) | 31.6 | |||
Other income tax and mining tax adjustments | (1.1 | ) | 1.1 | (0.7 | ) | 0.4 | ||
Adjusted net earnings | ||||||||
Adjusted earnings per share - basic |
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 | Nine Months Ended | |||
2023 | 2022 | 2023 | 2022 | |
Cash flow from operating activities | ||||
Add: Changes in working capital and taxes paid | 20.7 | 22.1 | 50.1 | 56.1 |
Cash flow from operating activities before changes in working capital and taxes paid | $133.2 | $96.1 | $398.7 | $252.3 |
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 | Nine Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Cash flow from operating activities | ||||||||
Less: mineral property, plant and equipment expenditures | (75.2 | ) | (72.6 | ) | (239.2 | ) | (228.9 | ) |
Company-wide free cash flow | $37.3 | $1.4 | $109.4 | ($32.7 | ) |
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.
Consolidated | Three Months Ended | Nine Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
(in millions) | ||||||||
Cash flow from operating activities | ||||||||
Add: operating cash flow used by non-mine site activity | 9.7 | 8.2 | 38.9 | 32.6 | ||||
Cash flow from operating mine-sites | $122.2 | $82.2 | $387.5 | $228.8 | ||||
Mineral property, plant and equipment expenditure | ||||||||
Less: capital expenditures from development projects, and corporate | (5.6 | ) | ( | ) | (14.8 | ) | (17.4 | ) |
Capital expenditure and capital advances from mine-sites | $69.6 | $65.7 | $224.4 | $211.5 | ||||
Total mine-site free cash flow | $52.6 | $16.5 | $163.1 | $17.3 |
Young-Davidson Mine-Site Free Cash Flow | Three Months Ended | Nine Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
(in millions) | ||||||||
Cash flow from operating activities | ||||||||
Mineral property, plant and equipment expenditure | (12.3 | ) | (15.1 | ) | (43.2 | ) | (50.9 | ) |
Mine-site free cash flow | $30.9 | $23.3 | $82.6 | $77.3 |
Island Gold Mine-Site Free Cash Flow | Three Months Ended | Nine Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
(in millions) | ||||||||
Cash flow from operating activities | ||||||||
Mineral property, plant and equipment expenditure | (47.5 | ) | (40.7 | ) | (159.2 | ) | (103.4 | ) |
Mine-site free cash flow | ($9.2 | ) | ($8.6 | ) | ($34.2 | ) | $5.6 |
Mulatos District Free Cash Flow | Three Months Ended | Nine Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
(in millions) | ||||||||
Cash flow from operating activities | ( | ) | ||||||
Mineral property, plant and equipment expenditure | (9.8 | ) | (9.9 | ) | (22.0 | ) | (57.2 | ) |
Mine-site free cash flow | $30.9 | $1.8 | $114.7 | ($65.6 | ) |
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. 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
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 | Nine Months Ended | |||
2023 | 2022 | 2023 | 2022 | |
(in millions, except ounces and per ounce figures) | ||||
Mining and processing | ||||
Royalties | 2.5 | 2.4 | 7.5 | 6.9 |
Total cash costs | 110.8 | 106.6 | 331.4 | 295.7 |
Gold ounces sold | 132,633 | 122,780 | 397,253 | 323,410 |
Total cash costs per ounce | $835 | $868 | $834 | $914 |
Total cash costs | ||||
Corporate and administrative (1) | 6.3 | 6.4 | 20.0 | 18.7 |
Sustaining capital expenditures (2) | 27.3 | 26.0 | 77.6 | 68.7 |
Share-based compensation | 1.8 | 4.5 | 15.4 | 11.2 |
Sustaining exploration | 0.7 | 0.5 | 1.9 | 1.8 |
Accretion of decommissioning liabilities | 1.8 | 0.6 | 5.1 | 2.0 |
Total all-in sustaining costs | ||||
Gold ounces sold | 132,633 | 122,780 | 397,253 | 323,410 |
All-in sustaining costs per ounce | $1,121 | $1,178 | $1,136 | $1,231 |
(1) | Corporate and administrative expenses exclude expenses incurred at development properties. |
(2) | Sustaining capital expenditures are defined as those expenditures which do not increase annual gold ounce production at a mine site and exclude all expenditures at growth projects and certain expenditures at operating sites which are deemed expansionary in nature. Total sustaining capital expenditures for the period are as follows: |
Three Months Ended | Nine Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
(in millions) | ||||||||
Capital expenditures per cash flow statement | ||||||||
Less: non-sustaining capital expenditures at: | ||||||||
(1.5 | ) | (2.1 | ) | (8.1 | ) | (17.3 | ) | |
Island Gold | (36.9 | ) | (31.6 | ) | (126.2 | ) | (77.0 | ) |
(3.9 | ) | (6.0 | ) | (12.5 | ) | (48.5 | ) | |
Corporate and other | (5.6 | ) | (6.9 | ) | (14.8 | ) | (17.4 | ) |
Sustaining capital expenditures |
Young-Davidson Total Cash Costs and Mine-site AISC Reconciliation | ||||
Three Months Ended | Nine Months Ended | |||
2023 | 2022 | 2023 | 2022 | |
(in millions, except ounces and per ounce figures) | ||||
Mining and processing | ||||
Royalties | 1.3 | 1.3 | 3.9 | 4.2 |
Total cash costs | ||||
Gold ounces sold | 45,498 | 49,218 | 134,744 | 147,405 |
Total cash costs per ounce | $939 | $870 | $945 | $858 |
Total cash costs | ||||
Sustaining capital expenditures | 10.8 | 13.0 | 35.1 | 33.6 |
Accretion of decommissioning liabilities | 0.1 | — | 0.3 | 0.2 |
Total all-in sustaining costs | ||||
Gold ounces sold | 45,498 | 49,218 | 134,744 | 147,405 |
Mine-site all-in sustaining costs per ounce | $1,178 | $1,134 | $1,207 | $1,087 |
Island Gold Total Cash Costs and Mine-site AISC Reconciliation | ||||
Three Months Ended | Nine Months Ended | |||
2023 | 2022 | 2023 | 2022 | |
(in millions, except ounces and per ounce figures) | ||||
Mining and processing | ||||
Royalties | 0.7 | 0.7 | 1.9 | 1.9 |
Total cash costs | ||||
Gold ounces sold | 35,255 | 31,342 | 97,165 | 91,507 |
Total cash costs per ounce | $610 | $651 | $636 | $650 |
Total cash costs | ||||
Sustaining capital expenditures | 10.6 | 9.1 | 33.0 | 26.4 |
Accretion of decommissioning liabilities | 0.2 | 0.1 | 0.4 | 0.2 |
Total all-in sustaining costs | ||||
Gold ounces sold | 35,255 | 31,342 | 97,165 | 91,507 |
Mine-site all-in sustaining costs per ounce | $916 | $944 | $980 | $941 |
Mulatos District Total Cash Costs and Mine-site AISC Reconciliation | ||||
Three Months Ended | Nine Months Ended | |||
2023 | 2022 | 2023 | 2022 | |
(in millions, except ounces and per ounce figures) | ||||
Mining and processing | ||||
Royalties | 0.5 | 0.4 | 1.7 | 0.8 |
Total cash costs | ||||
Gold ounces sold | 51,880 | 42,220 | 165,344 | 84,498 |
Total cash costs per ounce | $898 | $1,028 | $861 | $1,298 |
Total cash costs | ||||
Sustaining capital expenditures | 5.9 | 3.9 | 9.5 | 8.7 |
Sustaining exploration | 0.2 | 0.1 | 0.5 | 0.5 |
Accretion of decommissioning liabilities | 1.5 | 0.6 | 4.4 | 1.6 |
Total all-in sustaining costs | ||||
Gold ounces sold | 51,880 | 42,220 | 165,344 | 84,498 |
Mine-site all-in sustaining costs per ounce | $1,045 | $1,137 | $948 | $1,426 |
Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”)
EBITDA represents net earnings before interest, taxes, depreciation, and amortization. EBITDA is an indicator of the Company’s ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures.
EBITDA does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The following is a reconciliation of EBITDA to the consolidated financial statements:
(in millions) | ||||||
Three Months Ended | Nine Months Ended | |||||
2023 | 2022 | 2023 | 2022 | |||
Net earnings (loss) | ( | ) | ( | ) | ||
Add back: | ||||||
Inventory net realizable value adjustment | — | 11.6 | — | 33.9 | ||
Impairment expense | — | — | — | 38.2 | ||
Finance expense | 0.6 | 1.0 | 2.7 | 3.5 | ||
Amortization | 47.2 | 49.9 | 139.6 | 125.9 | ||
Deferred income tax expense | 23.8 | 34.9 | 26.4 | 51.9 | ||
Current income tax expense | 15.0 | 0.4 | 53.2 | 1.4 | ||
EBITDA | $126.0 | $96.4 | $384.8 | $251.3 |
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
Consolidated Statements of Financial Position
(Unaudited - stated in millions of
A S S E T S | |||||
Current Assets | |||||
Cash and cash equivalents | |||||
Equity securities | 14.0 | 18.6 | |||
Amounts receivable | 45.9 | 37.2 | |||
Inventory | 269.9 | 234.2 | |||
Other current assets | 13.7 | 16.2 | |||
Assets held for sale | — | 5.0 | |||
Total Current Assets | 559.4 | 441.0 | |||
Non-Current Assets | |||||
Mineral property, plant and equipment | 3,293.6 | 3,173.8 | |||
Other non-current assets | 57.2 | 59.4 | |||
Total Assets | $3,910.2 | $3,674.2 | |||
L I A B I L I T I E S | |||||
Current Liabilities | |||||
Accounts payable and accrued liabilities | |||||
Income taxes payable | 49.0 | 0.7 | |||
Total Current Liabilities | 227.8 | 181.9 | |||
Non-Current Liabilities | |||||
Deferred income taxes | 688.7 | 660.9 | |||
Decommissioning liabilities | 114.9 | 108.1 | |||
Other non-current liabilities | 2.3 | 2.2 | |||
Total Liabilities | 1,033.7 | 953.1 | |||
E Q U I T Y | |||||
Share capital | |||||
Contributed surplus | 88.4 | 90.7 | |||
Accumulated other comprehensive loss | (29.5 | ) | (24.8 | ) | |
Deficit | (914.1 | ) | (1,048.6 | ) | |
Total Equity | 2,876.5 | 2,721.1 | |||
Total Liabilities and Equity | $3,910.2 | $3,674.2 |
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited - stated in millions of
For three months ended | For nine months ended | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
OPERATING REVENUES | |||||||||||
COST OF SALES | |||||||||||
Mining and processing | 108.3 | 104.2 | 323.9 | 288.8 | |||||||
Inventory net realizable value adjustment | — | 11.6 | — | 33.9 | |||||||
Royalties | 2.5 | 2.4 | 7.5 | 6.9 | |||||||
Amortization | 47.2 | 49.9 | 139.6 | 125.9 | |||||||
158.0 | 168.1 | 471.0 | 455.5 | ||||||||
EXPENSES | |||||||||||
Exploration | 7.5 | 4.7 | 16.1 | 15.8 | |||||||
Corporate and administrative | 6.3 | 6.4 | 20.0 | 18.7 | |||||||
Share-based compensation | 1.8 | 4.5 | 15.4 | 11.2 | |||||||
Impairment charge | — | — | — | 38.2 | |||||||
173.6 | 183.7 | 522.5 | 539.4 | ||||||||
EARNINGS BEFORE INCOME TAXES | 82.6 | 29.9 | 246.2 | 49.9 | |||||||
OTHER EXPENSES | |||||||||||
Finance expense | (0.6 | ) | (1.0 | ) | (2.7 | ) | (3.5 | ) | |||
Foreign exchange gain | 0.5 | 1.5 | 1.6 | 1.9 | |||||||
Other (loss) gain | (4.3 | ) | 3.5 | (2.6 | ) | 1.5 | |||||
EARNINGS FROM OPERATIONS | $78.2 | $33.9 | $242.5 | $49.8 | |||||||
INCOME TAXES | |||||||||||
Current income tax expense | (15.0 | ) | (0.4 | ) | (53.2 | ) | (1.4 | ) | |||
Deferred income tax expense | (23.8 | ) | (34.9 | ) | (26.4 | ) | (51.9 | ) | |||
NET EARNINGS (LOSS) | $39.4 | ($1.4 | ) | $162.9 | ($3.5 | ) | |||||
Items that may be subsequently reclassified to net earnings: | |||||||||||
Net change in fair value of currency hedging instruments, net of taxes | (3.8 | ) | (14.8 | ) | 4.0 | (15.9 | ) | ||||
Net change in fair value of fuel hedging instruments, net of taxes | 0.2 | (0.9 | ) | — | 0.1 | ||||||
Items that will not be reclassified to net earnings: | |||||||||||
Unrealized gain (loss) on equity securities, net of taxes | (6.1 | ) | (6.1 | ) | (9.0 | ) | (19.1 | ) | |||
Total other comprehensive loss | ($9.7 | ) | ($21.8 | ) | ($5.0 | ) | ($34.9 | ) | |||
COMPREHENSIVE INCOME (LOSS) | $29.7 | ($23.2 | ) | $157.9 | ($38.4 | ) | |||||
EARNINGS (LOSS) PER SHARE | |||||||||||
– basic | $0.10 | $0.00 | $0.41 | ($0.01 | ) | ||||||
– diluted | $0.10 | $0.00 | $0.41 | ($0.01 | ) |
Consolidated Statements of Cash Flows
(Unaudited - stated in millions of
For three months ended | For nine months ended | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
CASH PROVIDED BY (USED IN): | |||||||||||
OPERATING ACTIVITIES | |||||||||||
Net earnings (loss) for the period | ( | ) | ( | ) | |||||||
Adjustments for items not involving cash: | |||||||||||
Amortization | 47.2 | 49.9 | 139.6 | 125.9 | |||||||
Impairment charge | — | — | — | 38.2 | |||||||
Inventory net realizable value adjustment | — | 11.6 | — | 33.9 | |||||||
Foreign exchange gain | (0.5 | ) | (1.5 | ) | (1.6 | ) | (1.9 | ) | |||
Current income tax expense | 15.0 | 0.4 | 53.2 | 1.4 | |||||||
Deferred income tax expense | 23.8 | 34.9 | 26.4 | 51.9 | |||||||
Share-based compensation | 1.8 | 4.5 | 15.4 | 11.2 | |||||||
Finance expense | 0.6 | 1.0 | 2.7 | 3.5 | |||||||
Other items | 5.9 | (3.3 | ) | 0.1 | (8.3 | ) | |||||
Changes in working capital and taxes paid | (20.7 | ) | (22.1 | ) | (50.1 | ) | (56.1 | ) | |||
112.5 | 74.0 | 348.6 | 196.2 | ||||||||
INVESTING ACTIVITIES | |||||||||||
Mineral property, plant and equipment | (75.2 | ) | (72.6 | ) | (239.2 | ) | (228.9 | ) | |||
Proceeds from sale of | — | — | — | 5.0 | |||||||
Proceeds from disposition of equity securities | — | — | 0.1 | — | |||||||
Investment in equity securities | (1.1 | ) | (1.2 | ) | (2.7 | ) | (3.9 | ) | |||
— | — | (0.2 | ) | — | |||||||
(76.3 | ) | (73.8 | ) | (242.0 | ) | (227.8 | ) | ||||
FINANCING ACTIVITIES | |||||||||||
Dividends paid | (8.7 | ) | (8.7 | ) | (26.7 | ) | (26.3 | ) | |||
Repurchase and cancellation of common shares | — | — | — | (8.2 | ) | ||||||
Proceeds from issuance of flow-through shares | — | 4.6 | — | 10.4 | |||||||
Proceeds from the exercise of options and warrants | 0.6 | — | 6.3 | 0.7 | |||||||
(8.1 | ) | (4.1 | ) | (20.4 | ) | (23.4 | ) | ||||
Effect of exchange rates on cash and cash equivalents | (0.8 | ) | (0.9 | ) | (0.1 | ) | (0.8 | ) | |||
Net increase (decrease) in cash and cash equivalents | 27.3 | (4.8 | ) | 86.1 | (55.8 | ) | |||||
Cash and cash equivalents - beginning of period | 188.6 | 121.5 | 129.8 | 172.5 | |||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD | $215.9 | $116.7 | $215.9 | $116.7 |
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/92a29fc1-c8e0-445d-9bd2-170c68d73711
Shaft site area - October, 2023
Shaft site area - October, 2023
2023 GlobeNewswire, Inc., source