Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
ended June 30, 2022.
“We achieved several key short- and long-term
objectives in the second quarter. Production was in-line with
guidance and costs well below quarterly guidance reflecting solid
performances at our Canadian operations and a strong start from La
Yaqui Grande which achieved initial production ahead of schedule.
With La Yaqui Grande expected to drive stronger production in the
second half of the year, we remain on track to achieve full year
guidance,” said John A. McCluskey, President and Chief Executive
Officer.
“La Yaqui Grande will be a key contributor to
stronger operational and financial results over the shorter term,
and as outlined in our Phase 3+ Expansion Study, Island Gold will
be the driver of higher production, lower costs and significantly
stronger free cash flow generation over the long term. The Phase 3+
expansion will transform Island Gold into one of the largest,
lowest cost and most profitable gold mines in Canada. With
increasing cash flow from our operations, we can fund this
high-return growth internally while generating strong free cash
flow over the next several years,” Mr. McCluskey added.
Second Quarter 2022
- Produced 103,900 ounces of gold, a
5% increase from the first quarter and in line with guidance
- Young-Davidson continued its strong
operational performance, with mining rates exceeding 8,000 tonnes
per day (“tpd”) for the fourth consecutive quarter, driving
production of 46,400 ounces and record mine-site free cash flow1 of
$30.8 million
- Island Gold produced 37,300 ounces,
a 52% increase from the first quarter of 2022 leading to mine-site
free cash flow1 of $20.2 million
- Announced the Phase 3+ Expansion of
Island Gold to 2,400 tpd outlining a larger, more profitable, and
valuable operation with production expected to more than double to
an average of 287,000 ounces per year at industry low mine-site
all-in sustaining costs of $576 per ounce starting in 2026
- Completed construction of La Yaqui
Grande ahead of schedule in June, and produced 5,000 ounces at
total cash costs of $451 per ounce. Mining and stacking rates
continue to ramp up and are expected to drive stronger consolidated
production from the Mulatos District at significantly lower costs
in the second half of the year
- Sold 102,164 ounces of gold at an
average realized price of $1,871 per ounce for revenues of $191.2
million
- Total cash costs1 of $895 per
ounce, and AISC1 of $1,170 per ounce per ounce were significantly
lower than the first quarter and consistent with annual guidance,
reflecting higher grades mined at Island Gold, the strong start at
La Yaqui Grande, and the weaker Canadian dollar
- Realized adjusted net earnings1 for
the quarter of $29.3 million, or $0.07 per share1. Adjusted net
earnings includes adjustments for a non-cash, after tax inventory
net realizable value adjustment at Mulatos of $14.7 million and
unrealized foreign exchange losses recorded within both deferred
taxes and foreign exchange of $12.5 million, partially offset by
other gains totaling $4.3 million
- Reported net earnings of $6.4
million, or $0.02 per share
- Cash flow from operating activities
was $75.7 million ($85.3 million, or $0.22 per share, before
changes in working capital1)
- Free cash flow1 was $6.7 million in
the quarter, driven by strong operating results at Young-Davidson
and Island Gold. With the completion of construction at La Yaqui
Grande, free cash flow is expected to increase in the second half
of the year
- Shareholder returns totaled $18.0 million in the quarter. This
included the quarterly dividend of $9.8 million, or $0.025 per
share (annualized rate of $0.10), as well as the repurchase of 1.1
million shares at a cost of $8.2 million ($7.41 per share) under
the Company's Normal Course Issuer Bid ("NCIB")
- Closed the sale of the Esperanza
Gold Project to Zacatecas Silver for total consideration of up to
$60 million, including up front consideration of $5 million cash,
and $10 million of Zacatecas Silver shares
- Ended the quarter with cash and
cash equivalents of $121.5 million, equity securities of $22.5
million, and no debt
- Announced a Company-wide target of
a 30% reduction in absolute Greenhouse Gas ("GHG") emissions by
2030 which is expected to further improve the Company's industry
low GHG emissions intensity
- Recipient of the Casco De Plata
safety award by the Mining Chamber of Mexico (CAMIMEX) in
recognition of outstanding health and safety performance and
governance at Mulatos
.(1) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.
Highlight Summary
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
|
2022 |
|
|
2021 |
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$191.2 |
$195.1 |
|
$375.7 |
|
$422.5 |
|
Cost of sales (1) |
$151.9 |
$126.9 |
|
$287.4 |
|
$266.2 |
|
Earnings (loss) from operations |
$25.7 |
($168.5 |
) |
$20.0 |
|
($92.2 |
) |
Earnings (loss) before income taxes |
$30.2 |
($172.7 |
) |
$15.9 |
|
($97.6 |
) |
Net earnings (loss) |
$6.4 |
($172.5 |
) |
($2.1 |
) |
($121.3 |
) |
Adjusted net earnings (2) |
$29.3 |
$38.7 |
|
$47.3 |
|
$87.8 |
|
Earnings before interest, depreciation and amortization (2) |
$92.0 |
$94.4 |
|
$154.9 |
|
$214.0 |
|
Cash provided by operations before working capital and cash
taxes(2) |
$85.3 |
$97.2 |
|
$156.2 |
|
$216.8 |
|
Cash provided by operating activities |
$75.7 |
$86.7 |
|
$122.2 |
|
$186.0 |
|
Capital expenditures (sustaining) (2) |
$20.1 |
$26.7 |
|
$42.7 |
|
$50.3 |
|
Capital expenditures (growth) (2) (3) (5) |
$43.3 |
$53.8 |
|
$101.9 |
|
$114.1 |
|
Capital expenditures (capitalized exploration) (4) |
$5.6 |
$6.4 |
|
$11.7 |
|
$11.9 |
|
Free cash flow (2) |
$6.7 |
($0.2 |
) |
($34.1 |
) |
$9.7 |
|
Operating Results |
|
|
|
|
Gold production (ounces) |
|
103,900 |
|
114,200 |
|
|
202,800 |
|
|
240,000 |
|
Gold sales (ounces) |
|
102,164 |
|
107,581 |
|
|
200,630 |
|
|
234,063 |
|
Per Ounce Data |
|
|
|
|
Average realized gold price |
$1,871 |
$1,814 |
|
$1,873 |
|
$1,805 |
|
Average spot gold price (London PM Fix) |
$1,871 |
$1,816 |
|
$1,874 |
|
$1,805 |
|
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,487 |
$1,180 |
|
$1,432 |
|
$1,137 |
|
Total cash costs per ounce of gold sold (2) |
$895 |
$791 |
|
$943 |
|
$773 |
|
All-in sustaining costs per ounce of gold sold (2) |
$1,170 |
$1,136 |
|
$1,264 |
|
$1,079 |
|
Share Data |
|
|
|
|
Earnings (Loss) per share, basic and diluted |
$0.02 |
($0.44 |
) |
($0.01 |
) |
($0.31 |
) |
Adjusted earnings per share, basic and diluted(2) |
$0.07 |
$0.10 |
|
$0.12 |
|
$0.22 |
|
Weighted average common shares outstanding (basic) (000’s) |
|
391,761 |
|
392,759 |
|
|
391,837 |
|
|
392,762 |
|
Financial Position (in millions) |
|
|
|
|
Cash and cash equivalents(6) |
|
|
$121.5 |
|
$172.5 |
|
(1) Cost of sales includes mining and
processing costs, royalties, and amortization expense. For the
three and six months ended June 30, 2022, cost of sales includes a
$22.3 million non-cash inventory net realizable value adjustment at
Mulatos District.(2) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.(3) Includes growth capital from
operating sites. (4) Includes capitalized exploration at
Island Gold, Young-Davidson and Mulatos
District.(5) Includes capital advances of nil for the
three and six months ended June 30, 2022 ($3.4 million and $20.2
million for the three and six months ended June 30,
2021).(6) Comparative cash and cash equivalents balance
as at December 31, 2021.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Gold production (ounces) |
|
|
|
|
Young-Davidson |
|
46,400 |
|
45,100 |
|
98,300 |
|
93,100 |
Island Gold |
|
37,300 |
|
33,200 |
|
61,800 |
|
75,400 |
Mulatos District(7) |
|
20,200 |
|
35,900 |
|
42,700 |
|
71,500 |
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
|
46,662 |
|
45,284 |
|
98,187 |
|
93,306 |
Island Gold |
|
36,797 |
|
33,632 |
|
60,165 |
|
73,514 |
Mulatos District |
|
18,705 |
|
28,665 |
|
42,278 |
|
67,243 |
Cost of sales (in
millions)(1) |
|
|
|
|
Young-Davidson |
$59.8 |
$61.3 |
$124.4 |
$123.3 |
Island Gold |
$32.0 |
$25.6 |
$56.2 |
$54.7 |
Mulatos District |
$60.1 |
$40.0 |
$106.8 |
$88.2 |
Cost of sales per ounce of gold sold (includes
amortization) |
|
|
|
Young-Davidson |
$1,282 |
$1,354 |
$1,267 |
$1,321 |
Island Gold |
$870 |
$761 |
$934 |
$744 |
Mulatos District(1) |
$3,213 |
$1,395 |
$2,526 |
$1,312 |
Total cash costs per ounce of gold sold
(2) |
|
|
|
|
Young-Davidson |
$866 |
$941 |
$852 |
$906 |
Island Gold |
$590 |
$502 |
$650 |
$483 |
Mulatos District |
$1,566 |
$893 |
$1,568 |
$906 |
Mine-site all-in sustaining costs per ounce of gold
sold (2),(3) |
|
|
Young-Davidson |
$1,087 |
$1,157 |
$1,064 |
$1,115 |
Island Gold |
$848 |
$830 |
$939 |
$777 |
Mulatos District |
$1,636 |
$1,144 |
$1,717 |
$1,084 |
Capital
expenditures (sustaining, growth, capitalized exploration and
capital advances) (in millions)(2) |
|
Young-Davidson (4) |
$13.1 |
$19.6 |
$35.8 |
$41.5 |
Island Gold (5) |
$29.3 |
$29.2 |
$62.7 |
$58.7 |
Mulatos District (6) |
$21.3 |
$31.6 |
$47.3 |
$65.1 |
Other |
$5.3 |
$6.5 |
$10.5 |
$11.0 |
(1) Cost of sales includes mining and
processing costs, royalties, and amortization. For the three and
six months ended June 30, 2022, cost of sales at Mulatos District
includes $22.3 million non-cash inventory net realizable value
adjustment.(2) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.(3) For the purposes of calculating
mine-site all-in sustaining costs, the Company does not include an
allocation of corporate and administrative and share based
compensation expenses.(4) Includes capitalized
exploration at Young-Davidson of $1.3 million and $2.3 million for
the three and six months ended June 30, 2022 ($1.5 million and $2.5
million for the three and six months ended June 30,
2021).(5) Includes capitalized exploration at Island
Gold of $4.1 million and $9.2 million for the three and six months
ended June 30, 2022 ($3.9 million and $8.4 million for the three
and six months ended June 30, 2021).(6) Includes
capitalized exploration at Mulatos District of $0.2 million for the
three and six months ended June 30, 2022 ($1.0 million for the
three and six months ended June 30, 2021).(7) The
Mulatos District includes both the Mulatos pit, as well as La Yaqui
Grande.Environment, Social and Governance Summary
Performance
Health and Safety
- Recordable
injury frequency rate1,2 of 1.50, an 8% decrease from the first
quarter of 2022
- Lost time injury
frequency rate1 of 0.08, an 11% decrease from the first quarter of
2022
- Competed in the
Ontario Mine Rescue Competition, with Young-Davidson’s Gary Bennett
winning the Individual Technician Competition
During the second quarter of 2022, the
recordable injury frequency rate decreased with 18 recordable
injuries, consistent with the first quarter of 2022 but with more
hours worked. One lost time injury was reported in the quarter,
consistent with the first quarter of 2022, though at a lower
frequency rate due to additional hours worked. Alamos strives to
maintain a safe, healthy working environment for all, with a strong
safety culture where everyone is continually reminded of the
importance of keeping themselves and their colleagues healthy and
injury-free. The Company’s overarching commitment is to have all
employees and contractors return Home Safe Every Day.
The World Health Organization declared COVID-19
a pandemic on March 11, 2020. The Company responded rapidly and
proactively and implemented several initiatives to help protect the
health and safety of our employees, their families and the
communities in which we operate. Specifically, each mine site
activated established crisis management plans and developed
site-specific plans that have enabled them to meet and respond to
changing conditions associated with COVID-19. Given the significant
precautionary measures taken by the Company, and thanks to the
dedication of its employees, contractors and stakeholders,
operations remain relatively unaffected by COVID-19.
Environment
- Announced its
Company target of a 30% reduction in absolute GHG emissions by 2030
from the 2020/2021 average baseline year
- Zero significant
environmental incidents in the second quarter of 2022 and
year-to-date
- One minor fine
at Mulatos related to a regulatory non-compliance at the mine camp
for using an unlicensed contractor for recycling of used cooking
oil. This oversight was due to a recent regulation change in
Mexico
- Work permits
received for Island Gold for the construction of the shaft site
access road and creek crossing
- Advanced both
federal and provincial permitting for the Lynn Lake Project
19 minor spills occurred during the first
quarter, including 16 at Island Gold and 3 at Mulatos. All spills
were immediately cleaned and remediated with no anticipated
long-term effects. The Company is committed to preserving the
long-term health and viability of the natural environment that
surround its operations and projects. This includes investing in
new initiatives to reduce our environmental footprint with the goal
of minimizing the environmental impacts of our activities and
offsetting any impacts that cannot be fully mitigated or
rehabilitated.
GHG Emissions Reduction Target
In June 2022, the Company released its target of
a 30% reduction in absolute GHG emissions by 2030. This target
includes scope 1 and scope 2 GHG emissions, inclusive of all GHG
emissions covered by the Kyoto Protocol. This is a significant
milestone in Alamos’ sustainability journey and considered a
credible target by definition of the Carbon Disclosure Project
(“CDP”).
Alamos is already an industry leader in GHG emission intensity
with an average of 0.38 tCO2e per ounce of gold produced across its
three operating mines (base year 2020/2021), 43% lower than the
mining industry average of 0.67 tCO2e per ounce of gold. The 30%
absolute reduction in GHG emissions will decrease Alamos’ emission
intensity by 55%. This includes the development of the Lynn Lake
project, which is expected to begin producing within the target
period.
As part of the Company’s emission reduction strategy, Alamos
developed an Energy and Greenhouse Gas Management Standard in
support of its Sustainability Performance Management Framework.
This included completing Energy and Carbon Management System
assessments at its operating sites to develop a baseline for its
existing Energy Management programs. Alamos reviewed and costed
over 30 different GHG emission reduction opportunities across the
organization and utilized a Marginal Abatement Cost Curve to
prioritize the projects that will support the achievement of its
emission reduction target.
Options investigated included renewable energy and clean grid
capacity, green fleet (hybrid or battery electric vehicles),
electrification of process, and conversion to cleaner fuels.
Electric conveyance systems were installed during the lower mine
expansion at the Young-Davidson Mine reducing the Company’s
reliance on diesel consumption and the Company is working to
connect to grid power at Mulatos to offset diesel power generation.
The Company is also considering increasing use of biodiesel vs.
conventional diesel at all operations, and replacing propane with
compressed natural gas for mine-air heaters at underground
operations.
The Company’s target to reduce GHG emissions is in support of
Canada’s Paris Accord Commitment and the World Gold Council’s (WGC)
commitment for members to adopt the recommendations of the Task
Force on Climate-Related Financial Disclosure (TCFD).
Community
- Continued
Indigenous community engagement, including the signing of a
Community Benefits Agreement with the Michipicoten First Nation for
Island Gold on April 4, 2022
- Various
community donations across all operations including funding for
emergency vehicles and medical equipment to the District of
Timiskiming Paramedic Service, the Temiskaming Hospital Foundation,
and the municipality of Sahuaripa
- Sponsored a
basketball camp with the Kirkland Lake Swamp Donkeys basketball
club and the Matachewan and Beaverhouse First Nations
- Installation of
solar street lighting in the village of Matarachi, Mexico
- Continued
support for local students in Sahuaripa, Matarachi and Hermosillo,
with 70 students supported through the Company’s Scholarship
Program
Alamos believes that excellence in
sustainability provides a net benefit to all stakeholders. The
Company continues to engage with local communities to understand
local challenges and priorities, and to offer support during the
COVID-19 pandemic. Ongoing investments in local infrastructure,
health care, education, cultural and community programs have
continued through the COVID-19 pandemic, with appropriate health
and safety protocols.
Governance and Disclosure
- Published Lynn
Lake Gold Project website to increase transparency and disclosure
for local stakeholders interested in the project and associated
opportunities
- Recipient of the
Casco De Plata safety award by the Mining Chamber of Mexico
(CAMIMEX) in recognition of outstanding health and safety
performance and governance at Mulatos
Alamos maintains the highest standards of
corporate governance to ensure that corporate decision-making
reflects its values, including the Company’s commitment to
sustainable development. During the quarter, the Company continued
to advance its implementation of the Responsible Gold Mining
Principles, developed by the World Gold Council as a framework that
sets clear expectations as to what constitutes responsible gold
mining.
(1) Frequency rate is calculated as incidents
per 200,000 hours worked.(2) The classification of medical
treatment injuries was updated retroactive to 1 January 2020 to
align with OSHA standards, resulting in changes to previously
reported recordable injury rates.
Outlook and Strategy
2022 Guidance |
|
Young-Davidson |
Island Gold |
Mulatos |
Other (2) |
Total |
Gold production (000’s ounces) |
185 - 200 |
125 - 135 |
130 - 145 |
|
440 - 480 |
Cost of sales, including amortization (in
millions)(4) |
|
|
|
|
$610 |
Cost of sales, including amortization ($ per
ounce)(4) |
|
|
|
|
$1,325 |
Total cash costs ($ per ounce)(1) |
$850 - $900 |
$550 - $600 |
$1,225 - $1,275 |
— |
$875- $925 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
|
$1,190 - $1,240 |
Mine-site all-in sustaining costs ($ per
ounce)(1)(3) |
$1,125 - $1,175 |
$850 - $900 |
$1,325 - $1,375 |
— |
|
Capital expenditures (in millions) |
|
|
|
|
|
Sustaining capital(1) |
$50 - $55 |
$35 - $40 |
$5 - $10 |
— |
$90 - $105 |
Growth capital(1) |
$5 - $10 |
$145 - $160 |
$50 - $55 |
$15 |
$215 - $240 |
Total Sustaining and Growth
Capital(1) |
$55 - $65 |
$180 - $200 |
$55 - $65 |
$15 |
$305 - $345 |
Capitalized exploration(1) |
$4 |
$20 |
— |
$3 |
$27 |
Total capital expenditures and capitalized
exploration(1) |
$59 - $69 |
$200 - $220 |
$55 - $65 |
$18 |
$332 - $372 |
(1) Refer to the "Non-GAAP Measures
and Additional GAAP" disclosure at the end of this press release
and associated MD&A for a description and calculation of these
measures.(2) Includes growth capital and capitalized
exploration at the Company's development projects (Lynn Lake and
Esperanza).(3) For the purposes of calculating mine-site
all-in sustaining costs at individual mine sites, the Company does
not include an allocation of corporate and administrative and share
based compensation expenses to the mine sites. (4) Cost
of sales includes mining and processing costs, royalties, and
amortization expense, and is calculated based on the mid-point of
total cash cost guidance.
The Company’s objective is to operate a
sustainable business model that can support growing returns to all
stakeholders over the long-term through growing production,
expanding margins, and increasing profitability. This includes a
balanced approach to capital allocation focused on generating
strong ongoing free cash flow while re-investing in high-return
internal growth opportunities and supporting higher returns to
shareholders.
The Company delivered on two key long-term
objectives during the second quarter which have solidified its
strong outlook. This included achieving initial low-cost production
at La Yaqui Grande and announcing the Phase 3+ Expansion of Island
Gold, which will create a larger, more profitable and valuable
operation.
Construction of La Yaqui Grande was completed in
June, ahead of schedule and marking a significant transition for
the Mulatos District. La Yaqui Grande is expected to drive Mulatos
District costs lower in the second half of the year and generate
significant free cash flow over the next five years. La Yaqui
Grande represents another in a long line of discoveries and
high-return projects developed within the Mulatos District that
have continued to extend the mine life. Despite the inflationary
environment, the impact of COVID-19, and several scope changes, the
total construction cost of $161 million was within 13% of the July
2020 estimate, demonstrating the Company's ability to execute in a
challenging environment.
In addition, the Company announced a Phase 3+
Expansion of Island Gold, which will result in a step change in
production, with mining rates increasing to 2,400 tpd from the
current rate of 1,200 tpd. This is expected to more than double
gold production to average 287,000 ounces per year at industry low
mine-site all-in sustaining costs of $576 per ounce starting in
2026 upon completion of the shaft. The larger, longer-life
operation reflects the significant increase in Mineral Reserve and
Resources since the Phase 3 study was completed in 2020, supporting
a 43% increase in mineable resources to 4.6 million ounces of gold
grading 10.59 g/t Au. Given strong ongoing cash flow from
operations, the majority of the Phase 3+ Expansion capital is
expected to be self-funded by Island Gold.
The Company provided inaugural three-year
production and operating guidance in January 2022, which outlined
growing production at significantly lower costs over the 2022 to
2024 period. Refer to the Company’s January 17, 2022 guidance press
release for a summary of the key assumptions and related risks
associated with the comprehensive 2022 guidance and three-year
production, cost and capital outlook.
The Company produced 202,800 ounces in the first
half of the year, and with stronger production expected in the
second half driven by the ramp up of La Yaqui Grande, the Company
remains well positioned to meet full year production guidance of
between 440,000 and 480,000 ounces. Third quarter production is
expected to increase to between 115,000 and 125,000 ounces, with a
further increase expected in the fourth quarter. Consistent with
full year guidance, total cash costs are expected to decrease in
the second half of the year compared to the first half with the
ramp up of low-cost production at La Yaqui Grande, higher grades at
Island Gold, and the weaker Canadian dollar.
At Young-Davidson, mining rates of 8,160 tpd
exceeded targeted rates for the fourth straight quarter, driving
strong first half production of 98,300 ounces and mine-site free
cash flow of $54.0 million. With the solid performance through the
first half of the year, Young-Davidson is on track to achieve full
year production and cost guidance. The operation generated a record
$100 million in mine-site free cash flow in 2021. With the strong
ongoing performance, Young-Davidson is expected to generate similar
mine-site free cash flow in 2022 and over the long term.
Island Gold produced 61,800 ounces in the first
half of the year, including a 52% increase in second quarter
production to 37,300 ounces at significantly lower costs relative
to the first quarter reflecting higher grades and tonnes mined and
processed. With production expected to be higher in the second half
of the year, Island Gold remains on track to achieve full year
guidance. Construction activities on the Phase 3+ Expansion are
ramping up with shaft site clearing ongoing, and the pre-sink
expected to commence in August. Capital spending is expected to
also increase in the second half of the year to be consistent with
full year guidance of between $180 and $200 million (excluding
exploration).
The exploration budget at Island Gold is $22
million in 2022 with the focus on following up on another
successful drilling campaign in 2021 that drove an 8% increase in
high-grade Mineral Reserves and Resources to 5.1 million ounces of
gold. This ongoing growth was incorporated into the Phase 3+
Expansion Study released in June.
Combined production from the Mulatos District
totaled 42,700 ounces in the first half of 2022, including 5,000
ounces from the recently completed La Yaqui Grande project. With
operations ramping up at La Yaqui Grande in the third quarter and
increasing grades from the El Salto portion of the Mulatos pit in
the fourth quarter, production from the Mulatos District is
expected to increase significantly through the remainder of the
year. As previously disclosed, total cash costs and mine-site AISC
were well above annual guidance during the first half of 2022, but
expected to trend significantly lower during the second half of the
year as La Yaqui Grande represents a larger proportion of Mulatos
District production.
The total capital budget for Lynn Lake in 2022
is $14 million, including $11 million for development activities
and $3 million for exploration. Development activities in 2022
remain focused on environmental work in support of permitting,
detailed engineering and other site access upgrades. The approval
of the Environmental Impact Statement (“EIS”) for the project is
expected in the latter part of 2022, following which the Company
expects to release an updated feasibility study.
The Company's liquidity position remains strong,
ending the second quarter with $121.5 million of cash and cash
equivalents, $22.5 million in equity securities, and no debt.
Additionally, the Company has a $500 million undrawn credit
facility, providing total liquidity of $621.5 million.
As part of the Company's balanced approach to
growth and capital allocation, the current focus is on the Phase 3+
Expansion at Island Gold. With no significant capital expected to
be spent on developing Lynn Lake until the Phase 3+ Expansion is
well underway, the Company remains well positioned to fund this
growth internally while generating strong free cash flow over the
next several years. The Company expects significant free cash flow
growth in 2025 and beyond as production rates ramp up at Island
Gold.
Second Quarter 2022 Results
Young-Davidson Financial and Operational
Review
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
46,400 |
|
|
45,100 |
|
|
98,300 |
|
|
93,100 |
|
Gold
sales (ounces) |
|
46,662 |
|
|
45,284 |
|
|
98,187 |
|
|
93,306 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$87.3 |
|
$82.1 |
|
$184.1 |
|
$168.2 |
|
Cost of sales (1) |
$59.8 |
|
$61.3 |
|
$124.4 |
|
$123.3 |
|
Earnings from operations |
$25.9 |
|
$20.8 |
|
$56.5 |
|
$44.9 |
|
Cash provided by operating
activities |
$43.9 |
|
$38.3 |
|
$89.8 |
|
$82.5 |
|
Capital expenditures
(sustaining) (2) |
$10.2 |
|
$9.8 |
|
$20.6 |
|
$19.3 |
|
Capital expenditures (growth)
(2) |
$1.6 |
|
$8.3 |
|
$12.9 |
|
$19.7 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.3 |
|
$1.5 |
|
$2.3 |
|
$2.5 |
|
Mine-site free cash flow
(2) |
$30.8 |
|
$18.7 |
|
$54.0 |
|
$41.0 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,282 |
|
$1,354 |
|
$1,267 |
|
$1,321 |
|
Total cash costs per ounce of gold sold (2) |
$866 |
|
$941 |
|
$852 |
|
$906 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,087 |
|
$1,157 |
|
$1,064 |
|
$1,115 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
742,516 |
|
|
682,857 |
|
|
1,478,820 |
|
|
1,384,019 |
|
Tonnes of ore mined per day |
|
8,160 |
|
|
7,504 |
|
|
8,170 |
|
|
7,647 |
|
Average grade of gold (4) |
|
2.24 |
|
|
2.22 |
|
|
2.30 |
|
|
2.23 |
|
Metres developed |
|
3,097 |
|
|
2,868 |
|
|
6,344 |
|
|
6,220 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
705,014 |
|
|
688,127 |
|
|
1,442,742 |
|
|
1,421,348 |
|
Tonnes of ore processed per day |
|
7,747 |
|
|
7,562 |
|
|
7,971 |
|
|
7,853 |
|
Average grade of gold (4) |
|
2.25 |
|
|
2.22 |
|
|
2.32 |
|
|
2.22 |
|
Contained ounces milled |
|
50,975 |
|
|
49,134 |
|
|
107,445 |
|
|
101,670 |
|
Average recovery rate |
|
91 |
% |
|
92 |
% |
|
91 |
% |
|
92 |
% |
(1) Cost of sales includes mining and
processing costs, royalties and amortization.(2) Refer
to the “Non-GAAP Measures and Additional GAAP Measures” disclosure
at the end of this press release and associated MD&A for a
description and calculation of these measures. (3) For
the purposes of calculating mine-site all-in sustaining costs, the
Company does not include an allocation of corporate and
administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t Au").
Young-Davidson produced 46,400 ounces of gold in
the second quarter of 2022, a 3% increase from the prior year
period reflecting higher tonnes and grades processed. With first
half production of 98,300 ounces, the operation is on track to meet
full year production guidance.
Underground mining rates continued to
outperform, averaging 8,160 tpd in the second quarter and 8,170 tpd
in the first half of 2022, representing the fourth consecutive
quarter the operation has exceeded the targeted rate of 8,000 tpd.
Grades mined averaged 2.24 g/t Au, within annual guidance of
between 2.15 and 2.35 g/t Au. Grades mined in the second half of
the year are expected to be consistent with the first half.
Mill throughput averaged 7,747 tpd in the second
quarter at an average grade of 2.25 g/t Au. Tonnes milled were
lower than the first quarter, reflecting a planned liner change in
the mill. Mill recoveries averaged 91% in the quarter, in line with
guidance and the prior year period.
Financial Review
Second quarter revenues of $87.3 million and
year-to date revenues of $184.1 million were 6% and 9% higher,
respectively, than the prior year periods driven by more ounces
sold and a higher realized gold price.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $59.8
million in the second quarter were lower than the prior year
period, due to lower unit mining costs. Underground unit mining
costs were CAD $48 per tonne in the quarter, an improvement from
the prior year driven by economies of scale from higher mining
rates. Cost of sales of $124.4 million in the first half of 2022
were slightly higher than the comparable period as lower mining
costs were offset by a 7% increase in tonnes mined.
Total cash costs of $866 per ounce in the second
quarter were 8% lower than the prior year period driven by higher
grades processed and lower mining costs per tonne. Mine-site AISC
of $1,087 per ounce in the second quarter were 6% lower than the
prior year period, consistent with the lower total cash costs.
Given the strong first half performance, Young-Davidson remains
well positioned to meet full year total cash cost and mine-site
AISC guidance.
Capital expenditures in the quarter included
$10.2 million of sustaining capital and $1.6 million of growth
capital. In addition, $1.3 million was invested in capitalized
exploration in the quarter. Capital expenditures totaled $35.8
million in the first half of 2022, a 14% decrease from the prior
year and in line with annual guidance.
Young-Davidson has consistently met or exceeded
expectations since transitioning to the lower mine infrastructure
in mid-2020, driving production higher, and significant free cash
flow growth. This included mine-site free cash flow of $30.8
million in the second quarter of 2022 and $54.0 million for the
first half of 2022.
Island Gold Financial and Operational
Review
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
37,300 |
|
|
33,200 |
|
|
61,800 |
|
|
75,400 |
|
Gold
sales (ounces) |
|
36,797 |
|
|
33,632 |
|
|
60,165 |
|
|
73,514 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$68.8 |
|
$61.1 |
|
$112.5 |
|
$132.6 |
|
Cost of sales (1) |
$32.0 |
|
$25.6 |
|
$56.2 |
|
$54.7 |
|
Earnings from operations |
$34.8 |
|
$33.7 |
|
$53.7 |
|
$75.5 |
|
Cash provided by operating
activities |
$49.5 |
|
$42.9 |
|
$76.9 |
|
$98.4 |
|
Capital expenditures
(sustaining) (2) |
$9.5 |
|
$11.0 |
|
$17.3 |
|
$21.6 |
|
Capital expenditures (growth)
(2) (5) |
$15.7 |
|
$14.3 |
|
$36.2 |
|
$28.7 |
|
Capital expenditures
(capitalized exploration) (2) |
$4.1 |
|
$3.9 |
|
$9.2 |
|
$8.4 |
|
Mine-site free cash flow (2) |
$20.2 |
|
$13.7 |
|
$14.2 |
|
$39.7 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$870 |
|
$761 |
|
$934 |
|
$744 |
|
Total cash costs per ounce of gold sold (2) |
$590 |
|
$502 |
|
$650 |
|
$483 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$848 |
|
$830 |
|
$939 |
|
$777 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
|
112,203 |
|
|
117,673 |
|
|
215,192 |
|
|
220,950 |
|
Tonnes of ore mined per day ("tpd") |
|
1,233 |
|
|
1,293 |
|
|
1,189 |
|
|
1,221 |
|
Average grade of gold (4) |
|
10.02 |
|
|
8.52 |
|
|
9.22 |
|
|
10.75 |
|
Metres developed |
|
1,902 |
|
|
1,907 |
|
|
3,341 |
|
|
3,858 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
|
114,448 |
|
|
111,898 |
|
|
215,097 |
|
|
221,183 |
|
Tonnes of ore processed per day |
|
1,258 |
|
|
1,230 |
|
|
1,188 |
|
|
1,222 |
|
Average grade of gold (4) |
|
10.09 |
|
|
8.85 |
|
|
9.18 |
|
|
10.91 |
|
Contained ounces milled |
|
37,132 |
|
|
31,835 |
|
|
63,459 |
|
|
77,619 |
|
Average recovery rate |
|
96 |
% |
|
97 |
% |
|
96 |
% |
|
97 |
% |
(1) Cost of sales includes mining and
processing costs, royalties, and amortization.(2) Refer
to the “Non-GAAP Measures and Additional GAAP Measures” disclosure
at the end of this press release and associated MD&A for a
description and calculation of these measures. (3) For
the purposes of calculating mine-site all-in sustaining costs, the
Company does not include an allocation of corporate and
administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t
Au").(5) Includes capital advances of nil and $1.4
million for the three and six months ended June 30, 2022 ($0.7
million and $2.8 million for the three and six months ended June
30, 2021).Island Gold produced 37,300 ounces in the second quarter
of 2022, a 12% improvement from the prior year period reflecting
higher grades mined and processed. Through the first half of 2022,
Island Gold produced 61,800 ounces. With grades mined in the second
half of the year expected to be consistent with the second quarter,
Island Gold remains on track to meet full year production
guidance.
Underground mining rates averaged 1,233 tpd in
the second quarter, with grades averaging 10.02 g/t Au. Mining
rates through the first half of the year averaged 1,189 tpd, in
line with guidance of 1,200 tpd. Grades mined in the quarter were
in line with full year guidance.
Mill throughput averaged 1,258 tpd, 5% above
annual guidance of 1,200 tpd, reflecting high mill availability and
the processing of approximately 8,000 tonnes of Island Gold ore at
the Young-Davidson mill. Given current permit limits at Island
Gold, stockpiled ore is expected be trucked to Young-Davidson for
the remainder of the year as capacity is available, boosting
production and cash flow. Mill recoveries averaged 96% in the
quarter, consistent with annual guidance and the prior year
period.
Financial Review
Island Gold generated revenues of $68.8 million
in the second quarter, a 13% increase compared to the prior year
period, reflecting 9% more ounces sold, and a higher realized gold
price. For the first half of the year, revenues were $112.5
million, lower than the comparable prior year period as a result of
less ounces sold, partially offset by a higher realized gold
price.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $32.0 million in the
second quarter were 25% higher than the prior year period,
reflecting higher ounces sold, partially offset by lower
amortization on a per ounce basis given the increase in Mineral
Reserve and Resources in 2022.
Total cash costs of $590 per ounce in the second
quarter were higher than the prior year period, due to higher
mining and processing costs, partially offset by higher grades
processed. Mine-site AISC of $848 per ounce in the second quarter
were consistent with the prior year period. Total cash costs and
mine-site AISC are expected to be lower in the second half of the
year, relative to the first half, reflecting higher grades
mined.
Total capital expenditures were $29.3 million in
the second quarter, including $4.1 million of capitalized
exploration. Spending was focused on lateral development, as well
as engineering, shaft site preparation and clearing for the shaft
infrastructure, early procurement for the Phase 3+ Expansion, and
other surface infrastructure. For the first half of the year,
capital spending was $62.7 million, inclusive of capitalized
exploration of $9.2 million, consistent with the prior year period.
Capital spending is expected to increase in the second half of the
year, with the pre-sink expected to commence in the third
quarter.
Island Gold generated mine-site free cash flow
of $20.2 million in the second quarter and $14.2 million in the
first half of 2022, inclusive of all capital spending on the Phase
3+ Expansion and exploration. At current gold prices, Island Gold
is expected to largely self-finance the Phase 3+ Expansion capital
spending in 2022 and beyond.
Mulatos District Financial and
Operational Review
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Gold production (ounces) |
|
20,200 |
|
|
35,900 |
|
|
42,700 |
|
|
71,500 |
|
Gold
sales (ounces) |
|
18,705 |
|
|
28,665 |
|
|
42,278 |
|
|
67,243 |
|
Financial Review Mulatos District (in
millions) |
|
|
|
|
Operating Revenues |
$35.1 |
|
$51.9 |
|
$79.1 |
|
$121.7 |
|
Cost of sales (1) |
$60.1 |
|
$40.0 |
|
$106.8 |
|
$88.2 |
|
(Loss) earnings from
operations |
($27.8 |
) |
$10.4 |
|
($32.1 |
) |
$30.2 |
|
Cash (used) provided by
operating activities |
($8.7 |
) |
$19.3 |
|
($20.1 |
) |
$29.2 |
|
Capital expenditures
(sustaining) (2) |
$0.4 |
|
$5.9 |
|
$4.8 |
|
$9.4 |
|
Capital expenditures (growth)
(2) (7) |
$20.7 |
|
$24.7 |
|
$42.3 |
|
$54.7 |
|
Capital expenditures
(capitalized exploration) (2) |
$0.2 |
|
$1.0 |
|
$0.2 |
|
$1.0 |
|
Mine-site free cash flow
(2) |
($30.0 |
) |
($12.3 |
) |
($67.4 |
) |
($35.9 |
) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$3,213 |
|
$1,395 |
|
$2,526 |
|
$1,312 |
|
Total cash costs per ounce of gold sold (2) |
$1,566 |
|
$893 |
|
$1,568 |
|
$906 |
|
Mine site all-in sustaining costs per ounce of gold
sold(2),(3) |
$1,636 |
|
$1,144 |
|
$1,717 |
|
$1,084 |
|
Mulatos Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
1,227,625 |
|
|
800,137 |
|
|
1,841,438 |
|
|
1,711,090 |
|
Total waste mined - open pit (6) |
|
1,691,474 |
|
|
2,426,047 |
|
|
3,664,026 |
|
|
4,887,970 |
|
Total tonnes mined - open pit |
|
2,919,099 |
|
|
3,226,184 |
|
|
5,505,464 |
|
|
6,599,060 |
|
Waste-to-ore ratio (operating) |
|
1.38 |
|
|
2.03 |
|
|
1.45 |
|
|
1.53 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
1,526,771 |
|
|
1,899,338 |
|
|
3,268,254 |
|
|
3,733,124 |
|
Average grade of gold processed (5) |
|
0.68 |
|
|
1.11 |
|
|
0.70 |
|
|
1.02 |
|
Contained ounces stacked |
|
33,197 |
|
|
67,697 |
|
|
74,049 |
|
|
122,420 |
|
Average recovery rate |
|
46 |
% |
|
53 |
% |
|
51 |
% |
|
58 |
% |
Ore
crushed per day (tonnes) |
|
16,800 |
|
|
20,900 |
|
|
18,100 |
|
|
20,600 |
|
La Yaqui Grande Mine |
|
|
|
|
Open Pit
Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
|
343,884 |
|
|
— |
|
|
496,818 |
|
|
— |
|
Total waste mined - open pit (6) |
|
6,260,883 |
|
|
— |
|
|
12,142,114 |
|
|
— |
|
Total tonnes mined - open pit |
|
6,604,767 |
|
|
— |
|
|
12,638,932 |
|
|
— |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
|
333,166 |
|
|
— |
|
|
333,166 |
|
|
— |
|
Average grade of gold processed (5) |
|
1.57 |
|
|
— |
|
|
1.57 |
|
|
— |
|
Contained ounces stacked |
|
16,777 |
|
|
— |
|
|
16,777 |
|
|
— |
|
(1) Cost of sales includes mining and processing
costs, royalties, and amortization. Cost of sales per ounce for the
three and six months ended June 30, 2022 include the inventory net
realizable value adjustment of $22.3 million.(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.(7)
Includes a drawdown of capital advances of $1.4 million for the
three and six months ended June 30, 2022 ($2.7 million and $17.4
million of advances for the three and six months ended June 30,
2021).
Mulatos produced 15,200 ounces in the second
quarter (excluding La Yaqui Grande), significantly lower than the
prior year period but consistent with first half guidance. With
pre-stripping of the El Salto pit completed, all ore mined in the
second quarter was from El Salto. Ore stacked in the second quarter
was supplemented by surface stockpiles, but at a lower rate than in
previous quarters. El Salto ore is expected to comprise the
majority of ore stacked at Mulatos the remainder of the year.
Mulatos production (excluding La Yaqui Grande) in the second half
of the year is expected to remain relatively consistent with the
first half of the year, with higher grade portions of El Salto not
being accessed until late 2022.
Total crusher throughput in the second quarter
averaged 16,800 tpd, for a total of 1,526,771 tonnes stacked at a
grade of 0.68 g/t Au, including surface stockpiles. Consistent with
the previous quarter, processing the lower recovery stockpiles,
combined with stacking on higher lifts of the leach pad, resulted
in a longer than anticipated leach cycle which contributed to a
lower recovery rate of 46%.
La Yaqui Grande Operational Review
La Yaqui Grande achieved initial gold production
in June 2022, following the completion of construction ahead of
schedule. La Yaqui Grande is an open pit mine located approximately
seven kilometres from the existing Mulatos operation and is
adjacent to the past producing La Yaqui Phase I operation. Stacking
rates continue to ramp up with higher than planned grades
contributing to a strong start with production of 5,000 ounces for
the quarter.
During the quarter, 343,884 tonnes of ore were
mined bringing total ore mined since the beginning of pre-stripping
to approximately 900,000 tonnes. The focus of mining activities in
the quarter was on completing pre-stripping to access the main ore
body, with 6,260,883 tonnes of waste mined. The majority of these
tonnes were capitalized and included in construction capital.
Stacking of ore commenced in June, with 333,166
tonnes placed on the leach pad at an average grade of 1.57 g/t Au.
Ore stacked in the period included higher grade ore mined and
stockpiled during the construction period.
Financial Review (Mulatos District)
Revenues of $35.1 million in the second quarter,
and $79.1 million for the first six months of the year, were lower
than the prior year period driven by fewer ounces sold, partially
offset by higher realized gold prices.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $60.1 million in the
second quarter were higher than in the comparative period, driven
by higher processing costs and an adjustment to the leach pad
inventory balance. During the second quarter, the Company reviewed
the carrying value of the Mulatos leach pad inventory to assess its
recoverability. Given a decline in the gold price at period end,
the Company recorded an adjustment to reduce the carrying value of
Mulatos leach pad inventory, resulting in a non-cash net realizable
value adjustment of $22.3 million ($14.7 million after tax). For
the first half of 2022, cost of sales of $106.8 million, were
higher than the prior year, primarily due to the inventory
adjustment.
Total cash costs for the Mulatos District of
$1,566 per ounce were higher than the prior year period as a result
of lower tonnes and grades stacked. Additionally the surface
stockpiles processed carry a higher cost per ounce given increased
reagent consumption driving processing costs higher. Total cash
costs for the Mulatos District included initial production from La
Yaqui Grande, which had total cash costs and mine-site AISC of $451
per ounce in the quarter given the higher grades stacked in June.
Mine-site AISC for the Mulatos District of $1,636 per ounce in the
quarter were higher than in the prior year period, consistent with
the increase in total cash costs.
Capital spending totaled $21.3 million in the
second quarter, which included La Yaqui Grande construction
capital, $0.4 million of sustaining capital and capitalized
exploration of $0.2 million. During the first half of 2022, capital
spending totaled $47.3 million, including $42.3 million of growth
capital for the completion of construction at La Yaqui Grande.
La Yaqui Grande construction was completed ahead
of schedule, with total capital spending on the project of $161
million, including $7 million recorded within accounts payable at
quarter end. Capital spending included pre-stripping of 33 million
tonnes of waste rock, as well as a new three-stage crushing
circuit, independent leach pad and process ponds, carbon columns, a
new camp and new ancillary buildings.
Total capital spending on the project was 13%,
or $19 million higher than the initial capital estimate of $142
million from mid-2020, mainly due to scope changes. The Company
installed a new crushing circuit rather than refurbishing the El
Chanate crushing circuit as originally planned. In addition, the
Company constructed a new camp given the challenges posed by
COVID-19. Capital spending in the second half of the year is
expected to include advancing the power-line upgrade to bring power
to site, as well as engineering and construction of a water
treatment plant.
The Mulatos District generated negative
mine-site free cash flow of $30.0 million in the quarter driven by
construction capital spending at La Yaqui Grande. With the
completion of construction and commencement of production, La Yaqui
Grande is expected to be a strong free cash flow contributor
starting in the second half of this year.
Below are pictures of the recently constructed
La Yaqui Grande mine in Mexico:
La Yaqui Grande - Pit
La Yaqui Grande - Leach pad and
processing circuit
Second Quarter 2022 Development Activities
Island Gold (Ontario,
Canada)
Phase 3+ Expansion Study
On June 28, 2022, the Company reported results
of the Phase 3+ Expansion Study (“P3+ Expansion Study”) conducted
on its Island Gold mine, located in Ontario, Canada. The P3+
Expansion Study was an update to the Phase 3 Study ("P3 2000
Study") released on July 14, 2020.
The P3+ Expansion Study was updated to reflect
the current costing environment, as well as incorporate the
significant growth in high-grade Mineral Reserves and Resources
into an optimized mine plan. The P3+ Expansion Study outlines a
larger, more profitable, and valuable operation than what was
included in the P3 2000 Study released in 2020.
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, and an expansion of the mill. This infrastructure was all
incorporated into the P3 2000 Study with several scope changes to
accommodate the 20% increase in production rates to 2,400 tpd
including a larger mill expansion and paste plant, as well as
accelerated development to support the higher mining rates. The
Phase 3+ Expansion also includes 30% more development over the mine
life to accommodate the 43% larger mineable resource.
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.
Phase 3+ Expansion Study Highlights:
- Higher production: average annual
gold production of 287,000 ounces starting in 2026 upon completion
of the shaft
- This represents a 22% increase from
the P3 2000 Study and a 121% increase from the mid-point of 2022
production guidance of 130,000 ounces
- Industry low costs: consistent cost
structure with the P3 2000 Study, with productivity gains and
economies of scale offsetting inflation
- Average total cash costs of $432 per
ounce (average $425 per ounce from 2026), consistent with the P3
2000 Study and 25% lower than the mid-point of 2022 guidance of
$575 per ounce
- Average mine-site all-in sustaining
costs of $610 per ounce (average $576 per ounce from 2026), a 30%
decrease from the mid-point of 2022 guidance of $875 per ounce
- Larger, longer-life operation
supported by significantly increased Mineral Reserve and Resources
- 43% increase in mineable resource to
4.6 million ounces of gold grading 10.59 g/t Au
- 18 year mine life to 2039, a four
year increase from the P3 2000 Study, while operating at 20% higher
production rates of 2,400 tpd
- Lower capital intensity: lower total
capital per ounce over the life of mine
- Growth capital of $756 million and
sustaining capital of $777 million, both up from the P3 2000 Study
reflecting the expansion, a larger mineable resource, and
industry-wide inflation
- Total capital intensity decreased 4%
to $344 per ounce reflecting the larger mineable resource with
increased ounces per vertical metre driving the lower capital
intensity and contributing to the stronger economics
- $100 million of the increase in
growth capital compared to the P3 2000 Study reflects sustaining
capital that has been brought forward to the expansion period for
accelerated underground development and infrastructure to support
the higher mining rate
- Expansion significantly de-risked
given increased detailed engineering, capital committed, and
projects completed to date, including the majority of
earthworks
- Stronger economics with expansion
and larger mineable resource more than offsetting inflation to
create a more valuable operation
- After-tax net present value (“NPV”)
(5%) of $1.6 billion, a 25% increase from the P3 2000 Study (base
case gold price assumption of $1,650 per ounce and USD/CAD foreign
exchange rate of $0.78:1)
- After-tax internal rate of return
(“IRR”) of 23%, up from 20% in P3 2000 Study
- After-tax NPV (5%) of $2.0 billion,
a 31% increase from the P3 2000 Study, and an after-tax IRR of 25%,
at gold prices of $1,850 per ounce
- Industry low Greenhouse Gas (“GHG”)
emission intensity
- 35% reduction in life of mine GHG
emissions relative to the current operation, supporting the
company-wide target of a 30% reduction in GHG emissions by
2030
- 31% additional reduction in
emissions per ounce of gold produced from already industry low
levels
- Fully funded, balanced approach to
growth: growing free cash flow expected starting in the second half
of 2022
- With no significant capital expected
to be spent on Lynn Lake until the P3+ Expansion is well underway;
the Company is well positioned to fund the expansion internally
while generating strong free cash flow over the next several
years
- The Company expects significant free
cash flow growth in 2025 and beyond as production rates ramp up at
Island Gold
During the second quarter, the Company was
focused on completion of the Phase 3+ Expansion Study, as well as
detailed engineering of the shaft and associated infrastructure,
including the hoisting plant and surface civil works, as well as
the paste plant. Contract tendering and awarding remains ongoing,
with commitments in place for over 30% of the anticipated spend.
Third quarter activities will include completion of site clearing
and preparation of the shaft area, with the pre-sink of the shaft
expected to begin in August 2022.
During the second quarter of 2022, the Company
spent $15.7 million on growth capital consisting of surface
infrastructure, capital development, and detailed engineering.
Shaft site area - clearing and
preparation work
Lynn Lake (Manitoba,
Canada)
The Company released a positive Feasibility
Study on the Lynn Lake project in December 2017 outlining average
annual production of 143,000 ounces over a 10 year mine life at
average mine-site AISC of $745 per ounce.
The project economics based on the 2017
Feasibility Study at a $1,500 per ounce gold price include an
after-tax internal rate of return ("IRR") of 21.5% and an after-tax
NPV of $290 million (12.5% IRR at a $1,250 per ounce gold price).
The Company filed the Environmental Impact Statement ("EIS") with
the federal government in 2020. Approval of the EIS is expected in
the latter part of 2022, following which the Company expects to
release an updated feasibility study on the project.
As part of the Company's balanced approach to
growth and capital allocation, no significant capital is expected
to be spent on the development of Lynn Lake until the Phase 3+
Expansion at Island Gold is well underway.
Development spending (excluding exploration) was
$2.9 million in the second quarter of 2022 and $6.0 million in the
first half to support the ongoing permitting process and
engineering.
Kirazlı (Çanakkale,
Türkiye)
On October 14, 2019, the Company suspended all
construction activities on its Kirazlı project following the
Turkish government's failure to grant a routine renewal of the
Company’s mining licenses, despite the Company having met all legal
and regulatory requirements for their renewal. In October 2020, the
Turkish government refused the renewal of the Company’s Forestry
Permit. The Company had been granted approval of all permits
required to construct Kirazlı including the Environmental Impact
Assessment approval, Forestry Permit, and GSM (Business Opening and
Operation) permit, and certain key permits for the nearby Ağı Dağı
and Çamyurt Gold Mines. These permits were granted by the Turkish
government after the project earned the support of the local
communities and passed an extensive multi-year environmental review
and community consultation process.
On April 20, 2021, the Company announced that
its Netherlands wholly-owned subsidiaries Alamos Gold Holdings
Coöperatief U.A, and Alamos Gold Holdings B.V. (the “Subsidiaries”)
would be filing an investment treaty claim against the Republic of
Türkiye for expropriation and unfair and inequitable treatment,
among other things, with respect to the Kirazlı, Ağı Dağı and
Çamyurt gold development projects in Türkiye. The claim was filed
under the Netherlands- Türkiye Bilateral Investment Treaty (the
“Treaty”). Alamos Gold Holdings Coöperatief U.A. and Alamos Gold
Holdings B.V. had its claim against the Republic of Türkiye
registered on June 7, 2021 with the International Centre for
Settlement of Investment Disputes (World Bank Group).
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 Netherlands. The Subsidiaries directly own and control the
Company’s Turkish assets. The Subsidiaries invoking their rights
pursuant to the Treaty does not mean that they relinquish their
rights to the Turkish project, or otherwise cease the Turkish
operations. The Company will continue to work towards a
constructive resolution with the Republic of Türkiye.
The Company incurred $1.3 million in the second
quarter related to ongoing holding costs and legal costs to
progress the Treaty claim, which was expensed.
Second Quarter 2022 Exploration Activities
Island Gold (Ontario,
Canada)
A total of $22 million has been budgeted for
surface and underground exploration at Island Gold in 2022. The
exploration focus remains on defining additional near mine Mineral
Resources across the Island Gold Main Zone (Island Main, West, and
East), as well as advancing and evaluating several regional
targets. This includes 30,000 metres (“m”) of surface directional
drilling, 27,500 m of underground exploration drilling, and 480 m
of underground exploration drift development to extend drill
platforms on the 620, 840, and 980-levels.
A regional exploration program including 9,000 m
of drilling is also budgeted in 2022. The focus is on evaluating
and advancing exploration targets outside the Island Gold Deposit
on the 15,524-hectare Island Gold property.
During the second quarter, four diamond drill
rigs remained focused on the surface directional exploration
program, one focused on the surface regional program, and one
underground diamond drill operated.
Surface exploration drilling
A total of 8,414 m of surface directional
drilling was completed in 11 holes during the second quarter.
Surface directional drilling targeted areas peripheral to the
Inferred Mineral Resource block in the Island West, Main, and East
areas between 1,400 m and 1,750 m below surface with drill hole
spacing ranging from 75 m to 200 m. In addition, a total of 5,629 m
of surface regional diamond drilling was completed in seven holes
during the second quarter in two target areas.
Underground exploration drilling
During the second quarter of 2022, a total of
5,123 m of standard underground exploration drilling was completed
in 33 holes. The objective of the underground drilling is to
identify new Mineral Resources close to existing Mineral Resource
or Reserve blocks. A total of 88 m of underground exploration drift
development was also completed during the second quarter.
Total exploration expenditures during the second
quarter were $6.1 million, of which $4.1 million was capitalized.
In the first half of 2022, the Company incurred exploration
expenditures of $11.8 million, of which $9.2 million was
capitalized.
Young-Davidson (Ontario,
Canada)
A total of $7.5 million has been budgeted for
exploration at Young-Davidson in 2022. The focus is on following up
on the success in the 2020 and 2021 programs which extended gold
mineralization below existing Mineral Reserves and Resources and
intersected higher grades in the hanging wall and footwall of the
deposit.
The 2022 program includes 21,600 m of
underground exploration drilling, and 500 m of underground
exploration drift development to extend drill platforms on the
9220, 9095, and 9025-levels. The focus of the underground
exploration drilling program will be to expand Mineral Resources in
six target areas that have been identified within proximity to
existing underground infrastructure. In addition, 10,000 m of
surface drilling is planned to test near-surface targets across the
5,720 hectare Young-Davidson Property.
Underground exploration drilling during the
second quarter was focused on two targets with 2,912 m completed in
three holes. The first target included one hole drilled from the
8960-level exploration drill bay established in the lower mine
infrastructure tested to the east and down-plunge of existing
Mineral Reserves and Resources. Drilling is targeting
syenite-hosted mineralization as well as continuing to test
mineralization in the footwall sediments and in the hanging wall
mafic-ultramafic stratigraphy. A second underground drill completed
two holes from the 9220 West exploration drift testing down-plunge
of the existing Mineral Reserves and Resources.
A total of 4,476 m of surface exploration
drilling was completed in seven holes, testing several near-surface
regional targets.
Exploration spending totaled $2.9 million of
which $1.3 million was capitalized in the second quarter 2022. For
the first half of 2022, exploration spending totaled $5.5 million
of which $2.3 million was capitalized.
Mulatos District (Sonora,
Mexico)
The Company has a large exploration package
covering 28,972 hectares with the majority of past exploration
efforts focused around the Mulatos mine. Exploration continues to
follow up on near-mine sulphide opportunities at Puerto del Aire,
as well as several earlier stage prospects throughout the wider
district.
During the second quarter of 2022, exploration
activities continued at Puerto del Aire and the near-mine areas
with 2,688 m of drilling completed in 11 holes. Drilling at Puerto
del Aire in 2021 was successful in establishing a new underground
Mineral Reserve at Mulatos, consisting of 0.4 million ounces of
gold (2.8 mt grading 4.67 g/t Au) as at December 31, 2021. The
focus in 2022 is on evaluating sulphide opportunities to expand
this Mineral Reserve. The higher-grade ore from Puerto del Aire is
expected to be processed through the existing mill at Mulatos.
Ongoing exploration results will be incorporated into an updated
development plan which is expected to be finalized over the next
year.
Drilling was completed in the second quarter at
the Carricito project with 2,064 m in 11 holes. At Refugio, 672 m
of drilling was completed in four holes testing extensions to gold
mineralization intersected in drilling completed in 2017. At
Bajios, two drill holes were completed totaling 453 m. Drilling
also continued at the Halcon West targets with seventeen drill
holes completed in the second quarter totaling 4,448 m.
During the second quarter, the Company incurred
$3.0 million of exploration spending of which $0.2 million was
capitalized. For the first half of 2022, the Company incurred
$4.6 million of exploration spending of which
$0.2 million was
capitalized.
Lynn Lake (Manitoba,
Canada)
During the second quarter of 2022, 26 holes
totaling 8,019 m were completed at the Gordon and MacLellan
deposits, as well as several regional greenfield target areas.
In July, two drill rigs will move to the Tulune
target area where Alamos Gold announced a greenfield discovery in
2021. A 3,192 line-km high resolution drone magnetic survey of the
Tulune area was completed in the second quarter and the new
geophysical information will be used in the design of targets for
the third quarter. A summer field program consisting of geological
mapping, prospecting and soil sampling that is designed to help
advance a pipeline of prospective regional exploration targets to
drill-ready stage was initiated in the second quarter, and will be
ongoing through the third quarter.
Exploration spending totaled $2.4 million in the
second quarter and $4.5 million year-to-date of which all was
capitalized.
Review of Second Quarter Financial
Results
During the second quarter of 2022, the Company
sold 102,164 ounces of gold for revenues of $191.2 million, a 2%
decrease from the prior year period driven by less ounces sold,
partially offset by higher realized gold prices.
The average realized gold price in the second
quarter was $1,871 per ounce, a 3% increase compared to $1,814 per
ounce realized in the prior year period. The average realized gold
price in the quarter was in line with the London PM Fix price.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) were $151.9
million in the second quarter, 20% higher than the prior year
period.
Mining and processing costs were $89.2 million,
9% higher than the prior year period. The increase was primarily
related to higher processing costs at Mulatos related to stockpiled
ore.
Consolidated total cash costs of $895 per ounce
and AISC of $1,170 per ounce in the quarter were both higher
compared to the prior year period due to higher processing costs
for stockpiled ore at Mulatos, partially offset by lower unit
mining costs at Young-Davidson and a weaker Canadian dollar.
The Company assesses the net realizable value of
inventory at each reporting period. Given the decrease in the gold
price at the end of the second quarter, and higher costs at the
Mulatos, the Company recorded a $22.3 million ($14.7 million after
tax) reduction in the value of the heap leach inventory. This
included $18.0 million related to mining and processing costs and
$4.3 million related to amortization.
Royalty expense was $2.2 million in the quarter,
lower than the prior year period of $3.0 million due to lower
ounces sold in the period.
Amortization of $38.2 million in the quarter was
lower than the prior year period due to less ounces sold.
Amortization of $374 per ounce was lower than guidance, and is
expected to increase slightly through future quarters.
The Company recognized earnings from operations
of $25.7 million in the quarter, a significant increase from the
prior year period as a result of the non-cash after-tax impairment
charge on the Turkish projects of $213.8 million taken in the
second quarter of 2021.
The Company reported net earnings of $6.4
million in the quarter, compared to a net loss of $172.5 million in
the prior year period. The increase in net earnings from the prior
year period is mainly driven by the non-cash impairment charge
related to the Turkish projects in 2021. On an adjusted basis,
earnings in the second quarter of 2022 were $29.3 million, or $0.07
per share, reflecting adjustments for the inventory net realizable
value charge, as well as foreign exchange losses recorded within
deferred taxes.
Associated Documents
This press release should be read in conjunction
with the Company’s interim consolidated financial statements for
the three-month period ended June 30, 2022 and associated
Management’s Discussion and Analysis (“MD&A”), which are
available from the Company's website, www.alamosgold.com, in the
"Investors" section under "Reports and Financials", and on SEDAR
(www.sedar.com) and EDGAR (www.sec.gov).
Reminder of Second Quarter 2022 Results
Conference Call
The Company's senior management will host a
conference call on Thursday, July 28, 2022 at 10:00 am ET to
discuss the results. Participants may join the conference call via
webcast or through the following dial-in numbers:
Toronto and International: (416) 641-6104Toll
free (Canada and the United States): (800) 952-5114Participant
passcode: 4365144#Webcast: www.alamosgold.com
A playback will be available until August 28,
2022 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The pass code is 1053605#. The webcast will be
archived at www.alamosgold.com.
Qualified Persons
Chris Bostwick, FAusIMM, Alamos’ Senior Vice
President, Technical Services, who is a qualified person within the
meaning of National Instrument 43-101 ("Qualified Person"), has
reviewed and approved the scientific and technical information
contained in this press release.
About Alamos
Alamos is a Canadian-based intermediate gold
producer with diversified production from three operating mines in
North America. This includes the Young-Davidson and Island Gold
mines in northern Ontario, Canada and the Mulatos mine in Sonora
State, Mexico. Additionally, the Company has a significant
portfolio of development stage projects in Canada, Mexico, Türkiye,
and the United States. Alamos employs more than 1,700 people and is
committed to the highest standards of sustainable development. The
Company’s shares are traded on the TSX and NYSE under the symbol
“AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K.
Parsons |
|
Vice-President, Investor
Relations |
|
(416) 368-9932 x 5439 |
|
All amounts are in United States dollars, unless otherwise
stated.
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this
release.
Cautionary Note Regarding
Forward-Looking Statements
This press release or incorporates by reference
“forward-looking statements” and “forward-looking information” as
defined under applicable Canadian and U.S. securities legislation.
All statements, other than statements of historical fact, which
address events, results, outcomes or developments that the Company
expects to occur are, or may be deemed, to be, forward-looking
statements. Forward-looking statements are generally, but not
always, identified by the use of forward-looking terminology such
as "expect", “assume”, “schedule”, "believe", "anticipate",
"intend", "estimate", “potential”, "forecast", "budget", “target”,
“on track”, “outlook”, “continue”, “plan” or variations of such
words and phrases and similar expressions or statements that
certain actions, events or results “may”, “could”, “would”, “might”
or “will” be taken, occur or be achieved or the negative
connotation of such terms.
Such statements include, but may not be limited
to, expectations pertaining to: increases in free cash flow
following the completion of La Yaqui Grande; ramp up of
stacking rates at La Yaqui Grande and corresponding increases to
production and decreases to costs; reductions in GHG
emissions; increases to production and decreases to costs,
including mine-site all-in sustaining 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; approval
of the Environmental Impact Study for the Lynn Lake Gold
Project and the intended release of an updated feasibility study
and timing related thereto; as well as other general
information as to strategy, plans or future financial or operating
performance, such as the Company’s expansion plans, project
timelines, production plans and expected sustainable productivity
increases, expected increases in mining activities and
corresponding cost efficiencies, expected drilling targets,
expected sustaining costs, expected improvements in cash flows and
margins, expectations of changes in capital expenditures,
forecasted cash shortfalls and the Company’s ability to fund them,
cost estimates, projected exploration results, reserve and resource
estimates, expected mine life, expected production rates and use of
the stockpile inventory, expected recoveries, sufficiency of
working capital for future commitments and other statements that
express management’s expectations or estimates of future plans and
performance.
Alamos cautions that forward-looking statements
are necessarily based upon a number of factors and assumptions
that, while considered reasonable by the Company at the time of
making such statements, are inherently subject to significant
business, economic, technical, legal, political and competitive
uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking statements and undue reliance should not be
placed on such statements and information.
Such factors and assumptions underlying the
forward-looking statements in this document include, but are not
limited to: changes to current estimates of mineral reserves and
resources; changes to production estimates (which assume accuracy
of projected ore grade, mining rates, recovery timing and recovery
rate estimates which may be impacted by unscheduled maintenance,
weather issues, labour and contractor availability and other
operating or technical difficulties); operations may be exposed to
new diseases, epidemics and pandemics, including the effects and
potential effects of the global COVID-19 pandemic; the impact of
the COVID-19 pandemic on the broader market and the trading price
of the Company's shares; provincial and federal orders or mandates
(including with respect to mining operations generally or auxiliary
businesses or services required for the Company’s operations) in
Canada, Mexico, the United States and Turkey; the duration of
regulatory responses to the COVID-19 pandemic; government and the
Company’s attempts to reduce the spread of COVID-19 which may
affect many aspects of the Company's operations including the
ability to transport personnel to and from site, contractor and
supply availability and the ability to sell or deliver gold doré
bars; fluctuations in the price of gold or certain other
commodities such as, diesel fuel, natural gas, and electricity;
changes in foreign exchange rates (particularly the Canadian
Dollar, Mexican Peso, U.S. Dollar and Turkish Lira); the impact of
inflation; changes in the Company's credit rating; any decision to
declare a quarterly dividend; employee and community relations;
litigation and administrative proceedings (including but not
limited to the investment treaty claim announced on April 20, 2021
against the Republic of Turkey by the Company’s wholly-owned
Netherlands subsidiaries, Alamos Gold Holdings Coöperatief U.A, and
Alamos Gold Holdings B.V.); disruptions affecting operations;
availability of and increased costs associated with mining inputs
and labour; delays with the Phase 3+ expansion project at the
Island Gold mine; delays in permitting, construction decisions and
any development of the Lynn Lake project; the risk that the
Company’s mines may not perform as planned; uncertainty with the
Company’s ability to secure additional capital to execute its
business plans; the speculative nature of mineral exploration and
development, including the risks of obtaining and maintaining
necessary licenses and permits, including the necessary licenses,
permits, authorizations and/or approvals from the appropriate
regulatory authorities for the Company’s development stage and
operating assets; labour and contractor availability (and being
able to secure the same on favourable terms); contests over title
to properties; expropriation or nationalization of property;
inherent risks and hazards associated with mining and mineral
processing including environmental hazards, industrial hazards,
industrial accidents, unusual or unexpected formations, pressures
and cave-ins; changes in national and local government legislation
(including tax and employment legislation), controls or regulations
in Canada, Mexico, Turkey, the United States and other
jurisdictions in which the Company does or may carry on business in
the future; increased costs and risks related to the potential
impact of climate change; failure to comply with environmental and
health and safety laws and regulations; disruptions in the
maintenance or provision of required infrastructure and information
technology systems; risk of loss due to sabotage, protests and
other civil disturbances; the impact of global liquidity and credit
availability and the values of assets and liabilities based on
projected future cash flows; risks arising from holding derivative
instruments; and business opportunities that may be pursued by the
Company. The litigation against the Republic of Turkey, described
above, results from the actions of the Turkish government in
respect of the Company’s projects in the Republic of Turkey. Such
litigation is a mitigation effort and may not be effective or
successful. If unsuccessful, the Company’s projects in Turkey may
be subject to resource nationalism and further expropriation; the
Company may lose any remaining value of its assets and gold mining
projects in Turkey and its ability to operate in Turkey. Even if
successful, there is no certainty as to the quantum of any damages
award or recovery of all, or any, legal costs. Any resumption of
activities in Turkey, or even retaining control of its assets and
gold mining projects in Turkey can only result from agreement with
the Turkish government. The investment treaty claim described in
this press release may have an impact on foreign direct investment
in the Republic of Turkey which may result in changes to the
Turkish economy, including but not limited to high rates of
inflation and fluctuation of the Turkish Lira which may also affect
the Company’s relationship with the Turkish government, the
Company’s ability to effectively operate in Turkey, and which may
have a negative effect on overall anticipated project values.
Additional risk factors and details with respect
to risk factors affecting that may affect the Company’s ability to
achieve the expectations set forth in the forward-looking
statements contained in this press release are set out in the
Company's latest 40-F/Annual Information Form for the year ended
December 31, 2021 under the heading “Risk Factors”, which is
available on the SEDAR website at www.sedar.com or on EDGAR at
www.sec.gov. The foregoing should be reviewed in conjunction with
the information, risk factors and assumptions found in this press
release.
The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Cautionary Note to U.S. Investors
Concerning Measured, Indicated and Inferred Resources
Measured, Indicated and Inferred
Resources: All resource and reserve estimates included in
this press release or documents referenced in this press release
have been prepared in accordance with Canadian National Instrument
43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101")
and the Canadian Institute of Mining, Metallurgy and Petroleum (the
"CIM") - CIM Definition Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council, as amended (the "CIM
Standards"). NI 43-101 is a rule developed by the Canadian
Securities Administrators, which established standards for all
public disclosure an issuer makes of scientific and technical
information concerning mineral projects. . Mining disclosure in the
United States was previously required to comply with SEC Industry
Guide 7 (“SEC Industry Guide 7”) under the United States Securities
Exchange Act of 1934, as amended. The U.S. Securities and Exchange
Commission (the “SEC”) has adopted final rules, to replace SEC
Industry Guide 7 with new mining disclosure rules under sub-part
1300 of Regulation S-K of the U.S. Securities Act (“Regulation S-K
1300”) which became mandatory for U.S. reporting companies
beginning with the first fiscal year commencing on or after January
1, 2021. Under Regulation S-K 1300, the SEC now recognizes
estimates of “Measured Mineral Resources”, “Indicated Mineral
Resources” and “Inferred Mineral Resources”. In addition, the SEC
has amended its definitions of “Proven Mineral Reserves” and
“Probable Mineral Reserves” to be substantially similar to
international standards.
Investors are cautioned that while the above
terms are “substantially similar” to CIM Definitions, there are
differences in the definitions under Regulation S-K 1300 and the
CIM Standards. Accordingly, there is no assurance any mineral
reserves or mineral resources that the Company may report as
“proven mineral reserves”, “probable mineral reserves”, “measured
mineral resources”, “indicated mineral resources” and “inferred
mineral resources” under NI 43-101 would be the same had the
Company prepared the mineral reserve or mineral resource estimates
under the standards adopted under Regulation S-K 1300. U.S.
investors are also cautioned that while the SEC recognizes
“measured mineral resources”, “indicated mineral resources” and
“inferred mineral resources” under Regulation S-K 1300, investors
should not assume that any part or all of the mineralization in
these categories will ever be converted into a higher category of
mineral resources or into mineral reserves. Mineralization
described using these terms has a greater degree of uncertainty as
to its existence and feasibility than mineralization that has been
characterized as reserves. Accordingly, investors are cautioned not
to assume that any measured mineral resources, indicated mineral
resources, or inferred mineral resources that the Company reports
are or will be economically or legally mineable.
International Financial Reporting
Standards: The condensed consolidated financial statements
of the Company have been prepared by management in accordance with
International Financial Reporting Standard 34, Interim Financial
Reporting, as issued by the International Accounting Standards
Board. These accounting principles differ in certain material
respects from accounting principles generally accepted in the
United States of America. The Company’s reporting currency is the
United States dollar unless otherwise noted.
Non-GAAP Measures and Additional GAAP
Measures
The Company has included certain non-GAAP
financial measures to supplement its Consolidated Financial
Statements, which are presented in accordance with IFRS, including
the following:
- adjusted net earnings and adjusted
earnings per share;
- cash flow from operating activities
before changes in working capital and taxes received;
- company-wide free cash flow;
- total mine-site free cash flow;
- mine-site free cash flow;
- net cash;
- total cash cost per ounce of gold
sold;
- all-in sustaining cost ("AISC") per
ounce of gold sold;
- mine-site all-in sustaining cost
("Mine-site AISC") per ounce of gold sold;
- sustaining and non-sustaining
capital expenditures; and
- earnings before interest, taxes,
depreciation, and amortization
The Company believes that these measures,
together with measures determined in accordance with IFRS, provide
investors with an improved ability to evaluate the underlying
performance of the Company. Non-GAAP financial measures do not have
any standardized meaning prescribed under IFRS, and therefore they
may not be comparable to similar measures employed by other
companies. The data is intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS.
Management's determination of the components of non-GAAP and
additional measures are evaluated on a periodic basis influenced by
new items and transactions, a review of investor uses and new
regulations as applicable. Any changes to the measures are dully
noted and retrospectively applied as applicable.
Adjusted Net Earnings and Adjusted
Earnings per Share
“Adjusted net earnings” and “adjusted earnings
per share” are non-GAAP financial measures with no standard meaning
under IFRS which exclude the following from net earnings:
- Foreign exchange
gain (loss)
- Items included
in other gain (loss)
- Certain
non-reoccurring items
- Foreign exchange
gain (loss) recorded in deferred tax expense
- The income and
mining tax impact of items included in other gain (loss)
Net earnings have been adjusted, including the
associated tax impact, for the group of costs in “other loss” on
the consolidated statement of comprehensive income. Transactions
within this grouping are: the fair value changes on non-hedged
derivatives; the renunciation of flow-through exploration
expenditures; loss on disposal of assets; severance costs related
to Turkish Projects; and Turkish Projects holding costs and
arbitration costs. The adjusted entries are also impacted for tax
to the extent that the underlying entries are impacted for tax in
the unadjusted net earnings.
The Company uses adjusted net earnings for its
own internal purposes. Management’s internal budgets and forecasts
and public guidance do not reflect the items which have been
excluded from the determination of adjusted net earnings.
Consequently, the presentation of adjusted net earnings enables
shareholders to better understand the underlying operating
performance of the core mining business through the eyes of
management. Management periodically evaluates the components of
adjusted net earnings based on an internal assessment of
performance measures that are useful for evaluating the operating
performance of our business and a review of the non-GAAP measures
used by mining industry analysts and other mining companies.
Adjusted net earnings is intended to provide
additional information only and does not have any standardized
meaning under IFRS and may not be comparable to similar measures
presented by other companies. It should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. The measure is not necessarily indicative
of operating profit or cash flows from operations as determined
under IFRS. The following table reconciles this non-GAAP measure to
the most directly comparable IFRS measure.
(in
millions) |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net earnings (loss) |
$6.4 |
|
($172.5 |
) |
($2.1 |
) |
($121.3 |
) |
Adjustments: |
|
|
|
|
Inventory net realizable value adjustment, net of taxes |
|
14.7 |
|
|
— |
|
|
14.7 |
|
|
— |
|
Impairment charge, net of taxes |
|
— |
|
|
213.8 |
|
|
26.7 |
|
|
213.8 |
|
Foreign exchange gain |
|
(0.4 |
) |
|
(0.5 |
) |
|
(0.4 |
) |
|
(0.3 |
) |
Other (gain) loss |
|
(5.4 |
) |
|
3.7 |
|
|
2.0 |
|
|
3.7 |
|
Unrealized foreign exchange loss (gain) recorded in deferred tax
expense |
|
12.9 |
|
|
(5.5 |
) |
|
7.1 |
|
|
(8.0 |
) |
Other income tax and mining tax adjustments |
|
1.1 |
|
|
(0.3 |
) |
|
(0.7 |
) |
|
(0.1 |
) |
Adjusted net earnings |
$29.3 |
|
$38.7 |
|
$47.3 |
|
$87.8 |
|
Adjusted earnings per share - basic and diluted |
$0.07 |
|
$0.10 |
|
$0.12 |
|
$0.22 |
|
Cash Flow from Operating Activities
before Changes in Working Capital and Cash Taxes
“Cash flow from operating activities before
changes in working capital and cash taxes” is a non-GAAP
performance measure that could provide an indication of the
Company’s ability to generate cash flows from operations, and is
calculated by adding back the change in working capital and taxes
received to “Cash provided by (used in) operating activities” as
presented on the Company’s consolidated statements of cash flows.
“Cash flow from operating activities before changes in working
capital” is a non-GAAP financial measure with no standard meaning
under IFRS.
The following table reconciles the non-GAAP
measure to the consolidated statements of cash flows.
(in
millions) |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Cash flow from operating activities |
$75.7 |
$86.7 |
$122.2 |
$186.0 |
Add: Changes in working
capital and cash taxes |
|
9.6 |
|
10.5 |
|
34.0 |
|
30.8 |
Cash flow from operating activities before changes in
working capital and cash taxes |
$85.3 |
$97.2 |
$156.2 |
$216.8 |
Company-wide Free Cash Flow
“Company-wide free cash flow" is a non-GAAP
performance measure calculated from the consolidated operating cash
flow, less consolidated mineral property, plant and equipment
expenditures. The Company believes this to be a useful indicator of
our ability to operate without reliance on additional borrowing or
usage of existing cash company-wide. Company-wide free cash flow is
intended to provide additional information only and does not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other mining
companies. Company-wide free cash flow should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
(in
millions) |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Cash flow from operating activities |
$75.7 |
|
$86.7 |
|
$122.2 |
|
$186.0 |
|
Less: mineral property, plant
and equipment expenditures |
|
(69.0 |
) |
|
(83.5 |
) |
|
(156.3 |
) |
|
(156.1 |
) |
Less:
capital advances |
|
— |
|
|
(3.4 |
) |
|
— |
|
|
(20.2 |
) |
Company-wide free cash flow |
$6.7 |
|
($0.2 |
) |
($34.1 |
) |
$9.7 |
|
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.
Total Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$75.7 |
|
$86.7 |
|
$122.2 |
|
$186.0 |
|
Add:
operating cash flow used by non-mine site activity |
|
9.0 |
|
|
13.8 |
|
|
24.4 |
|
|
24.1 |
|
Cash flow from operating mine-sites |
$84.7 |
|
$100.5 |
|
$146.6 |
|
$210.1 |
|
|
|
|
|
|
Mineral property, plant and
equipment expenditure |
$69.0 |
|
$83.5 |
|
$156.3 |
|
$156.1 |
|
Capital advances |
|
— |
|
|
3.4 |
|
|
— |
|
|
20.2 |
|
Less: capital expenditures
from development projects, and corporate |
|
(5.3 |
) |
($6.5 |
) |
|
(10.5 |
) |
|
(11.0 |
) |
Capital expenditure and capital advances from
mine-sites |
$63.7 |
|
$80.4 |
|
$145.8 |
|
$165.3 |
|
|
|
|
|
|
Total mine-site free cash flow |
$21.0 |
|
$20.1 |
|
$0.8 |
|
$44.8 |
|
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$43.9 |
|
$38.3 |
|
$89.8 |
|
$82.5 |
|
Mineral
property, plant and equipment expenditure |
|
(13.1 |
) |
|
(19.6 |
) |
|
(35.8 |
) |
|
(41.5 |
) |
Mine-site free cash flow |
$30.8 |
|
$18.7 |
|
$54.0 |
|
$41.0 |
|
Island Gold Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
$49.5 |
|
$42.9 |
|
$76.9 |
|
$98.4 |
|
Mineral property, plant and
equipment expenditure |
|
(29.3 |
) |
|
(29.2 |
) |
|
(62.7 |
) |
|
(58.7 |
) |
Mine-site free cash flow |
$20.2 |
|
$13.7 |
|
$14.2 |
|
$39.7 |
|
(1) Includes capital advances of nil
and $1.4 million for the three and six months ended June 30, 2022
($0.7 million and $2.8 million for the three and six months ended
June 30, 2021).
Mulatos District Free Cash Flow |
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Cash flow from operating
activities |
($8.7 |
) |
$19.3 |
|
($20.1 |
) |
$29.2 |
|
Mineral property, plant and
equipment expenditure |
|
(21.3 |
) |
|
(31.6 |
) |
|
(47.3 |
) |
|
(65.1 |
) |
Mine-site free cash flow |
($30.0 |
) |
($12.3 |
) |
($67.4 |
) |
($35.9 |
) |
(1) Includes a drawdown of capital
advances of $1.4 million for the three and six months ended June
30, 2022 ($2.7 million and $17.4 million of advances for the three
and six months ended June 30, 2021).
Net Cash
The Company defines net cash as cash and cash equivalents less
long-term debt.
Total Cash Costs per ounce
Total cash costs per ounce is a non-GAAP term
typically used by gold mining companies to assess the level of
gross margin available to the Company by subtracting these costs
from the unit price realized during the period. This non-GAAP term
is also used to assess the ability of a mining company to generate
cash flow from operations. Total cash costs per ounce includes
mining and processing costs plus applicable royalties, and net of
by-product revenue and net realizable value adjustments. This
metric excludes COVID-19 costs incurred in the period. Total cash
costs per ounce is exclusive of exploration costs.
Total cash costs per ounce is intended to
provide additional information only and does not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other mining companies. It should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. The measure is not
necessarily indicative of cash flow from operations under IFRS or
operating costs presented under IFRS.
All-in Sustaining Costs per ounce and
Mine-site All-in Sustaining Costs
The Company adopted an “all-in sustaining costs
per ounce” non-GAAP performance measure in accordance with the
World Gold Council published in June 2013. The Company believes the
measure more fully defines the total costs associated with
producing gold; however, this performance measure has no
standardized meaning. Accordingly, there may be some variation in
the method of computation of “all-in sustaining costs per ounce” as
determined by the Company compared with other mining companies. In
this context, “all-in sustaining costs per ounce” for the
consolidated Company reflects total mining and processing costs,
corporate and administrative costs, share-based compensation,
exploration costs, sustaining capital, and other operating
costs.
For the purposes of calculating "mine-site
all-in sustaining costs" at the individual mine-sites, the Company
does not include an allocation of corporate and administrative
costs and share-based compensation, as detailed in the
reconciliations below.
Sustaining capital expenditures are expenditures
that do not increase annual gold ounce production at a mine site
and excludes all expenditures at the Company’s development projects
as well as certain expenditures at the Company’s operating sites
that are deemed expansionary in nature. For each mine-site
reconciliation, corporate and administrative costs, and non-site
specific costs are not included in the all-in sustaining cost per
ounce calculation.
All-in
sustaining costs per gold ounce is
intended to provide additional information only and does not
have any standardized
meaning under IFRS and may not be comparable to similar measures presented by other mining companies.
It should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.
Total Cash Costs and All-in Sustaining
Costs per Ounce Reconciliation Tables
The following tables reconciles these non-GAAP
measures to the most directly comparable IFRS measures on a
Company-wide and individual mine-site basis.
Total Cash
Costs and AISC Reconciliation - Company-wide |
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$89.2 |
$82.1 |
$184.6 |
$174.8 |
Royalties |
|
2.2 |
|
3.0 |
|
4.5 |
|
6.1 |
Total cash costs |
|
91.4 |
|
85.1 |
|
189.1 |
|
180.9 |
Gold
ounces sold |
|
102,164 |
|
107,581 |
|
200,630 |
|
234,063 |
Total cash costs per ounce |
$895 |
$791 |
$943 |
$773 |
|
|
|
|
|
Total cash costs |
$91.4 |
$85.1 |
$189.1 |
$180.9 |
Corporate and
administrative(1) |
|
6.2 |
|
6.3 |
|
12.3 |
|
12.4 |
Sustaining capital
expenditures(2) |
|
20.1 |
|
26.7 |
|
42.7 |
|
50.3 |
Share-based compensation |
|
0.4 |
|
2.3 |
|
6.7 |
|
5.1 |
Sustaining exploration |
|
0.6 |
|
1.2 |
|
1.3 |
|
2.5 |
Accretion of decommissioning
liabilities |
|
0.8 |
|
0.6 |
|
1.4 |
|
1.3 |
Total all-in sustaining costs |
$119.5 |
$122.2 |
$253.5 |
$252.5 |
Gold
ounces sold |
|
102,164 |
|
107,581 |
|
200,630 |
|
234,063 |
All-in sustaining costs per ounce |
$1,170 |
$1,136 |
$1,264 |
$1,079 |
(1) Corporate and administrative
expenses exclude expenses incurred at development
properties.(2) Sustaining capital expenditures are
defined as those expenditures which do not increase annual gold
ounce production at a mine site and exclude all expenditures at
growth projects and certain expenditures at operating sites which
are deemed expansionary in nature. Total sustaining capital for the
period is as follows:
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
(in millions) |
|
|
|
|
Capital expenditures per cash
flow statement |
$69.0 |
|
$83.5 |
|
$156.3 |
|
$156.1 |
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
Young-Davidson |
|
(2.9 |
) |
|
(9.8 |
) |
|
(15.2 |
) |
|
(22.2 |
) |
Island Gold |
|
(19.8 |
) |
|
(17.5 |
) |
|
(45.4 |
) |
|
(34.3 |
) |
Mulatos District |
|
(20.9 |
) |
|
(23.0 |
) |
|
(42.5 |
) |
|
(38.3 |
) |
Corporate and other |
|
(5.3 |
) |
|
(6.5 |
) |
|
(10.5 |
) |
|
(11.0 |
) |
Sustaining capital expenditures |
$20.1 |
|
$26.7 |
|
$42.7 |
|
$50.3 |
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$39.1 |
$41.1 |
$80.8 |
$81.7 |
Royalties |
|
1.3 |
|
1.5 |
|
2.9 |
|
2.8 |
Total cash costs |
$40.4 |
$42.6 |
$83.7 |
$84.5 |
Gold
ounces sold |
|
46,662 |
|
45,284 |
|
98,187 |
|
93,306 |
Total cash costs per ounce |
$866 |
$941 |
$852 |
$906 |
|
|
|
|
|
Total cash costs |
$40.4 |
$42.6 |
$83.7 |
$84.5 |
Sustaining capital
expenditures |
|
10.2 |
|
9.8 |
|
20.6 |
|
19.3 |
Accretion of decommissioning liabilities |
|
0.1 |
|
— |
|
0.2 |
|
0.2 |
Total all-in sustaining costs |
$50.7 |
$52.4 |
$104.5 |
$104.0 |
Gold
ounces sold |
|
46,662 |
|
45,284 |
|
98,187 |
|
93,306 |
Mine-site all-in sustaining costs per ounce |
$1,087 |
$1,157 |
$1,064 |
$1,115 |
Island
Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$21.0 |
$15.6 |
$37.9 |
$32.8 |
Royalties |
|
0.7 |
|
1.3 |
|
1.2 |
|
2.7 |
Total cash costs |
$21.7 |
$16.9 |
$39.1 |
$35.5 |
Gold
ounces sold |
|
36,797 |
|
33,632 |
|
60,165 |
|
73,514 |
Total cash costs per ounce |
$590 |
$502 |
$650 |
$483 |
|
|
|
|
|
Total cash costs |
$21.7 |
$16.9 |
$39.1 |
$35.5 |
Sustaining capital
expenditures |
|
9.5 |
|
11.0 |
|
17.3 |
|
21.6 |
Accretion of decommissioning liabilities |
|
— |
|
— |
|
0.1 |
|
— |
Total all-in sustaining costs |
$31.2 |
$27.9 |
$56.5 |
$57.1 |
Gold
ounces sold |
|
36,797 |
|
33,632 |
|
60,165 |
|
73,514 |
Mine-site all-in sustaining costs per ounce |
$848 |
$830 |
$939 |
$777 |
Mulatos
District Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$29.1 |
$25.4 |
$65.9 |
$60.3 |
Royalties |
|
0.2 |
|
0.2 |
|
0.4 |
|
0.6 |
Total cash costs |
$29.3 |
$25.6 |
$66.3 |
$60.9 |
Gold
ounces sold |
|
18,705 |
|
28,665 |
|
42,278 |
|
67,243 |
Total cash costs per ounce |
$1,566 |
$ 893 |
$1,568 |
$906 |
|
|
|
|
|
Total cash costs |
$29.3 |
$25.6 |
$66.3 |
$60.9 |
Sustaining capital
expenditures |
|
0.4 |
|
5.9 |
|
4.8 |
|
9.4 |
Sustaining exploration |
|
0.2 |
|
0.7 |
|
0.4 |
|
1.5 |
Accretion of decommissioning liabilities |
|
0.7 |
|
0.6 |
|
1.1 |
|
1.1 |
Total all-in sustaining costs |
$30.6 |
$32.8 |
$72.6 |
$72.9 |
Gold
ounces sold |
|
18,705 |
|
28,665 |
|
42,278 |
|
67,243 |
Mine-site all-in sustaining costs per ounce |
$1,636 |
$1,144 |
$1,717 |
$1,084 |
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 June 30, |
Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net earnings (loss) |
$6.4 |
($172.5 |
) |
($2.1 |
) |
($121.3 |
) |
Add back: |
|
|
|
|
Inventory net realizable value adjustment |
|
22.3 |
|
— |
|
|
22.3 |
|
|
— |
|
Impairment charge |
|
— |
|
224.3 |
|
|
38.2 |
|
|
224.3 |
|
Finance expense |
|
1.3 |
|
1.0 |
|
|
2.5 |
|
|
2.0 |
|
Amortization |
|
38.2 |
|
41.8 |
|
|
76.0 |
|
|
85.3 |
|
Deferred income tax (recovery) expense |
|
23.5 |
|
(2.9 |
) |
|
17.0 |
|
|
15.1 |
|
Current income tax expense |
|
0.3 |
|
2.7 |
|
|
1.0 |
|
|
8.6 |
|
EBITDA |
$92.0 |
$94.4 |
|
$154.9 |
|
$214.0 |
|
Additional GAAP Measures
Additional GAAP measures are presented on the
face of the Company’s consolidated statements of comprehensive
income (loss) and are not meant to be a substitute for other
subtotals or totals presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measures. The
following additional GAAP measures are used and are intended to
provide an indication of the Company’s mine and operating
performance:
- Earnings from
operations - represents the amount of earnings before net finance
income/expense, foreign exchange gain/loss, other income/loss, loss
on redemption of senior secured notes and income tax expense
Unaudited Consolidated Statements of
Financial Position, ComprehensiveIncome, and Cash
Flow
ALAMOS GOLD
INC.Consolidated Statements of Financial
Position(Unaudited - stated in millions of United States
dollars)
|
June 30, 2022 |
|
December 31, 2021 |
A S S E T
S |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$121.5 |
|
|
$172.5 |
|
Equity securities |
|
22.5 |
|
|
|
23.9 |
|
Amounts receivable |
|
24.2 |
|
|
|
31.1 |
|
Income taxes receivable |
|
9.3 |
|
|
|
8.7 |
|
Inventory |
|
217.3 |
|
|
|
199.0 |
|
Other current assets |
|
21.5 |
|
|
|
24.2 |
|
Total Current
Assets |
|
416.3 |
|
|
|
459.4 |
|
|
|
|
|
Non-Current
Assets |
|
|
|
Long-term inventory |
|
7.3 |
|
|
|
10.6 |
|
Mineral property, plant and
equipment |
|
3,097.5 |
|
|
|
3,108.5 |
|
Other non-current assets |
|
64.7 |
|
|
|
43.0 |
|
Total Assets |
$3,585.8 |
|
|
$3,621.5 |
|
|
|
|
|
L I A B I L I T I E
S |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
$156.0 |
|
|
$157.4 |
|
Total Current
Liabilities |
|
156.0 |
|
|
|
157.4 |
|
|
|
|
|
Non-Current
Liabilities |
|
|
|
Deferred income taxes |
|
623.6 |
|
|
|
623.2 |
|
Decommissioning
liabilities |
|
103.6 |
|
|
|
102.8 |
|
Other non-current
liabilities |
|
2.5 |
|
|
|
2.5 |
|
Total Liabilities |
|
885.7 |
|
|
|
885.9 |
|
|
|
|
|
E Q U I T
Y |
|
|
|
Share capital |
$3,689.3 |
|
|
$3,692.9 |
|
Contributed surplus |
|
90.1 |
|
|
|
89.5 |
|
Accumulated other
comprehensive income |
|
(11.2 |
) |
|
|
1.9 |
|
Deficit |
|
(1,068.1 |
) |
|
|
(1,048.7 |
) |
Total Equity |
|
2,700.1 |
|
|
|
2,735.6 |
|
Total Liabilities and Equity |
$3,585.8 |
|
|
$3,621.5 |
|
ALAMOS GOLD
INC.Consolidated Statements of Comprehensive
Income (Loss) (Unaudited - stated in millions of United
States dollars, except share and per share amounts)
|
For three months ended |
|
For six months ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
OPERATING
REVENUES |
$191.2 |
|
|
$195.1 |
|
|
$375.7 |
|
|
$422.5 |
|
|
|
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
|
|
|
Mining and processing |
|
89.2 |
|
|
|
82.1 |
|
|
|
184.6 |
|
|
|
174.8 |
|
Inventory net realizable value
adjustment |
|
22.3 |
|
|
|
— |
|
|
|
22.3 |
|
|
|
— |
|
Royalties |
|
2.2 |
|
|
|
3.0 |
|
|
|
4.5 |
|
|
|
6.1 |
|
Amortization |
|
38.2 |
|
|
|
41.8 |
|
|
|
76.0 |
|
|
|
85.3 |
|
|
|
151.9 |
|
|
|
126.9 |
|
|
|
287.4 |
|
|
|
266.2 |
|
EXPENSES |
|
|
|
|
|
|
|
Exploration |
|
7.0 |
|
|
|
3.8 |
|
|
|
11.1 |
|
|
|
6.7 |
|
Corporate and
administrative |
|
6.2 |
|
|
|
6.3 |
|
|
|
12.3 |
|
|
|
12.4 |
|
Share-based compensation |
|
0.4 |
|
|
|
2.3 |
|
|
|
6.7 |
|
|
|
5.1 |
|
Impairment charge |
|
— |
|
|
|
224.3 |
|
|
|
38.2 |
|
|
|
224.3 |
|
|
|
165.5 |
|
|
|
363.6 |
|
|
|
355.7 |
|
|
|
514.7 |
|
EARNINGS (LOSS) BEFORE
INCOME TAXES |
|
25.7 |
|
|
|
(168.5 |
) |
|
|
20.0 |
|
|
|
(92.2 |
) |
|
|
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
|
|
|
Finance expense |
|
(1.3 |
) |
|
|
(1.0 |
) |
|
|
(2.5 |
) |
|
|
(2.0 |
) |
Foreign exchange gain |
|
0.4 |
|
|
|
0.5 |
|
|
|
0.4 |
|
|
|
0.3 |
|
Other gain (loss) |
|
5.4 |
|
|
|
(3.7 |
) |
|
|
(2.0 |
) |
|
|
(3.7 |
) |
EARNINGS (LOSS) FROM
OPERATIONS |
$30.2 |
|
|
($172.7 |
) |
|
$15.9 |
|
|
($97.6 |
) |
|
|
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
|
|
|
Current income tax
expense |
|
(0.3 |
) |
|
|
(2.7 |
) |
|
|
(1.0 |
) |
|
|
(8.6 |
) |
Deferred income tax
expense |
|
(23.5 |
) |
|
|
2.9 |
|
|
|
(17.0 |
) |
|
|
(15.1 |
) |
NET EARNINGS
(LOSS) |
$6.4 |
|
|
($172.5 |
) |
|
($2.1 |
) |
|
($121.3 |
) |
|
|
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
|
4.3 |
|
|
|
(0.6 |
) |
|
|
(1.1 |
) |
|
|
(1.7 |
) |
Net change in fair value of fuel hedging instruments, net of
taxes |
|
0.1 |
|
|
|
0.2 |
|
|
|
1.0 |
|
|
|
0.4 |
|
Items that will not be
reclassified to net earnings: |
|
|
|
|
|
|
|
Unrealized loss on equity securities, net of taxes |
|
(10.5 |
) |
|
|
(0.7 |
) |
|
|
(13.0 |
) |
|
|
(0.5 |
) |
Total other
comprehensive loss |
($6.1 |
) |
|
($1.1 |
) |
|
($13.1 |
) |
|
($1.8 |
) |
COMPREHENSIVE INCOME
(LOSS) |
$0.3 |
|
|
($173.6 |
) |
|
($15.2 |
) |
|
($123.1 |
) |
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE |
|
|
|
|
|
|
|
– basic |
$0.02 |
|
|
($0.44 |
) |
|
($0.01 |
) |
|
($0.31 |
) |
–
diluted |
$0.02 |
|
|
($0.44 |
) |
|
($0.01 |
) |
|
($0.31 |
) |
Weighted average number of
common shares outstanding (000's) |
|
|
|
|
|
|
|
– basic |
|
391,761 |
|
|
|
392,759 |
|
|
|
391,837 |
|
|
|
392,762 |
|
– diluted |
|
394,540 |
|
|
|
392,759 |
|
|
|
391,837 |
|
|
|
392,762 |
|
ALAMOS GOLD
INC.Consolidated Statements of Cash
Flows(Unaudited - stated in millions of United States
dollars)
|
For three months ended |
|
For six months ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
CASH PROVIDED BY (USED
IN): |
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
Net earnings (loss) for the
period |
$6.4 |
|
|
($172.5 |
) |
|
($2.1 |
) |
|
($121.3 |
) |
Adjustments for items not
involving cash: |
|
|
|
|
|
|
|
Amortization |
|
38.2 |
|
|
|
41.8 |
|
|
|
76.0 |
|
|
|
85.3 |
|
Impairment charge |
|
— |
|
|
|
224.3 |
|
|
|
38.2 |
|
|
|
224.3 |
|
Inventory net realizable value adjustment |
|
22.3 |
|
|
|
— |
|
|
|
22.3 |
|
|
|
— |
|
Foreign exchange gain |
|
(0.4 |
) |
|
|
(0.5 |
) |
|
|
(0.4 |
) |
|
|
(0.3 |
) |
Current income tax expense |
|
0.3 |
|
|
|
2.7 |
|
|
|
1.0 |
|
|
|
8.6 |
|
Deferred income tax expense (recovery) |
|
23.5 |
|
|
|
(2.9 |
) |
|
|
17.0 |
|
|
|
15.1 |
|
Share-based compensation |
|
0.4 |
|
|
|
2.3 |
|
|
|
6.7 |
|
|
|
5.1 |
|
Finance expense |
|
1.3 |
|
|
|
1.0 |
|
|
|
2.5 |
|
|
|
2.0 |
|
Other items |
|
(6.7 |
) |
|
|
1.0 |
|
|
|
(5.0 |
) |
|
|
(2.0 |
) |
Changes in working capital and
taxes paid |
|
(9.6 |
) |
|
|
(10.5 |
) |
|
|
(34.0 |
) |
|
|
(30.8 |
) |
|
|
75.7 |
|
|
|
86.7 |
|
|
|
122.2 |
|
|
|
186.0 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Mineral property, plant and
equipment |
|
(69.0 |
) |
|
|
(83.5 |
) |
|
|
(156.3 |
) |
|
|
(156.1 |
) |
Capital advances |
|
— |
|
|
|
(3.4 |
) |
|
|
— |
|
|
|
(20.2 |
) |
Proceeds from sale of
Esperanza Project |
|
5.0 |
|
|
|
— |
|
|
|
5.0 |
|
|
|
— |
|
Proceeds from disposition of
equity securities |
|
— |
|
|
|
5.1 |
|
|
|
— |
|
|
|
25.8 |
|
Investment in equity
securities |
|
(2.7 |
) |
|
|
(1.2 |
) |
|
|
(2.7 |
) |
|
|
(4.3 |
) |
|
|
(66.7 |
) |
|
|
(83.0 |
) |
|
|
(154.0 |
) |
|
|
(154.8 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
Dividends paid |
|
(8.9 |
) |
|
|
(8.6 |
) |
|
|
(17.6 |
) |
|
|
(17.2 |
) |
Repurchase and cancellation of
common shares |
|
(8.2 |
) |
|
|
— |
|
|
|
(8.2 |
) |
|
|
(1.5 |
) |
Proceeds from issuance of
flow-through shares |
|
5.8 |
|
|
|
— |
|
|
|
5.8 |
|
|
|
— |
|
Proceeds from the exercise of
options |
|
— |
|
|
|
0.2 |
|
|
|
0.7 |
|
|
|
0.2 |
|
Repayment of equipment
financing obligations |
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
(11.3 |
) |
|
|
(8.5 |
) |
|
|
(19.3 |
) |
|
|
(18.6 |
) |
Effect of exchange rates on
cash and cash equivalents |
|
(0.4 |
) |
|
|
0.5 |
|
|
|
0.1 |
|
|
|
0.8 |
|
Net (decrease) increase in
cash and cash equivalents |
|
(2.7 |
) |
|
|
(4.3 |
) |
|
|
(51.0 |
) |
|
|
13.4 |
|
Cash and cash equivalents -
beginning of period |
|
124.2 |
|
|
|
238.2 |
|
|
|
172.5 |
|
|
|
220.5 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$121.5 |
|
|
$233.9 |
|
|
$121.5 |
|
|
$233.9 |
|
Photos accompanying this announcement are available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/b3737aab-0803-4708-8914-58bbc8010238
https://www.globenewswire.com/NewsRoom/AttachmentNg/be0efa8c-ab13-48c7-aa0d-fbdfba42132f
https://www.globenewswire.com/NewsRoom/AttachmentNg/f99970bc-3327-4c66-972d-7e1815b7a726
https://www.globenewswire.com/NewsRoom/AttachmentNg/0cf36447-c5ed-4209-bc92-d6b2b3ac0a6f
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