Alamos Gold Inc. (
TSX:AGI;
NYSE:AGI) (“Alamos” or the “Company”) today reported
results of the positive internal economic study completed on its
Puerto Del Aire (“PDA”) project located within the Mulatos District
in Sonora, Mexico. PDA is a higher-grade underground deposit
adjacent to the Mulatos open pit.
Given PDA’s attractive economics and proximity
to the existing Mulatos infrastructure, the Company anticipates
starting development of PDA in 2025 with first production expected
mid-2027. The project is expected to nearly triple the mine life of
the Mulatos District, extending production into 2035. There are
excellent opportunities currently being tested that could extend
the mine life further and enhance already robust economics through
the significant exploration upside potential at both PDA and Cerro
Pelon, as outlined earlier today.
PDA Project Highlights
- Average
annual gold production of 127,000 ounces over the first four years
and 104,000 ounces over the current mine life, based on
Mineral Reserves as at December 31, 2023
- Low cost
profile: total cash costs of $921 per payable ounce and mine-site
all-in sustaining costs of $1,003 per payable ounce,
consistent with the Company’s overall low cost structure
- Mine life tripled to
2035: PDA mine life of eight years based on current
Mineral Reserves, extending the Mulatos District mine life from
2027 to 2035
- High-return project with
significant upside potential
- After-tax Internal Rate of Return (“IRR”) of 46% and
after-tax Net Present Value (“NPV”) (5%) of $269 million
(using base case gold price assumption of $1,950 per ounce and a
MXN/USD foreign exchange rate of 18:1)
-
After-tax IRR of 73% and after-tax NPV (5%) of $492
million at current gold prices of approximately $2,500 per
ounce and a MXN/USD foreign exchange rate of 18:1
- Payback
of two years at the base case gold price of $1,950/oz and
1.5 years at current gold prices
- Low
initial capital to be internally funded by strong ongoing free cash
flow generation at the Mulatos District
- Initial
capital of $165 million to be spent over a two-year period starting
mid-2025. Life of mine capital is expected to total $231
million including $66 million of sustaining capital
- Low
initial capital intensity of $195 per ounce produced, or
$273 per ounce based on total life of mine capital
- PDA will
benefit from the use of existing crushing and mill infrastructure
from Cerro Pelon and Island Gold, supporting lower initial
capital and project execution risk
- La Yaqui
Grande is expected to finance the development of PDA at base case
gold prices of $1,950 per ounce, following which PDA is
expected to generate strong free cash flow. Through the first half
of 2024, the Mulatos District generated $120 million of mine-site
free cash flow
- Lower
execution risk with PDA located within existing operation
-
Experienced team in Mexico with strong track record of
building projects on schedule and within budget including
La Yaqui Phase I, Cerro Pelon and La Yaqui Grande
- PDA will
represent the second underground mine developed and operated in the
Mulatos District following San Carlos
- Lower
development and permitting risk with PDA located within
the existing operating footprint in the Mulatos District and
utilizing existing infrastructure
-
Significant exploration upside at PDA and Cerro
Pelon
-
Higher-grade mineralization continues to be extended beyond
existing Mineral Reserves and Resources at PDA and the
deposit remains open in multiple directions, highlighting the
potential for further growth
-
Higher-grade mineralization intersected below the past
producing Cerro Pelon open pit which is expected to support an
initial underground Mineral Resource with the year-end Mineral
Reserve and Resource update to be released in February
2025. Cerro Pelon represents upside as a potential source
of additional feed to the PDA sulphide mill that could extend the
higher rates of production beyond the first four years of the
current mine plan
“Mulatos has been operating for nearly 20 years
reflecting a long-term track record of exploration success with the
discovery of multiple new deposits in the District. PDA is an
extension of that success, having discovered and outlined another
attractive, high-return project that we expect will extend the
Mulatos District mine life to at least 2035, representing 30 years
since it began producing. The development of PDA and transition to
underground sulphide milling operations will open up additional
opportunities for growth in the Mulatos District. Given our ongoing
exploration success at PDA, and newly defined and growing
higher-grade zones of mineralization at Cerro Pelon, we see
excellent potential to further extend the mine life and add to
already attractive economics,” said John A. McCluskey, President
and Chief Executive Officer.
Puerto Del Aire Project Highlights |
Life of Mine1 |
Production |
|
Mine life (years) |
8 |
|
|
Total gold production (000 ounces) |
848 |
Total payable gold production (000 ounces) |
806 |
Average annual gold production (000 ounces) |
|
Years 1 to 4 |
127 |
Years 1 to 8 |
104 |
|
|
Total ore mined (000 tonnes) |
5,375 |
|
|
Average gold grade mined (grams per tonne) |
5.61 |
|
|
Average mill throughput (tonnes per day (“tpd”)) |
2,000 |
|
|
Gold recovery (%) |
85% |
Gold payability (%) |
95% |
|
|
Operating Costs |
|
Mining cost per tonne of ore mined |
$88 |
Processing cost per tonne of ore milled |
$20 |
G&A cost per tonne of ore milled |
$20 |
Total site operating cost per tonne of ore milled |
$120 |
|
|
Total operating cost per tonne of ore milled (including concentrate
treatment & transportation) |
$127 |
|
|
Total cash cost (per payable ounce)2 |
$921 |
Mine-site all-in sustaining cost (per payable ounce)2 |
$1,003 |
Capital Costs (millions) 1 |
|
Initial capital expenditure |
$165 |
Sustaining capital expenditure |
$66 |
Total capital expenditure |
$231 |
Initial capital intensity (per ounce produced) |
$195 |
Base Case Economic Analysis1 |
|
IRR (after-tax) |
46% |
|
|
NPV @ 0% discount rate (millions, after-tax) |
$383 |
NPV @ 5% discount rate (millions, after-tax) |
$269 |
|
|
Gold price assumption (per payable ounce) |
$1,950 |
Exchange Rate (MXN/USD) |
18.0 |
Economic Analysis at $2,500 per ounce Gold
Price1 |
|
IRR (after-tax) |
73% |
|
|
NPV @ 0% discount rate (millions, after-tax) |
$676 |
NPV @ 5% discount rate (millions, after-tax) |
$492 |
|
|
Gold price assumption (per payable ounce) |
$2,500 |
Exchange Rate (MXN/USD) |
18.0 |
1 Capital spending and economic
analysis (NPV and IRR) are calculated starting January 1, 20252
Total cash costs and mine-site all-in sustaining costs include
silver as a by-product credit, the 0.5% government royalty on
revenue, and are per payable ounce
Mineral Reserves and
Resources
The PDA mine plan and economic analysis are
based on Mineral Reserves as of December 31, 2023 which total 5.4
million tonnes (“Mt”), grading 5.61 grams per tonne of gold (“g/t
Au”), containing 969,000 ounces of gold. Additionally, the project
hosts Measured and Indicated Mineral Resources which total 2.1 Mt,
grading 3.54 g/t Au, containing 240,000 ounces of gold. Only
Mineral Reserves were included in the mine plan with Mineral
Resources representing potential upside.
Mineral Reserves – Effective as of December 31,
2023
Classification |
Tonnage (000’s) |
Grade (g/t Au) |
Contained oz(000’s Au) |
Proven |
833 |
4.71 |
126 |
Probable |
4,542 |
5.77 |
843 |
Total Proven & Probable |
5,375 |
5.61 |
969 |
- Mineral Reserves reported are
consistent with the CIM Definition Standards for Mineral Resources
and Mineral Reserves.
- Mineral Reserves are reported to a
cut-off grade of 3.0 g/t Au.
- The cut-off grades are based on a
gold price of $1,400/oz Au.
- Metallurgical Au recovery is
85%.
- Totals may not add up due to
rounding.
- Chris Bostwick, FAusIMM, Senior Vice President, Technical
Services is the Qualified Person for the Mineral Reserve estimate.
Mr. Bostwick is a Qualified Person within the meaning of Canadian
Securities Administrator's National Instrument 43-101 ("NI
43-101").
Mineral Resources – Effective as of December 31,
2023
Category |
Tonnage (000’s) |
Grade (g/t Au) |
Contained oz (000’s Au) |
MeasuredIndicated |
3261,780 |
3.293.59 |
35205 |
Measured & Indicated |
2,106 |
3.54 |
240 |
Inferred |
73 |
5.97 |
14 |
- Mineral Resources reported are
consistent with the CIM Definition Standards for Mineral Resources
and Mineral Reserves.
- The Mineral Resources are reported at
an assumed gold price of US$1,600/oz.
- Mineral Resources are not Mineral
Reserves and do not have demonstrated economic viability. There is
no certainty that all or any part of the Mineral Resources
estimated will be converted into Mineral Reserves.
- Contained Au ounces are in-situ and do
not include metallurgical recovery losses.
- Mineral Resources are exclusive of
Mineral Reserves.
- Totals may not add up due to
rounding.
- Marc
Jutras P.Eng., Principal, Ginto Consulting Inc. is the Qualified
Person for the Mineral Resource estimate. Mr. Jutras is a Qualified
Person within the meaning of Canadian Securities Administrator's
National Instrument 43-101 ("NI 43-101").
Economic Analysis
PDA’s estimated after-tax IRR is 46% and
after-tax NPV (5%) is $269 million assuming a gold price of $1,950
per payable ounce and MXN/USD foreign exchange rate of 18:1.
Assuming spot gold prices of approximately $2,500 per ounce and
MXN/USD foreign exchange rate of 18:1, the after-tax IRR increases
to 73% and after-tax NPV (5%) increases to $492 million.
The mine plan, operating parameters, and capital
estimates incorporated in the study are based on actual operating
experience, and mining contractor quotations. Capital estimates for
the processing circuit are based on Class 5 estimates from the
third-party engineering firm that designed the processing circuit
at La Yaqui Grande.
The project economics are sensitive to metal
price assumptions, foreign exchange rates, and input costs as
detailed in the tables below.
Puerto Del Aire After-Tax NPV (5%) Sensitivity ($
Millions)
|
-10% |
-5% |
Base Case |
5% |
10% |
Gold Price |
$190 |
$230 |
$269 |
$309 |
$348 |
Mexican Peso |
$288 |
$279 |
$269 |
$258 |
$245 |
Operating Costs |
$305 |
$287 |
$269 |
$251 |
$233 |
Capital Costs |
$286 |
$277 |
$269 |
$261 |
$252 |
Puerto Del Aire After-Tax NPV (5%) Sensitivity to Gold
Price and MXN/USD ($ Millions)
|
Mexican Peso |
Gold PriceUS$/oz |
|
17.0 |
18.0 |
19.0 |
20.0 |
$1,750 |
$175 |
$188 |
$199 |
$209 |
$1,850 |
$216 |
$229 |
$240 |
$250 |
$1,950 |
$257 |
$269 |
$280 |
$290 |
$2,100 |
$317 |
$330 |
$341 |
$351 |
$2,300 |
$398 |
$411 |
$422 |
$432 |
$2,500 |
$480 |
$492 |
$503 |
$513 |
Puerto Del Aire After-Tax IRR Sensitivity to Gold Price
and MXN/USD (%)
|
Mexican Peso |
Gold PriceUS$/oz |
|
17.0 |
18.0 |
19.0 |
20.0 |
$1,750 |
33.3% |
35.6% |
37.7% |
39.7% |
$1,850 |
38.8% |
41.1% |
43.2% |
45.2% |
$1,950 |
44.0% |
46.3% |
48.5% |
50.5% |
$2,100 |
51.4% |
53.9% |
56.1% |
58.1% |
$2,300 |
60.9% |
63.4% |
65.7% |
67.9% |
$2,500 |
69.9% |
72.5% |
74.9% |
77.2% |
Project Overview
The PDA underground deposit is located adjacent
to the main Mulatos pit and will be accessed via two portals
located in the east wall of the Mulatos Pit (Figures 1 and 2).
Underground ore mined will be processed through a flotation plant.
No cyanide will be utilized with a concentrate produced for final
gold recovery offsite. Tailings from onsite processing will be dry
stacked.
Higher-grade sulphide mineralization was
intersected at PDA more than 10 years ago. The focus at that time
was on finding additional oxide, heap leachable ore such that
follow up drilling at PDA did not resume until 2019. The
exploration program has been extremely successful with an initial
Mineral Reserve of 428,000 ounces (2.8 Mt grading 4.67 g/t Au)
declared at the end of 2021. Since then, the deposit has continued
to grow, more than doubling by the end of 2023 to 1.0 million
ounces with grades also increasing 20% (5.4 Mt grading 5.61 g/t
Au).
PDA will represent the second underground mining
operation within the Mulatos District following San Carlos
underground which successfully operated from 2014 to 2018. PDA will
be developed by an experienced team with a strong track record of
building projects on schedule and within budget including La Yaqui
Phase I, Cerro Pelon, and most recently La Yaqui Grande.
Production and Mine-Site AISC
Profile
Mining
PDA will be accessed via two portals located in
the east wall of the Mulatos Pit. Transverse long-hole open stoping
will be the primary mining method utilized, as well as underhand
drift and fill, with cemented rockfill supporting higher mining and
ore recovery rates. Ore will be mined at a rate of 2,000 tonnes per
day (“tpd”) over an eight-year mine life based on existing Mineral
Reserves. Contract mining will be utilized over the mine life.
Initial production from PDA is expected
mid-2027. Grades mined are expected to average approximately 7 g/t
Au over the first four years supporting higher average annual
production of 127,000 ounces over that time frame, and peak annual
production of 149,000 ounces
Grades are expected to decrease to average
approximately 4 g/t Au 2031 onward under the current mine plan.
Ongoing exploration success at PDA and Cerro Pelon represents an
upside opportunity to define additional higher-grade Mineral
Reserves and Resources that could maintain higher grades and
production well beyond the initial four years of the current mine
plan.
Processing
The processing circuit will include three-stage
crushing, utilizing the existing Cerro Pelon crushing circuit, and
two primary ball mills. One of the ball mills will come from Island
Gold as the mill will be decommissioned in 2025 with ore from
Island Gold to be fed through the larger Magino mill. Ore at PDA
will be crushed to 80% passing (P80) ¼ inch. Following crushing,
ore will be sent to the grinding circuit and then flotation circuit
that includes both rougher flotation and cleaner flotation (Figures
3 and 4).
The flow sheet incorporates the following major
process operations:
- Three-stage
crushing
- Two ball mills in parallel – one to
be supplied from the Island Gold mill
- Two regrind mills – supplied from
the Island Gold mill
- Flotation circuit
- Concentrate dewatering
- Tailings dewatering
A concentrate will be produced with gold to be
recovered off-site, eliminating the use of cyanide for on-site
processing. Over the life of mine, approximately 300,000 tonnes of
concentrate will be produced at average grades of 90 g/t Au.
Off-site treatment, refining and transportation costs are estimated
to be $130 per tonne of concentrate. Mill recoveries are expected
to average 85%, of which 95% is payable.
Power to site will be supplied from the existing
connection to the commercial electricity grid operated by the
state-owned electric utility of Mexico, the Comisión Federal de
Electricidad (“CFE”).
With the tailings dry stacked, no tailings dam
will be required. Tailings will be filtered and deposited where
low-grade stockpiles from Mulatos were previously located.
Operating Costs
Total cash costs are expected to average $921
per payable ounce and mine-site all-in sustaining costs $1,003 per
payable ounce over the life of the operation. Total unit operating
costs are expected to average $127 per tonne of ore milled,
including concentrate treatment and transportation costs. This
includes average mining costs of $88 per tonne of ore mined,
processing costs of $20 per tonne of ore milled, and G&A costs
of $20 per tonne of ore milled.
The breakdown of unit costs is summarized as
follows.
Operating
Costs1 |
|
US$/t |
LOM US$M |
Mining |
$/t mined |
$88 |
$473 |
Processing |
$/t milled |
$20 |
$117 |
G&A |
$/t milled |
$20 |
$117 |
Total On-Site Operating Costs |
$/t milled |
$120 |
$707 |
|
|
|
|
Concentrate Treatment & Transportation |
$/t conc. |
$130 |
$38 |
Total Operating Costs |
$/t milled |
$127 |
$746 |
|
|
|
|
Total Cash
Costs2.3 |
$/oz |
$921 |
|
Mine-site All-in Sustaining
Costs2.3 |
$/oz |
$1,003 |
|
1 Operating costs exclude silver by-product
credit, 0.5% government royalty on revenue and working capital 2
Total cash costs and mine-site all-in sustaining costs include
silver as a by-product credit, the 0.5% government royalty on
revenue, and are per payable ounce3 Please refer to the Cautionary
Notes on non-GAAP Measures and Additional GAAP Measures
Capital Costs
Total initial capital is estimated to be $165
million and expected to be spent over a two-year period starting
mid-2025. This includes $51 million for underground development,
and $109 million for the processing facility which includes a 25%
contingency.
The crushing circuit that was previously
utilized for Cerro Pelon will be re-located and integrated into the
PDA circuit, and one primary ball mill and two regrind mills from
Island Gold will be refurbished and shipped to site. The remaining
life of mine capital includes $66 million of sustaining capital,
predominantly for underground development.
A breakdown of the initial and total capital
requirements is detailed as follows.
Capital Cost ($ millions) |
|
Processing Facility1 |
$109 |
Mine
Development & Fixed Assets |
$56 |
|
|
Total Initial Capital |
$165 |
|
|
Sustaining capital |
$66 |
|
|
Total Capital |
$231 |
1 Includes a 25% contingency
Taxes and Royalties
Earnings at PDA are subject to the corporate tax
rate of 30%, as well as the Mexican Mining Royalty (7.5% EBITDA
royalty). Additionally, the project is subject to the 0.5%
government royalty on revenue. The Mulatos District, including PDA
is not subject to any third party royalties. Over the current mine
life and using a base case gold price assumption of $1,950 per
ounce, PDA is expected to pay $215 million in taxes.
Permitting
An amendment to the existing environmental
impact assessment (“MIA”) will be required for PDA. The amended MIA
application has been submitted with approval expected by the end of
2024. PDA is expected to be a straightforward project to permit
given:
- PDA will be an
underground mine located next to the Mulatos pit, within the
existing Mulatos District concessions
- No Change of Land
Use (“CUS”) permit is expected to be required with PDA located
within the existing Mulatos operating footprint
- No tailings dam
will be required with dry stacked tailings
- No use of cyanide
with a concentrate to be produced and shipped off-site for
treatment
Additional Upside
Opportunities
Addition of a paste plant
The addition of a paste plant will be evaluated
as an upside opportunity. The use of paste backfill would allow for
increased mining recovery, contributing to higher life of mine
production, as well as faster stope cycle times providing improved
operational flexibility.
Ongoing near-mine exploration success at
PDA
Through ongoing exploration success, PDA’s
Mineral Reserves base had increased to 1.0 million ounces (5.4 mt
grading 5.61 g/t Au) at the end of 2023, more than doubling over
the previous two years with grades also increasing 20%. This growth
to the end of 2023 was incorporated into the PDA development
plan.
The initial focus of the surface exploration
program in 2024 has been on the GAP-Victor zones, and in the
relatively untested area between the PDA zones and Gap-Victor. The
program has been successful in further extending high-grade gold
mineralization beyond Mineral Reserves and Resources. Given ongoing
exploration success in 2024, and with the deposit open in multiple
directions, there is excellent potential for further growth in
higher-grade Mineral Reserves and Resources which represents upside
to the project.
New highlights reported earlier today
include1:
GAP-Victor Zone
-
5.43 g/t Au over 18.05 m (23MUL278);
-
23.60 g/t Au over 3.00 m (24MUL302);
-
27.62 g/t Au (23.06 g/t cut) over 2.25 m
(24MUL332);
-
12.28 g/t Au over 4.95 m (24MUL363); and
-
5.77 g/t Au over 8.65 m (24MUL304).
PDA3 Zone
-
3.03 g/t Au over 28.40m (24MUL347); and
-
6.63 g/t Au over 5.50 m (24MUL365).
PDA Extension Zone
-
36.20 g/t Au over 0.90 m (24MUL341);
-
3.51 g/t Au over 5.05 m (24MUL315); and
-
4.16 g/t Au over 4.20 m (24MUL283).
1All reported composite widths are estimated
true width of the mineralized zones. Drillhole composite gold
grades reported as “cut” at PDA include higher grade samples which
have been cut to 40 g/t Au.
Cerro Pelon and other regional
targets
Cerro Pelon was an open pit operation that
successfully operated between 2019 and 2021 with 127,000 ounces of
gold produced at an average grade of 1.7 g/t Au. Open pit oxide ore
was trucked from the Cerro Pelon pit to the existing Mulatos
crushing and heap leach infrastructure, which included a dedicated
Cerro Pelon crushing plant.
Between 2008 and 2017 high-grade mineralization
was intersected below the Cerro Pelon pit across multiple drill
holes including the following previously reported highlights from
2015 and 20162:
-
15.35 g/t Au (14.04 g/t cut) over 25.04 m
(15PEL012);
-
9.16 g/t Au over 19.22 m (16PEL018);
-
10.36 g/t Au over 17.40 m (15PEL020);
-
6.95 g/t Au over 13.53 m (15PEL069); and
-
13.47 g/t Au over 3.47 m (15PEL085).
2All reported historic composite
widths are estimated true width of the mineralized
zones. Drillhole composite gold grades reported as “cut”
include higher grade samples which have been cut to 40 g/t
Au.
The 2024 drill program at Cerro Pelon has
expanded high-grade mineralization beyond the historical drilling
in multiple oxide and sulphide zones. Step-out drilling below the
open pit has identified significant high-grade feeder structures
that range in size from 45 to 125 metres (“m”) in width and up to
170 m vertically. New highlights reported earlier today
include1:
-
5.45 g/t Au over 27.90 m, including 31.07 g/t Au over 1.25
m (24PEL048);
-
12.47 g/t Au (9.41 g/t cut) over 6.46 m, including 58.10
g/t Au (40.00 g/t cut) over 1.09 m (24PEL048);
-
4.79 g/t Au over 15.82 m (24PEL071);
-
4.46 g/t Au over 15.40 m (24PEL051);
-
5.64 g/t Au over 12.16 m (24PEL059);
-
5.77 g/t Au over 9.81 m (24PEL067); and
-
4.01 g/t Au over 13.85 m (24PEL054).
1All reported
composite widths are estimated true width of the mineralized
zones. Drillhole composite gold grades reported as “cut” at
Cerro Pelon include higher grade samples which have been cut to 40
g/t Au.
Drilling to date indicates that more than five
pipes with lateral dimensions ranging from 150 m by 100 m, to 75 m
by 60 m, and vertical extents ranging between 40 m and 150 m. There
is significant potential to expand the mineralization in all
directions with limited drilling completed beyond the five feeders
identified to date.
Cerro Pelon is located nine kilometres (“km”) by
road from the planned PDA mill, similar to the distance that lower
grade open pit ore from Cerro Pelon was trucked to the Mulatos
circuit (Figure 5). An initial underground Mineral Resource is
expected to be declared on Cerro Pelon with the 2024 year-end
update which will be evaluated as a source of additional high-grade
mill feed.
Under the current PDA mine plan, grades are
expected to decrease from 2031 onward. Cerro Pelon represents an
opportunity to mine and process higher relative grades, extending
higher rates of gold production beyond the first four years of the
current mine plan.
Technical Disclosure
Chris Bostwick, FAusIMM, Alamos Gold's
Senior Vice President, Technical Services, has reviewed and
approved the scientific and technical information contained in this
news release. Mr. Bostwick is a Qualified Person within
the meaning of Canadian Securities
Administrator's National Instrument 43-101 ("NI 43-101").
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 mine and Island
Gold District in northern Ontario, Canada and the Mulatos District
in Sonora State, Mexico. Additionally, the Company has a
significant portfolio of development stage projects, including the
Phase 3+ Expansion at Island Gold, and the Lynn Lake project in
Manitoba, Canada. Alamos employs more than 2,400 people and is
committed to the highest standards of sustainable development. The
Company’s shares are traded on the TSX and NYSE under the symbol
“AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K. Parsons
Senior Vice President, Corporate Development
& Investor Relations
(416) 368-9932 x 5439
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
Cautionary Note
This news release contains or incorporates by
reference “forward-looking statements” and “forward-looking
information” as defined under applicable Canadian and U.S.
securities laws. All statements in this news release, 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 and are generally,
but not always, identified by the use of forward-looking
terminology such as "expect", “assume”, “anticipate”, “potential”,
“plan”, “opportunity”, “estimate”, “continue”, “ongoing”,
“evaluate”, “budget”, “target” 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. Forward-looking statements contained in this news release
are based on information, expectations, estimates and projections
as of the date of this news release.
Forward-looking statements in this news release
include, but may not be limited to, information as to strategy,
plans, expectations or future financial or operating performance
pertaining to, or anticipated to result from, the PDA development
project, such as expectations, assumptions and estimations
regarding: the project and its attractive economics and significant
exploration upside; development of the project; the mine plan; the
method of mining the project and the intended method of processing
ore from the PDA deposit; initial underground Mineral Resource at
Cerro Pelon; expected timing of approval of the amended MIA
application for the PDA project; mine life and expected mine life
extension at Mulatos; exploration potential, programs and targets;
anticipated production; gold grades; mineralization; Mineral
Reserves and Resources (and potential growth in Mineral Reserves as
exploration continues); Proven and Probable Mineral Reserves;
Inferred Mineral Resources; operating costs including mine-site
all-in sustaining costs; capital costs; capital costs; economic
analysis including anticipated after-tax net present value and
internal rate of return; applicable taxes; gold price, other metal
prices and foreign exchange rates; project execution risk; returns
to stakeholders; and other statements that express management's
expectations or estimates of future performance, operational,
geological or financial results.
Exploration results that include geophysics,
sampling, and drill results on wide spacings may not be indicative
of the occurrence of a mineral deposit. Such results do not provide
assurance that further work will establish sufficient grade,
continuity, metallurgical characteristics and economic potential to
be classed as a category of Mineral Resource. A Mineral Resource
that is classified as "Inferred" or "Indicated" has a great amount
of uncertainty as to its existence and economic and legal
feasibility. It cannot be assumed that any or part of an "Indicated
Mineral Resource" or "Inferred Mineral Resource" will ever be
upgraded to a higher category of Mineral Resource. Investors are
cautioned not to assume that all or any part of mineral deposits in
these categories will ever be converted into Proven and Probable
Mineral Reserves.
The Company cautions that forward-looking
statements are necessarily based upon several factors and
assumptions that, while considered reasonable by management 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 include (without limitation): the
actual results of current exploration activities; conclusions of
economic and geological evaluations; changes in project parameters
as plans continue to be refined; any impacts of any illnesses,
diseases, epidemics or pandemics on operations and the broader
market, including the nature and duration of any regulatory
responses; state and federal orders or mandates (including with
respect to mining operations generally or auxiliary businesses or
services required for the Company’s operations) in Mexico; changes
in national and local government legislation, controls or
regulations; failure to comply with environmental and health and
safety laws and regulations; labour and contractor availability
(and being able to secure the same on favourable terms); ability to
sell or deliver gold doré bars; disruptions in the maintenance or
provision of required infrastructure and information technology
systems; fluctuations in the price of gold or certain other
commodities such as, diesel fuel, natural gas, and electricity;
operating or technical difficulties in connection with mining or
development activities, including geotechnical challenges and
changes to production estimates (which assume accuracy of projected
ore grade, mining rates, recovery timing and recovery rate
estimates and may be impacted by unscheduled maintenance); changes
in foreign exchange rates (particularly the Canadian dollar, U.S.
dollar, and Mexican peso); the impact of inflation; employee and
community relations; litigation and administrative proceedings;
disruptions affecting operations; availability of and increased
costs associated with mining inputs and labour; delays in the
development or updating of mine and/or development plans; delays in
receiving approval of the amended MIA application for the PDA
project; changes that may be required to the intended method of
accessing and mining the deposit at Puerto Del Aire and changes
related to the intended method of processing any ore from the
deposit at Puerto Del Aire; inherent risks and hazards associated
with mining and mineral processing including environmental hazards,
industrial accidents, unusual or unexpected formations, pressures
and cave-ins; 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, risks in
obtaining and maintaining necessary licenses, permits and
authorizations, contests over title to properties; expropriation or
nationalization of property; political or economic developments in
Canada or Mexico and other jurisdictions in which the Company may
carry on business in the future; increased costs and risks related
to the potential impact of climate change; the costs and timing of
construction and development of new deposits; 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; and business
opportunities that may be pursued by the Company.
For a more detailed discussion of such risks and
other risk factors that may affect the Company's ability to achieve
the expectations set forth in the forward-looking statements
contained in this news release, see the Company’s latest
40-F/Annual Information Form and Management’s Discussion and
Analysis, each under the heading “Risk Factors” available on the
SEDAR website at www.sedarplus.ca or on EDGAR at www.sec.gov. The
foregoing should be reviewed in conjunction with the information,
risk factors and assumptions found in this news 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
Alamos prepares its disclosure in accordance
with the requirements of securities laws in effect in Canada.
Unless otherwise indicated, all Mineral Resource and Mineral
Reserve estimates included in this document 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.
Cautionary non-GAAP Measures and
Additional GAAP Measures
Note that for purposes of this section, GAAP
refers to IFRS. The Company believes that investors use certain
non-GAAP and additional GAAP measures as indicators to assess gold
mining companies. They are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared with GAAP.
“Cash flow from operating activities before
changes in non-cash working capital” 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 non-cash working capital to “cash provided by
(used in) operating activities” as presented on the Company’s
consolidated statements of cash flows. “Cash flow per share” is
calculated by dividing “cash flow from operations before changes in
working capital” by the weighted average number of shares
outstanding for the period. “Free cash flow” is a non-GAAP
performance measure that is calculated as cash flows from
operations net of cash flows invested in mineral property, plant
and equipment and exploration and evaluation assets as presented on
the Company’s consolidated statements of cash flows and that would
provide an indication of the Company’s ability to generate cash
flows from its mineral projects. “Mine site free cash flow” is a
non-GAAP measure which includes cash flow from operating activities
at, less capital expenditures at each mine site. “Return on equity”
is defined as earnings from continuing operations divided by the
average total equity for the current and previous year. “Mining
cost per tonne of ore” and “cost per tonne of ore” are non-GAAP
performance measures that could provide an indication of the mining
and processing efficiency and effectiveness of the mine. These
measures are calculated by dividing the relevant mining and
processing costs and total costs by the tonnes of ore processed in
the period. “Cost per tonne of ore” is usually affected by
operating efficiencies and waste-to-ore ratios in the period.
“Total capital expenditures per ounce produced” is a non-GAAP term
used to assess the level of capital intensity of a project and is
calculated by taking the total growth and sustaining capital of a
project divided by ounces produced life of mine. “Total cash costs
per ounce”, “all-in sustaining costs per ounce”, “mine-site all-in
sustaining costs”, and “all-in costs per ounce” as used in this
analysis are non-GAAP terms 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. These non-GAAP terms are also used to assess the ability of
a mining company to generate cash flow from operations. There may
be some variation in the method of computation of these metrics as
determined by the Company compared with other mining companies. In
this context, “total cash costs” reflects mining and processing
costs allocated from in-process and doré inventory and associated
royalties with ounces of gold sold in the period. Total cash costs
per ounce are exclusive of exploration costs. “All-in sustaining
costs per ounce” include total cash costs, exploration, corporate
and administrative, share based compensation and sustaining capital
costs. “Mine-site all-in sustaining costs” include total cash
costs, exploration, and sustaining capital costs for the mine-site,
but exclude an allocation of corporate and administrative and share
based compensation. “Adjusted net earnings” and “adjusted earnings
per share” are non-GAAP financial measures with no standard meaning
under IFRS. “Adjusted net earnings” excludes the following from net
earnings: foreign exchange gain (loss), items included in other
loss, certain non-reoccurring items, and foreign exchange gain
(loss) recorded in deferred tax expense. “Adjusted earnings per
share” is calculated by dividing “adjusted net earnings” by the
weighted average number of shares outstanding for the period.
Additional GAAP measures that are presented on
the face of the Company’s consolidated statements of comprehensive
income 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. This includes
“Earnings from operations”, which is intended to provide an
indication of the Company’s operating performance and represents
the amount of earnings before net finance income/expense, foreign
exchange gain/loss, other income/loss, and income tax expense.
Non-GAAP and additional GAAP measures do not have a standardized
meaning prescribed under IFRS and therefore may not be comparable
to similar measures presented by other companies. A reconciliation
of historical non-GAAP and additional GAAP measures are detailed in
the Company’s latest Management’s Discussion and Analysis available
online on the SEDAR website at www.sedar.ca or on EDGAR at
www.sec.gov and at www.alamosgold.com.
Table 1: PDA
Life of Mine Production
Schedule |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOM |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
2031 |
2032 |
2033 |
2034 |
2035 |
Mining |
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes Mined (000 tonnes) |
5,375 |
|
|
434 |
723 |
719 |
721 |
730 |
730 |
730 |
588 |
- |
Mined Grade (g/t Au) |
5.61 |
|
|
6.94 |
7.54 |
7.47 |
6.35 |
4.74 |
4.38 |
3.85 |
3.85 |
- |
Processing |
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes Milled (000 tonnes)1 |
5,872 |
|
|
516 |
730 |
730 |
730 |
730 |
730 |
730 |
730 |
247 |
Milled Grade (g/t Au) |
5.29 |
|
|
6.10 |
7.48 |
7.38 |
6.29 |
4.74 |
4.38 |
3.85 |
3.46 |
1.85 |
Mill Recovery (% Au)2 |
85% |
|
|
85% |
85% |
85% |
85% |
85% |
85% |
85% |
85% |
85% |
Gold Production (000 oz) |
848 |
|
|
86 |
149 |
147 |
126 |
95 |
87 |
77 |
69 |
12 |
Payable Gold Production (000
oz)2 |
806 |
|
|
79 |
139 |
137 |
116 |
86 |
79 |
69 |
62 |
11 |
Operating Costs |
|
|
|
|
|
|
|
|
|
|
|
|
Mining (US$/tonne mined) |
$87 |
|
|
$66 |
$99 |
$97 |
$93 |
$85 |
$84 |
$84 |
$82 |
- |
Processing (US$/tonne milled) |
$20 |
|
|
$24 |
$19 |
$19 |
$19 |
$19 |
$19 |
$19 |
$19 |
$25 |
G&A (US$/tonne milled) |
$20 |
|
|
$20 |
$20 |
$20 |
$20 |
$20 |
$20 |
$20 |
$20 |
$20 |
Total Cash Costs (US$/oz)
3,4 |
$921 |
|
|
$747 |
$743 |
$743 |
$841 |
$1,056 |
$1,132 |
$1,284 |
$1,174 |
$1,058 |
Mine-Site All-in Sustaining Costs (US$/oz)
3,4 |
$1,003 |
|
|
$1,016 |
$758 |
$848 |
$974 |
$1,129 |
$1,189 |
$1,284 |
$1,174 |
$1,058 |
Capital Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
Initial Capital (US$M) |
$165 |
$20 |
$93 |
$52 |
- |
- |
- |
- |
- |
- |
- |
- |
Sustaining Capital (US$M) |
$66 |
- |
- |
$22 |
$2 |
$15 |
$16 |
$7 |
$5 |
- |
- |
- |
Total Capital (US$M) |
$231 |
$20 |
$93 |
$74 |
$2 |
$15 |
$16 |
$7 |
$5 |
- |
- |
- |
1 Processed tonnes
exceed mined tonnes and Mineral Reserves reflecting the inclusion
of lower grade development ore2 Mill recoveries
are expected to average 85% of which 95% are
payable3 Please refer to Cautionary Notes on
non-GAAP Measures and Additional GAAP Measures4
Total cash costs and mine-site all-in sustaining costs are per
payable ounce and inclusive of silver credits, government
royalties, and concentrate treatment and transportation costs while
unit operating costs are reported exclusive of these costs
Figure 1: PDA Deposit and Mill
Location
Figure 2: PDA Long Section Including
Planned Underground Development
Figure 3: PDA Crushing and Flotation
Plant
Figure 4: PDA Project Layout
Figure 5: PDA and Cerro Pelon Location
Map, Mulatos District
Photos accompanying this announcement are available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/18faa915-6092-42ba-b22c-78d283020fea
https://www.globenewswire.com/NewsRoom/AttachmentNg/8dfdb773-dad8-4fb8-9fd5-f5734af7db7f
https://www.globenewswire.com/NewsRoom/AttachmentNg/d6a81dd6-e621-48c9-80a7-1104a7d48152
https://www.globenewswire.com/NewsRoom/AttachmentNg/d3e2415b-81ac-41d4-9d4f-fcd7a9ba188c
https://www.globenewswire.com/NewsRoom/AttachmentNg/be9c547c-067b-4db5-ac8f-84d9b294e0ab
https://www.globenewswire.com/NewsRoom/AttachmentNg/92100ea6-66a8-48f4-afaf-93ffe91f257b
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