Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported its financial results for the quarter
ended September 30, 2021.
“We had a challenging third quarter at our
Mulatos mine which offset strong performances at our Canadian
operations. The challenges at Mulatos are temporary with the
operation transitioning to low-cost production from La Yaqui Grande
in 2022; however, given the weaker quarter, we reduced 2021
guidance at the operation by 15,000 ounces. We have also increased
our consolidated cost guidance for the year given the stronger than
budgeted Canadian dollar and higher than planned costs at Mulatos,”
said John A. McCluskey, President and Chief Executive Officer.
“We expect higher production in the fourth
quarter with our Canadian operations continuing to perform well.
This has been led by Young-Davidson which achieved a new record for
underground mining rates in the third quarter. We are also making
good progress on our growth initiatives including the Phase III
expansion at Island Gold and construction of La Yaqui Grande. Both
are key drivers of our strong outlook with production potential of
750,000 ounces per year by 2025 at significantly lower all-in
sustaining costs of approximately $800 per ounce,” Mr. McCluskey
added.
Third Quarter 2021
- Production of 104,700 ounces of
gold, an 11% decrease from the third quarter of 2020, with lower
than anticipated production from Mulatos more than offsetting a
strong performance at Young-Davidson
- Gold production at Mulatos of
26,700 ounces was well below expectations due to an above average
rainy season in Mexico which impacted stacking rates, and a longer
than anticipated leach cycle for stockpiled ore stacked in the
quarter. With Cerro Pelon winding down, stockpiled ore will
represent a larger proportion of stacked ore at Mulatos until
production from La Yaqui Grande ramps up in the second half of
2022
- Given the lower production at
Mulatos in the quarter and longer than anticipated leach cycle for
stockpiled ore, the Company has revised production guidance lower
by 15,000 ounces at Mulatos. Production guidance for Young-Davidson
and Island Gold remains unchanged with both operations continuing
to perform well
- Young-Davidson achieved record
mining rates of 8,017 tonnes per day ("tpd"), driving production of
50,000 ounces of gold and mine-site free cash flow1 of $28.9
million. With a further increase in production expected in the
fourth quarter, Young-Davidson is expected to generate
approximately $100 million in mine-site free cash flow in 2021
- Consolidated total cash costs1 of
$788 per ounce, all-in sustaining costs ("AISC")1 of $1,152 per
ounce and cost of sales of $1,172 per ounce were higher than annual
guidance reflecting the stronger than budgeted Canadian dollar, and
higher costs at Mulatos. The USD/CAD foreign exchange rate averaged
$0.79:1 in the third quarter and $0.80:1 year-to-date relative to
the budgeted rate of $0.75:1 which has increased total cash costs
by $30 per ounce and AISC by $45 per ounce. In addition, Mulatos
costs increased in the third quarter and are expected to increase
further in the fourth quarter, reflecting higher reagent costs
associated with processing stockpiled ore
- Given the stronger than budgeted
Canadian dollar, and higher than planned costs at Mulatos, the
Company has revised its 2021 total cash cost guidance to $790 to
$810 per ounce and all-in sustaining costs to $1,120 to $1,140 per
ounce
- Construction of La Yaqui Grande is
progressing well and remains on track for commercial production in
the third quarter of 2022. La Yaqui Grande is expected to
significantly reduce the cost profile at Mulatos as production
ramps up towards the end of 2022. Despite inflationary cost
pressures and other challenges related to COVID-19, capital
spending for La Yaqui Grande remains on budget
- Sold 110,488 ounces of gold at an
average realized price of $1,792 per ounce for revenues of $198.0
million, a 9% decrease compared to the third quarter of 2020
- Generated cash flow from operating
activities of $82.4 million ($102.3 million, or $0.26 per share,
before changes in working capital1), a decrease from the prior year
period due to lower realized gold prices and less ounces sold
- Free cash flow1 was negative in the
quarter, driven by higher capital spending mainly related to La
Yaqui Grande and the Phase III expansion at Island Gold
- Realized adjusted net earnings1 of
$37.6 million, or $0.10 per share1, which includes adjustments for
unrealized foreign exchange loss of $12.8 million recorded within
deferred taxes and foreign exchange, and other gains of $0.3
million
- Recorded net earnings of $25.1
million, or $0.06 per share
- Ended the quarter with cash and
cash equivalents of $211.4 million, equity securities of $22.9
million, and no debt
- Paid a quarterly dividend of $9.8
million, or US$0.025 per share (annualized rate of US$0.10 per
share), bringing total dividends through the first nine months of
2021 to $29.4 million
- Repurchased an additional 600,000
shares in the quarter at a cost of $4.5 million under the Company's
Normal Course Issuer Bid ("NCIB") bringing the total amount
repurchased year-to-date to $6.0 million
- Reported results from the
underground exploration drill program at Young-Davidson which has
successfully extended gold mineralization below existing Mineral
Reserves and Resources and intersected higher grades in the hanging
wall and footwall of the deposit
(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 September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
|
2020 |
|
Financial Results (in millions) |
|
|
|
|
Operating revenues |
$198.0 |
|
$218.4 |
|
$620.5 |
|
$521.5 |
|
Cost of sales (1) |
$129.5 |
|
$122.6 |
|
$395.7 |
|
$346.2 |
|
Earnings (Loss) from operations |
$57.3 |
|
$88.0 |
|
($34.9 |
) |
$146.3 |
|
Earnings (Loss) before income taxes |
$56.3 |
|
$85.9 |
|
($41.3 |
) |
$132.4 |
|
Net earnings (loss) |
$25.1 |
|
$67.9 |
|
($96.2 |
) |
$67.3 |
|
Adjusted net earnings (2) |
$37.6 |
|
$56.9 |
|
$125.4 |
|
$96.2 |
|
Earnings before interest, depreciation and amortization (2) |
$100.0 |
|
$130.5 |
|
$314.0 |
|
$248.1 |
|
Cash provided by operations before working capital and cash taxes
(2) |
$102.3 |
|
$130.0 |
|
$319.1 |
|
$256.4 |
|
Cash provided by operating activities |
$82.4 |
|
$130.8 |
|
$268.4 |
|
$237.0 |
|
Capital expenditures (sustaining) (2) |
$30.9 |
|
$22.7 |
|
$81.2 |
|
$54.6 |
|
Capital expenditures (growth) (2) (3) |
$51.4 |
|
$29.2 |
|
$145.3 |
|
$109.3 |
|
Capital expenditures (capitalized exploration) (4) |
$6.9 |
|
$2.9 |
|
$18.8 |
|
$8.8 |
|
Free cash flow (2) |
($8.1 |
) |
$76.0 |
|
$1.6 |
|
$64.3 |
|
Operating Results |
|
|
|
|
Gold production (ounces) |
104,700 |
|
117,100 |
|
344,700 |
|
306,400 |
|
Gold sales (ounces) |
110,488 |
|
116,035 |
|
344,551 |
|
302,494 |
|
Per Ounce Data |
|
|
|
|
Average realized gold price |
$1,792 |
|
$1,882 |
|
$1,801 |
|
$1,724 |
|
Average spot gold price (London PM Fix) |
$1,790 |
|
$1,909 |
|
$1,800 |
|
$1,735 |
|
Cost of sales per ounce of gold sold (includes amortization)
(1) |
$1,172 |
|
$1,057 |
|
$1,148 |
|
$1,144 |
|
Total cash costs per ounce of gold sold (2) |
$788 |
|
$681 |
|
$778 |
|
$772 |
|
All-in sustaining costs per ounce of gold sold (2) |
$1,152 |
|
$949 |
|
$1,102 |
|
$1,052 |
|
Share Data |
|
|
|
|
Earnings (Loss) per share, basic and diluted |
$0.06 |
|
$0.17 |
|
($0.24 |
) |
$0.17 |
|
Adjusted earnings per share, basic and diluted (2) |
$0.10 |
|
$0.15 |
|
$0.32 |
|
$0.25 |
|
Weighted average common shares outstanding (basic) (000’s) |
392,742 |
|
391,553 |
|
392,755 |
|
391,325 |
|
Financial Position (in millions) |
|
|
|
|
Cash and cash equivalents (5) |
|
|
$211.4 |
|
$220.5 |
|
(1) Cost of sales includes mining and
processing costs, royalties, COVID-19 costs and amortization
expense. (2) Refer to the “Non-GAAP Measures and
Additional GAAP Measures” disclosure at the end of this press
release and associated MD&A for a description and calculation
of these measures.(3) Includes growth capital from
operating sites. 2020 growth capital excludes the Island Gold
royalty repurchase completed in March 2020 for $54.8
million.(4) Includes capitalized exploration at Island
Gold, Young-Davidson and Mulatos.(5) Comparative cash
and cash equivalents balance as at December 31, 2020.
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Gold production (ounces) (1) |
|
|
|
|
Young-Davidson |
50,000 |
|
36,400 |
|
143,100 |
|
88,200 |
|
Island Gold |
28,000 |
|
39,600 |
|
103,400 |
|
97,800 |
|
Mulatos |
26,700 |
|
41,100 |
|
98,200 |
|
119,600 |
|
Gold sales (ounces) |
|
|
|
|
Young-Davidson |
48,625 |
|
35,548 |
|
141,931 |
|
86,893 |
|
Island Gold |
28,331 |
|
39,322 |
|
101,845 |
|
97,009 |
|
Mulatos |
33,532 |
|
41,165 |
|
100,775 |
|
118,592 |
|
Cost of sales (in
millions) (2) |
|
|
|
|
|
Young-Davidson |
$58.5 |
|
$50.5 |
|
$181.8 |
|
$140.5 |
|
Island Gold |
$24.5 |
|
$28.1 |
|
$79.2 |
|
$78.2 |
|
Mulatos |
$46.5 |
|
$44.0 |
|
$134.7 |
|
$127.5 |
|
Cost of sales per
ounce of gold sold (includes amortization) |
|
|
|
|
|
Young-Davidson |
$1,203 |
|
$1,421 |
|
$1,281 |
|
$1,617 |
|
Island Gold |
$865 |
|
$715 |
|
$778 |
|
$806 |
|
Mulatos |
$1,387 |
|
$1,069 |
|
$1,337 |
|
$1,075 |
|
Total cash costs per ounce of gold sold
(3) |
|
|
|
|
Young-Davidson |
$810 |
|
$923 |
|
$873 |
|
$1,145 |
|
Island Gold |
$586 |
|
$394 |
|
$512 |
|
$438 |
|
Mulatos |
$927 |
|
$746 |
|
$913 |
|
$772 |
|
Mine-site all-in
sustaining costs per ounce of gold sold
(3),(4) |
|
|
|
|
|
|
Young-Davidson |
$1,051 |
|
$1,196 |
|
$1,093 |
|
$1,370 |
|
Island Gold |
$1,077 |
|
$575 |
|
$860 |
|
$653 |
|
Mulatos |
$1,124 |
|
$928 |
|
$1,097 |
|
$928 |
|
Capital expenditures
(sustaining, growth and capitalized exploration) (in
millions) (3) |
|
|
|
|
|
|
Young-Davidson (5) |
$22.3 |
|
$25.6 |
|
$63.8 |
|
$82.2 |
|
Island Gold (6) |
$33.2 |
|
$15.9 |
|
$89.1 |
|
$53.9 |
|
Mulatos (7) |
$28.4 |
|
$9.1 |
|
$76.1 |
|
$21.6 |
|
Other |
$5.3 |
|
$4.2 |
|
$16.3 |
|
$15.0 |
|
(1) Production for the three and nine
months ended September 30, 2020 included nil and 800 ounces,
respectively, from El Chanate which transitioned to the reclamation
phase of the mine life in 2019. There was no production from El
Chanate for the three and nine months ended September 30,
2021. (2) Cost of sales includes mining and processing
costs, royalties, COVID-19 costs, and amortization.
(3) 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.(4) 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.(5) Includes capitalized exploration at
Young-Davidson of $1.3 million and $3.8 million for the three and
nine months ended September 30, 2021 ($nil for the three and nine
months ended September 30, 2020).(6) Includes
capitalized exploration at Island Gold of $5.2 million and $13.6
million for the three and nine months ended September 30, 2021
($2.9 million and $8.1 million for the three and nine months ended
September 30, 2020); Capital expenditures exclude the Island Gold
royalty repurchase for $54.8 million for the nine months ended
September 30, 2020.(7) Includes capitalized exploration
at Mulatos of $0.4 million and $1.4 million for the three and nine
months ended September 30, 2021 ($nil and $0.7 million for the
three and nine months ended September 30, 2020).
Environment, Social and Governance
Summary Performance
Health and Safety
- Recordable
injury frequency rate1 of 2.37 in the quarter and 2.35
year-to-date, a 7% increase from 2.20 in 2020
- Lost time injury
frequency rate1 of 0.33 in the quarter and 0.20 year-to-date,
consistent with 0.20 in 2020
- Performed over
65,000 COVID-19 tests to-date on employees, contractors and
visitors as part of an enhanced screening program
During the third quarter of 2021, the recordable
injury frequency rate decreased with 29 recordable injuries
reported, down from 35 in the second quarter of 2021. Four lost
time injuries were reported in the quarter, up from one in the
second quarter of 2021, resulting in an overall increase to the
Company’s lost time injury frequency rate. 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. At Mulatos, where three lost time injuries occurred in
the quarter, safety teams increased communications, meetings and
safety huddles to reinforce site safety standards and procedures
and underscore that all injuries are avoidable. Throughout the
quarter, the Company continued to advance implementation of its
Sustainability Performance Management Framework, which includes
standards specific to safety leadership and managing higher-risk
activities. 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. The Company has adopted the
advice of public health authorities and is adhering to government
regulations with respect to COVID-19 in the jurisdictions in which
it operates.
The following measures have been instituted at
sites to prevent the potential spread of the COVID-19 virus:
- Medical
screening for all personnel prior to entry to site for symptoms of
COVID-19
- Testing of
personnel at all operating sites prior to starting their work
rotation
- Vaccinations
offered at Island Gold for employees
- Training on
proper hand hygiene and social distancing
- Remote work
options have been implemented for eligible employees
- Social
distancing practices have been implemented for all meetings,
huddles and transportation
- Mandatory use of
personal protective equipment for employees where social distancing
is not practicable
- Rigid camp and
site hygiene protocols have been instituted and are being
followed
- Elimination of
all non-essential business travel
- In addition,
since the COVID-19 pandemic began the Company’s teams in Canada,
Mexico, and Turkey have donated their time, medical supplies, and
funds to help combat the effects and spread of the virus
COVID 19 - Impact on Operations
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. All the Company's operations
continue to incur additional costs related to testing of personnel,
lodging and transportation, which have been included in mining and
processing costs. These incremental costs have increased total cash
costs globally by approximately $25 per ounce and are expected to
be incurred through the remainder of 2021.
Environment
- Zero significant
environmental incidents in the third quarter and year-to-date
- Completed
independent reviews of cyanide management practices at all
operations in accordance with the International Cyanide Management
Code
- Completed
independent reviews of energy and greenhouse gas management
practices at all operations in accordance with the ISO 50001 Energy
Management Systems Standard, to develop and/or improve site energy
management plans
- Advanced
permitting of the Lynn Lake Project and the Phase III expansion of
Island Gold – a project that will significantly increase automation
and reduce fleet diesel usage resulting in 35% lower life-of-mine
greenhouse gas ("GHG") emissions
- Nearing the
completion of the power line which will connect the Mulatos Mine to
grid power and eliminate the need for site diesel power generation,
reducing GHG emissions by 12% annually
Seven minor spills occurred during the third
quarter, including one at Young-Davidson, one at Island Gold and
five 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.
Community
- Donated time,
medical supplies, food supplies and funds across select operations
and projects to help combat the effects and spread of COVID-19 in
local communities
- Organized
several community health initiatives during the third quarter in
collaboration with the Matarachi community, located near the
Mulatos mine. These included ongoing COVID-19 vaccination clinics,
nutrition health programs, improvements to local water network
infrastructure, and installation planning for solar-powered street
lighting
- In partnership
with local educational organization Educatón, we introduced a
program at Mulatos to support local youth and adults to finish
their intermediate level studies
- Supported the
construction of new military barracks and facilities in Yécora
- Partnered with
Tech Manitoba and the Northern Manitoba Sector Council to deliver
digital literacy classes in Lynn Lake. The DigitALL initiative
targets Indigenous youth, low-income earners and seniors to improve
their skills and confidence with computers and the internet through
hands on training courses, creating opportunities for further
education, employment and overall participation in the online
world
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 has
continued through the COVID-19 pandemic, with appropriate health
and safety protocols.
Governance and Disclosure
- Received the
Socially Responsible Company Award by CEMEFI, the Mexican Center
for Philanthropy, for the 13th consecutive year at Mulatos
- Received the
“Award for Corporate Ethics and Values in Industry” by CONCAMIN,
the Industrial Chambers Confederation of Mexico, for the second
consecutive year at Mulatos. The award is in recognition of strong
progress and maturity in corporate social responsibility
- Received the
“Award for Outstanding Practice in Action for Climate” by CONCAMIN,
in recognition of strong practices supporting the UN Sustainable
Development Goals at Mulatos. The award recognized strong
performance in four categories: Good Health and Well-Being, Gender
Equality, Decent Work and Economic Growth, and Climate Action.
- Completed the
Carbon Disclosure Project’s 2021 Climate Change Questionnaire
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.
Outlook and Strategy
2021 Guidance |
|
|
Young-Davidson |
Island Gold |
Mulatos |
Other (2) |
Revised Guidance |
Previous Guidance |
Gold production (000’s ounces) |
190 - 205 |
130 - 145 |
135 - 145 |
|
455 - 495 |
470 - 510 |
Total cash costs ($ per ounce)(1)(5) |
~ $850 |
~ $525 |
~ $1,000 |
— |
$790 - $810 |
$710 - $760 |
All-in sustaining costs ($ per ounce)(1) |
|
|
|
|
$1,120 - $1,140 |
$1,025 - $1,075 |
Mine-site all-in sustaining costs ($ per
ounce)(1)(3)(6) |
~ $1,060 |
~ $865 |
~ $1,235 |
— |
|
|
Capital expenditures (in millions) |
|
|
|
|
|
|
Sustaining capital(1) |
$40 - $45 |
$40 - $45 |
$30 - $35 |
— |
$110 - $125 |
$110 - $125 |
Growth capital(1) |
$25 - $30 |
$80 - $85 |
$95 - $100 |
$10 |
$210 - $225 |
$210 - $225 |
Total Sustaining and Growth
Capital(1) |
$65 - $75 |
$120 - $130 |
$125 - $135 |
$10 |
$320 - $350 |
$320 - $350 |
Capitalized exploration(1) |
$7 |
$20 |
— |
$7 |
$34 |
$34 |
Total capital expenditures and capitalized
exploration(1) |
$72 - $82 |
$140 - $150 |
$125 - $135 |
$17 |
$354 - $384 |
$354 - $384 |
(1) Refer to the "Non-GAAP Measures
and Additional GAAP" disclosure at the end of this press release
and associated MD&A for a description of these
measures.(2) Includes growth capital and capitalized
exploration at the Company's development projects (Lynn Lake,
Esperanza and Quartz Mountain).(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 guidance. (5) Total cash cost
guidance for Young-Davidson has been revised from between $790 -
$840 per ounce to approximately $850 per ounce; for Island Gold,
revised from between $430 - $480 per ounce to approximately $525
per ounce; and for Mulatos, revised from between $840 - $890 per
ounce to approximately $1,000 per ounce(6) Mine-site
AISC guidance for Young-Davidson has been revised from between
$1,000 - $1,050 per ounce to approximately $1,060 per ounce; for
Island Gold, revised from between $750 - $800 per ounce to
approximately $865 per ounce; and for Mulatos, revised from between
$1,060 - $1,110 per ounce to approximately $1,235 per ounce
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 continues to deliver on its key
long-term objectives while managing temporary challenges at Mulatos
as the operation transitions to the higher grade, low-cost La Yaqui
Grande deposit. The Company expects stronger production in the
fourth quarter at all three operations; however, given the
challenging third quarter at Mulatos, the Company has reduced full
year production guidance at Mulatos. Production guidance at the
Canadian operations remains unchanged with both operations
continuing to perform well and on track to achieve full year
guidance. This included another strong quarter from Young-Davidson
with mining rates increasing to average 8,017 tpd for the quarter,
a new record for the operation.
Total cash costs and all-in sustaining costs
("AISC") in the third quarter and through the first nine months of
the year were above initial annual guidance reflecting the impact
of the stronger than budgeted Canadian dollar. Full year cost
guidance was based on a USD/CAD foreign exchange rate of $0.75:1
compared to the actual USD/CAD rate of $0.79:1 in the third quarter
and $0.80:1 average year-to-date. This has increased Company-wide
total cash costs by $30 per ounce, and AISC by $45 per ounce
relative to initial guidance. Excluding this impact, total cash
costs and AISC through the first three quarters of 2021 are
consistent with initial annual guidance. Given the ongoing impact
of the stronger Canadian dollar and higher than planned costs at
Mulatos, the Company is increasing full year consolidated total
cash cost guidance to a range of $790 to $810 per ounce and AISC
guidance to a range of $1,120 to $1,140 per ounce. Although the
Company has managed inflationary pressures on operating costs
through the first nine-months of the year, price increases for
certain consumables are expected to start having more of an impact
on costs in the fourth quarter and into 2022.
The Company continues to advance its high-return
organic growth initiatives. Construction of the higher grade La
Yaqui Grande project remains on budget and on schedule to begin
supplying low-cost production in the third quarter of 2022.
Development activities on the Phase III expansion at Island Gold
are also advancing while ongoing exploration success continues to
highlight the significant potential for further high-grade Mineral
Reserve and Resource growth and additional operational upside to
what was outlined in the July 2020 study. Both projects are key
contributors to the Company's strong outlook with consolidated
production potential of approximately 750,000 ounces per year by
2025 at substantially lower AISC of approximately $800 per
ounce.
Young-Davidson continues to perform well having
consistently met or exceeded expectations following the completion
of the lower mine expansion in July 2020. Mining rates increased to
average a record 8,017 tpd in the third quarter driving production
higher, costs lower, and strong mine-site free cash flow. The
operation remains on track to achieve full year production guidance
and generate mine-site free cash flow of approximately $100 million
in 2021.
Production at Island Gold decreased slightly in
the third quarter reflecting unplanned maintenance in the mill.
This was completed early in the third quarter with additional
critical spares now on site to mitigate future unplanned downtime.
Given the strong production through the first three quarters of the
year and with higher production expected in the fourth quarter
reflecting higher milling rates, the operation remains on track to
achieve full year guidance. Exploration success continued in the
third quarter following up on the best hole drilled to date at
Island Gold as announced in the second quarter at 71.21 g/t Au
(39.24 g/t cut) over 21.33 m (MH25-08), down-plunge from Mineral
Resources in Island East. Drilling activities were limited by
drilling contractor availability constraints; however, this
improved later in the quarter with another exploration update
expected in the fourth quarter.
Production from the Mulatos District was
impacted by higher than average rainfall during the rainy season
and longer than anticipated recovery times for stockpiled ore
stacked during the quarter. The above average rainfall and wet ore
impacted stacking rates during the quarter which were approximately
20% below annual guidance. Additionally, with the higher grade
Cerro Pelon deposit nearly depleted, an increasing proportion of
previously mined and stockpiled ore is now being stacked. The leach
cycle for this ore has been longer than anticipated and is
requiring the application of additional reagents resulting in
significantly higher processing costs. Production is expected to
increase in the fourth quarter; however, given the lower production
during the third quarter, full year production guidance has been
reduced by 15,000 ounces to a range of 135,000 to 145,000 ounces.
Given the higher reagent costs associated with processing this
stockpiled ore, total cash costs and mine-site AISC at Mulatos are
expected to increase significantly in the fourth quarter and
through the first half of 2022. Costs are expected to decrease into
the second half of 2022 as production from the high grade La Yaqui
Grande project ramps up. Mulatos District costs are expected to be
sharply lower in 2023 with La Yaqui Grande supplying the majority
of production.
The Company continues to advance permitting of
the Lynn Lake project, with approval of its Environmental Impact
Statement ("EIS") expected mid-2022. The Company expects to make a
construction decision following the conclusion of the EIS
permitting process.
In April 2021, the Company announced that its
Netherlands wholly-owned subsidiaries would proceed with an
investment treaty claim against the Republic of Turkey for
expropriation and unfair and inequitable treatment, among other
things, with respect to the Kirazlı, Ağı Dağı and Çamyurt gold
development projects in Turkey. The claim was registered with the
International Centre for Settlement of Investment Disputes (World
Bank Group) under the Netherlands-Turkey Bilateral Investment
Treaty on June 7, 2021, and is expected to exceed $1 billion. In
its effort to secure the renewal of its mining licenses, the
Company has attempted to work cooperatively with the Turkish
government, has raised with the Turkish government its obligations
under the Treaty, has sought to resolve the dispute by good faith
negotiations, and has made considerable effort to build support
among stakeholders and host communities. The Turkish government has
failed to provide the Company with a reason for the non-renewal of
its licenses. As a result, Alamos and the Subsidiaries incurred an
after-tax impairment charge of $213.8 million in the second quarter
of 2021. The non-cash impairment charge reflects the Company’s net
carrying value of the Turkish Projects.
The Company's liquidity position remains strong,
ending the third quarter with $211.4 million of cash and cash
equivalents, $22.9 million in equity securities, and no debt.
Additionally, the Company has a $500 million undrawn credit
facility, providing total liquidity of $711.4 million. Combined
with strong ongoing cash flow generation, the Company's high-return
internal growth initiatives are fully funded, which have the
capacity to increase production by 50%, and reduce AISC by over 20%
by 2025.
Third Quarter 2021 Results
Young-Davidson Financial and Operational
Review
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
|
2020 |
|
Gold production (ounces) |
50,000 |
|
36,400 |
|
143,100 |
|
88,200 |
|
Gold
sales (ounces) |
48,625 |
|
35,548 |
|
141,931 |
|
86,893 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$87.1 |
|
$66.7 |
|
$255.3 |
|
$150.1 |
|
Cost of sales (1) |
$58.5 |
|
$50.5 |
|
$181.8 |
|
$140.5 |
|
Earnings from operations |
$28.6 |
|
$16.2 |
|
$73.5 |
|
$9.6 |
|
Cash provided by operating
activities |
$51.2 |
|
$36.4 |
|
$133.7 |
|
$51.0 |
|
Capital expenditures
(sustaining) (2) |
$11.7 |
|
$9.6 |
|
$31.0 |
|
$19.3 |
|
Capital expenditures (growth)
(2) |
$9.3 |
|
$16.0 |
|
$29.0 |
|
$62.9 |
|
Capital expenditures
(capitalized exploration) (2) |
$1.3 |
|
$— |
|
$3.8 |
|
$— |
|
Mine-site free cash flow
(2) |
$28.9 |
|
$10.8 |
|
$69.9 |
|
($31.2 |
) |
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,203 |
|
$1,421 |
|
$1,281 |
|
$1,617 |
|
Total cash costs per ounce of gold sold (2) |
$810 |
|
$923 |
|
$873 |
|
$1,145 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,051 |
|
$1,196 |
|
$1,093 |
|
$1,370 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
737,554 |
|
617,551 |
|
2,121,573 |
|
1,252,300 |
|
Tonnes of ore mined per day |
8,017 |
|
6,713 |
|
7,771 |
|
4,570 |
|
Average grade of gold (4) |
2.30 |
|
2.24 |
|
2.26 |
|
2.27 |
|
Metres developed |
3,031 |
|
3,231 |
|
9,251 |
|
9,326 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
738,646 |
|
591,544 |
|
2,159,994 |
|
1,451,577 |
|
Tonnes of ore processed per day |
8,029 |
|
6,430 |
|
7,912 |
|
5,298 |
|
Average grade of gold (4) |
2.30 |
|
2.19 |
|
2.25 |
|
2.01 |
|
Contained ounces milled |
54,640 |
|
41,598 |
|
156,310 |
|
93,959 |
|
Average recovery rate |
92 |
% |
93 |
% |
92 |
% |
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 50,000 ounces of gold in
the third quarter of 2021, a 37% increase from the prior year
period which had been impacted by downtime to complete the lower
mine expansion in July 2020. With production of 143,100 ounces
through the first nine months and strong production expected in the
fourth quarter, Young-Davidson remains on track to meet full year
production guidance of between 190,000 and 205,000 ounces.
Underground mining rates continued to perform
extremely well, increasing to average a record 8,017 tpd in the
quarter. Since the completion of the lower mine expansion in the
third quarter of 2020, mining rates have met or exceeded targeted
rates. The Company expects similar mining rates in the fourth
quarter with the new lower mine infrastructure now operating at its
design rate of 8,000 tpd.
Grades mined increased slightly in the third
quarter to average 2.30 g/t Au. Grades mined are expected to
increase further in the fourth quarter. Mill throughput averaged
8,029 tpd in the third quarter, consistent with tonnes mined. Mill
recoveries averaged 92% in the quarter, in line with guidance and
the prior year.
Financial Review
Third quarter revenues of $87.1 million and
year-to-date revenues of $255.3 million were 31% and 70% higher
than the prior year periods, respectively. This reflected higher
gold production with the prior year impacted by the temporary
shutdown of the Northgate shaft to complete the lower mine
expansion. Revenues in third quarter of 2021 were the second
highest in the history of the operation.
Cost of sales (which includes mining and
processing costs, royalties, and amortization expense) of $58.5
million in the third quarter were higher than the prior year
period, due to significantly higher mining and processing rates
compared to the prior year. Similarly, cost of sales for the first
nine months of 2021 were higher than the prior year given lower
mining rates during the shutdown period. Underground unit mining
costs were CAD $44 per tonne in the quarter, a significant
improvement from the prior year and the lowest quarterly unit
mining costs of the year driven by economies of scale with mining
rates increasing to average a record 8,000 tpd.
Total cash costs of $810 per ounce and mine-site
AISC of $1,051 per ounce in the third quarter were both 12% lower
than the comparative period in 2020, and the lowest result in 2021
driven by higher throughput and lower mining and processing costs
per tonne. The stronger than budgeted Canadian dollar has increased
total cash costs by approximately $50 per ounce and mine-site AISC
by $65 per ounce year-to-date. Excluding the impact of the stronger
than budgeted Canadian dollar, year-to-date costs are in-line with
initial annual guidance. With higher grades expected in the fourth
quarter, total cash costs and mine-site AISC are expected to
decrease further to the lowest levels of the year.
Capital expenditures in the quarter included
$11.7 million of sustaining capital and $9.3 million of growth
capital. In addition, $1.3 million was invested in capitalized
exploration as part of the first significant exploration program at
the operation since 2011. Capital expenditures totaled $63.8
million in the first nine months of 2021, a 22% decrease from the
prior year reflecting the completion of the lower mine expansion in
July 2020. Capital expenditures in 2021 are expected to be slightly
higher than guidance due to the impact of the stronger Canadian
dollar.
Young-Davidson has consistently met or exceeded
expectations since transitioning to the new lower mine
infrastructure in mid-2020, driving production higher, costs lower,
and strong free cash flow growth. This included mine-site free cash
flow of $28.9 million in the third quarter, and $69.9 million in
the first nine months of 2021. With a strong fourth quarter,
Young-Davidson is expected to generate mine-site free cash flow of
approximately $100 million for the full year.
Island Gold Financial and Operational
Review
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
Gold production (ounces) |
28,000 |
|
39,600 |
|
103,400 |
|
97,800 |
|
Gold
sales (ounces) |
28,331 |
|
39,322 |
|
101,845 |
|
97,009 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$50.8 |
|
$74.1 |
|
$183.4 |
|
$167.4 |
|
Cost of sales (1) |
$24.5 |
|
$28.1 |
|
$79.2 |
|
$78.2 |
|
Earnings from operations |
$25.5 |
|
$45.9 |
|
$101.0 |
|
$88.7 |
|
Cash provided by operating
activities |
$31.5 |
|
$56.7 |
|
$129.9 |
|
$123.5 |
|
Capital expenditures
(sustaining) (2) |
$13.9 |
|
$7.0 |
|
$35.5 |
|
$20.7 |
|
Capital expenditures (growth)
(2) |
$14.1 |
|
$6.0 |
|
$40.0 |
|
$25.1 |
|
Capital expenditures
(capitalized exploration) (2) |
$5.2 |
|
$2.9 |
|
$13.6 |
|
$8.1 |
|
Capital advances |
$0.6 |
|
$— |
|
$3.4 |
|
$— |
|
Mine-site free cash flow (2) |
($2.3 |
) |
$40.8 |
|
$37.4 |
|
$69.6 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$865 |
|
$715 |
|
$778 |
|
$806 |
|
Total cash costs per ounce of gold sold (2) |
$586 |
|
$394 |
|
$512 |
|
$438 |
|
Mine-site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,077 |
|
$575 |
|
$860 |
|
$653 |
|
Underground Operations |
|
|
|
|
Tonnes of ore mined |
108,241 |
|
111,263 |
|
329,190 |
|
298,629 |
|
Tonnes of ore mined per day ("tpd") |
1,177 |
|
1,209 |
|
1,206 |
|
1,090 |
|
Average grade of gold (4) |
8.59 |
|
13.68 |
|
10.04 |
|
11.33 |
|
Metres developed |
1,708 |
|
1,430 |
|
5,566 |
|
4,313 |
|
Mill Operations |
|
|
|
|
Tonnes of ore processed |
99,425 |
|
101,447 |
|
320,608 |
|
281,082 |
|
Tonnes of ore processed per day |
1,081 |
|
1,103 |
|
1,174 |
|
1,026 |
|
Average grade of gold (4) |
8.90 |
|
13.62 |
|
10.29 |
|
11.52 |
|
Contained ounces milled |
28,443 |
|
44,414 |
|
106,062 |
|
104,072 |
|
Average recovery rate |
95 |
% |
97 |
% |
96 |
% |
97 |
% |
(1) Cost of sales includes mining and
processing costs, royalties, COVID-19 costs 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").
Island Gold produced 28,000 ounces in the third
quarter of 2021, a decrease from the comparative period reflecting
lower planned grades mined. Through the first nine months of 2021,
Island Gold produced 103,400 ounces, and remains well positioned to
meet full year production guidance.
Underground mining rates averaged 1,177 tpd in
the third quarter, a 3% decrease from the prior year period. Mining
rates through the first nine months of the year averaged 1,206 tpd,
consistent with annual guidance of 1,200 tpd. As previously guided,
underground grades remained at similar levels to the second
quarter, averaging 8.59 g/t Au. Grades mined are expected to
slightly increase in the fourth quarter, and average approximately
10 g/t Au for the year, in line with the Mineral Reserve grade.
Mill throughput averaged 1,081 tpd in the third
quarter, a decrease from the first half of the year and below
annual guidance of 1,200 tpd due to approximately eight days of
downtime for unplanned maintenance in July. The mill operated at
full capacity in August and September. To mitigate future unplanned
downtime, additional maintenance protocols have been put in place
as well as an increase in critical spare inventory. Excess ore
mined during the quarter was stockpiled for future processing. Mill
recoveries averaged 95% in the quarter and 96% year-to-date,
consistent with annual guidance.
Financial Review
Island Gold generated revenues of $50.8 million
in the third quarter, a 31% decrease compared to the prior year
period, reflecting less ounces sold given the lower grades and
lower processing rates in the quarter. For the first nine months of
the year, revenues were $183.4 million, a 10% increase from prior
year, primarily due to the higher realized gold price and more
ounces sold.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $24.5 million in the
third quarter and $79.2 million during the first nine months of
2021 were relatively consistent with the prior year periods. Higher
mining and processing rates in 2021 were offset by lower costs per
tonne mined and lower amortization charges.
Total cash costs of $586 per ounce in the third
quarter were significantly higher than the comparative quarter, due
to lower grades mined in the period and the impact of the stronger
Canadian dollar on mining and milling costs. Mine-site AISC of
$1,077 per ounce were 87% higher than in the prior year given
higher sustaining capital spending. On a year-to-date basis, total
cash costs and mine-site AISC are slightly higher than initial full
year guidance, largely reflecting the stronger than budgeted
Canadian dollar. This has increased total cash costs by
approximately $30 per ounce and mine-site AISC by approximately $50
per ounce, relative to initial guidance.
Total capital expenditures were $33.2 million in
the third quarter, including $5.2 million of capitalized
exploration. Spending was focused on lateral development,
engineering and early procurement for the Phase III project, and
surface infrastructure. For the nine months ended September 30,
2021, capital spending was $89.1 million inclusive of capitalized
exploration of $13.6 million. In addition, Island Gold advanced
$3.4 million for long lead time items supporting the Phase III
expansion in the first nine months of 2021. Capital spending is
expected to increase in the fourth quarter, however there is
potential for some capital to be deferred to early 2022.
Given the lower production in the quarter and
higher capital spending related to the Phase III expansion, Island
Gold generated negative mine-site free cash flow of $2.3 million in
the third quarter. On a year-to-date basis, Island Gold continues
to more than self finance the Phase III expansion, generating
mine-site free cash of $37.4 million driven by strong ongoing
operating margins.
Mulatos Financial and Operational
Review
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
|
2020 |
|
Gold production (ounces) |
26,700 |
|
41,100 |
|
98,200 |
|
119,600 |
|
Gold
sales (ounces) |
33,532 |
|
41,165 |
|
100,775 |
|
118,592 |
|
Financial Review (in millions) |
|
|
|
|
Operating Revenues |
$60.1 |
|
$77.6 |
|
$181.8 |
|
$204.0 |
|
Cost of sales (1) |
$46.5 |
|
$44.0 |
|
$134.7 |
|
$127.5 |
|
Earnings from operations |
$11.2 |
|
$32.7 |
|
$41.4 |
|
$73.9 |
|
Cash provided by operating
activities |
$9.2 |
|
$40.0 |
|
$38.4 |
|
$85.9 |
|
Capital expenditures
(sustaining) (2) |
$5.3 |
|
$6.1 |
|
$14.7 |
|
$14.6 |
|
Capital expenditures (growth)
(2) |
$22.7 |
|
$3.0 |
|
$60.0 |
|
$6.3 |
|
Capital expenditures
(capitalized exploration) (2) |
$0.4 |
|
$— |
|
$1.4 |
|
$0.7 |
|
Capital advances |
$0.7 |
|
$— |
|
$18.1 |
|
$— |
|
Mine-site free cash flow
(2) |
($19.9 |
) |
$30.9 |
|
($55.8 |
) |
$64.3 |
|
Cost of sales, including amortization per ounce of gold sold
(1) |
$1,387 |
|
$1,069 |
|
$1,337 |
|
$1,075 |
|
Total cash costs per ounce of gold sold (2) |
$927 |
|
$746 |
|
$913 |
|
$772 |
|
Mine site all-in sustaining costs per ounce of gold sold
(2),(3) |
$1,124 |
|
$928 |
|
$1,097 |
|
$928 |
|
Open Pit Operations |
|
|
|
|
Tonnes of ore mined - open pit (4) |
744,827 |
|
1,320,034 |
|
2,455,916 |
|
4,370,921 |
|
Total waste mined - open pit (6) |
1,675,335 |
|
2,130,232 |
|
6,563,305 |
|
5,621,000 |
|
Total tonnes mined - open pit |
2,420,162 |
|
3,450,266 |
|
9,019,222 |
|
9,991,921 |
|
Waste-to-ore ratio (operating) |
1.15 |
|
0.76 |
|
1.41 |
|
0.70 |
|
Crushing and Heap Leach Operations |
|
|
|
|
Tonnes of ore stacked |
1,580,707 |
|
1,894,725 |
|
5,313,831 |
|
5,338,725 |
|
Average grade of gold processed (5) |
1.08 |
|
0.91 |
|
1.04 |
|
1.17 |
|
Contained ounces stacked |
54,999 |
|
55,411 |
|
177,418 |
|
201,455 |
|
Average recovery rate |
49 |
% |
74 |
% |
55 |
% |
59 |
% |
Ore
crushed per day (tonnes) - combined |
17,200 |
|
20,600 |
|
19,500 |
|
19,484 |
|
(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) 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, but excludes tonnes mined at La Yaqui
Grande.
Mulatos produced 26,700 ounces in the third
quarter, significantly lower than the prior year quarter, due to
the impact of an above-average rainy season on crushing and
stacking operations, as well as longer leach cycles for stockpiled
ore. For the first nine months of 2021, Mulatos produced 98,200
ounces, an 18% decrease from the prior year driven by lower grades
mined primarily from Cerro Pelon, as well as the timing of gold
recovery on ore stacked in the third quarter.
Tonnes of ore mined in the third quarter
decreased compared to the prior year period, with mining activities
within the main Mulatos pit focused on pre-stripping the El Salto
portion of the pit. The majority of ore mined in the quarter was
from Cerro Pelon and San Carlos, which are both expected to be
depleted by the end of the year. Total tonnes mined is exclusive of
pre-stripping activities at La Yaqui Grande, where an additional
6.3 million tonnes of waste was mined in the quarter.
Total crusher throughput in the third quarter
averaged 17,200 tpd for a total of 1,580,707 tonnes stacked at a
grade of 1.08 g/t Au. Crusher throughput was 17% below the prior
year and nearly 20% below annual guidance with above average
rainfall impacting crushing and stacking rates.
Tonnes stacked in the quarter exceeded tonnes
mined due to the processing of surface stockpiles, which were mined
in previous years. With mining rates at Cerro Pelon winding down as
the deposit is depleted, a higher proportion of higher grade but
lower recovery stockpiles are being stacked. This contributed to
grades stacked being 19% higher than the prior year period.
The increased proportion of stockpiles stacked
in the quarter, combined with ore being stacked on higher lifts on
the leach pad, and a longer than anticipated leach cycle all
contributed to a lower recovery rate of 49%. The Company expects
higher production over the next two quarters as these previously
stacked ounces are recovered; however, at significantly higher
processing costs given the additional reagents required for
processing stockpiles. Given stockpiles are expected to be a bigger
contributor to production until La Yaqui Grande begins producing in
the second half of 2022, Mulatos District total cash costs and
mine-site AISC are expected to increase significantly in the fourth
quarter and first half of 2022.
Financial Review
Revenues of $60.1 million in the third quarter
were lower than the prior year period driven by fewer ounces sold.
The number of ounces sold were higher than production, reflecting
the catch up of ounces produced but not sold in the second quarter.
For the first nine months, revenues of $181.8 million were lower
than prior year, as fewer ounces sold were partially offset by a
higher realized gold price.
Cost of sales (includes mining and processing
costs, royalties and amortization expense) of $46.5 million in the
third quarter were higher than in the comparative period, primarily
due to higher processing costs related to surface stockpiles and
higher amortization charges in the period. Amortization per ounce
was higher in the quarter given the proportion of ore coming from
Cerro Pelon which carries a higher amortization charge, as well as
the impact of straight line depreciation on lower sales in the
quarter. Total cash costs of $927 per ounce were higher than in the
prior year period as a result of less tonnes stacked, and an
increasing proportion of surface stockpiles processed which carry a
higher cost per ounce given the increased reagents required to
recover the gold. The surface stockpiles also include historical
inventory costs of approximately $150 per ounce, which were
incurred in previous years when these tonnes were mined. Mine-site
AISC of $1,124 per ounce in the quarter was higher than in the
prior year period, consistent with the increase in total cash
costs, and further driven by pre-stripping costs at El Salto
incurred in the period.
Capital spending totaled $28.4 million in the
third quarter, of which $5.3 million was sustaining capital
primarily related to capitalized stripping at El Salto. Growth
capital of $22.7 million was primarily related to pre-stripping and
construction activities at La Yaqui Grande. An additional $0.7
million of capital advances were made to vendors for equipment.
During the first nine months of 2021, Mulatos incurred $76.1
million of capital spending primarily on the construction of La
Yaqui Grande.
Mine-site free cash flow at Mulatos was negative
$19.9 million, reflecting the ramp up of construction spending on
La Yaqui Grande. Mulatos paid $2.5 million in taxes in the quarter
related to 2021 installment payments, and $26.9 million in the
first nine months of the year. The Company does not expect to make
any cash tax payments in the fourth quarter given the level of
installment payments made to date.
Third Quarter 2021 Development Activities
Island Gold (Ontario,
Canada)
Phase III Expansion Study
On July 14, 2020 the Company reported results of
the positive Phase III expansion study conducted on its Island Gold
mine. Based on the results of the study, the Company is proceeding
with an expansion of the operation to 2,000 tpd. This follows a
detailed evaluation of several scenarios which demonstrated the
shaft expansion as the best option, having the strongest economics,
being the most efficient and productive, and the best positioned to
capitalize on further growth in Mineral Reserves and Resources. The
Phase III expansion is expected to drive average annual gold
production to 236,000 ounces per year starting in 2025 upon
completion of the shaft, representing a 70% increase from 2020
production. This will also reduce total cash costs to an average of
$403 per ounce and mine-site all-in sustaining costs to $534 per
ounce to starting in 2025.
The Phase III expansion study was based on
Mineral Reserves and Resources at Island Gold as of December 31,
2019 and does not include the significant growth subsequent to the
study as outlined in the 2020 year end Mineral Reserve and Resource
statement. Incorporating this growth is expected to improve already
attractive economics. This growth included an 8% increase in
Mineral Reserves to 1.3 million ounces of gold (4.2 mt grading 9.71
g/t Au) and a 0.9 million ounce, or 40%, increase in Inferred
Mineral Resources to 3.2 million ounces with grades also increasing
9% to 14.43 g/t Au (6.9 mt).
The Company is currently focused on permitting
and 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 significant contracts signed for the shaft
sinking and headworks and shaft site surface works. In addition,
procurement of long lead time items is underway. Phase III
permitting is anticipated to be completed in 2022 with the pre-sink
for the shaft expected to begin in mid-2022.
During the third quarter of 2021, the Company
spent $14.1 million on surface infrastructure, capital development,
detailed engineering and permitting activities. Growth capital
spending through the first nine months of the year totaled $40.0
million. Capital spending is expected to increase in the fourth
quarter, however there is potential for some capital to be deferred
to early 2022.
Mulatos District (Sonora,
Mexico)
La Yaqui Grande
On July 28, 2020, the Company reported results
of an internal study completed on its fully permitted La Yaqui
Grande project located in the Mulatos District in Sonora, Mexico.
La Yaqui Grande is located approximately seven kilometres (straight
line) from the existing Mulatos operation and adjacent to the past
producing La Yaqui Phase I operation. As with La Yaqui Phase I, La
Yaqui Grande is being developed with an independent heap leach pad
and crushing circuit.
La Yaqui Grande is expected to produce an
average of 123,000 ounces of gold per year starting in the third
quarter of 2022 at mine-site all-in sustaining costs of $578 per
ounce, significantly reducing the Mulatos District all-in
sustaining costs from approximately $1,100 per ounce through the
first three quarters of 2021. This will replace higher cost
production from the main Mulatos pit, keeping combined production
at approximately 150,000 ounces per year. Initial capital is
expected to be $137 million to be spent over a two year period.
Construction activities progressed well in the
third quarter, with the project on schedule to achieve commercial
production in the third quarter of 2022. The Company has closely
monitored capital spending against budget, and despite inflationary
pressures, the project remains on track to achieve its original
construction budget of $137 million.
Capital spending increased to $22.2 million in
the quarter bringing total capital spent since the start of
construction to $70.2 million. In addition, the Company has
advanced $18.1 million to contractors during the first nine months
of 2021, which will be applied against the construction budget.
Third quarter highlights at La Yaqui Grande
included:
- Over six million
tonnes of waste mined with mining rates increasing 20% compared to
the second quarter to average 68,000 tpd
- Construction of
crushing circuit, agglomeration system, and ADR process plant well
underway
- Structural fill
placed and compacted for the heap leach facility
- Haul roads
complete, and both the pregnant and barren solution ponds have been
lined
- Delivery and
installation of tanks and pumps for the water supply and
distribution to be received in the fourth quarter
- Purchase orders
placed for the water treatment plant components
La Yaqui Grande - Pit
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/761e91f4-b0c8-442b-b927-24e0490ade06
La Yaqui Grande - Crusher area
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/e8aa5bb4-a6cb-40d3-ba7c-e8a4e631fc60
La Yaqui Grande - ADR Plant
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/adfb01e4-a9c9-4829-8f83-b74a68cf0a24
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 all-in sustaining costs 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 IRR of 21.5% and an after-tax NPV of $290 million (12.5%
IRR at a $1,250 per ounce gold price). During the second quarter of
2020, the Company filed the Environmental Impact Statement ("EIS")
with the federal government. The federal and provincial permitting
process is expected to take approximately two years, with a
construction decision planned for 2022.
Development spending (excluding exploration) was
$2.0 million in the third quarter of 2021 to support the ongoing
permitting process and engineering, and $3.3 million for the first
nine months of 2021.
Kirazlı (Çanakkale, Turkey)
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
Turkey for expropriation and unfair and inequitable treatment,
among other things, with respect to the Kirazlı, Ağı Dağı and
Çamyurt gold development projects in Turkey. The claim was filed
under the Netherlands-Turkey Bilateral Investment Treaty (the
“Treaty”). Alamos Gold Holdings Coöperatief U.A. and Alamos Gold
Holdings B.V. had its claim against the Republic of Turkey
registered on June 7, 2021 with the International Centre for
Settlement of Investment Disputes (World Bank Group).
In its effort to secure the renewal of its
mining licenses, the Company has attempted to work cooperatively
with the Turkish government, has raised with the Turkish government
its obligations under the Treaty, has sought to resolve the dispute
by good faith negotiations, and has made considerable effort to
build support among stakeholders and host communities. The Turkish
government has failed to provide the Company with a reason for the
non-renewal of its licenses.
Alamos has had an active presence in Turkey
since 2010. Over that time frame, the Company’s Turkish operations
have met all legal and regulatory requirements, complied with best
practices relating to sustainable development including meeting the
highest environmental and social management standards, created
hundreds of jobs, and developed trusting relationships with the
local communities. Alamos and the Subsidiaries have invested over
$250 million in Turkey, unlocked over a billion dollars worth of
project value, and contributed over $20 million in royalties, taxes
and forestry fees to the Turkish government. Over the life of the
project, government revenues alone are expected to total $551
million. Additionally, Alamos and the Subsidiaries have invested
$25 million to date towards various community and social
initiatives.
Bilateral investment treaties are agreements
between countries to assist with the protection of investments. The
Treaty establishes legal protections for investment between Turkey
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 Turkey.
Alamos and the Subsidiaries are being
represented by the leading Canadian law firm Torys LLP, with a team
that includes John Terry and former Canadian Supreme Court Justice,
the Hon. Frank Iacobucci. The Company is also being supported by
its strategic advisor John Baird, former Canadian Minister of
Foreign Affairs and Senior Advisor to Bennett Jones LLP.
As a result, the Company incurred an after-tax
impairment charge of $213.8 million in the second quarter of 2021.
The non-cash impairment charge reflects the Company’s entire net
carrying value of the Turkish mineral property, plant and equipment
and certain other current assets.
In addition, the Company incurred approximately
$1.6 million in the period for severances, legal costs, and ongoing
holding costs which have been expensed, with the majority incurred
in the second quarter following the announcement of the Treaty
claim. Going forward, the Company expects holding costs will be
approximately $1.0 to $2.0 million per year during the Treaty claim
process.
Third Quarter 2021 Exploration Activities
Island Gold (Ontario,
Canada)
The 2021 exploration drilling program is focused
on expanding high-grade mineralization in the down-plunge and
lateral extensions of the Island Gold deposit with the objective of
adding new near-mine Mineral Resources across the two kilometre
long Island Gold deposit. The Company continued its strong track
record of exploration success and Mineral Reserve and Resource
growth in 2020, with an 8% increase in Mineral Reserves to 1.3
million ounces of gold (4.2 mt grading 9.71 g/t Au) and a 0.9
million ounce, or 40% increase in Inferred Mineral Resources to 3.2
million ounces with grades also increasing 9% to 14.43 g/t Au (6.9
mt).
Surface diamond drilling programs continued with
three drill rigs operating in the third quarter focused on the
surface directional exploration program. One underground regular
exploration diamond drill operated at the beginning of the quarter
and two diamond drill rigs were focused on underground directional
drilling. A total of 4,741 m of surface directional drilling, 3,362
m of underground directional drilling and 1,761 m of standard
underground exploration drilling was completed in the third quarter
of 2021.
Year-to-date, approximately 60% of the 2021
planned drilling has been completed due to constraints on drilling
contractor availability which has limited the pace of drilling.
Contractor availability improved in the latter part of the third
quarter. Ongoing exploration drilling has continued to extend
high-grade mineralization with another exploration update planned
in the fourth quarter.
Surface exploration drilling
A total of 4,741 m of surface directional
drilling was completed in four holes during the third quarter.
Surface directional drilling targeted areas peripheral to the
Inferred Mineral Resource block in the Island East area between
1,400 m and 1,750 m below surface with drill hole spacing ranging
from 75 m to 100 m.
Underground exploration drilling
During the third quarter of 2021, a total of
3,362 m of underground directional drilling was completed in four
holes from the 620, 740 and 840 levels. A total of 1,761 m of
standard underground exploration drilling was completed in 11 holes
from the 340, 620 and 840 levels. The objective of the underground
drilling is to identify new Mineral Resources close to existing
Mineral Resource or Reserve blocks. A total of 222 m of underground
exploration drift development was completed on the 490, 620, 790
and 840 levels during the third quarter of 2021.
Total exploration expenditures during the third
quarter were $6.0 million, of which $5.2 million was capitalized.
For the first nine months of 2021, $16.8 million of exploration
expenditures were incurred, with $13.6 million capitalized.
Young-Davidson (Ontario,
Canada)
A total of $7.0 million has been budgeted for
Young-Davidson for 2021. This represents the first significant
exploration program since 2011, with the focus of the last several
years on completing the lower mine expansion. Underground
exploration drilling during the third quarter was focused on two
targets with 2,151 m completed in four holes. Drilling from the
8960-level exploration drill bay established in the lower mine
infrastructure continued to target to the west and down-plunge of
existing Mineral Reserves and Resources with three drill holes
completed in the third quarter. 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 also
completed one hole from the 9440-level exploration drill bay
targeting an untested area to the west of existing Mineral Reserves
and Resources.
As previously disclosed in a July 12, 2021 press
release, the current drilling campaign has been successful in
extending gold mineralization 150 m below existing Inferred Mineral
Resources. This follows a 220 m extension of gold mineralization in
2020 which contributed to an increase in Inferred Mineral Resources
in the 2020 year-end update. The 2021 campaign has also intersected
high-grade mineralization 200 m outside of the syenite in the
hanging wall, as well as in the footwall of the deposit
highlighting significant near-mine exploration potential outside of
the known ore body.
Exploration spending totaled $1.3 million in the
third quarter and $3.8 million in the first nine months of 2021,
all of which 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 has moved
beyond the main Mulatos pit area and is focused on earlier stage
prospects throughout the wider district.
During the third quarter of 2021, exploration
activities were focused on the near-mine, Puerto del Aire trend
with 1,481 m of drilling completed in six drill holes. Regional
targets at Carricito were also tested with nine holes completed
totaling 2,773 m. Drilling continued at the El Halcon targets with
nine drill holes completed totaling 3,097 m.
Exploration activities also continued on the Los
Venados property, pursuant to an option agreement with Aloro
Mining, with five drill holes completed in the quarter for a total
of 1,209 m, and additional surface mapping and sampling. In August,
an option agreement was signed which will allow for exploration
activities on the La Cumbre project located approximately 34 km
south west of the Mulatos mine. During the third quarter, the
Company incurred $2.8 million of exploration spending, of which
$0.4 million was capitalized. For the first nine months of 2021,
$7.1 million was incurred, of which $1.4 million capitalized.
Lynn Lake (Manitoba,
Canada)
In the third quarter of 2021, 5,215 m of
drilling was completed in twenty-two holes at the Gordon deposit
and on regional targets. The 2021 summer field season also
progressed, with the focus on continuing to advance a pipeline of
prospective regional exploration targets. Exploration spending
totaled $2.3 million in the third quarter, and $6.5 million
year-to-date which was capitalized.
Review of Third Quarter Financial Results
During the third quarter of 2021, the Company
sold 110,488 ounces of gold for revenues of $198.0 million, a 9%
decrease from the prior year period driven by lower realized gold
prices and less ounces sold. Ounces sold were higher than
production in the current period due to timing of second quarter
shipments at the Mulatos mine, which were caught up in the third
quarter.
The average realized gold price in the third
quarter was $1,792 per ounce, a 5% decrease compared to $1,882 per
ounce realized in the prior year period. The average realized gold
price was slightly above the average London PM Fix price of $1,790
per ounce.
Cost of sales were $129.5 million in the third
quarter, 6% higher than the prior year period.
Mining and processing costs were $84.5 million,
11% higher than the prior year comparative period. The increase in
mining costs was primarily related to increased mining activity at
Young Davidson, where mining rates were 19% higher than the prior
year, as well as higher processing costs at Mulatos. Further,
additional costs have been incurred in 2021 related to COVID-19
preventative measures, and reported US dollar costs have been
impacted by the stronger Canadian dollar in the period.
Consolidated total cash costs of $788 per ounce
and AISC of $1,152 per ounce in the quarter were both higher
compared to the prior year period due to higher processing costs at
Mulatos, a stronger Canadian dollar, and lower grades mined at
Island Gold, partially offset by lower unit costs at
Young-Davidson.
Royalty expense was $2.6 million in the quarter,
lower than the prior year period of $2.8 million due to lower
ounces sold in the period.
Amortization of $42.4 million in the quarter was
lower than the prior year period due to less ounces sold, partially
offset by higher amortization charges on a per ounce basis at
Mulatos. Amortization of $384 per ounce was 2% higher than the
prior year reflecting higher amortization at Mulatos, driven by
Cerro Pelon production which carries a higher amortization charge
per ounce.
The Company recognized earnings from operations
of $57.3 million in the quarter, a decrease from the prior year
driven mainly by less ounces sold, a $90 per ounce lower realized
gold price, and higher cash costs at Mulatos and Island Gold.
The Company reported net earnings of $25.1
million in the quarter, compared to net earnings of $67.9 million
in the comparative period. The decrease in net earnings from the
prior year quarter is mainly due to lower operating margins given
the lower average realized gold price, higher cost of sales, and a
higher effective tax rate driven by foreign exchange losses
recorded within taxes. On an adjusted basis, earnings of $37.6
million, or $0.10 per share, were lower compared to the prior year
quarter due to lower operating margins, but reflect adjustments to
the 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 September 30, 2021 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 Third Quarter 2021 Results Conference
Call
The Company's senior management will host a
conference call on Thursday, October 28, 2021 at 11:00 am ET to
discuss the third quarter 2021 results. Participants may join the
conference call via webcast or through the following dial-in
numbers:
Toronto and
International: |
(416)
406-0743 |
Toll free (Canada and the United States): |
(800) 898-3989 |
Participant passcode: |
8987852# |
Webcast: |
www.alamosgold.com |
A playback will be available until November 28,
2021 by dialling (905) 694-9451 or (800) 408-3053 within Canada and
the United States. The pass code is 5112333#. The webcast will be
archived at www.alamosgold.com.
Qualified Persons
Chris Bostwick, FAusIMM, Alamos’ 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, Turkey,
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 contains 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”, “inferred”,
“schedule”, "believe", "anticipate", "intend", "estimate",
“potential”, "forecast", "budget", “target”, “on track”, “outlook”,
“continue”, “plan”, “trending” 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, 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 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, 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.
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 widespread pandemic and
its impact 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 our operations) in Canada,
Mexico, the United States and Turkey; the duration of regulatory
responses to the COVID-19 pandemic; governments 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 dore 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;
expansion delays with the Phase III Expansion Project at the Island
Gold mine; construction delays at the La Yaqui Grande project;
inherent risks associated with mining and mineral processing; 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 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, including renewal of
the requisite operating licenses or permits, or even retaining
control of its assets and gold mining projects in Turkey can only
result from agreement with the Turkish government. The litigation
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 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 40-F/Annual
Information Form for the year ended December 31, 2020 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 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
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. The terms "Mineral
Reserve", "Proven Mineral Reserve" and "Probable Mineral Reserve"
are Canadian mining terms as defined in accordance with NI 43-101
and the CIM Standards. Investors are cautioned not to assume that
all or any part of mineral deposits in these categories will ever
be converted into reserves. "Inferred Mineral Resources" have a
great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot
be assumed that all or any part of an Inferred Mineral Resource
will ever be upgraded to a higher category. Under Canadian rules,
estimates of Inferred Mineral Resources may not form the basis of
feasibility or pre-feasibility studies, except in very limited
circumstances. Investors are cautioned not to assume that all or
any part of an Inferred Mineral Resource exists or is economically
or legally mineable. Disclosure of "contained ounces" in a resource
is permitted disclosure under Canadian regulations.
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 September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
Net earnings (loss) |
$25.1 |
|
$67.9 |
|
($96.2 |
) |
$67.3 |
|
Adjustments: |
|
|
|
|
Impairment charge, net of taxes |
— |
|
— |
|
213.8 |
|
— |
|
COVID-19 costs |
— |
|
— |
|
— |
|
6.5 |
|
Foreign exchange loss (gain) |
0.1 |
|
(0.8 |
) |
(0.2 |
) |
4.1 |
|
Other (gain) loss |
(0.4 |
) |
1.9 |
|
3.3 |
|
6.8 |
|
Unrealized foreign exchange loss (gain) recorded in deferred tax
expense |
12.7 |
|
(9.9 |
) |
4.7 |
|
16.8 |
|
Other income tax and mining tax adjustments |
0.1 |
|
(2.2 |
) |
— |
|
(5.3 |
) |
Adjusted net earnings |
$37.6 |
|
$56.9 |
|
$125.4 |
|
$96.2 |
|
Adjusted earnings per share - basic and diluted |
$0.10 |
|
$0.15 |
|
$0.32 |
|
$0.25 |
|
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 September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
Cash flow from operating activities |
$82.4 |
|
$130.8 |
|
$268.4 |
$237.0 |
|
Add: Changes in working
capital and cash taxes |
19.9 |
|
(0.8 |
) |
50.7 |
19.4 |
|
Cash flow from operating activities before changes in
working capital and cash taxes |
$102.3 |
|
$130.0 |
|
$319.1 |
$256.4 |
|
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 September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
Cash flow from operating activities |
$82.4 |
|
$130.8 |
|
$268.4 |
|
$237.0 |
|
Less: mineral property, plant
and equipment expenditures (1) |
(89.2 |
) |
(54.8 |
) |
(245.3 |
) |
(172.7 |
) |
Less:
capital advances |
(1.3 |
) |
— |
|
(21.5 |
) |
— |
|
Company-wide free cash flow |
($8.1 |
) |
$76.0 |
|
$1.6 |
|
$64.3 |
|
(1) Mineral property, plant and equipment expenditures exclude
the Island Gold royalty repurchase of $54.8 million in the first
quarter of 2020.
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 September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$82.4 |
|
$130.8 |
|
$268.4 |
|
$237.0 |
|
Add:
operating cash flow used by non-mine site activity |
9.5 |
|
2.3 |
|
33.6 |
|
23.4 |
|
Cash flow from operating mine-sites |
$91.9 |
|
$133.1 |
|
$302.0 |
|
$260.4 |
|
|
|
|
|
|
Mineral property, plant and
equipment expenditure 1 |
$89.2 |
|
$54.8 |
|
$245.3 |
|
$172.7 |
|
Capital advances |
1.3 |
|
— |
|
21.5 |
|
— |
|
Less: capital expenditures
from development projects, and corporate |
(5.3 |
) |
($4.2 |
) |
(16.3 |
) |
(15.0 |
) |
Capital expenditure and capital advances from
mine-sites |
$85.2 |
|
$50.6 |
|
$250.5 |
|
$157.7 |
|
|
|
|
|
|
Total mine-site free cash flow |
$6.7 |
|
$82.5 |
|
$51.5 |
|
$102.7 |
|
(1) Excludes a royalty repurchase of
$54.8 million at Island Gold in the first quarter of 2020
Young-Davidson Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$51.2 |
|
$36.4 |
|
$133.7 |
|
$51.0 |
|
Mineral
property, plant and equipment expenditure |
(22.3 |
) |
(25.6 |
) |
(63.8 |
) |
(82.2 |
) |
Mine-site free cash flow |
$28.9 |
|
$10.8 |
|
$69.9 |
|
($31.2 |
) |
Island Gold Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$31.5 |
|
$56.7 |
|
$129.9 |
|
$123.5 |
|
Mineral property, plant and
equipment expenditure 1 |
(33.2 |
) |
(15.9 |
) |
(89.1 |
) |
(53.9 |
) |
Capital
advances |
(0.6 |
) |
— |
|
(3.4 |
) |
— |
|
Mine-site free cash flow |
($2.3 |
) |
$40.8 |
|
$37.4 |
|
$69.6 |
|
(1) Excludes a royalty repurchase of
$54.8 million at Island Gold in the first quarter of 2020
Mulatos Mine-Site Free Cash Flow |
|
|
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions) |
|
|
|
|
Cash flow from operating activities |
$9.2 |
|
$40.0 |
|
$38.4 |
|
$85.9 |
|
Mineral property, plant and
equipment expenditure |
(28.4 |
) |
(9.1 |
) |
(76.1 |
) |
(21.6 |
) |
Capital advances |
(0.7 |
) |
— |
|
(18.1 |
) |
— |
|
Mine-site free cash flow |
($19.9 |
) |
$30.9 |
|
($55.8 |
) |
$64.3 |
|
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 September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$84.5 |
|
$76.2 |
|
$259.3 |
|
$226.6 |
|
Royalties |
2.6 |
|
2.8 |
|
8.7 |
|
6.9 |
|
Total cash costs |
87.1 |
|
79.0 |
|
268.0 |
|
233.5 |
|
Gold
ounces sold |
110,488 |
|
116,035 |
|
344,551 |
|
302,494 |
|
Total cash costs per ounce |
$788 |
|
$681 |
|
$778 |
|
$772 |
|
|
|
|
|
|
Total cash costs |
$87.1 |
|
$79.0 |
|
$268.0 |
|
$233.5 |
|
Corporate and
administrative(1) |
5.4 |
|
5.0 |
|
17.8 |
|
15.3 |
|
Sustaining capital
expenditures(2) |
30.9 |
|
22.7 |
|
81.2 |
|
54.6 |
|
Share-based compensation |
2.1 |
|
1.3 |
|
7.2 |
|
9.1 |
|
Sustaining exploration |
1.3 |
|
1.3 |
|
3.8 |
|
3.8 |
|
Accretion of decommissioning
liabilities |
0.5 |
|
0.8 |
|
1.8 |
|
2.0 |
|
Total all-in sustaining costs |
$127.3 |
|
$110.1 |
|
$379.8 |
|
$318.3 |
|
Gold
ounces sold |
110,488 |
|
116,035 |
|
344,551 |
|
302,494 |
|
All-in sustaining costs per ounce |
$1,152 |
|
$949 |
|
$1,102 |
|
$1,052 |
|
(1) Corporate and administrative
expenses exclude expenses incurred at development
properties.(2) Sustaining capital expenditures are
defined as those expenditures which do not increase annual gold
ounce production at a mine site and exclude all expenditures at
growth projects and certain expenditures at operating sites which
are deemed expansionary in nature. Total sustaining capital
expenditures for the period are as follows:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions) |
|
|
|
|
Capital expenditures per cash flow statement |
$89.2 |
|
$54.8 |
|
$245.3 |
|
$172.7 |
|
Less: non-sustaining capital
expenditures at: |
|
|
|
|
Young-Davidson |
(10.6 |
) |
(16.0 |
) |
(32.8 |
) |
(62.9 |
) |
Island Gold |
(19.3 |
) |
(8.9 |
) |
(53.6 |
) |
(33.2 |
) |
Mulatos |
(23.1 |
) |
(3.0 |
) |
(61.4 |
) |
(7.0 |
) |
Corporate and other |
(5.3 |
) |
(4.2 |
) |
(16.3 |
) |
(15.0 |
) |
Sustaining capital expenditures |
$30.9 |
|
$22.7 |
|
$81.2 |
|
$54.6 |
|
Young-Davidson Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$38.2 |
|
$31.8 |
|
$119.9 |
|
$97.0 |
|
Royalties |
1.2 |
|
1.0 |
|
4.0 |
|
2.5 |
|
Total cash costs |
$39.4 |
|
$32.8 |
|
$123.9 |
|
$99.5 |
|
Gold
ounces sold |
48,625 |
|
35,548 |
|
141,931 |
|
86,893 |
|
Total cash costs per ounce |
$810 |
|
$923 |
|
$873 |
|
$1,145 |
|
|
|
|
|
|
Total cash costs |
$39.4 |
|
$32.8 |
|
$123.9 |
|
$99.5 |
|
Sustaining capital
expenditures |
11.7 |
|
9.6 |
|
31.0 |
|
19.3 |
|
Accretion of decommissioning liabilities |
— |
|
0.1 |
|
0.2 |
|
0.2 |
|
Total all-in sustaining costs |
$51.1 |
|
$42.5 |
|
$155.1 |
|
$119.0 |
|
Gold
ounces sold |
48,625 |
|
35,548 |
|
141,931 |
|
86,893 |
|
Mine-site all-in sustaining costs per ounce |
$1,051 |
|
$1,196 |
|
$1,093 |
|
$1,370 |
|
Island
Gold Total Cash Costs and Mine-site AISC
Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$15.5 |
|
$14.1 |
|
$48.3 |
|
$39.1 |
|
Royalties |
1.1 |
|
1.4 |
|
3.8 |
|
3.4 |
|
Total cash costs |
$16.6 |
|
$15.5 |
|
$52.1 |
|
$42.5 |
|
Gold
ounces sold |
28,331 |
|
39,322 |
|
101,845 |
|
97,009 |
|
Total cash costs per ounce |
$586 |
|
$394 |
|
$512 |
|
$438 |
|
|
|
|
|
|
Total cash costs |
$16.6 |
|
$15.5 |
|
$52.1 |
|
$42.5 |
|
Sustaining capital
expenditures |
13.9 |
|
7.0 |
|
35.5 |
|
20.7 |
|
Accretion of decommissioning liabilities |
— |
|
0.1 |
|
— |
|
0.1 |
|
Total all-in sustaining costs |
$30.5 |
|
$22.6 |
|
$87.6 |
|
$63.3 |
|
Gold
ounces sold |
28,331 |
|
39,322 |
|
101,845 |
|
97,009 |
|
Mine-site all-in sustaining costs per ounce |
$1,077 |
|
$575 |
|
$860 |
|
$653 |
|
Mulatos
Total Cash Costs and Mine-site AISC Reconciliation |
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
(in millions, except ounces and per ounce figures) |
|
|
|
|
Mining and processing |
$30.8 |
|
$30.3 |
|
$91.1 |
|
$90.5 |
|
Royalties |
0.3 |
|
0.4 |
|
0.9 |
|
1.0 |
|
Total cash costs |
$31.1 |
|
$30.7 |
|
$92.0 |
|
$91.5 |
|
Gold
ounces sold |
33,532 |
|
41,165 |
|
100,775 |
|
118,592 |
|
Total cash costs per ounce |
$927 |
|
$746 |
|
$913 |
|
$772 |
|
|
|
|
|
|
Total cash costs |
$31.1 |
|
$30.7 |
|
$92.0 |
|
$91.5 |
|
Sustaining capital
expenditures |
5.3 |
|
6.1 |
|
14.7 |
|
14.6 |
|
Sustaining exploration |
0.8 |
|
0.8 |
|
2.3 |
|
2.3 |
|
Accretion of decommissioning liabilities |
0.5 |
|
0.6 |
|
1.6 |
|
1.7 |
|
Total all-in sustaining costs |
$37.7 |
|
$38.2 |
|
$110.6 |
|
$110.1 |
|
Gold
ounces sold |
33,532 |
|
41,165 |
|
100,775 |
|
118,592 |
|
Mine-site all-in sustaining costs per ounce |
$1,124 |
|
$928 |
|
$1,097 |
|
$928 |
|
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 September 30, |
Nine Months Ended September 30, |
|
2021 |
2020 |
2021 |
2020 |
Net earnings (loss) |
$25.1 |
|
$67.9 |
|
($96.2 |
) |
$67.3 |
|
Add back: |
|
|
|
|
Impairment charge |
— |
|
— |
|
224.3 |
|
— |
|
COVID-19 costs |
— |
|
— |
|
— |
|
6.5 |
|
Finance expense |
1.3 |
|
1.0 |
|
3.3 |
|
3.0 |
|
Amortization |
42.4 |
|
43.6 |
|
127.7 |
|
106.2 |
|
Deferred income tax expense |
29.0 |
|
6.4 |
|
44.1 |
|
44.7 |
|
Current income tax expense |
2.2 |
|
11.6 |
|
10.8 |
|
20.4 |
|
EBITDA |
$100.0 |
|
$130.5 |
|
$314.0 |
|
$248.1 |
|
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)
|
September 30, 2021 |
December 31, 2020 |
A S S E T
S |
|
|
Current
Assets |
|
|
Cash and cash equivalents |
$211.4 |
|
$220.5 |
|
Equity securities |
22.9 |
|
43.7 |
|
Amounts receivable |
36.2 |
|
34.7 |
|
Income taxes receivable |
0.2 |
|
— |
|
Inventory |
185.7 |
|
148.5 |
|
Other current assets |
29.2 |
|
26.0 |
|
Total Current
Assets |
485.6 |
|
473.4 |
|
|
|
|
Non-Current
Assets |
|
|
Long-term inventory |
12.6 |
|
17.9 |
|
Mineral property, plant and
equipment |
3,007.6 |
|
3,101.3 |
|
Other non-current assets |
43.6 |
|
43.9 |
|
Total Assets |
$3,549.4 |
|
$3,636.5 |
|
|
|
|
L I A B I L I T I E
S |
|
|
Current
Liabilities |
|
|
Accounts payable and accrued
liabilities |
$144.8 |
|
$131.4 |
|
Income taxes payable |
— |
|
15.5 |
|
Total Current
Liabilities |
144.8 |
|
146.9 |
|
|
|
|
Non-Current
Liabilities |
|
|
Deferred income taxes |
603.8 |
|
559.9 |
|
Decommissioning
liabilities |
75.7 |
|
75.2 |
|
Other non-current
liabilities |
3.0 |
|
3.0 |
|
Total Liabilities |
827.3 |
|
785.0 |
|
|
|
|
E Q U I T
Y |
|
|
Share capital |
$3,699.1 |
|
$3,702.9 |
|
Contributed surplus |
91.0 |
|
88.5 |
|
Accumulated other
comprehensive income |
2.1 |
|
18.2 |
|
Deficit |
(1,070.1 |
) |
(958.1 |
) |
Total Equity |
2,722.1 |
|
2,851.5 |
|
Total Liabilities and Equity |
$3,549.4 |
|
$3,636.5 |
|
|
ALAMOS GOLD
INC.Consolidated Statements of Comprehensive
(Loss) Income(Unaudited - stated in millions of United
States dollars, except share and per share amounts)
|
For three months ended |
For nine months ended |
|
September 30, |
September 30, |
September 30, |
September 30, |
|
2021 |
2020 |
2021 |
2020 |
OPERATING REVENUES |
$198.0 |
|
$218.4 |
|
$620.5 |
|
$521.5 |
|
|
|
|
|
|
COST OF
SALES |
|
|
|
|
Mining and processing |
84.5 |
|
76.2 |
|
259.3 |
|
226.6 |
|
Royalties |
2.6 |
|
2.8 |
|
8.7 |
|
6.9 |
|
COVID-19 costs |
— |
|
— |
|
— |
|
6.5 |
|
Amortization |
42.4 |
|
43.6 |
|
127.7 |
|
106.2 |
|
|
129.5 |
|
122.6 |
|
395.7 |
|
346.2 |
|
EXPENSES |
|
|
|
|
Exploration |
3.7 |
|
1.5 |
|
10.4 |
|
4.6 |
|
Corporate and
administrative |
5.4 |
|
5.0 |
|
17.8 |
|
15.3 |
|
Share-based compensation |
2.1 |
|
1.3 |
|
7.2 |
|
9.1 |
|
Impairment charge |
— |
|
— |
|
224.3 |
|
— |
|
|
140.7 |
|
130.4 |
|
655.4 |
|
375.2 |
|
EARNINGS (LOSS) FROM
OPERATIONS |
57.3 |
|
88.0 |
|
(34.9 |
) |
146.3 |
|
|
|
|
|
|
OTHER
EXPENSES |
|
|
|
|
Finance expense |
(1.3 |
) |
(1.0 |
) |
(3.3 |
) |
(3.0 |
) |
Foreign exchange (loss)
gain |
(0.1 |
) |
0.8 |
|
0.2 |
|
(4.1 |
) |
Other gain (loss) |
0.4 |
|
(1.9 |
) |
(3.3 |
) |
(6.8 |
) |
EARNINGS (LOSS) FROM
OPERATIONS |
$56.3 |
|
$85.9 |
|
($41.3 |
) |
$132.4 |
|
|
|
|
|
|
INCOME
TAXES |
|
|
|
|
Current income tax
expense |
(2.2 |
) |
(11.6 |
) |
(10.8 |
) |
(20.4 |
) |
Deferred income tax
expense |
(29.0 |
) |
(6.4 |
) |
(44.1 |
) |
(44.7 |
) |
NET EARNINGS
(LOSS) |
$25.1 |
|
$67.9 |
|
($96.2 |
) |
$67.3 |
|
|
|
|
|
|
Items that may be subsequently
reclassified to net earnings: |
|
|
|
|
Net change in fair value of currency hedging instruments, net of
taxes |
(2.1 |
) |
2.5 |
|
(3.8 |
) |
(2.6 |
) |
Net change in fair value of fuel hedging instruments, net of
taxes |
0.2 |
|
0.2 |
|
0.3 |
|
(0.3 |
) |
Items that will not be
reclassified to net earnings: |
|
|
|
|
Unrealized (loss) gain on equity securities, net of taxes |
(0.1 |
) |
7.2 |
|
(0.6 |
) |
13.3 |
|
Total other
comprehensive (loss) income |
($2.0 |
) |
$9.9 |
|
($4.1 |
) |
$10.4 |
|
COMPREHENSIVE INCOME
(LOSS) |
$23.1 |
|
$77.8 |
|
($100.3 |
) |
$77.7 |
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE |
|
|
|
|
– basic |
$0.06 |
|
$0.17 |
|
($0.24 |
) |
$0.17 |
|
–
diluted |
$0.06 |
|
$0.17 |
|
($0.24 |
) |
$0.17 |
|
Weighted average number of
common shares outstanding (000's) |
|
|
|
|
– basic |
392,742 |
|
391,553 |
|
392,755 |
|
391,325 |
|
– diluted |
395,850 |
|
395,641 |
|
392,755 |
|
394,948 |
|
|
ALAMOS GOLD
INC.Consolidated Statements of Cash
Flows(Unaudited - stated in millions of United States
dollars)
|
For three months ended |
For nine months ended |
|
September 30, |
September 30, |
September 30, |
September 30, |
|
2021 |
2020 |
2021 |
2020 |
CASH PROVIDED BY (USED
IN): |
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
Net earnings (loss) for the period |
$25.1 |
|
$67.9 |
|
($96.2 |
) |
$67.3 |
|
Adjustments for items not
involving cash: |
|
|
|
|
Amortization |
42.4 |
|
43.6 |
|
127.7 |
|
107.3 |
|
Impairment charge |
— |
|
— |
|
224.3 |
|
— |
|
Foreign exchange loss (gain) |
0.1 |
|
(0.8 |
) |
(0.2 |
) |
4.1 |
|
Current income tax expense |
2.2 |
|
11.6 |
|
10.8 |
|
20.4 |
|
Deferred income tax expense |
29.0 |
|
6.4 |
|
44.1 |
|
44.7 |
|
Share-based compensation |
2.1 |
|
1.3 |
|
7.2 |
|
9.1 |
|
Finance expense |
1.3 |
|
1.0 |
|
3.3 |
|
3.0 |
|
Other items |
0.1 |
|
(1.0 |
) |
(1.9 |
) |
0.5 |
|
Changes in working capital and
taxes paid |
(19.9 |
) |
0.8 |
|
(50.7 |
) |
(19.4 |
) |
|
82.4 |
|
130.8 |
|
268.4 |
|
237.0 |
|
INVESTING
ACTIVITIES |
|
|
|
|
Mineral property, plant and
equipment |
(89.2 |
) |
(54.8 |
) |
(245.3 |
) |
(172.7 |
) |
Capital advances |
(1.3 |
) |
— |
|
(21.5 |
) |
— |
|
Repurchase of Island Gold
royalty |
— |
|
— |
|
— |
|
(54.8 |
) |
Proceeds from disposition of
equity securities |
— |
|
— |
|
25.8 |
|
— |
|
Investment in equity
securities |
(0.5 |
) |
— |
|
(4.8 |
) |
(2.3 |
) |
Other |
— |
|
1.1 |
|
— |
|
1.1 |
|
|
(91.0 |
) |
(53.7 |
) |
(245.8 |
) |
(228.7 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
Proceeds from draw down of
credit facility |
— |
|
— |
|
— |
|
100.0 |
|
Repayment of equipment
financing obligations |
— |
|
(0.1 |
) |
(0.1 |
) |
(0.4 |
) |
Interest paid |
— |
|
— |
|
— |
|
(0.8 |
) |
Repurchase and cancellation of
common shares |
(4.5 |
) |
— |
|
(6.0 |
) |
(5.5 |
) |
Proceeds from the exercise of
options |
— |
|
1.1 |
|
0.2 |
|
7.4 |
|
Dividends paid |
(8.7 |
) |
(5.4 |
) |
(25.9 |
) |
(16.5 |
) |
|
(13.2 |
) |
(4.4 |
) |
(31.8 |
) |
84.2 |
|
Effect of exchange rates on
cash and cash equivalents |
(0.7 |
) |
0.1 |
|
0.1 |
|
(1.2 |
) |
Net (decrease) increase in
cash and cash equivalents |
(22.5 |
) |
72.8 |
|
(9.1 |
) |
91.3 |
|
Cash and cash equivalents -
beginning of period |
233.9 |
|
201.3 |
|
220.5 |
|
182.8 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$211.4 |
|
$274.1 |
|
$211.4 |
|
$274.1 |
|
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