Alamos Gold Inc. (
TSX:AGI;
NYSE:AGI) (“Alamos” or the “Company”) today reported
results of the Phase 3+ Expansion Study (“P3+ Expansion Study”)
conducted on its Island Gold mine, located in Ontario, Canada. The
P3+ Expansion Study outlines a larger, more profitable, and
valuable operation than outlined in the Phase III Expansion Study
released in 2020 (“P3 2000 Study"). Based on the results of the P3+
Expansion Study, the Company is proceeding with an expansion of the
operation to 2,400 tonnes per day (“tpd”).
The P3+ Expansion Study has been updated to reflect the current
costing environment. All economics, costs and capital referenced in
this release for the previous P3 2000 Study are based on estimates
as of 2020 and do not reflect industry-wide cost and capital
inflation since that time. All amounts are in United States
dollars, unless otherwise stated.
Phase 3+ Expansion Study Highlights:
Higher production: average annual gold production of
287,000 ounces starting in 2026 upon completion of the
shaft
- This represents a 22% increase from the P3 2000 Study and a
121% increase from the mid-point of 2022 production guidance of
130,000 ounces
Industry low costs: consistent cost structure with the
P3 2000 Study, with productivity gains and economies of scale
offsetting inflation
- Average total cash costs of $432 per ounce (average
$425 per ounce from 2026), consistent with the P3 2000
Study and 25% lower than the mid-point of 2022 guidance of $575 per
ounce
- Average mine-site all-in sustaining costs of $610 per
ounce (average $576 per ounce from 2026), a 30% decrease
from the mid-point of 2022 guidance of $875 per ounce
Larger, longer-life operation supported by significantly
increased Mineral Reserve and Resource
- 43% increase in mineable resource to 4.6 million ounces of gold
grading 10.59 grams per tonne (“g/t Au”)
- 18 year mine life to 2039, a four year increase from the P3
2000 Study, while operating at 20% higher production rates of 2,400
tpd
Lower capital intensity: lower total capital per ounce
over the life of mine
- Growth capital of $756 million and sustaining capital of $777
million, both up from the P3 2000 Study reflecting the expansion, a
larger mineable resource, and industry-wide inflation
- Total capital intensity decreased 4% to $344 per ounce
reflecting the larger mineable resource with increased ounces per
vertical metre driving the lower capital intensity and contributing
to the stronger economics
- $100 million of the increase in growth capital compared to the
P3 2000 Study reflects sustaining capital that has been brought
forward to the expansion period for accelerated underground
development and infrastructure to support the higher mining
rate
- Expansion significantly de-risked given increased detailed
engineering, capital committed and projects completed to date,
including the majority of earthworks
Stronger economics with expansion and larger mineable
resource more than offsetting inflation to create a more valuable
operation
- After-tax net present value (“NPV”) (5%) of $1.6
billion, a 25% increase from the P3 2000 Study (base case
gold price assumption of $1,650 per ounce and USD/CAD foreign
exchange rate of $0.78:1)
- After-tax internal rate of return (“IRR”) of
23%, up from 20% in P3 2000 Study
- After-tax NPV (5%) of $2.0 billion, a 31% increase from
the P3 2000 Study, and an after-tax IRR of 25%, at current gold
prices of $1,850 per ounce
Industry low Greenhouse Gas (“GHG”) emission
intensity
- 35% reduction in life of mine GHG emissions relative to the
current operation, supporting the company-wide target of a 30%
reduction in GHG emissions by 2030
- 31% additional reduction in emissions per ounce of gold
produced from industry low levels
Fully funded, balanced approach to growth: growing free
cash flow expected starting in the second half of 2022
- With no significant capital expected to be spent on Lynn Lake
until the P3+ Expansion is well underway; the Company is well
positioned to fund the expansion internally while generating strong
free cash flow over the next several years
- The Company expects significant free cash flow growth in 2025
and beyond as production rates ramp up at Island Gold
“Island Gold continues to grow in every sense with our planned
Phase 3+ Expansion driving the value of Island Gold to $2 billion
at current gold prices. Mineral Reserves and Resources have
increased to 5.1 million ounces, supporting the Phase 3+ increase
in production rates, which will create a bigger, longer-life, more
profitable and valuable operation. As a producing mine with a
well-understood cost structure, this expansion is low risk from an
execution perspective, and has a significantly reduced carbon
footprint. The exploration story continues to unfold with a Mineral
Reserve and Resource base that has nearly tripled over the past
four years, and with the deposit open laterally and down-plunge, we
expect Island Gold will be one of the lowest cost and most
profitable mines for decades to come,” said John A. McCluskey,
President and Chief Executive Officer.
Phase 3+ Expansion Study Highlights |
Phase 3 Expansion4(as of
January 2020) |
Phase 3+ Expansion(as of January 2022) |
Production |
|
|
Mine life (years) |
16 (to 2035) |
18 (to 2039) |
Project/Expansion completion date |
Q2 2025 |
Q1 2026 |
|
|
|
Total gold production (000 ounces) |
3,104 |
4,460 |
|
|
|
Average annual gold production – life of mine (000 ounces) |
201 |
255 |
Average annual gold production – post project (000 ounces) |
236 |
287 |
|
|
|
Total mill feed (000 tonnes) |
9,572 |
13,550 |
|
|
|
Average gold grade (grams per tonne) |
10.45 |
10.59 |
|
|
|
Recovery (%) |
96.5% |
96.5% |
|
|
|
Average mill throughput (tpd) |
2,000 |
2,400 |
|
|
|
Operating Costs |
|
|
Total cost per tonne of mill feed1 (C$) |
$184 |
$178 |
|
|
|
Total cash cost – life of mine (per ounce sold)2,6 |
$443 |
$432 |
Total cash cost – post project (per ounce sold)2,6 |
$422 |
$425 |
Mine-site all-in sustaining cost – life of mine (per ounce
sold)2,6 |
$627 |
$610 |
Mine-site all-in sustaining cost – post project (per ounce
sold)2,6 |
$559 |
$576 |
|
|
|
Capital Costs (millions) |
|
|
Growth (project) capital expenditure |
$538 |
$756 |
Sustaining capital expenditure |
$576 |
$777 |
Total capital expenditure – life of mine |
$1,114 |
$1,533 |
Total capital expenditure (per ounce produced) – life of mine6 |
$359 |
$344 |
Total all-in cost (per ounce produced) – life of mine5,6 |
$802 |
$776 |
|
|
|
Base Case Economic Analysis: $1,650 per ounce Gold
Price(USD/CAD foreign exchange rate of
$0.78:1) |
|
|
IRR vs current 1,200 tpd operation (after-tax)3 |
20% |
23% |
|
|
|
NPV @ 0% discount rate (millions, after-tax) |
$2,057 |
$2,786 |
NPV @ 5% discount rate (millions, after-tax) |
$1,303 |
$1,632 |
|
|
|
Economic Analysis at $1,850 per ounce Gold Price
(USD/CAD foreign exchange rate of $0.78:1) |
|
|
IRR vs current 1,200 tpd operation (after-tax)3 |
22% |
25% |
|
|
|
NPV @ 0% discount rate (millions, after-tax) |
$2,416 |
$3,365 |
NPV @ 5% discount rate (millions, after-tax) |
$1,533 |
$2,004 |
|
|
|
1. Total unit cost per tonne (“t”) of ore includes royalties and
silver as a by-product credit2. Total cash costs and mine-site
all-in sustaining costs include royalties and silver as a
by-product credit3. The IRR is calculated on the differential
after-tax cash flow between the expansion scenarios and continuing
to mine at 1,200 tpd with ramp access and with a paste fill plant4.
The 2020 P3 2000 Study has been normalized to the P3+ Expansion
using a gold price of $1,800/oz and USD/CAD foreign exchange rate
of $0.79:1 from 2020-2022; and gold price of $1,650/oz and USD/CAD
foreign exchange rate of 0.78:1 2023 onward5. Total all-in cost per
ounce produced is calculated as total cash cost per ounce plus
total capital per ounce produced over the life of mine6. Please
refer to the Cautionary Notes on non-GAAP Measures and Additional
GAAP Measures
Mineable Resource
A mineable resource totaling 13.6 million tonnes, grading 10.59
g/t Au containing 4.6 million ounces of gold has been included in
the Phase 3+ Expansion Study. This represents a 43% increase from
the P3 2000 Study reflecting the significant growth in Mineral
Reserves and Resources since 2020. The P3+ Expansion Study
incorporates Mineral Reserves and approximately 87% of Measured and
Indicated and Inferred Mineral Resources as of December 31,
2021.
Mineral Resources included in the P3+ Expansion Study had
stoping outlines applied and then were assigned Island Gold’s
standard zonal dilution and recovery rates. Stopes were evaluated
against applicable cut-off grades and a mine design and sequence
was generated. The inclusion of 87% of the Mineral Resource is
conservative relative to the historical conversion rate of Inferred
Mineral Resource to Mineral Reserve, which has averaged over 100%
since 2016. This also reflects the high degree of confidence in the
quality of the Mineral Resource which is part of the same structure
as Mineral Reserves with a consistent style of mineralization.
Mineable Resource as of December 31, 2021
|
December 31, 2021 |
Undiluted Resource Used in Phase 3+ Study |
Diluted & Recovered Resource Used in Phase 3+
Study |
|
Tonnes(000) |
Grade(g/t Au) |
Ounces(000) |
Tonnes(000) |
Grade(g/t Au) |
Ounces(000) |
Tonnes(000) |
Grade(g/t Au) |
Ounces(000) |
Mineral Reserves |
|
|
|
|
|
|
|
|
|
Proven |
834 |
9.33 |
250 |
|
|
|
834 |
9.33 |
250 |
Probable |
3,278 |
10.33 |
1,088 |
|
|
|
3,278 |
10.33 |
1,088 |
Total Reserves |
4,112 |
10.12 |
1,338 |
|
|
|
4,112 |
10.12 |
1,338 |
Mineral Resources |
|
|
|
|
|
|
|
|
|
Measured |
20 |
4.92 |
3 |
19 |
4.92 |
3 |
21 |
4.11 |
3 |
Indicated |
1,076 |
8.18 |
283 |
991 |
8.18 |
261 |
1,128 |
6.83 |
248 |
Total Measured & Indicated |
1,096 |
8.12 |
286 |
1,010 |
8.12 |
264 |
1,149 |
6.78 |
251 |
Inferred |
7,906 |
13.59 |
3,454 |
7,283 |
13.59 |
3,182 |
8,289 |
11.34 |
3,023 |
|
|
|
|
|
Phase 3+ Mill Feed |
13,550 |
10.59 |
4,612 |
Economic Analysis
The Phase 3+ Expansion has an estimated base case after-tax NPV
(5%) of $1.6 billion and after-tax IRR of 23% assuming a gold price
of $1,650 per ounce and USD/CAD foreign exchange rate of
$0.78:1.
Assuming an $1,850 per ounce gold price, the after-tax NPV (5%)
increases to $2.0 billion and after-tax IRR increases to 25%. The
mine plan, operating parameters and capital estimates incorporated
in the P3+ Expansion Study are effective January 1, 2022. The
project economics are sensitive to metal price assumptions and
input costs as detailed in the tables below.
Phase 3+ Expansion After-Tax NPV (5%) Sensitivity ($
Millions)
|
-10% |
-5% |
Base Case |
5% |
10% |
Gold Price |
$1,324 |
$1,479 |
$1,632 |
$1,785 |
$1,939 |
Canadian Dollar |
$1,772 |
$1,702 |
$1,632 |
$1,562 |
$1,491 |
Capital Costs |
$1,723 |
$1,678 |
$1,632 |
$1,587 |
$1,541 |
Operating Costs |
$1,716 |
$1,674 |
$1,632 |
$1,590 |
$1,548 |
Phase 3+ Expansion After-Tax NPV (5%) and IRR
Sensitivity to Gold Price
|
After tax NPV 5% (US$M)1 |
IRR (%)2 |
Gold price |
P3+ 2400 |
P3 20003 |
P3+ 2400 |
P3 20003 |
$1,450 |
$1,258 |
$1,072 |
20% |
17% |
$1,550 |
$1,446 |
$1,187 |
22% |
18% |
$1,650 |
$1,632 |
$1,303 |
23% |
20% |
$1,750 |
$1,818 |
$1,418 |
24% |
21% |
$1,850 |
$2,004 |
$1,533 |
25% |
22% |
$1,950 |
$2,189 |
$1,648 |
26% |
23% |
1 NPV and IRR are calculated for life of mine starting January
20222 IRR is calculated on the differential after-tax cash flow
between the respective expansion scenarios and the base case of
continuing to mine at 1,200 tpd with ramp only access3 The 2020
Phase 3 Expansion Study (P3 2000) has been normalized to the P3+
Expansion using a gold price of $1,800/oz and USD/CAD foreign
exchange rate of $0.79:1 from 2020-2022; and gold price of
$1,650/oz and USD/CAD foreign exchange rate of 0.78:1 2023
onward
Phase 3+ Expansion Overview
The Phase 3+ Expansion to 2,400 tpd from the current rate of
1,200 tpd will involve various infrastructure investments. These
include the installation of a shaft, paste plant, and an expansion
of the mill. This infrastructure was all incorporated into the P3
2000 Study with several scope changes to accommodate the 20%
increase in production rates to 2,400 tpd including a larger mill
expansion and paste plant, as well as accelerated development to
support the higher mining rates. The Phase 3+ Expansion also
includes 30% more development over the mine life to accommodate the
43% larger mineable resource.
Following the completion of the expansion in 2026, the operation
will transition from trucking ore and waste to skipping ore and
waste to surface through the new shaft infrastructure, driving
production higher and costs significantly lower.
The completion of the shaft is expected in Q1 2026, compared to
Q2 2025 in the P3 2000 Study which is attributable to a delay in
the receipt of the Closure Plan Amendment (“CPA”). The CPA was
received in March 2022 allowing for the ramp up of construction
activities. This delay has been offset by an optimized mine plan
which will access higher grades sooner such that total production
between 2023 and 2025 is consistent under both plans.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/42bbd1c7-44a3-4a17-a775-33d87a7f8ef3
Project Significantly De-Risked Given Level of Detailed
Engineering & Progress to Date
Design engineering and costing for the majority of the Phase 3+
Expansion was completed to a feasibility level providing increased
confidence in the estimates compared to the P3 2000 Study which was
completed to a pre-feasibility level. Costing was based on first
principles and with a high degree of confidence given existing
operating experience. Since the completion of the P3 2000 Study,
various projects have been completed including an expansion of the
tailings facility and clearing of the shaft site area. With the
mill expansion area located on bedrock, the bulk of the Phase 3+
earthworks have been completed. Combined with other projects
completed and capital contracted to date, and with there being far
less unknowns with a brownfield expansion of an operating mine, the
project has been significantly de-risked.
Mining
Longitudinal long-hole open stoping will continue to be utilized
as the primary mining method with both the addition of the shaft
and paste plant key elements to supporting the increase in mining
rates to 2,400 tpd. Relative to the P3 2000 Study, the paste plant
has been sized with a 20% larger capacity, and $100 million of
growth capital has been brought forward from sustaining capital to
be spent by 2026 to support the 20% higher mining rates. This
includes $70 million of accelerated development and $30 million for
underground equipment and infrastructure.
Shaft
The main components of the shaft infrastructure are unchanged
from the P3 2000 Study with the exception of the addition of a bin
house and hoist drive cooling building. The bin house will allow
for a more efficient and lower cost transfer of ore and waste to
haul trucks on surface.
A 5.0 metre diameter concrete lined shaft will be constructed
with a steel head frame. The shaft will house two 12 tonne skips in
dedicated compartments for ore and waste movement, and a
double-deck service cage for the transport of personnel and
materials. The shaft will be sunk to an initial depth of 1,373
metres. The hoisting plant is designed for an ultimate depth of
2,000 metres providing flexibility to accommodate future
exploration success. At the initial depth of 1,373 metres, the
shaft has a capacity of 4,500 tpd, more than sufficient to
accommodate the peak mining rates of 3,600 tpd (ore &
waste).
A conventional blind sink methodology will be utilized providing
improved schedule reliability with minimal impact on existing
operations. The underground ore and waste handling and loading
pocket will be a conventional configuration similar to that of
Young-Davidson. Once skipped to surface, ore will be trucked to the
expanded mill circuit.
The total construction capital for the shaft installation
including all supporting infrastructure is expected to be $229
million.
Paste plant
As with the P3 2000 Expansion, a paste plant will be
constructed; however, it will be sized 20% larger to accommodate
the higher mining rates. The addition of paste fill underground
will allow for faster stope cycling, thereby supporting higher
mining rates and providing increased geotechnical stability. It
will also increase mining recovery resulting in an additional
140,000 ounces of gold recovered over the life of mine, with an
in-situ value of $231 million at a gold price of $1,650 per ounce.
Further, 44% of tailings will be placed underground reducing
tailings dam raise requirements over the mine life.
The total capital for the paste plant including the underground
distribution system is expected to be $52 million.
Mobile fleet
Mining rates are expected to begin ramping up from the current
1,200 tpd rate in 2025 and reach design rates of 2,400 tpd by the
end of 2026. This will be supported by a significantly smaller
mobile fleet than required under the current ramp operation. Post
completion of the shaft, a total of five haul trucks will be
required to support a mining rate of 2,400 tpd. This compares to a
peak of 18 haul trucks required to sustain ramp haulage at 1,200
tpd. This contributes to the lower ventilation requirements, and
significantly lower diesel usage.
The Phase 3+ Expansion is expected to reduce GHG emissions by
35% over the life of mine while further reducing Island Gold’s
already industry-low GHG emissions per ounce by 31%.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/6928601d-cf64-4148-a00a-1617304cbdd7
Processing and Infrastructure
The P3 2000 mill expansion included upgrading the crushing
circuit, adding a second parallel ball mill, and a new elution and
carbon in pulp (“CIP”) circuit with carbon screens. The P3+ mill
expansion will increase the capacity to 2,400 tpd, double the
current capacity of 1,200 tpd. The expanded circuit will be a
conventional milling operation with additional scope changes to
accommodate the higher throughput rates. These include a new
crushing circuit, a covered stockpile, a larger ADR and the
conversion of the existing CIP circuit to carbon in leach (“CIL”)
while adding three new tanks. The total cost of the mill expansion
is expected to be $76 million.
Construction of a new mill was also evaluated; however, the
capital cost was significantly higher in the current environment,
which more than offset its lower operating costs. The configuration
of the expanded circuit also provides greater operational
flexibility with two parallel circuits.
The flow sheet of the new circuit includes upgrades and
expansions for the following major process operations:
- New two-stage crushing plant
- New covered ore stockpile and feeders
- Additional ball mill and convert existing circuit to two
trains
- Upgrade feed well on existing pre-leach thickener
- Convert existing five leach tanks to CIL and add three new
larger CIL tanks
- New packaged 5t ADR plant
- New cyanide destruction circuit
Mill recoveries are expected to average 96.5% over the life of
mine, consistent with the historical performance of the existing
operation.
To accommodate the increased electricity requirements with the
larger mill and higher mining rates, the power line will be
upgraded to a peak capacity of 34 MW compared to 26 MW in the P3
2000 Study.
An expansion of the existing tailings impoundment area has
already been completed with the current footprint containing
sufficient capacity with future raises to accommodate existing
Mineral Reserves and Resources. Given the 43% increase in mineable
resource, one additional tailings lift has been incorporated into
the P3+ Expansion. The next lift is scheduled for 2024.
An effluent treatment plant has also been incorporated into the
P3+ Expansion at a cost of $16 million.
Operating Costs
Total cash costs are expected to average $425 per ounce and
mine-site all-in sustaining costs $576 per ounce following the
completion of the shaft construction in 2026. These represent a 26%
and 34% decrease, respectively from the mid-point of 2022 guidance
reflecting the significant productivity improvements, increased
automation, and higher throughput rates associated with a
shaft-hoisting operation.
Costs are consistent with the P3 2000 Study with the
productivity improvements and higher grades offsetting
inflation.
Total operating costs are expected to average C$178 per tonne of
mill feed over the life of mine and C$174 per tonne post completion
of the expansion. This includes average mining costs of C$101 per
tonne over the life of mine and C$100 per tonne post completion of
the expansion. The shaft will allow for unit mining costs to remain
relatively stable as mining moves deeper compared to ramp access
mining where costs would continue to increase with depth. This will
help ensure Island Gold remains one of the lowest cost mines in the
world over the long-term.
The breakdown of unit costs is summarized as follows.
(in C$/tonne) |
P3 20001 |
P3+ 2400 |
Mining (less cap dev) |
$98 |
$101 |
Milling |
$31 |
$35 |
Admin |
$39 |
$37 |
Subtotal Operating Cost |
$168 |
$173 |
Silver
Credit |
-$1 |
-$1 |
Royalties |
$17 |
$6 |
Total Operating Cost (includes royalties) |
$184 |
$178 |
Total Cash Cost (US$/oz) 2 -
Average LOM |
$443 |
$432 |
Total Cash Cost (US$/oz) 2-
Average Post Project Completion |
$422 |
$425 |
Mine-site All-in Sustaining Costs (US$/oz)
2 - Average LOM |
$627 |
$610 |
Mine-site All-in Sustaining Costs (US$/oz)
2 - Average Post Project Completion |
$559 |
$576 |
1 The 2020 Phase 3 Expansion Study (P3 2000) has been normalized
to the P3+ Expansion using a gold price of $1,800/oz and USD/CAD
foreign exchange rate of $0.79:1 from 2020-2022; and gold price of
$1,650/oz and USD/CAD foreign exchange rate of 0.78:1 2023 onward2
Please refer to Cautionary Notes on non-GAAP Measures and
Additional GAAP Measures.
Royalty
Production from Island Gold is subject to third party net
smelter return (“NSR”) royalties. The total effective NSR royalty
averages approximately 2.5% over the life of mine based on ounces
produced. However, approximately 90% of NSR royalties at Island
Gold are paid in-kind (ounces) to a third party. The accounting
treatment requires that in-kind royalties be recorded at production
cost which lowers royalty expense, with an offsetting reduction in
revenue given in-kind ounces transferred to royalty holders do not
meet the definition of sales. As a result, the average NSR included
in the P3+ Study is approximately 0.9% of revenue over the life of
mine. There is no net impact on gross margin from the accounting
for in-kind NSR royalties compared to cash-paid NSR royalties given
the lower royalty expense is offset by a reduction in ounces
sold.
Capital Costs
The Phase 3+ Expansion has extended the mine life four years to
2039 for an 18 year mine life. Growth capital is expected to total
$756 million, an increase from the P3 2000 Study with the main
drivers being the 43% increase in the mineable resource, scope
changes to support the 20% expansion, accelerated development to
support the higher mining rates, and inflation.
Approximately $100 million of sustaining capital has been
brought forward from later in the mine life to be spent in the
expansion period from 2022 to 2026 to support the 20% higher mining
rates. This includes $70 million of accelerated development and $30
million for underground equipment and infrastructure.
Sustaining capital is expected to total $777 million over the
life of mine. The majority of the increase from the P3 2000 Study
is related to increased capital development and underground
infrastructure to accommodate the larger mineable resource as well
as one additional tailings lift.
Combined growth and sustaining capital are expected to total
$1.5 billion over the life of mine, or $344 per ounce produced.
This represents a 4% decrease on a per ounce basis with the
economies of scale from a larger operation and increasing ounces
per vertical metre driving lower capital intensity and stronger
profitability.
Including operating costs and total capital, the all-in cost is
expected to total $776 per ounce produced over the life of mine, a
3% decrease from $802 per ounce in the P3 2000 Study.
A breakdown of the capital requirements for the Phase 3+
Expansion relative to P3 2000 is detailed as follows.
Total capital (in US$ millions) |
P3 20001as of Jan 2020 |
P3+ 2400as of Jan 2022 |
Growth capital |
$538 |
$756 |
|
|
|
Sustaining capital |
$576 |
$777 |
|
|
|
Total capital |
$1,114 |
$1,533 |
Total production – life of mine (000 oz) |
3,104 |
4,460 |
Total capital per ounce produced
(US$/oz)1 |
$359 |
$344 |
1 Please refer to the Cautionary Notes on non-GAAP Measures and
Additional GAAP Measures
Growth Capital (including indirects &
contingency) (in US$ millions) |
P3 20001as of Jan 2020 |
P3+ 2400as of Jan 2022 |
Shaft Surface Complex |
34 |
59 |
Shaft |
184 |
170 |
Mill |
34 |
76 |
Paste Plant |
39 |
52 |
Power Upgrade |
14 |
24 |
Effluent Treatment Plant |
- |
16 |
General Indirect Costs |
5 |
64 |
Contingency |
55 |
55 |
Total Growth Capital |
$366 |
$516 |
Underground Equipment & Infrastructure |
41 |
79 |
Accelerated Capital Development |
131 |
162 |
Total Growth Capital (including Accelerated
Spend) |
$538 |
$756 |
Total Growth Capital per ounce Produced
(US$/oz)2 |
$173 |
$169 |
1 The 2020 P3 2000 Study has been normalized to the P3+
Expansion using a gold price of $1,800/oz and USD/CAD foreign
exchange rate of $0.79:1 from 2020-2022; and gold price of
$1,650/oz and USD/CAD foreign exchange rate of 0.78:1 2023 onward2
Please refer to the Cautionary Notes on non-GAAP Measures and
Additional GAAP Measures
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/310eb2de-6c01-422b-a6f1-96a6e5a0d94f
Sustaining Capital (in US$ millions) |
P3 20001as of Jan 2020 |
P3+ 2400as of Jan 2022 |
Tailings
Lifts |
17 |
32 |
Underground Infrastructure |
130 |
154 |
Mobile
Equipment |
112 |
112 |
Delineation Drilling |
20 |
32 |
Capital Development |
292 |
436 |
Total Sustaining Capital |
$571 |
$765 |
Reclamation |
5 |
12 |
Total (including Reclamation) |
$576 |
$777 |
Total Sustaining Capital per ounce Produced
(US$/oz) 2 |
$186 |
$174 |
1 The 2020 Phase 3 Expansion Study (P3 2000) has been normalized
to the P3+ Expansion using a gold price of $1,800/oz and USD/CAD
foreign exchange rate of $0.79:1 from 2020-2022; and gold price of
$1,650/oz and USD/CAD foreign exchange rate of 0.78:1 2023 onward2
Please refer to the Cautionary Notes on non-GAAP Measures and
Additional GAAP Measures
Updated Three Year Capital Outlook
The company-wide three year capital outlook is revised to
reflect the increase in growth capital at Island Gold over the next
three years as detailed in the Phase 3+ Expansion Study. While 2022
capital remains unchanged, 2023 is expected to increase by $60
million to between $280 and $320 million, and 2024 expected to
increase by $60 million to between $290 and $330 million.
There are no other significant changes to the Company’s three
year production, total cash cost, or AISC guidance arising from the
Phase 3+ Expansion Study.
Taxes
Given existing tax pools, Island Gold is not expected to pay any
significant cash taxes until 2027 assuming a $1,650 per ounce gold
price, after which the effective tax rate is expected to average
approximately 32% including federal tax and Ontario mining tax.
With the significantly larger operation and higher profitability,
taxes paid under the P3+ Expansion are expected to increase to $1.0
billion over the life of mine, compared with $0.6 billion under the
P3 2000 study.
Permitting
The approval of the CPA in March 2022 was a significant
permitting milestone allowing for the ramp up of construction
activities. This includes construction of the shaft and associated
infrastructure which is currently underway. The majority of
remaining permitting requirements fall within the provincial
government jurisdiction. These include amendments to existing
operational authorizations and new authorizations for construction
related activities.
A subsequent CPA will need to be filed for additional scope
changes related to the Phase 3+ Expansion that were not covered
under the initial CPA. These include the effluent treatment plant,
new paste plant location and other changes to the surface
infrastructure. Amendments to current Environmental Compliance
Approvals will also be required as the expansion moves forward.
Permitting activities fall within a well known jurisdiction
where Alamos has successfully operated for years, achieving various
permitting milestones at both of its Young-Davidson and Island Gold
mines.
Consultant Contributions
The Phase 3+ Expansion Study was consolidated by Alamos Gold’s
technical team in collaboration with the following third party
consulting firms in their respective areas of expertise:
- Hatch: Overall Infrastructure Design/Engineering
- Redpath: Sinking Engineering & Design
- Paterson & Cook : Paste Fill Plant & UDS Design
- Airfinders: Ventilation
Engineering
- Golder: Water Management & Tails Dam; and Environmental
Baseline Monitoring & Permitting Support
- DRA/Halyard: Mill Expansion
Island Gold Phase 3+ Expansion Study
Webcast
The Company will be hosting a technical session
on Wednesday, June 29, 2022 at 8:30 am ET to discuss the results of
the Phase 3+ Expansion Study. Participants may join the webcast at
www.alamosgold.com.
Technical Disclosure
Chris Bostwick, FAusIMM, Alamos Gold’s Senior Vice
President, Technical Services, has reviewed and approved the
scientific and technical information contained in this news
release. Mr. Bostwick is a Qualified Person within the
meaning of Canadian Securities Administrator's National
Instrument 43-101 ("NI 43-101").
The Company will file a technical report prepared in accordance
with NI 43-101 on SEDAR at www.sedar.com within 45 days of the date
of this 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 |
|
|
|
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this release.
All amounts are in United States dollars, unless otherwise
stated.
Cautionary Note
This news release contains or incorporates by
reference “forward-looking statements” and “forward-looking
information” as defined under applicable Canadian and U.S.
securities laws. All statements, other than statements of
historical fact, which address events, results, outcomes or
developments that the Company expects to occur are, or may be
deemed to be, forward-looking statements and are generally, but not
always, identified by the use of forward-looking terminology such
as "expect", “is expected”, “assume”, “believe”, “anticipate”,
“intend”, “inferred”, “potential”, "will", “plan”, “planned”,
“outlook”, “estimates”, “estimated”, “continue”, “ongoing”
“forecast”, “budget”, “target” or variations of such words and
phrases and similar expressions or statements that certain actions,
events or results “may", “could”, “would”, "might" or "will" be
taken, occur or be achieved or the negative connotation of such
terms. Forward-looking statements contained in this news release
are based on expectations, estimates and projections as of the date
of this news release.
Forward-looking statements in this news release
include, but may not be limited to, information as to strategy,
plans, expectations or future financial or operating performance,
such as expectations and guidance regarding: costs; budgets;
capital expenditures, growth capital, sustaining capital;
production growth; returns to stakeholders; the effects of the
Phase III expansion at Island Gold and timing of its progress and
completion; anticipated gold production and production rates;
mining processing and rates; mined and processed gold grades and
weights; mine life; tax rates and timing of payment of certain
taxes; GHG emission intensity; value of operation; effects on
profitability; project-related risks as well as any other
statements related to the Company's production forecasts and plans,
expected sustaining costs, expected improvements in cash flows and
margins, expectations of changes in capital expenditures, expansion
plans, project timelines, and expected sustainable productivity
increases, expected increases in mining activities and
corresponding cost efficiencies, cost estimates, sufficiency of
working capital for future commitments, Mineral Reserve and Mineral
Resource estimates, and other statements that express management's
expectations or estimates of future performance.
The Company cautions that forward-looking
statements are necessarily based upon a number of factors and
assumptions that, while considered reasonable by management at the
time of making such statements, are inherently subject to
significant business, economic, technical, legal, political and
competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements, and undue reliance
should not be placed on such statements and information.
Such factors and assumptions underlying the
forward-looking statements in this news release, include, but are
not limited to: changes to current estimates of Mineral Reserves
and Resources; changes to production estimates (which assume
accuracy of projected ore grade, mining rates, recovery timing and
recovery rate estimates and 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
continued and potential effects of COVID-19 and its impact on the
broader market and the trading price of the Company’s shares;
provincial, state and federal orders or mandates (including with
respect to mining operations generally or auxiliary businesses or
services required for the Company’s operations) in Canada, Mexico,
the United States and Turkey; the duration of regulatory responses
to COVID-19 and government and the Company’s attempts to reduce the
spread of COVID-19 which may affect many aspects of the Company’s
operations including the ability to transport personnel to and from
site, contractor and supply availability and the ability to sell or
deliver gold doré bars; fluctuations in the price of gold or
certain other commodities such as, diesel fuel, natural gas and
electricity; changes in foreign exchange rates (particularly the
Canadian dollar, U.S. dollar, Mexican peso and Turkish Lira); the
impact of inflation; changes in the Company’s credit rating; any
decision to declare a dividend; employee and community relations;
labour and contractor availability (and being able to secure the
same on favourable terms); litigation and administrative
proceedings; disruptions affecting operations; expansion or
construction delays with the Phase III expansion project at the
Island Gold mine availability of and increased costs associated
with mining inputs and labour; inherent risks and hazards
associated with mining and mineral processing including
environmental hazards, industrial accidents, unusual or unexpected
formations, pressures and cave-ins; the risk that
the Company’s mines may not perform as planned; uncertainty
with the Company's ability to secure additional capital to execute
its business plans; the speculative nature of mineral exploration
and development, including the risks of obtaining and maintaining
necessary licenses, permits and authorizations, contests over title
to properties; expropriation or nationalization of property;
political or economic developments in Canada, Mexico, the United
States, Turkey and other jurisdictions in which the Company may
carry on business in the future; increased costs and risks related
to the potential impact of climate change; changes in national and
local government legislation, controls or regulations (including
tax and employment legislation) in jurisdictions in which the
Company does or may carry on business in the future; the costs and
timing of construction and development of new deposits; risk of
loss due to sabotage, protests and other civil disturbances;
disruptions in the maintenance or provision of required
infrastructure and information technology systems, 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.
For a more detailed discussion of such risks and
other factors that may affect the Company's ability to achieve the
expectations set forth in the forward-looking statements contained
in this news release, see the Company’s latest 40-F/Annual
Information Form and Management’s Discussion and Analysis, each
under the heading “Risk Factors” available on the SEDAR website at
www.sedar.com or on EDGAR at www.sec.gov. The foregoing should be
reviewed in conjunction with the information and risk factors and
assumptions found in this news release.
The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Cautionary Note to U.S.
Investors
Alamos prepares its disclosure in accordance
with the requirements of securities laws in effect in Canada.
Unless otherwise indicated, all Mineral Resource and Mineral
Reserve estimates included in this document have been prepared in
accordance with National Instrument 43-101 - Standards of
Disclosure for Mineral Projects (“NI 43-101”) and the Canadian
Institute of Mining, Metallurgy and Petroleum (the “CIM”) - CIM
Definition Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council, as amended (the “CIM Standards”). NI
43-101 is a rule developed by the Canadian Securities
Administrators, which established standards for all public
disclosure an issuer makes of scientific and technical information
concerning mineral projects. Mining disclosure in the United States
was previously required to comply with SEC Industry Guide 7 (“SEC
Industry Guide 7”) under the United States Securities Exchange Act
of 1934, as amended. The U.S. Securities and Exchange Commission
(the “SEC”) has adopted final rules, to replace SEC Industry Guide
7 with new mining disclosure rules under sub-part 1300 of
Regulation S-K of the U.S. Securities Act (“Regulation S-K 1300”)
which became mandatory for U.S. reporting companies beginning with
the first fiscal year commencing on or after January 1, 2021. Under
Regulation S-K 1300, the SEC now recognizes estimates of “Measured
Mineral Resources”, “Indicated Mineral Resources” and “Inferred
Mineral Resources”. In addition, the SEC has amended its
definitions of “Proven Mineral Reserves” and “Probable Mineral
Reserves” to be substantially similar to international
standards.
Investors are cautioned that while the above
terms are “substantially similar” to CIM Definitions, there are
differences in the definitions under Regulation S-K 1300 and the
CIM Standards. Accordingly, there is no assurance any mineral
reserves or mineral resources that the Company may report as
“proven mineral reserves”, “probable mineral reserves”, “measured
mineral resources”, “indicated mineral resources” and “inferred
mineral resources” under NI 43-101 would be the same had the
Company prepared the mineral reserve or mineral resource estimates
under the standards adopted under Regulation S-K 1300. U.S.
investors are also cautioned that while the SEC recognizes
“measured mineral resources”, “indicated mineral resources” and
“inferred mineral resources” under Regulation S-K 1300, investors
should not assume that any part or all of the mineralization in
these categories will ever be converted into a higher category of
mineral resources or into mineral reserves. Mineralization
described using these terms has a greater degree of uncertainty as
to its existence and feasibility than mineralization that has been
characterized as reserves. Accordingly, investors are cautioned not
to assume that any measured mineral resources, indicated mineral
resources, or inferred mineral resources that the Company reports
are or will be economically or legally mineable.
Cautionary non-GAAP Measures and
Additional GAAP Measures
Note that for purposes of this section, GAAP
refers to IFRS. The Company believes that investors use certain
non-GAAP and additional GAAP measures as indicators to assess gold
mining companies. They are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared with GAAP.
“Cash flow from operating activities before
changes in non-cash working capital” is a non-GAAP performance
measure that could provide an indication of the Company’s ability
to generate cash flows from operations, and is calculated by adding
back the change in non-cash working capital to “Cash provided by
(used in) operating activities” as presented on the Company’s
consolidated statements of cash flows. “Free cash flow” is a
non-GAAP performance measure that is calculated as cash flows from
operations net of cash flows invested in mineral property, plant
and equipment and exploration and evaluation assets as presented on
the Company’s consolidated statements of cash flows and that would
provide an indication of the Company’s ability to generate cash
flows from its mineral projects. “Mine site free cash flow” is a
non-GAAP measure which includes cash flow from operating activities
at, less capital expenditures at each mine site. Return on Equity
is defined as Earnings from Continuing Operations divided by the
average Total Equity for the current and previous year. “Mining
cost per tonne of ore” and “Cost per tonne of ore” are non-GAAP
performance measures that could provide an indication of the mining
and processing efficiency and effectiveness of the mine. These
measures are calculated by dividing the relevant mining and
processing costs and total costs by the tonnes of ore processed in
the period. “Cost per tonne of ore” is usually affected by
operating efficiencies and waste-to-ore ratios in the period.
“Total capital expenditures per ounce produced” is a non-GAAP term
used to assess the level of capital intensity of a project and is
calculated by taking the total growth and sustaining capital of a
project divided by ounces produced life of mine. “Total cash costs
per ounce”, “all-in sustaining costs per ounce”, “mine-site all-in
sustaining costs”, and “all-in costs per ounce” as used in this
analysis are non-GAAP terms typically used by gold mining companies
to assess the level of gross margin available to the Company by
subtracting these costs from the unit price realized during the
period. These non-GAAP terms are also used to assess the ability of
a mining company to generate cash flow from operations. There may
be some variation in the method of computation of these metrics as
determined by the Company compared with other mining companies. In
this context, “total cash costs” reflects mining and processing
costs allocated from in-process and doré inventory associated and
associated royalties with ounces of gold sold in the period. Total
cash costs per ounce are exclusive of exploration costs. “All-in
sustaining costs per ounce” include total cash costs, exploration,
corporate and administrative, share based compensation and
sustaining capital costs. “Mine-site all-in sustaining costs”
include total cash costs, exploration, and sustaining capital costs
for the mine-site, but exclude an allocation of corporate and
administrative and share based compensation.
Additional GAAP measures that are presented on
the face of the Company’s consolidated statements of comprehensive
income and are not meant to be a substitute for other subtotals or
totals presented in accordance with IFRS, but rather should be
evaluated in conjunction with such IFRS measures. This includes
“Earnings from operations”, which is intended to provide an
indication of the Company’s operating performance, and represents
the amount of earnings before net finance income/expense, foreign
exchange gain/loss, other income/loss, and income tax expense.
Non-GAAP and additional GAAP measures do not have a standardized
meaning prescribed under IFRS and therefore may not be comparable
to similar measures presented by other companies. A reconciliation
of historical non-GAAP and additional GAAP measures are available
in the Company’s latest Management’s Discussion and Analysis
available online on the SEDAR website at www.sedar.com or on EDGAR
at www.sec.gov and at www.alamosgold.com.
Table 1: Phase 3+ Expansion Production
Schedule
|
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
2031 |
2032 |
2033 |
2034 |
2035 |
2036 |
2037 |
2038 |
2039 |
Mill Feed mined (000’s tonnes) |
438 |
438 |
439 |
479 |
699 |
876 |
878 |
876 |
876 |
876 |
878 |
876 |
876 |
876 |
878 |
875 |
874 |
542 |
Waste mined (000’s tonnes) |
493 |
579 |
647 |
676 |
537 |
393 |
393 |
370 |
427 |
412 |
376 |
227 |
219 |
229 |
122 |
81 |
0 |
0 |
Total tonnes mined (000’s) |
931 |
1,017 |
1,086 |
1,155 |
1,236 |
1,269 |
1,272 |
1,246 |
1,303 |
1,288 |
1,255 |
1,103 |
1,095 |
1,105 |
1,000 |
956 |
874 |
542 |
Grades (g/t Au) |
9.73 |
9.40 |
11.29 |
12.47 |
10.45 |
10.46 |
10.12 |
11.66 |
11.79 |
12.81 |
11.73 |
10.27 |
11.94 |
10.16 |
9.78 |
9.32 |
8.73 |
7.34 |
Gold production (oz) |
132,414 |
127,790 |
153,828 |
185,287 |
232,577 |
284,401 |
275,792 |
317,015 |
320,326 |
348,148 |
319,683 |
279,249 |
324,615 |
276,227 |
266,537 |
253,014 |
236,529 |
126,766 |
Gold Sales (oz) |
129,957 |
125,446 |
151,285 |
181,818 |
227,541 |
277,060 |
268,075 |
309,146 |
312,241 |
340,991 |
312,693 |
273,071 |
316,232 |
270,199 |
261,582 |
247,917 |
231,662 |
124,403 |
Operating costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit mining costs (C$/tonne) |
$106 |
$109 |
$100 |
$112 |
$114 |
$95 |
$96 |
$95 |
$94 |
$97 |
$98 |
$103 |
$103 |
$103 |
$106 |
$107 |
$96 |
$101 |
Unit milling costs (C$/tonne) |
$38 |
$38 |
$39 |
$37 |
$33 |
$34 |
$34 |
$35 |
$35 |
$35 |
$35 |
$34 |
$34 |
$34 |
$34 |
$34 |
$34 |
$31 |
Unit G&A costs (C$/tonne) |
$52 |
$46 |
$46 |
$44 |
$36 |
$35 |
$35 |
$35 |
$34 |
$34 |
$35 |
$37 |
$37 |
$37 |
$38 |
$39 |
$33 |
$36 |
Total unit operating costs2
(C$/tonne) |
$202 |
$199 |
$190 |
$199 |
$181 |
$169 |
$169 |
$169 |
$167 |
$171 |
$172 |
$179 |
$179 |
$179 |
$183 |
$185 |
$166 |
$172 |
Total cash costs (US$/oz) 1 |
$539 |
$542 |
$431 |
$408 |
$461 |
$416 |
$431 |
$374 |
$365 |
$342 |
$378 |
$448 |
$387 |
$452 |
$480 |
$508 |
$489 |
$584 |
Mine-site AISC (US$/oz) 1 |
$833 |
$964 |
$813 |
$733 |
$696 |
$641 |
$645 |
$577 |
$553 |
$496 |
$521 |
$579 |
$530 |
$577 |
$584 |
$585 |
$507 |
$681 |
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sustaining capex (US$ M) |
$38 |
$53 |
$58 |
$59 |
$54 |
$62 |
$57 |
$63 |
$58 |
$52 |
$45 |
$36 |
$45 |
$34 |
$27 |
$19 |
$4 |
$12 |
Growth capex (US$ M) |
$168 |
$183 |
$187 |
$168 |
$48 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
1 Please refer to Cautionary Notes on non-GAAP
Measures and Additional GAAP Measures.2 Total unit
operating costs are inclusive of royalties and silver credits
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