Alamos Gold Reports First Quarter 2022 Results
Alamos Gold Inc.
Brookfield Place, 181 Bay Street, Suite 3910, P .O. Box #823
Toronto, Ontario M5J 2T3
Telephone: (416) 368-9932 or 1 (866) 788-8801
All amounts are in United States dollars, unless otherwise stated.
Alamos Gold Reports First Quarter 2022 Results
Toronto, Ontario ( April 27, 2022) - Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today
reported its financial results for the quarter ended March 31, 2022.
“Our first quarter production and costs were in line with guidance and with stronger results expected through the year,
we remain well positioned to achieve our annual guidance. La Yaqui Grande remains on track for initial production in
the third quarter and is expected to drive our production higher and costs significantly lower in the second half of the
year,” said John A. McCluskey, President and Chief Executive Officer.
“We are also making good progress on our other growth initiatives, including at Island Gold where we achieved a key
permitting milestone with approval of the Closure Plan Amendment . We officially broke ground on the Phase III
expansion and are getting closer to completing an updated mine plan for the operation which we plan to release mid-
year. Given the significant growth in high-grade Mineral Reserves and Resources since the completion of the Phase
III study and opportunities to optimize the operation, we expect the updated mine plan will showcase a significantly
more valuabl e operation. Both of these high -return projects support our strong outlook with growing production,
declining costs and increasing profitability,” Mr. McCluskey added.
First Quarter 2022
• Produced 98,900 ounces of gold, in line with guidance for the first quarter. Consistent with guidance, g old
production is expected to increase through the rest of the year reflecting higher grades at Island Gold in the
second quarter and with La Yaqui Grande on track for initial production in the third quarter
• Young-Davidson averaged over 8,000 tonnes per day mined in the quarter, driving production of 51,900 ounces
and mine-site free cash flow1 of $23.2 million
• Sold 98,466 ounces of gold at an average realized price of $1,874 per ounce for revenues of $184.5 mi llion
• As previously guided, total cash costs1 of $992 per ounce, AISC1 of $1,360 per ounce and cost of sales of $1,376
per ounce were all above annual cost guidance. Costs are expected to decrease through the year driven by higher
grades at Island Gold, and the start of low-cost production from La Yaqui Grande
• Realized adjusted net earnings 1 for the quarter of $ 18.0 million, or $0. 05 per share 1. Adjusted net earnings
includes adjustments for the non -cash, after tax impairment charge of $ 26.7 million triggered by the sale of the
Esperanza Project, unrealized foreign exchange gains recorded within both deferred taxes and foreign exchange
of $5.8 million, and other losses totaling $5.6 million
• Reported a net loss of $8.5 million, or $0.02 per share
• Cash flow from operating activities was $46.5 million ($70.9 million, or $0.18 per share, before changes in working
capital1)
• Free cash flow 1 was negative in the quarter, primarily related to lower planned production from Mulat os as well
as ongoing capital spending on the La Yaqui Grande project. The Company expects to transition to positive free
cash flow in the second half of the year driven by lower capital spending and low -cost production from La Yaqui
Grande
• Declared a quarterly dividend of $9.8 million, or $0.025 per share (annualized rate of $0.10)
• Ended the quarter with cash and cash equivalents of $124.2 million, equity securities of $21.6 million, and no debt
• Announced the sale of the non -core Esperanza Gold Project to Zacatecas Silver Corp. for total consideration of
up to $60 million, with the transaction having closed in April 2022
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2 | Alamos Gold Inc
• Reported year end 2021 Mineral Reserves of 10.3 million ounces of gold, a 4% increase from the end of 2020
with growth at all three operating mines more than offsetting mining depletion. This included a 5% increase in
global Mineral Reserve Grades reflecti ng higher grade additions at Island Gold and Mulatos. Island Gold
continues to grow with combined Mineral Reserves and Resources increasing 8% to 5.1 million ounces of gold,
net of mining depletion, marking a key milestone for the operation and highlighting its significant upside potential
• Achieved a significant permitting milestone for the Phase III Expansion at Island Gold with the approval of the
Closure Plan Amendment by the Ontario Government which allows for the commencement of construction
activities. A groundbreaking ceremony was held on site on April 11, 2022, and was attended by Carol Hughes,
Member of Parliament, Greg Rickford, Ontario Minister of Northern Development, Mines, Natural Resources and
Forestry and Minister of Indigenous Affairs, Todd Smith, Ontario Minister of Energy, Michael Mantha, Member of
Provincial Parliament, Beverly Nantel, Mayor of Dubreuilville, as well as other municipal government
representatives, Indigenous partners, and other key stakeholders
(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.
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3 | Alamos Gold Inc
Highlight Summary
Three Months Ended March 31,
2022 2021
Financial Results (in millions)
Operating revenues $184.5 $227.4
Cost of sales (1) $135.5 $139.3
(Loss) earnings from operations ($5.7) $76.3
(Loss) earnings before income taxes ($14.3) $75.1
Net (loss) earnings ($8.5) $51.2
Adjusted net earnings (2) $18.0 $49.1
Earnings before interest, depreciation and amortization (2) $62.9 $119.6
Cash provided by operations before working capital and cash taxes(2) $70.9 $119.6
Cash provided by operating activities $46.5 $99.3
Capital expenditures (sustaining) (2) $22.5 $23.6
Capital expenditures (growth) (2) (3) (5) $58.7 $60.3
Capital expenditures (capitalized exploration) (4) $6.1 $5.5
Free cash flow (2) ($40.8) $9.9
Operating Results
Gold production (ounces) 98,900 125,800
Gold sales (ounces) 98,466 126,482
Per Ounce Data
Average realized gold price $1,874 $1,798
Average spot gold price (London PM Fix) $1,877 $1,794
Cost of sales per ounce of gold sold (includes amortization) (1) $1,376 $1,101
Total cash costs per ounce of gold sold (2) $992 $757
All-in sustaining costs per ounce of gold sold (2) $1,360 $1,030
Share Data
(Loss) earnings per share, basic and diluted ($0.02) $0.13
Adjusted earnings per share, basic and diluted(2) $0.05 $0.13
Weighted average common shares outstanding (basic) (000’s) 391,913 392,776
Financial Position (in millions)
Cash and cash equivalents(6) $124.2 $172.5
(1) Cost of sales includes mining and processing costs, royalties, and amortization expense.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation
of these measures.
(3) Includes growth capital from operating sites.
(4) Includes capitalized exploration at Island Gold, Young-Davidson and Mulatos.
(5) Includes capital advances of nil for the three months ended March 31, 2022 ($16.8 million for the three months ended March 31, 2021).
(6) Comparative cash and cash equivalents balance as at December 31, 2021.
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Three Months Ended March 31,
2022 2021
Gold production (ounces)
Young-Davidson 51,900 48,000
Island Gold 24,500 42,200
Mulatos 22,500 35,600
Gold sales (ounces)
Young-Davidson 51,525 48,022
Island Gold 23,368 39,882
Mulatos 23,573 38,578
Cost of sales (in millions)(1)
Young-Davidson $64.6 $62.0
Island Gold $24.2 $29.1
Mulatos $46.7 $48.2
Cost of sales per ounce of gold sold (includes amortization)
Young-Davidson $1,254 $1,491
Island Gold $1,036 $801
Mulatos $1,981 $1,249
Total cash costs per ounce of gold sold (2)
Young-Davidson $840 $873
Island Gold $745 $466
Mulatos $1,570 $915
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
Young-Davidson $1,044 $1,075
Island Gold $1,083 $732
Mulatos $1,782 $1,039
Capital expenditures (sustaining, growth, capitalized exploration and capital advances) (in millions)(2)
Young-Davidson(4) $22.7 $21.9
Island Gold (5) $33.4 $27.4
Mulatos(6) $26.0 $18.8
Other $5.2 $4.5
(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 capitalized exploration at Young -Davidson $1.0 million for th e three months ended March 31, 2022 ($1.0 million for the three months ended March 31,
2021).
(5) Includes capitalized exploration at Island Gold of $5.1 million for the three months ended March 31, 2022 ($4.5 million for the three months ended March 31, 2021).
(6) Includes capitalized exploration at Mulatos of $nil for the three months ended March 31, 2022 ($nil for the three months ende d March 31, 2021).
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5 | Alamos Gold Inc
Environment, Social and Governance Summary Performance
Health and Safety
• Recordable injury frequency rate1,2 of 1.65 in the quarter, a 19% decrease from 2021
• Lost time injury frequency rate1 of 0.09 in the quarter, a 56% decrease from 2021
• Commenced phasing out mandatory COVID-19 testing across Alamos operations
During the first quarter of 2022, the recordable injury frequency rate decreased with 18 recordable injuries, down from
28 in the fourth quarter of 2021. One lost time injury was reported in the quarter, down from three in the fourth quarter
of 2021, resulting in an overall decrease to the Company’s lost time injury frequency rate from the previous quarter.
Alamos strives to maintain a safe, healthy working environment for all, with a strong safety culture where everyone is
continually reminded of the importance of keeping themselves and their colleagues healthy and injury -free. The
Company’s overarching commitment is to have all employees and contractors return Home Safe Every Day.
The World Health Organization declared COVID-19 a pandemic on March 11, 2020. The Company responded rapidly
and proactively and implemented several initiatives to help protect the health and safety of our employees, their
families and the communities in wh ich 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 p ublic health authorities and is
adhering to government regulations with respect to COVID-19 in the jurisdictions in which it operates. During the first
quarter of 2022, in close collaboration with medical experts, Alamos began amending its COVID -19 measure s to
reflect the changing risk profile of the pandemic in each of its operating jurisdictions. Mandatory medical screening
and testing is no longer required for full-time employees and contractors, though they remain available on a voluntary
basis and for symptomatic personnel.
The following measures remain in place to prevent the potential spread of the COVID -19 virus:
• Testing of personnel on a voluntary basis
• Vaccinations offered to employees at Island Gold and Mulatos given their unique camp set-up
• Training on proper hand hygiene and social distancing
• Remote work options for eligible employees
• Rigid camp and site hygiene protocols
• In addition, since the COVID-19 pandemic began the Company has donated 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
have incurred additional costs related to testing of personnel, lodging and transportation.
Environment
• Zero significant environmental incidents in the first quarter of 2022
• Closure Plan Amendment for the Island Gold Mine approved by the Ontario Government, allowing for the ramp
up of Phase III construction activities at Island Gold
• Advanced both federal and provincial permitting for the Lynn Lake Project
• Completed greenhouse gas and energy workshops and site visits at all Alamos operations as part of planning to
develop emission reduction targets for the Company
• Continued Indigenous community engagement, including the signing of a Community Benefits Agreement with
the Michipicoten First Nation for Island Gold subsequent to quarter end on April 4, 2022
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• Advanced the power line project at the Mulatos and La Yaqui Grande which will connect the operations to grid
power and eliminate the need for site diesel power generation, reducing GHG emissions
Six minor spills occurred during the first quarter, including two at Island Gold and four 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
• Recipient of the inaugural Reconciliation Award at the Manitoba Prospectors and Developers Association Gala
in recognition of the positive collaboration and engagement between Alamos and Marce l Colomb First Nation
with respect to the Lynn Lake Gold Project
• Met with Matarachi community representatives to plan the activities for 2022 following implementation of the Mi
Matarachi community development program
• Continued to support local students in Sahuaripa, Matarachi and Hermosillo, Mexico with 180 students supported
through the Company’s Scholarship Program
• Made various donations of school and health supplies to local communities in Matarachi, Sahuaripa and Arivechi
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 infrastruct ure, health care, education, cultural and community programs
have continued through the COVID-19 pandemic, with appropriate health and safety protocols.
Governance and Disclosure
• Finalized three sustainability standards during the quarter and 25 to date as part of Alamos’ Sustainability
Performance Management Framework that addresses governance, health & safety, security, environment and
community relations management
• Received independent assurance over the Company’s 2021 Responsible Gold Mining Principles (RGMP)
Progress Report
• Advanced development of the Company’s 2021 Environmental, Social and Corporate Governance (ESG) Report,
to be published in Q2 2022
Alamos maintains the highest standards of corporate governance to ensure that corporate decision -making reflects
its values, including the Company’s commitment to sustainable development. During the quarter, the Company
continued to advance its implementation of the Responsible Gold Mining Principles, developed by the World Gold
Council as a framework that sets clear expectations as to what constitutes responsible gold mining.
(1) Frequency rate is calculated as incidents per 200,000 hours worked.
(2) The classification of medical treatment injuries was updated retroactive to 1 January 2020 to align with OSHA standards, resu lting in changes to previously reported
recordable injury rates.
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Outlook and Strategy
2022 Guidance
Young-
Davidson Island Gold Mulatos Other (2) Total
Gold production (000’s ounces) 185 - 200 125 - 135 130 - 145 440 - 480
Cost of sales, including amortization (in millions)(4) $610
Cost of sales, including amortization ($ per ounce)(4) $1,325
Total cash costs ($ per ounce)(1) $850 - $900 $550 - $600 $1,225 - $1,275 — $875- $925
All-in sustaining costs ($ per ounce)(1) $1,190 - $1,240
Mine-site all-in sustaining costs ($ per ounce)(1)(3) $1,125 - $1,175 $850 - $900 $1,325 - $1,375 —
Capital expenditures (in millions)
Sustaining capital(1) $50 - $55 $35 - $40 $5 - $10 — $90 - $105
Growth capital(1) $5 - $10 $145 - $160 $50 - $55 $15 $215 - $240
Total Sustaining and Growth Capital(1) $55 - $65 $180 - $200 $55 - $65 $15 $305 - $345
Capitalized exploration(1) $4 $20 — $3 $27
Total capital expenditures and capitalized exploration(1) $59 - $69 $200 - $220 $55 - $65 $18 $332 - $372
(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release and associated MD&A for a description and calculation of these
measures.
(2) Includes growth capital and capitalized exploration at the Company's development proje cts (Lynn Lake and Esperanza).
(3) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative
and share based compensation expenses to the mine sites.
(4) Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid -point of total cash cost guidance.
The Company’s objective is to operate a sustainable business model that can support growing returns to all
stakeholders over the long -term through growing production, expanding margins, and increasing profitability. This
includes a balanced approach to capital allocation focused on generating strong ongoing free cash flow while re -
investing in high-return internal growth opportunities and supporting higher returns to shareholders.
The Company continues to deliver on its key long -term objectives including significant progress on its high -return
growth projects which are expected to provide important catalysts over the next several months. Construction of La
Yaqui Grande is nearing completion with the project on track to achieve initial production in the third quarter of 2022.
Given its higher grades and lower cost profile, La Yaqui Grande is expected drive costs significantly lower in the
second half of the year.
At Island Gold, the Company achieved a significant permitting milestone with the approval of the Closure Plan
Amendment, allowing for ramp up of construction activities on the Phase III expansion. Through ongoing exploration
success, Island Gold's Mineral Reserves and Resources have grown to more than five million ounces of high -grade
gold. This includes a 37% increase in Mineral Reserves and Resources since the completion of the Pha se III
expansion study ("Phase III Study") in 2020. This growth and higher-grade additions in proximity to the planned shaft
are being incorporated into an optimized mine plan to be released mid -2022 which is expected to highlight a
significantly more valuable operation.
The Company provided inaugural three -year production and operating guidance in January 2022, which outlined
growing production at significantly lower costs over the 2022 to 2024 period. Refer to the Company’s January 17,
2022 guidance press release for a summary of the key assumptions and related risks associated with the
comprehensive 2022 guidance and three -year production, cost and capital outlook. Production is expected to be
between 440,000 and 480,000 ounces of gold in 2022, consistent with 2021, and increase approximately 4% (based
on the mid-point of guidance) to between 460,000 and 500,000 ounces in 2023 and 2024. La Yaqui Grade is expected
to drive Mulatos and consolidated costs lower in the second half of 2022 and will be a key contributor to an expected
18% decrease in AISC between 2022 and 2024. The Company expects a further increase in production and reduction
in costs following the completion of the Phase III expansion at Island Gold in 2025.
First quarter production of 98,900 ounces was in line with guidance and with production expected to increase through
the year, the Company remains on track to achieve full year guidance. Production is expected to increase to between
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8 | Alamos Gold Inc
100,000 and 110,000 ounces in the second quarter at similar costs to the first quarter. Production is expected to
further increase and costs decrease in the second half of the year with the start of low-cost production from La Yaqui
Grande. The Company is managing the impact of industry-wide inflation on input costs such as diesel, cyanide, steel,
and labour.
Young-Davidson continues to perform well operating from the new lower mine infrastructure. Mining rates of 8,181
tpd exceeded targeted rates driving strong first quarter production of 51,900 ounces and mine -site free cash flow of
$23.2 million. With the solid first quarter performance, Young-Davidson is on track to achieve full year production and
cost guidance. Capital spending in 2022 (excluding exploration) is expected to range between $55 and $65 million, a
27% decrease from 2021 with construction of the new life of mine tailings facility (“TIA 1”) completed in the fourth
quarter of 2021. The operation generated record mine-site free cash flow of $100 million in 2021, and with a 15 year
Mineral Reserve life, Young-Davidson is expected to generate similar mine -site free cash flow in 2022 and over the
long term.
Island Gold produced 24,500 ounces in the first quarter with total cash costs and mine -site AISC above annual
guidance reflecting lower grades mined due to mine sequencing. Consistent with annual guidance, grades mined are
expected to increase through the remainder of year driving production higher and costs lower. Capital spending at
Island Gold (excluding exploration) is expected to increase to betwee n $180 and $200 million in 2022, reflecting the
ramp up of construction activities on the Phase III expansion following the approval of the Closure Plan Amendment
in March.
The exploration budget for Island Gold in 2022 of $22 million will follow up on the successful drilling campaign in 2021
that drove an 8% increase in high -grade Mineral Reserves and Resources to 5.1 million ounces of gold. Since the
completion of the Phase III Study, Mineral Reserves and Resources have increased 37%, or 1.4 million ounces
demonstrating the significant growth in size and value of operation. This ongoing growth will be incorporated into an
optimized mine plan to be released mid-2022.
Combined production from the Mulatos District totaled 22,500 ounces in the first quarter, in line with first half guidance.
With the start of production from La Yaqui Grande in the third quarter and increasing grades from the El Salto portion
of the Mulatos pit, approximately 65% of 2022 production is expected in the second half of the year at substantially
lower costs. As previously disclosed, total cash costs and mine -site AISC are expected to be well above annual
guidance during the first half of 2022 and trend significantly lower during the second half of the year, driven by low -
cost production from La Yaqui Grande. Capital spending is expected to total $55 to $65 million in 2022 with the
majority being growth capital to complete construction of La Yaqui Grande , which remains on track to achieve initial
production in the third quarter of 2022.
The total capital budget for Lynn Lake in 2022 is $14 million, including $11 million for development activities and $3
million for exploration. Development activities in 2022 remain focused on environmental work in support of permitting,
detailed engineering and other site access upgrades. The approval of the Environmental Impact Statement (“EIS”) for
the project is expected in the second half of 2022 following which the Co mpany expects to make a construction
decision.
A total of $40 million has been budgeted for exploration in 2022 with Island Gold continuing to account for the largest
portion of the budget at $22 million, followed by $7 million at Mulatos, $5 million at Young-Davidson and $3 million at
Lynn Lake. This follows a successful 2021 program with Mineral Reserves more than replaced at all three operations.
This drove a 4% increase in Mineral Reserves to 10.3 million ounces of gold with grades also increasing 5% reflecting
higher grade increases at Island Gold and Mulatos.
The Company's liquidity position remains strong, ending the first quarter with $124.2 million of cash and cash
equivalents, $21.6 million in equity securities, and no debt. Additionally, the Co mpany has a $500 million undrawn
credit facility, providing total liquidity of $624.2 million. Combined with strong ongoing cash flow generation, the
Company's high-return internal growth initiatives are fully funded, with the capacity to increase producti on by more
than 60% and reduce AISC by over 30% by 2025.