Alamos Gold Reports Fourth Quarter and Year-End 2019 Results Record operating cash flow of $86 million in the fourth quarter and $297 million in 2019
Alamos Gold Reports Fourth Quarter and Year-End 2019 Results
Record operating cash flow of $86 million in the fourth quarter and $297 million in 2019
TORONTO, Feb. 19, 2020 -- Alamos Gold Inc. ( TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its
financial results for the quarter and year ended December 31, 2019.
“We reported a solid fourth quarter and 2019. We met our production guidance for the fifth consecutive year, and we met our
cost guidance with a 10% reduction in total cash costs from a year ago. Stronger gold prices and lower costs drove a 40%
increase in operating cash flow,” said John A. McCluskey, President and Chief Executive Officer.
“We expect 2020 will be a transformational year for Alamos driven by several significant catalysts. On the back of another
substantial increase in Mineral Reserves and Resources at Island Gold it is clear the ore body is evolving into a world class
deposit. A Phase III expansion study will be completed in the second quarter and is expected to showcase a larger, highly
profitable and longer-life operation. The lower mine expansion at Young-Davidson is on track for completion in June after which
we expect to transition to strong free cash flow growth,” Mr. McCluskey added.
Fourth Quarter 2019
• Produced 122,100 ounces of gold, consistent with guidance, driven by strong performances at Young-Davidson and
Island Gold
• Island Gold produced 38,600 ounces of gold and generated mine-site free cash flow1 of $9.4 million
• Young-Davidson produced 48,000 ounces of gold and achieved underground mining rates of 7,000 tonnes per day
("tpd"), exceeding budgeted mining rates for the fourth consecutive quarter and marking the second highest quarterly
mining rate ever. Construction of the lower mine expansion remains on schedule with the tie-in of the upper and lower
mines on track for completion in June 2020
• Sold 127,148 ounces of gold at an average realized price of $1,463 per ounce for record revenues of $186.0 million
• Record cash flow from operating activities of $77.8 million (and a record $85.7 million, or $0.22 per share, before
changes in working capital1), reflecting higher gold prices and operating margins
• Consolidated total cash costs 1 of $722 per ounce were in line with annual guidance and 6% lower than the fourth
quarter of 2018, driven by low cost production growth at Island Gold
• All-in sustaining costs ("AISC") 1 decreased slightly from the fourth quarter of 2018 to $972 per ounce, reflecting the
timing of capital spending. Full year AISC of $951 per ounce were in line with guidance
• Reported adjusted net earnings1 of $32.1 million, or $0.08 per share1, include adjustments for unrealized foreign
exchange gains recorded within deferred taxes of $8.6 million, partially offset by other one-time losses and tax
adjustments totaling $2.7 million
• Realized net earnings of $38.0 million, or $0.10 per share
• Ended the quarter with no debt, cash and cash equivalents of $182.8 million, and equity securities of $22.8 million
• Completed construction of the Cerro Pelon mine ahead of schedule and achieved initial production in the fourth quarter
• Announced a 50% increase to the quarterly dividend, commencing in the first quarter of 2020
Full Year 2019
• Produced 494,500 ounces of gold, meeting production guidance for the fifth consecutive year
• Island Gold exceeded guidance with record production of 150,400 ounces, driving record mine-site free cash flow1 of
$64.5 million
• Sold 494,702 ounces of gold at an average realized price of $1,381 per ounce for record revenues of $683.1 million
• Total cash costs 1 of $720 per ounce and AISC1 of $951 per ounce were both in line with guidance. Cost of sales of
$1,054 per ounce were 2% below guidance reflecting lower amortization charges
• Realized adjusted net earnings1 of $83.5 million, or $0.21 per share1, a 326% increase compared to 2018. Adjusted net
earnings include adjustments for unrealized foreign exchange gains recorded within both deferred taxes and foreign
exchange of $13.5 million, partially offset by other items totaling $0.9 million
• Reported net earnings of $96.1 million, or $0.25 per share
• Record cash flow from operating activities of $260.4 million ($296.9 million, or $0.76 per share, before changes in
working capital1, a 40% increase from 2018)
• Generated total mine-site free cash flow of $61.7 million1 with strong cash flow more than funding the lower mine
expansion at Young-Davidson, exploration activities at Island Gold, and construction of Cerro Pelon
• Reported year end 2019 Mineral Reserves of 9.7 million ounces, a slight increase over 2018 with additions at Island
Gold, La Yaqui Grande and Kirazlı more than offsetting mining depletion (2)
• Ongoing exploration success at Island Gold drove a 21% increase in Mineral Reserves and 46% increase in Inferred
Mineral Resources from the end of 2018 for a combined increase of nearly one million ounces
• Received permit approval for the Phase II expansion of Island Gold to 1,200 tpd in May 2019
• Completed permitting of the La Yaqui Grande project in Mexico in July 2019
• Announced the suspension of construction activities at the Kirazlı project in Turkey pending the renewal of the
Company's mining concessions which expired on October 13, 2019
• Received the "Best Corporate Social Responsibility Practice 2019" award from the Mexican Center for Philanthropy
(Cemefi) and the Alliance for Corporate Social Responsibility in Mexico (AliaRSE) for the Company's voluntary
relocation program of residents from Mulatos to Matarachi in Mexico
• Repurchased 2.7 million shares at a cost of $11.4 million, or $4.17 per share under the Normal Course Issuer Bid
("NCIB")
• Paid $15.6 million in dividends, double the amount paid in 2018
• Sold non-core royalties to Metalla Royalty & Streaming Ltd. ("Metalla") for 2.1 million shares of Metalla, currently
valued at $12.4 million
(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.
(2) Refer to press release dated February 18, 2020 entitled: “Alamos Gold Reports Mineral Reserves and Resources for the
Year-Ended 2019”.
Highlight Summary
Three Months Ended
December 31,
Years Ended December
31,
2019 2018 2019 2018
Financial Results (in millions)
Operating revenues $186.0 $163.1 $683.1 $651.8
Cost of sales (1) $136.0 $207.1 $521.4 $639.4
Earnings (loss) from operations $41.6 ($51.3) $126.0 ($22.6)
Net earnings (loss) $38.0 ($71.5) $96.1 ($72.6)
Adjusted net earnings (2) $32.1 $4.3 $83.5 $19.6
Earnings before interest, depreciation and amortization (2) $88.4 $43.0 $296.4 $195.2
Cash provided by operations before working capital and cash taxes(2) $85.7 $52.8 $296.9 $212.7
Cash provided by operating activities $77.8 $47.4 $260.4 $213.9
Capital expenditures (sustaining) (2) $23.3 $21.4 $76.8 $63.8
Capital expenditures (growth) (2) $43.6 $36.4 $169.1 $139.2
Capital expenditures (capitalized exploration) (3) $6.0 $3.7 $17.7 $18.5
Operating Results
Gold production (ounces) 122,100 125,600 494,500 505,000
Gold sales (ounces) 127,148 131,161 494,702 509,879
Per Ounce Data
Average realized gold price $1,463 $1,244 $1,381 $1,278
Average spot gold price (London PM Fix) $1,481 $1,227 $1,393 $1,268
Cost of sales per ounce of gold sold (includes amortization) (1) $1,070 $1,579 $1,054 $1,254
Total cash costs per ounce of gold sold (2) $722 $770 $720 $802
All-in sustaining costs per ounce of gold sold (2) $972 $983 $951 $989
Share Data
Earnings per share, basic and diluted $0.10 ($0.18) $0.25 ($0.19)
Adjusted earnings per share, basic and diluted(2) $0.08 $0.01 $0.21 $0.05
Weighted average common shares outstanding (basic) (000’s) 391,076 390,540 390,160 389,816
Financial Position (in millions)
Cash and cash equivalents $182.8 $206.0
(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 capitalized exploration at Mulatos and Island Gold.
Three Months Ended
December 31, Years Ended December 31,
2019 2018 2019 2018
Gold production (ounces)
Young-Davidson 48,000 50,900 188,000 180,000
Mulatos 34,100 35,600 142,000 175,500
Island Gold 38,600 29,000 150,400 105,800
El Chanate (1) 1,400 10,100 14,100 43,700
Gold sales (ounces)
Young-Davidson 51,694 51,944 188,785 185,593
Mulatos 34,127 38,819 141,496 175,104
Island Gold 39,652 30,199 149,746 105,520
El Chanate (1) 1,675 10,199 14,675 43,662
Cost of sales (in millions)(2)
Young-Davidson $59.4 $61.5 $231.1 $235.0
Mulatos $35.8 $38.4 $138.9 $173.1
Island Gold $36.4 $28.7 $129.4 $106.5
El Chanate $4.4 $78.5 $22.0 $124.8
Cost of sales per ounce of gold sold (includes amortization)
Young-Davidson $1,149 $1,184 $1,224 $1,266
Mulatos $1,049 $989 $982 $989
Island Gold $918 $950 $864 $1,009
El Chanate $2,627 $7,697 $1,499 $2,858
Total cash costs per ounce of gold sold (3)
Young-Davidson $766 $764 $800 $822
Mulatos $820 $793 $784 $786
Island Gold $507 $570 $495 $589
El Chanate $2,448 $1,304 $1,390 $1,289
Mine-site all-in sustaining costs per ounce of gold sold (3),(4)
Young-Davidson $1,083 $974 $1,047 $1,017
Mulatos $891 $881 $868 $855
Island Gold $653 $834 $656 $781
El Chanate $2,448 $1,333 $1,411 $1,317
Capital expenditures (sustaining, growth and capitalized exploration) (in millions)(3)
Young-Davidson $27.0 $23.1 $99.9 $86.6
Mulatos(5) $9.5 $11.8 $54.2 $35.3
Island Gold (6) $24.7 $16.8 $68.9 $66.1
El Chanate $— $0.1 $— $0.6
Other $11.7 $9.7 $40.6 $32.9
(1) El Chanate ceased mining activities in October 2018 and transitioned to residual leaching.
(2) Cost of sales includes mining and processing costs, royalties 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 Mulatos of $1.3 for the three and twelve months ended December 31, 2019 ($0.6 million
and $2.9 million for the three and twelve months ended December 31, 2018).
(6) Includes capitalized exploration at Island Gold of $4.7 million and $16.4 million for the three and twelve months ended
December 31, 2019 ($3.1 million and $15.6 million for the three and twelve months ended December 31, 2018)
Outlook and Strategy
2020 Guidance
Young-
Davidson
Island
Gold Mulatos Other (2) Total
Gold production (000’s ounces) 145-160 130-145 150-160 425-465
Cost of sales, including amortization (in millions)(4) $207 $120 $168 — $495
Cost of sales, including amortization ($ per ounce)(4) $1,360 $880 $1,085 — $1,130
Total cash costs ($ per ounce)(1) $910-950 $520-560 $840-880 — $770-810
All-in sustaining costs ($ per ounce)(1) — $1,020-
1,060
Mine-site all-in sustaining costs ($ per ounce)(1),(3)
$1,110-
1,150 $780-820 $940-980 — —
Amortization costs ($ per ounce)(1) $430 $340 $225 — $340
Capital expenditures (in millions)
Sustaining capital(1) $30-35 $35-40 $15-20 — $80-95
Growth capital(1) $45-50 $15-20 $5 $10 $75-85
Capitalized exploration(1) $1 $19 — $5 $25
Total capital expenditures and capitalized exploration (1) $76-86 $69-79 $20-25 $15 $180-205
(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 (Turkey, 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.
The Company’s long-term strategic objective is to generate increasing returns for its shareholders through low-cost production
and free cash flow growth from its existing operations and portfolio of development projects. The Company was successful in
achieving these objectives in 2019, with production of 494,500 ounces of gold and a 10% reduction in total cash costs driving
record operating cash flow. In addition, the Company made substantial progress on its growth initiatives having completed
construction of the low-cost Cerro Pelon mine in Mexico, and advancing construction of the lower mine expansion at Young-
Davidson.
With several significant near term positive catalysts, 2020 is expected to be a transformational year for Alamos. These include
the recently announced substantial increase in high-grade Mineral Reserves and Resources at Island Gold; the Phase III
expansion study of Island Gold which is expected to be competed in June and demonstrate a larger, very profitable, long-life
operation; the completion of the lower mine expansion at Young-Davidson which remains on track for June; and the transition
to strong company-wide free cash flow starting in the second half of 2020.
Production is expected to temporarily decrease in 2020 to between 425,000 and 465,000 ounces of gold. This reflects the
previously guided lower production from Young-Davidson during the first half of 2020 while completing the tie-in of the upper
and lower mines, as well as the end of production at El Chanate. Total cash cost guidance of $770 to $810 per ounce and
AISC guidance of $1,020 to $1,060 per ounce are temporarily higher reflecting lower gold production at Young-Davidson during
the tie-in period in the first half of 2020. Gold production in the first quarter of 2020 is expected to be within a range of 105,000
to 110,000 ounces, consistent with annual guidance. Costs are expected to be higher in the first half of 2020 and decrease in
the second half with the completion of the lower mine tie-in at Young-Davidson. In 2021, production is expected to increase to
approximately 500,000 ounces at lower costs driven by higher mining and production rates at Young-Davidson.
The construction of the lower mine infrastructure at Young-Davidson is in the final stages. The tie-in of the lower mine recently
commenced and remains on schedule to be completed in June 2020. During this previously guided downtime of the Northgate
shaft, ore will be trucked to surface from the upper mine at a rate of approximately 2,500 tpd. Given the lower production rate
and a full workforce to support ongoing development during this period, total cash costs and mine-site AISC are expected to
increase significantly in the first half of the year. Following completion of the tie-in, underground mining rates are anticipated to
increase from approximately 6,500 tpd to a rate of 7,500 tpd by the end of 2020. This is expected to drive Young-Davidson
production higher and costs significantly lower in the second half of 2020.
Capital spending at Young-Davidson in 2020 is expected to be between $75 and $85 million, down from 2019 levels. Capital
spending is expected to be lower during the second half of 2020 with approximately 60% of the capital budget planned for the
first half of the year to complete the lower mine expansion. Combined with higher production and lower costs, Young-Davidson
is expected to generate strong free cash flow in the second half of 2020. Higher mining rates are expected to drive annual gold
production to approximately 200,000 ounces at lower costs in 2021.
Gold production at Island Gold in 2020 is expected to be marginally lower than 2019, with higher throughput offset by lower
grades. Mined grades are expected to be higher during the first half of 2020 and lower during the second half of the year
reflecting mine sequencing. Total cash costs and mine-site all-in sustaining costs are expected to increase slightly from 2019.
Capital spending at Island Gold is expected to be between $50 and $60 million in 2020, excluding capitalized exploration. The
Company is undertaking a number of projects to support the growing operation and mine life. This includes an expansion of the
tailings facility and the construction of a new administration building, dry facility, and underground workshop.
The Company is currently conducting a Phase III expansion study at Island Gold beyond 1,200 tpd, which is expected to be
completed during the second quarter of 2020. This study will incorporate the recently released 2019 year end Mineral Reserve
and Resource update for Island Gold which included substantial growth in Mineral Reserves and Resources. The Company
expects this study will demonstrate Island Gold as a larger, more profitable, long-life operation.
A total of $21 million has been budgeted in 2020 for surface and underground exploration at Island Gold to follow up on
ongoing exploration success. The 2020 program will be focused on continuing to define new near mine Mineral Resources
across the two-kilometre long Island Gold Main Zone which remains open laterally and down-plunge across multiple areas of
focus.
Production from the Mulatos District in 2020 is expected to be consistent with long term guidance of 150,000 to 160,000
ounces of gold. Ore will be mined and stacked from multiple sources in 2020, including the Mulatos, El Victor and San Carlos
open pits, as well as the newly constructed Cerro Pelon mine. In addition, the crushing and stacking of surface stockpiles will
ramp up through the year as mining activities wind down in the San Carlos and El Victor pits in the first half of 2020.
Total cash costs are expected to increase slightly from 2019 reflecting the processing of lower recovery stockpiles, which
carry non-cash historical inventory costs resulting in a higher reported cash cost per ounce. Mine-site all-in sustaining costs
are also expected to increase due to higher sustaining capital, mainly related to waste stripping activities at Cerro Pelon.
Capital spending across the Mulatos District is expected to total $20 to $25 million, the majority of which is sustaining capital.
The Company expects to make a construction decision on the La Yaqui Grande project during the second quarter of 2020. La
Yaqui Grande is fully permitted having received the approval of the environmental impact assessment during the second
quarter of 2019 and the Change in Land Use permit in July 2019.
Capital spending on the Company’s development projects and capitalized exploration at existing operations is expected to
total $35 million in 2020. The majority of this spending will be focused on exploration at Island Gold and exploration, permitting
and development activities at Lynn Lake.
With $183 million of cash and cash equivalents, no debt, and growing cash flow from its operations, the Company is well
positioned to fund its internal growth initiatives, and expects to transition to strong free cash flow generation in the second half
of 2020.
Fourth Quarter and Year End 2019 Results
Young-Davidson Financial and Operational Review
Three Months Ended
December 31,
Years Ended December
31,
2019 2018 2019 2018
Gold production (ounces) 48,000 50,900 188,000 180,000
Gold sales (ounces) 51,694 51,944 188,785 185,593
Financial Review (in millions)
Operating Revenues $75.9 $64.4 $262.1 $236.3
Cost of sales (1) $59.4 $61.5 $231.1 $235.0
Earnings from operations $16.5 $2.9 $31.0 $1.3
Cash provided by operating activities $38.9 $23.6 $112.7 $97.5
Capital expenditures (sustaining) (2) $16.4 $10.8 $46.2 $35.8
Capital expenditures (growth) (2) $10.6 $12.3 $53.7 $50.8
Mine-site free cash flow (2) $11.9 $0.5 $12.8 $10.9
Cost of sales, including amortization per ounce of gold sold (1) $1,149 $1,184 $1,224 $1,266
Total cash costs per ounce of gold sold (2) $766 $764 $800 $822
Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $1,083 $974 $1,047 $1,017
Underground Operations
Tonnes of ore mined 644,010 588,956 2,452,623 2,280,399
Tonnes of ore mined per day ("tpd") 7,000 6,402 6,720 6,248
Average grade of gold (4) 2.65 2.71 2.56 2.51
Metres developed 2,925 2,975 11,519 12,009
Mill Operations
Tonnes of ore processed 622,002 745,567 2,571,319 2,683,692
Tonnes of ore processed per day 6,761 8,104 7,045 7,353
Average grade of gold (4) 2.65 2.39 2.46 2.31
Contained ounces milled 53,043 57,192 203,452 190,701
Average recovery rate 92% 92% 91% 92%
(1) Cost of sales includes mining and processing costs, royalties and amortization.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and
associated MD&A for a description and calculation of these measures.
(3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate
and administrative and share based compensation expenses.
(4) Grams per tonne of gold ("g/t Au").
Young-Davidson produced 48,000 ounces of gold in the fourth quarter of 2019, 6% below the same period of 2018 due to lower
tonnes processed as a result of depleting low grade stockpiles in the third quarter of 2019. For the full year, Young-Davidson
met the high end of guidance with production of 188,000 ounces.
Underground mining rates averaged 7,000 tpd in the fourth quarter, exceeding guidance and marking a 9% increase from the
prior year. Mining rates exceeded full year guidance of 6,500 tpd in every quarter this year, with the fourth quarter being the
highest quarter since 2017 and second highest quarterly mining rate ever. Mining rates averaged 6,720 tpd for the year, an 8%
increase compared to 2018 due to improved operating performance from the mid-mine infrastructure. Underground grades
mined in the fourth quarter of 2.65 g/t Au were consistent with annual guidance. For the full year, underground grades mined
of 2.56 g/t Au were slightly below annual guidance, reflecting lower grades mined during the first half of the year.
Mill throughput of 6,761 tpd was lower than the prior year period as only underground ore was processed in the fourth quarter
with low-grade surface stockpiles having been largely depleted. For the full year, mill throughput was relatively consistent with
2018, with more underground ore processed in 2019 offset by a reduction in the processing of surface stockpiles. Mill
recoveries of 92% in the quarter and 91% for the year were in line with guidance and the prior year.
Lower Mine Construction and Tie-In
Substantial progress on the lower mine expansion was made in the fourth quarter of 2019, including completion of the ore
passes from the upper mine (9590 level) feeding the lower mine coarse ore bin (9025 level) above the crusher. Installation of
the grizzlies and rock breaker have commenced and are expected to be completed in the second quarter of 2020.
In addition, the three fine ore bins have been excavated with the two ore bins at the Northgate shaft now commissioned and
the feeder from the ore bin on the 8930 level below the crusher currently being installed. Installation and commissioning of the
crusher will be completed in February. The shaft bottom steel, ore and waste bins at the Northgate shaft, and the 8940 level
loading pocket have been completed, with the shaft ready to be roped up following removal of the pentice. Installation of the
hangers and trays for the main conveyor (CV21) from the crusher loadout level to the top of the shaft bins has progressed and
is awaiting completion of the 8930 loadout.
The Northgate shaft was shutdown in mid-February 2020 and removal of the ropes has commenced. All supplies and
equipment required to complete the tie-in are now on site. During the shutdown, the shaft steel at the mid-shaft location will be
removed, the pentice will be excavated, and the new head, tail and guide ropes will be installed. Hoisting from the lower mine
(8940 level) is expected to commence in June 2020.
A photo of the Lower mine loadout is available: https://www.globenewswire.com/NewsRoom/AttachmentNg/d3ae5d4f-d292-
4d7a-8aee-4681a317b576
A photo of the Lower mine crusher installation is
available: https://www.globenewswire.com/NewsRoom/AttachmentNg/632e761f-c1b3-4209-8757-a366f311d189
A photo of the Lower mine conveyor is available: https://www.globenewswire.com/NewsRoom/AttachmentNg/d19e3fa9-a67c-
4dc2-b9ad-8b9b7359f863
Financial Review
Fourth quarter revenues of $75.9 million were 18% above the prior year quarter, reflecting higher realized gold prices. For the
year ended December 31, 2019, revenues of $262.1 million were $25.8 million higher than the prior year, attributable to a 2%
increase in ounces sold, as well as higher realized prices.
Cost of sales (which includes mining and processing costs, royalties, and amortization expense) of $59.4 million in the fourth
quarter were consistent with the comparative quarter of 2018, as were underground mining costs of CAD$51 per tonne. Cost of
sales for the year ended December 31, 2019 were $231.1 million, slightly lower than the prior year period due to lower mining
costs per tonne and lower tonnes processed.
Total cash costs of $766 per ounce in the fourth quarter were consistent with the comparative period and in line with annual
guidance. Total cash costs improved significantly in the fourth quarter compared to the first half of the year, as a result of
higher grades mined, and lower mining and milling costs. For the year ended December 31, 2019, total cash costs of $800 per
ounce were 3% lower than the prior year period, and slightly above guidance. Total cash costs are expected to be higher in the
first half of 2020, due to lower production during the lower mine tie-in, decreasing significantly in the second half of the year.
Mine-site AISC of $1,083 per ounce in the fourth quarter were higher than the comparative quarter of 2019 and higher than
annual guidance, reflecting the timing of sustaining capital expenditures. Mine-site AISC for the year were $1,047 per ounce,
above guidance as a result of higher sustaining capital expenditures.
Capital expenditures were $27.0 million in the fourth quarter. This included $16.4 million of sustaining capital and $10.6 million
of growth capital. Growth capital spending was focused on construction of the new TIA1 tailings facility and continued lower
mine construction. For the full year, capital expenditures of $99.9 million were focused on lower mine construction, lateral
development in the upper and lower mines, and construction of the new TIA1 tailings facility. Capital spending was above
guidance due to additional grouting requirements and a change in scope of the new tailings facility from an upstream to a
centreline design.
Young-Davidson generated $11.9 million of mine-site free cash flow in the fourth quarter, significantly higher than the same
period of 2018 due to a higher gold price, and improved operating costs. For the full year, mine-site free cash flow was $12.8
million, generating a return after self financing the lower mine expansion. Since the acquisition of Young-Davidson in 2015, the
mine has generated operating cash flow of $467.4 million and invested $420.0 million in capital expenditures, the majority of
which has been focused on the lower mine expansion. With declining capital spending following the completion of the lower
mine expansion in June 2020, and a corresponding increase in gold production and lower operating costs, Young-Davidson is
expected to generate strong free cash flow starting in the second half of 2020.
Island Gold Financial and Operational Review
Three Months Ended
December 31,
Years Ended December
31,
2019 2018 2019 2018
Gold production (ounces) 38,600 29,000 150,400 105,800
Gold sales (ounces) 39,652 30,199 149,746 105,520
Financial Review (in millions)
Operating Revenues $58.2 $37.5 $207.3 $135.1
Cost of sales (1) $36.4 $28.7 $129.4 $106.5
Earnings from operations $21.5 $7.8 $76.8 $27.2
Cash provided by operating activities $34.1 $16.3 $133.4 $75.9
Capital expenditures (sustaining) (2) $5.7 $8.0 $24.1 $20.2
Capital expenditures (growth) (2) $14.3 $5.7 $28.4 $30.3
Capital expenditures (capitalized exploration) (2) $4.7 $3.1 $16.4 $15.6
Mine-site free cash flow (2) $9.4 ($0.5) $64.5 $9.8
Cost of sales, including amortization per ounce of gold sold (1) $918 $950 $864 $1,009
Total cash costs per ounce of gold sold (2) $507 $570 $495 $589
Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $653 $834 $656 $781
Underground Operations
Tonnes of ore mined 102,652 102,692 380,266 344,336
Tonnes of ore mined per day ("tpd") 1,116 1,116 1,042 943
Average grade of gold (4) 12.44 8.95 12.28 9.07
Metres developed 1,831 1,560 6,031 6,477
Mill Operations
Tonnes of ore processed 93,912 105,432 401,276 369,767
Tonnes of ore processed per day 1,021 1,146 1,099 1,013
Average grade of gold (4) 13.03 9.02 11.85 9.20
Contained ounces milled 39,345 30,585 152,905 109,383
Average recovery rate 97% 96% 97% 96%
(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").
Island Gold produced 38,600 ounces in the fourth quarter, marking a 33% increase from the fourth quarter of 2018 driven by
higher grades mined and milled. For the full year, Island Gold produced a record 150,400 ounces, 4% above the high end of
guidance, and 42% higher than 2018 reflecting higher grades mined and milled. The operation generated mine-site free cash
flow of $9.4 million in the fourth quarter, bringing the 2019 total to a record $64.5 million.
Underground mining rates were 1,116 tpd in the fourth quarter, consistent with the prior year period. For the full year,
underground mining rates increased 10% to average 1,042 tpd. Underground grades mined averaged 12.44 g/t Au in the fourth
quarter, higher than annual guidance and 39% higher than the fourth quarter of 2018 due to mine sequencing. Full year grades
mined of 12.28 g/t Au were above guided levels due to a combination of positive grade reconciliation and mine sequencing.
Mill throughput of 1,021 tpd in the fourth quarter was down from the prior year period; however, throughput of 1,099 tpd for the
full year was in line with annual guidance. Mill recoveries were 97% in the fourth quarter, in line with the prior year quarter and
guidance.
Financial Review
Island Gold generated record revenues of $58.2 million in the fourth quarter, an increase of 55% compared to the prior year
period, reflecting significantly more ounces sold and a higher realized gold price. For the full year, revenues of $207.3 million
were also a record and $72.2 million, or 53% higher than the prior year, primarily attributable to more ounces sold.
Cost of sales (includes mining and processing costs, royalties, and amortization expense) of $36.4 million in the fourth quarter
were 27% higher than the comparative period, reflecting more ounces sold and higher unit mining costs. However, on a per
ounce basis, cost of sales decreased 3%, driven by higher grades mined and lower amortization charges. Cost of sales for the
full year of $129.4 million increased 22% from the prior year period due to higher mining and processing rates.
Total cash costs were $507 per ounce in the fourth quarter, an 11% improvement from the comparative quarter, driven by
higher grades mined partially offset by higher mining costs. Unit mining costs were CAD$165 per tonne in the quarter due to
higher contractor and maintenance costs. For the full year, total cash costs of $495 per ounce were 16% lower than the prior
year due to higher grades mined, and in line with annual guidance.
Mine-site AISC of $653 per ounce in the fourth quarter were below the full year guidance range of $730 to $770 per ounce,
reflecting lower sustaining capital spending. Mine-site AISC for the full year of $656 per ounce were 16% lower than the prior
year and below guidance due to the deferral of certain sustaining capital spending to 2020.
Total capital expenditures were $24.7 million in the fourth quarter, with spending focused on lateral development, tailings
construction, mining equipment, and capitalized exploration. This included $5.7 million of sustaining capital and $19.0 million
of growth capital (inclusive of $4.7 million of capitalized exploration). For the full year, total capital expenditures, including
capitalized exploration, were $68.9 million, consistent with the prior year.
Island Gold generated mine-site free cash flow of $9.4 million during the fourth quarter driven by strong gold production and
operating margins. For the full year, Island Gold generated a record $64.5 million of mine-site free cash flow, net of all
investment in capital and exploration. Since the acquisition of Island Gold in November 2017, the mine has generated $81
million of free cash flow, while funding an expansion of the operation from 900 tpd to 1,200 tpd, and more than doubling Mineral
Reserves and Resources.
Mulatos Financial and Operational Review
Three Months Ended
December 31,
Years Ended December
31,
2019 2018 2019 2018
Gold production (ounces) 34,100 35,600 142,000 175,500
Gold sales (ounces) 34,127 38,819 141,496 175,104
Financial Review (in millions)
Operating Revenues $49.7 $48.1 $194.4 $223.3
Cost of sales (1) $35.8 $38.4 $138.9 $173.1
Earnings from operations $13.0 $8.8 $51.9 $42.7
Cash provided by operating activities $10.5 $14.7 $41.5 $71.0
Capital expenditures (sustaining) (2) $1.2 $2.5 $6.5 $7.2
Capital expenditures (growth) (2) $7.0 $8.7 $46.4 $25.2
Capital expenditures (capitalized exploration) (2) $1.3 $0.6 $1.3 $2.9
Mine-site free cash flow (2) $1.0 $2.9 ($12.7) $35.7
Cost of sales, including amortization per ounce of gold sold (1) $1,049 $989 $982 $989
Total cash costs per ounce of gold sold (2) $820 $793 $784 $786
Mine site all-in sustaining costs per ounce of gold sold (2),(3) $891 $881 $868 $855
Open Pit & Underground Operations
Tonnes of ore mined - open pit (4) 1,558,458 2,118,300 7,166,679 8,479,211
Total waste mined - open pit (6) 2,058,732 2,151,749 7,095,650 8,788,488
Total tonnes mined - open pit 3,617,190 4,270,049 14,262,329 17,267,699
Waste-to-ore ratio (operating) 0.98 0.51 0.73 0.71
Tonnes of ore mined - underground — — — 48,772
Crushing and Heap Leach Operations
Tonnes of ore stacked 1,823,418 1,776,719 7,289,811 6,795,175
Average grade of gold processed (5) 0.99 0.92 0.94 0.90
Contained ounces stacked 58,205 52,296 219,655 195,606
Mill Operations
Tonnes of high-grade ore milled — — — 91,680