Alamos Gold Reports Second Quarter 2021 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 Second Quarter 2021 Results
Toronto, Ontario ( July 28, 202 1) - Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today
reported its financial results for the quarter ended June 30, 2021.
“Our overall performance through the first half of 2021 has been solid, led by another strong quarter at Young -
Davidson which continues to meet or exceed expectations operating from the new lower mine infrastructure. We
expect mining rates at Young -Davidson to increase to design capacity in the third quarter driving our consolidated
production and free cash flow higher in the second half of the year. Combi ned with a stronger performance from
Mulatos, we remain well positioned to achieve full year guidance,” said John A. McCluskey, President and Chief
Executive Officer.
“We had a successful quarter on the exploration front at Young -Davidson and Island Gold w ith results from both
operations highlighting the significant upside potential, in particular at Island Gold where we reported the best hole
ever. Our other internal growth initiatives continue to advance, including work on the Phase III expansion at Islan d
Gold, construction of La Yaqui Grande, and permitting at Lynn Lake. All support our strong long term outlook with
production potential of approximately 750,000 ounces per year at substantially lower costs by 2025,” Mr. McCluskey
added.
Second Quarter 2021
• Production of 114,200 ounces of gold, a 46% increase from the second quarter of 2020, primarily reflecting
temporary downtime related to COVID-19 during the prior year period
• Young-Davidson produced 45,100 ounces of gold and generated mine-site free cash flow1 of $18.7 million. Mining
rates of 7,504 tonnes per day ("tpd") were in-line with the targeted mining rate of 7,500 tpd, and are expected to
increase to the long-term run rate of 8,000 tpd in the third quarter
• Island Gold produced 33,200 ounces of gold and generated mine -site free cash flow 1 of $13.7 million, net of
growth capital expenditures and capitalized exploration totaling $28.5 million
• Sold 107,581 ounces of gold at an average realized price of $1,814 per ounce for revenues of $195.1 million, a
55% increase compared to the second quarter of 2020. Ounces sold were lower than production due to the timing
of shipments, with deferred ounces being sold in July
• Generated cash flow from operating activities of $86.7 million ($97.2 million, or $0.25 per share, before changes
in working capital1), a 75% increase from the prior year period
• Free cash flow 1 neutral in the quarter, net of $6.2 million in cash taxes paid in Mexico, higher capital spending
mainly related to La Yaqui Grande, and the above noted deferred gold sales. The Company expects stronger free
cash flow in the second half of 2021 reflecting higher gold production and sales
• Consolidated total cash costs 1 of $791 per ounce, all-in sustaining costs ("AISC")1 of $1,136 per ounce and cost
of sales of $1,180 per ounce were higher than annual guidance primarily d ue to the impact of the stronger than
budgeted Canadian dollar, with USD/CAD foreign exchange rate averaging $0.81:1 relative to the budgeted rate
of $0.75:1
• Filed an investment treaty claim against the Republic of Turkey for expropriation and unfair and inequitable
treatment, among other things, with respect to its Turkish projects. As a result, the Company recorded a non -
cash, after-tax impairment charge of $213.8 million in the period, representing the entire carrying value of the
Turkish assets
TRADING SYMBOL: TSX:AGI NYSE:AGI
2 | Alamos Gold Inc
• Realized adjusted net earnings 1 of $38.7 million, or $0.10 per share 1, which includes adjustments for the non -
cash, after-tax impairment charge of the Turkish projects of $213.8 million, unrealized foreign exchange gains of
$6.0 million recorded within deferred taxes and foreign exchange, and other losses of $3.4 million
• Recorded a net loss of $172.5 million, or $0.44 per share, inclusive of the after -tax impairment charge of $213.8
million
• Ended the quarter with cash and cash equivalents of $233.9 million and equity securities of $22.4 million. During
the quarter, the Company generated $5.1 million in cash on the liquidation of certain equity securities and realized
an after-tax gain of $2.7 million (recorded within equity)
• Paid a quarterly dividend of $9.8 million, or US$0.025 per share (annualized rate of US$0.10 per share), bringing
total dividends distributed through the first half of 2021 to $19.6 million
• Announced the best hole drilled to -date at Island Gold, extending high -grade mineralization dow n-plunge from
existing Mineral Resources
• Subsequent to quarter -end, provided an exploration update at Young -Davidson extending gold mineralization
below existing Mineral Reserves and Resources and intersecting higher grades in the hanging wall and footwall
of the deposit
• Development activities continued to ramp up at La Yaqui Grande, with pre -stripping reaching budgeted rates of
over 55,000 tpd. La Yaqui Grande remains on track to achieve commercial production in the third quarter of 2022
• Published the Company’s 2020 Environmental, Social and Corporate Governance (ESG) Report
.(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.
TRADING SYMBOL: TSX:AGI NYSE:AGI
3 | Alamos Gold Inc
Highlight Summary
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Financial Results (in millions)
Operating revenues $195.1 $126.2 $422.5 $303.1
Cost of sales (1) $126.9 $103.3 $266.2 $223.6
(Loss) Earnings from operations ($168.5) $12.1 ($92.2) $58.3
(Loss) Earnings before income taxes ($172.7) $6.0 ($97.6) $46.5
Net (loss) earnings ($172.5) $11.7 ($121.3) ($0.6)
Adjusted net earnings (2) $38.7 $9.8 $87.8 $39.2
Earnings before interest, depreciation and amortization (2) $94.4 $40.9 $214.0 $117.6
Cash provided by operations before working capital and
cash taxes(2) $97.2 $44.7 $216.8 $126.4
Cash provided by operating activities $86.7 $49.6 $186.0 $106.2
Capital expenditures (sustaining) (2) $26.7 $14.4 $50.3 $31.9
Capital expenditures (growth) (2) (3) $50.4 $38.8 $93.9 $80.1
Capital expenditures (capitalized exploration) (4) $6.4 $1.4 $11.9 $5.9
Free cash flow (2) ($0.2) ($5.0) $9.7 ($11.7)
Operating Results
Gold production (ounces) 114,200 78,400 240,000 189,300
Gold sales (ounces) 107,581 74,605 234,063 186,459
Per Ounce Data
Average realized gold price $1,814 $1,692 $1,805 $1,626
Average spot gold price (London PM Fix) $1,816 $1,711 $1,805 $1,647
Cost of sales per ounce of gold sold (includes
amortization) (1) $1,180 $1,385 $1,137 $1,199
Total cash costs per ounce of gold sold (2) $791 $933 $773 $829
All-in sustaining costs per ounce of gold sold (2) $1,136 $1,276 $1,079 $1,117
Share Data
(Loss) Earnings per share, basic and diluted ($0.44) $0.03 ($0.31) $0.00
Adjusted earnings per share, basic and diluted(2) $0.10 $0.03 $0.22 $0.10
Weighted average common shares outstanding (basic)
(000’s) 392,759 391,076 392,762 391,208
Financial Position (in millions)
Cash and cash equivalents(5) $233.9 $220.5
(1) Cost of sales includes mining and processing costs, royalties, COVID -19 costs and amortization expense.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation
of these measures.
(3) Includes growth capital from operating sites. 2020 growth capital excludes th e Island Gold royalty repurchase completed in March 2020 for $54.8 million.
(4) Includes capitalized exploration at Island Gold, Young-Davidson and Mulatos.
(5) Comparative cash and cash equivalents balance as at December 31, 2020.
TRADING SYMBOL: TSX:AGI NYSE:AGI
4 | Alamos Gold Inc
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Gold production (ounces) (1)
Young-Davidson 45,100 23,100 93,100 51,800
Island Gold 33,200 19,400 75,400 58,200
Mulatos 35,900 35,900 71,500 78,500
Gold sales (ounces)
Young-Davidson 45,284 22,440 93,306 51,345
Island Gold 33,632 18,560 73,514 57,687
Mulatos 28,665 33,605 67,243 77,427
Cost of sales (in millions)(2)
Young-Davidson $61.3 $46.2 $123.3 $90.0
Island Gold $25.6 $19.6 $54.7 $50.1
Mulatos $40.0 $37.5 $88.2 $83.5
Cost of sales per ounce of gold sold (includes amortization)
Young-Davidson $1,354 $2,059 $1,321 $1,753
Island Gold $761 $1,056 $744 $868
Mulatos $1,395 $1,116 $1,312 $1,078
Total cash costs per ounce of gold sold (3)
Young-Davidson $941 $1,564 $906 $1,299
Island Gold $502 $501 $483 $468
Mulatos $893 $750 $906 $785
Mine-site all-in sustaining costs per ounce of gold sold (3),(4)
Young-Davidson $1,157 $1,809 $1,115 $1,490
Island Gold $830 $781 $777 $706
Mulatos $1,144 $890 $1,084 $929
Capital expenditures (sustaining, growth and capitalized exploration) (in millions)(3)
Young-Davidson(5) $19.6 $29.6 $41.5 $56.6
Island Gold (6) $28.5 $15.9 $55.9 $38.0
Mulatos(7) $28.9 $5.1 $47.7 $12.5
Other $6.5 $4.0 $11.0 $10.8
(1) Production for the three and six months ended June 30, 2020 included nil and 800 ounces, respectively, from El Chanate which transitioned to the reclamation phase
of the mine life in 2019. There was no production from El Chanate for the three and six months ended June 30, 2021.
(2) Cost of sales includes mining and processing costs, royalties, COVID -19 costs, and amortization.
(3) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation
of these measures.
(4) For the purposes of calculating mine -site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based
compensation expenses.
(5) Includes capitalized exploration at Young -Davidson of $1.5 million and $2.5 million for the three and six months ended June 30, 2021 ($nil for the three and six
months ended June 30, 2020).
(6) Includes capitalized exploration at Island Gold of $3.9 million and $8.4 million for the three and six months ended June 30, 2021 ($1.2 million and $5.2 million for the
three and six months ended June 30, 2020); Capital expenditures exclude the Island Gold royalty repurchase for $54.8 million for the six months ended June 30,
2020.
(7) Includes capitalized exploration at Mulatos of $1.0 million for the three and six months ended June 30, 2021 ($0.2 million and $0.7 million for the three and six months
ended June 30, 2020).
TRADING SYMBOL: TSX:AGI NYSE:AGI
5 | Alamos Gold Inc
Environment, Social and Governance Summary Performance
Health and Safety
• Recordable injury frequency rate 1 of 2.80 in the quarter and 2.38 year -to-date, a 6% increase from 2.25 in
the first half of 2020
• Lost time injury frequency rate1 of 0.08 in the quarter and 0.17 year-to-date, a 21% increase from 0.14 in the
first half of 2020
• Performed over 50,000 COVID -19 tests to -date on employees, contractors and visitors as part of an
enhanced screening program
During the second quarter of 2021, the recordable injury frequency rate increased with 35 recordable injuries
reported up from 21 in the first quarter of 2021. One lost time injury was reported in the quarter, down from three in
the first quarter of 2021, resulting in an overall improvement to the Company’s lost time injury frequency rate.
Alamos strives to maintain a safe, healthy working environment for all, with a strong safety culture where everyone
is continually reminded of the importance of keeping themselves and their colleagues healthy and injury -free.
Throughout the quarter, the Company continued to advance implementation of its Sustainability Performance
Management Framework, which includes standards specific to safety leadership and managing higher -risk
activities. The Company’s overarching commitment is to have all employees and contractors return Home Safe
Every Day.
The World Health Organization declared COVID-19 a pandemic on March 11, 2020. The Company responded rapidly
and proactively and implemented several initiatives to help protect the health and safety of our employees, their
families and the communities in which we operate.
Specifically, each mine site activated established crisis management plans and developed site -specific plans that
have enabled them to meet and respond to changing conditions associated with COVID -19. The Company has
adopted the advice of public health authorities and is adhering to government regulations with respect to COVID -19
in the jurisdictions in which it operates.
The following measures have been instituted at sites to prevent the potential spread of the virus:
• Medical screening for all personnel prior to entry to site for symptoms of COVID-19
• Testing of personnel at all operating sites prior to starting their work rotation
• Vaccinations offered at Island Gold for employees
• Training on proper hand hygiene and social distancing
• Remote work options have been implemented for eligible employees
• Social distancing practices have been implemented for all meetings, huddles and transportation
• Mandatory use of personal protective equipment for employees where social distancing is n ot practicable
• Rigid camp and site hygiene protocols have been instituted and are being followed
• Elimination of all non-essential business travel
• In addition, since the COVID-19 pandemic began the Company’s teams in Canada, Mexico, and Turkey have
donated their time, medical supplies, and funds to help combat the effects and spread of the virus
COVID 19 - Impact on Operations
Given the significant precautionary measures taken by the Company, and thanks to the dedication of its employees,
contractors and st akeholders, operations remain relatively unaffected by COVID -19. All the Company's operations
continue to incur additional costs related to testing of personnel, lodging and transportation, which have been included
in mining and processing costs. These inc remental costs have increased total cash costs globally by approximately
$25 per ounce and are expected to be incurred throughout 2021.
TRADING SYMBOL: TSX:AGI NYSE:AGI
6 | Alamos Gold Inc
Environment
• Zero significant environmental incidents in the second quarter and year-to-date
• Advanced permitting of the Lynn Lake Project and the Phase III expansion of Island Gold – a project that will
significantly increase automation and reduce fleet diesel usage resulting in 35% lower life -of-mine
greenhouse gas ("GHG") emissions
• Nearing the completion of the power line which will connect the Mulatos Mine to grid power and eliminate the
need for site diesel power generation, reducing GHG emissions by 12% annually
Six minor hydrocarbon spills occurred during the second quarter, including one at each of Young-Davidson and 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
• Donated time, medical supplies, food supplies and funds across select operations and projects to help combat
the effects and spread of COVID-19 in local communities
• Organized several community health initiatives during the second quarter in colla boration with the Matarachi
community, located near the Mulatos mine. These included a COVID-19 vaccination clinic, nutrition program,
visual health program, first aid training, and a cancer screening campaign
Alamos believes that excellence in sustainabil ity provides a net benefit to all stakeholders. The Company continues
to engage with local communities to understand local challenges and priorities, and to offer support during the COVID-
19 pandemic. Ongoing investments in local infrastructure, health car e, education, cultural and community programs
has continued through the COVID-19 pandemic, with appropriate health and safety protocols.
Governance and Disclosure
• Published the Company’s 2020 Environmental, Social and Corporate Governance (ESG) Report which is
available on the Company's website: www.alamosgold.com
• Issued the Company’s 2020 Extractive Sector Transparency Measures Act (ESTMA) Report, outlining
payments made to governments in Canada and abroad
• Published the Company’s 2020 ESG Summary Tables in July 2021
• Compiled data for the Carbon Disclosure Project’s 2021 Climate Change Questionnaire, which will be
submitted in the third quarter of 2021
Alamos maintains the highest standards of corporate g overnance 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, develop ed 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.
TRADING SYMBOL: TSX:AGI NYSE:AGI
7 | Alamos Gold Inc
Outlook and Strategy
2021 Guidance
Young-
Davidson Island Gold Mulatos Other (2) Total
Gold production (000’s ounces) 190 - 205 130 - 145 150 - 160 470 - 510
Cost of sales, including amortization (in millions)(4) $255 $108 $177 — $540
Cost of sales, including amortization ($ per ounce)(4) $1,290 $785 $1,145 — $1,105
Total cash costs ($ per ounce)(1) $790 - $840 $430 - $480 $840 - $890 — $710 - $760
All-in sustaining costs ($ per ounce)(1) $1,025 - $1,075
Mine-site all-in sustaining costs ($ per ounce)(1)(3) $1,000 - $1,050 $750 - $800 $1,060 - $1,110 —
Amortization costs ($ per ounce)(1) $475 $330 $280 — $370
Capital expenditures (in millions)
Sustaining capital(1) $40 - $45 $40 - $45 $30 - $35 — $110 - $125
Growth capital(1) $25 - $30 $80 - $85 $95 - $100 $10 $210 - $225
Total Sustaining and Growth Capital(1) $65 - $75 $120 - $130 $125 - $135 $10 $320 - $350
Capitalized exploration(1) $7 $20 — $7 $34
Total capital expenditures and capitalized exploration(1) $72 - $82 $140 - $150 $125 - $135 $17 $354 - $384
(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release and associated MD&A for a description of these measures.
(2) Includes growth capital and capitalized exploration at the Company's development projects (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 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 objectives and remains well positioned to meet full year guidance with
production totaling 240,000 ounces of gold through the first half of 2021. The strong performance was led by Young-
Davidson with underground mining rates continuing to meet or exceed expectations. Total cash costs and all -in
sustaining costs (“AISC”) in the second quarter and first h alf of the year were above annual guidance reflecting the
impact of the stronger than budgeted Canadian dollar. Full year cost guidance was based on a USD/CAD foreign
exchange rate of $0.75:1 compared to actual USD/CAD rate of $0.81:1 in the second quarter . For the first half of
2021, the stronger Canadian dollar increased company-wide total cash costs by $30 per ounce, and AISC by $45 per
ounce relative to budget. Assuming the Canadian dollar remains at $0.80:1 for the remainder of the year, the Company
expects total cash costs and AISC to be impacted by similar amounts.
Additionally, the Company continues to advance its high -return organic growth initiatives. Construction of the higher
grade La Yaqui Grande project remains on track for commercial producti on in the third quarter of 2022, while
development activities on the Phase III expansion at Island Gold continue to ramp up. In parallel, larger exploration
programs at Island Gold and Young-Davidson are successfully extending gold mineralization, highligh ting the strong
potential for Mineral Reserve and Resource growth at both operations. This included the best hole ever drilled at
Island Gold with high -grade mineralization extended down -plunge from existing Mineral Resources in Island East
over significantly greater widths. The Company expects to continue to generate solid free cash flow while reinvesting
in these high return growth initiatives and supporting its higher dividend, which has increased nearly 70% over the
past year.
Gold production in the third quarter is expected to increase to between 115,000 and 125,000 ounces, driven by higher
mining rates and grades at Young -Davidson, and increased production at Mulatos. Total cash costs and AISC are
expected to remain at similar levels to the second quarter, before decreasing in the fourth quarter.
TRADING SYMBOL: TSX:AGI NYSE:AGI
8 | Alamos Gold Inc
Production at Young-Davidson is expected to increase by 45% in 2021 (based on the mid -point of guidance), driven
by significantly higher mining rates following the completion of the lower mine expansion in July 2020. The new lower
mine infrastructure continues to perform well with underground mining rates averaging 7,647 tpd for the first half of
2021, exceeding guidance of 7,500 tpd. Mining rates are expected to increase to the long -term rate of 8,000 tpd i n
the third quarter. With first half production of 93,100 ounces , and higher mining rates and grades expected to drive
production higher and costs lower in the second half of 2021, Young -Davidson remains on track to meet full year
guidance. Combined with lower capital spending, this is expected to drive record mine-site free cash flow in 2021.
Island Gold remains well positioned to achieve full year guidance with first half production of 75,400 ounces. As
previously guided, grades decreased in the second qu arter, and are expected to remain at similar levels in the third
quarter. Full year grades are expected to be approximately 10 g/t Au. A total of $25 million has been budgeted for
exploration at Island Gold in 2021, a significant increase from $12.9 millio n spent in 2020. Ongoing exploration
success continues to demonstrate the significant potential for further growth in Mineral Reserves and Resources. This
included the best hole drilled to date at Island Gold as released in the second quarter with 71.21 g/t Au (39.24 g/t cut)
over 21.33 m (MH25 -08), further extending high -grade gold mineralization down -plunge from Mineral Resources in
Island East.
The Mulatos District produced 71,500 ounces in the first half of the year. With stronger production expected in the
second half of 2021, the operation remains on track to meet full year guidance of between 150,000 to 160,000 ounces.
Cerro Pelon, the Mulatos pits, and surface stockpiles will supply all production in 2021. In parallel, the Company
continues to advance construction of the high grade La Yaqui Grande project, which remains on track for commercial
production in third quarter of 2022. La Yaqui Grande is expected to keep production in the Mulatos District at
approximately 150,000 ounces per year at significantly lower costs.
The Company continues to advance permitting of the Lynn Lake project, with approval of its Environmental Impact
Statement ("EIS") expected mid -2022. The 2021 capital budget for Lynn Lake is $13 million, including $6 million for
development activities to support the permitting process and $7 million for exploration. The Company expects to make
a construction decision following the conclusion of the EIS permitting process.
In April, the Company announced that its Netherlands wholly -owned subsidiaries would proceed with an investment
treaty claim against the Republic of Turkey for expropriation and unfair and inequitable treatment, among other things,
with respect to the Kirazlı, Ağı Dağı and Çamyurt gold development projects in Turkey. The claim was registered with
the International Centre for Settlement of Investment Disputes (World Bank Group) under the Netherlands -Turkey
Bilateral Investment Treaty on June 7, 2021, and is expected to exceed $1 billion. In its effort to secure the renewal
of its mining licenses, the Company has attempted to work cooperatively with the Turkish government, has raised
with the Turkish government its obligations under the Treaty, has sought to resolve the dispute by good faith
negotiations, and has made conside rable effort to build support among stakeholders and host communities. The
Turkish government has failed to provide the Company with a reason for the non-renewal or a timeline for renewal of
its licenses. As a result, Alamos and the Subsidiaries incurred an after-tax impairment charge of $213.8 million in the
second quarter of 2021. The non -cash impairment charge reflects the Company’s net carrying value of the Turkish
Projects.
The Company's liquidity position remains strong, ending the second quarter with $233.9 million of cash and cash
equivalents, $22.4 million in equity securities, and no debt. Additionally, the Company has a $500.0 million undrawn
credit facility, providing $756.3 million of liquidity. The Company expects to generate ongoing free cash flow in 2021
while continuing to fund its high-return internal growth initiatives.