Alamos Gold Reports Second Quarter 2022 Results
TRADING SYMBOL: TSX:AGI NYSE:AGI
1 | Alamos Gold Inc
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 2022 Results
Toronto, Ontario ( July 27, 202 2) - Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today
reported its financial results for the quarter ended June 30, 2022.
“We achieved several key short- and long-term objectives in the second quarter. Production was in-line with guidance
and costs well below quarterly guidance reflecting solid performances at our Canadian operations and a strong start
from La Yaqui Grande which achieved initial production ahead of schedule. With La Yaqui Grande expected to drive
stronger production in the second half of the year, we remain o n track to achieve full year guidance,” said John A.
McCluskey, President and Chief Executive Officer.
“La Yaqui Grande will be a key contributor to stronger operational and financial results over the shorter term, and as
outlined in our Phase 3+ Expansion Study, Island Gold will be the driver of higher production, lower costs and
significantly stronger free cash flow generation over the long term. The Phase 3+ expansion will transform Island Gold
into one of the largest, lowest cost and most profitable gol d mines in Canada. With increasing cash flow from our
operations, we can fund this high-return growth internally while generating strong free cash flow over the next several
years,” Mr. McCluskey added.
Second Quarter 2022
• Produced 103,900 ounces of gold, a 5% increase from the first quarter and in line with guidance
• Young-Davidson continued its strong operational performance, with mining rates exceeding 8,000 tonnes per day
(“tpd”) for the fourth consecutive quarter, driving production of 46,400 ounces and record mine-site free cash flow1
of $30.8 million
• Island Gold produced 37,300 ounces, a 52% increase from the first quarter of 2022 leading to mine-site free cash
flow1 of $20.2 million
• Announced the Phase 3+ Expansion of Island Gold to 2,400 tpd outlining a larger, more profitable, and valuable
operation with production expected to more than double to an average of 287,000 ounces per year at industry
low mine-site all-in sustaining costs of $576 per ounce starting in 2026
• Completed construction of La Yaqui Grande ahead of schedule in June, and produced 5,000 ounces at total cash
costs of $451 per ounce. Mining and stacking rates continue to ramp up and are expected to drive stronger
consolidated production from the Mulatos District at significantly lower costs in the second half of the year
• Sold 102,164 ounces of gold at an average realized price of $1,871 per ounce for revenues of $191.2 million
• Total cash costs1 of $895 per ounce, and AISC1 of $1,170 per ounce per ounce were significantly lower than the
first quarter and consistent with annual guidance, reflecting higher grades mined at Island Gold, the strong start
at La Yaqui Grande, and the weaker Canadian dollar
• Realized adjusted net earnings 1 for the qua rter of $29.3 million, or $0.07 per share 1. Adjusted net earnings
includes adjustments for a non-cash, after tax inventory net realizable value adjustment at Mulatos of $14.7 million
and unrealized foreign exchange losses recorded within both deferred taxe s and foreign exchange of $12.5
million, partially offset by other gains totaling $4.3 million
• Reported net earnings of $6.4 million, or $0.02 per share
• Cash flow from operating activities was $75.7 million ($85.3 million, or $0.22 per share, before changes in working
capital1)
TRADING SYMBOL: TSX:AGI NYSE:AGI
2 | Alamos Gold Inc
• Free cash flow1 was $6.7 million in the quarter, driven by strong operating results at Young-Davidson and Island
Gold. With the completion of construction at La Yaqui Grande, free cash flow is expected to increase in the second
half of the year
• Shareholder returns totaled $18.0 million in the quarter. This included the quarterly dividend of $9.8 million, or
$0.025 per share (annualized rate of $0.10), as well as the repurchase of 1.1 million shares at a cost of $8.2
million ($7.41 per share) under the Company's Normal Course Issuer Bid ("NCIB")
• Closed the sale of the Esperanza Gold Project to Zacatecas Silver for total consideration of up to $60 million,
including up front consideration of $5 million cash, and $10 million of Zacatecas Silver shares
• Ended the quarter with cash and cash equivalents of $121.5 million, equity securities of $22.5 million, and no debt
• Announced a Company-wide target of a 30% reduction in absolute Greenhouse Gas ("GHG") emissions by 2030
which is expected to further improve the Company's industry low GHG emissions intensity
• Recipient of the Casco De Plata safety award by the Mining Chamber of Mexico (CAMIMEX) in recognition of
outstanding health and safety performance and governance at Mulatos
.(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 June 30, Six Months Ended June 30,
2022 2021 2022 2021
Financial Results (in millions)
Operating revenues $191.2 $195.1 $375.7 $422.5
Cost of sales (1) $151.9 $126.9 $287.4 $266.2
Earnings (loss) from operations $25.7 ($168.5) $20.0 ($92.2)
Earnings (loss) before income taxes $30.2 ($172.7) $15.9 ($97.6)
Net earnings (loss) $6.4 ($172.5) ($2.1) ($121.3)
Adjusted net earnings (2) $29.3 $38.7 $47.3 $87.8
Earnings before interest, depreciation and amortization (2) $92.0 $94.4 $154.9 $214.0
Cash provided by operations before working capital and
cash taxes(2) $85.3 $97.2 $156.2 $216.8
Cash provided by operating activities $75.7 $86.7 $122.2 $186.0
Capital expenditures (sustaining) (2) $20.1 $26.7 $42.7 $50.3
Capital expenditures (growth) (2) (3) (5) $43.3 $53.8 $101.9 $114.1
Capital expenditures (capitalized exploration) (4) $5.6 $6.4 $11.7 $11.9
Free cash flow (2) $6.7 ($0.2) ($34.1) $9.7
Operating Results
Gold production (ounces) 103,900 114,200 202,800 240,000
Gold sales (ounces) 102,164 107,581 200,630 234,063
Per Ounce Data
Average realized gold price $1,871 $1,814 $1,873 $1,805
Average spot gold price (London PM Fix) $1,871 $1,816 $1,874 $1,805
Cost of sales per ounce of gold sold (includes
amortization) (1) $1,487 $1,180 $1,432 $1,137
Total cash costs per ounce of gold sold (2) $895 $791 $943 $773
All-in sustaining costs per ounce of gold sold (2) $1,170 $1,136 $1,264 $1,079
Share Data
Earnings (Loss) per share, basic and diluted $0.02 ($0.44) ($0.01) ($0.31)
Adjusted earnings per share, basic and diluted(2) $0.07 $0.10 $0.12 $0.22
Weighted average common shares outstanding (basic)
(000’s) 391,761 392,759 391,837 392,762
Financial Position (in millions)
Cash and cash equivalents(6) $121.5 $172.5
(1) Cost of sales includes mining and processing costs, royalties, and amortization expense. For the three and six months ended J une 30, 2022, cost of sales includes
a $22.3 million non-cash inventory net realizable value adjustment at Mulatos District.
(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 District.
(5) Includes capital advances of nil for the three and six months ended June 30, 2022 ($3.4 million and $20.2 million for the three and six months ended June 30, 2021).
(6) Comparative cash and cash equivalents balance as at December 31, 2021 .
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4 | Alamos Gold Inc
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Gold production (ounces)
Young-Davidson 46,400 45,100 98,300 93,100
Island Gold 37,300 33,200 61,800 75,400
Mulatos District(7) 20,200 35,900 42,700 71,500
Gold sales (ounces)
Young-Davidson 46,662 45,284 98,187 93,306
Island Gold 36,797 33,632 60,165 73,514
Mulatos District 18,705 28,665 42,278 67,243
Cost of sales (in millions)(1)
Young-Davidson $59.8 $61.3 $124.4 $123.3
Island Gold $32.0 $25.6 $56.2 $54.7
Mulatos District $60.1 $40.0 $106.8 $88.2
Cost of sales per ounce of gold sold (includes amortization)
Young-Davidson $1,282 $1,354 $1,267 $1,321
Island Gold $870 $761 $934 $744
Mulatos District(1) $3,213 $1,395 $2,526 $1,312
Total cash costs per ounce of gold sold (2)
Young-Davidson $866 $941 $852 $906
Island Gold $590 $502 $650 $483
Mulatos District $1,566 $893 $1,568 $906
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
Young-Davidson $1,087 $1,157 $1,064 $1,115
Island Gold $848 $830 $939 $777
Mulatos District $1,636 $1,144 $1,717 $1,084
Capital expenditures (sustaining, growth, capitalized exploration and capital advances) (in millions)(2)
Young-Davidson (4) $13.1 $19.6 $35.8 $41.5
Island Gold (5) $29.3 $29.2 $62.7 $58.7
Mulatos District (6) $21.3 $31.6 $47.3 $65.1
Other $5.3 $6.5 $10.5 $11.0
(1) Cost of sales includes mining and processing costs, royalties, and amortization. For the three and six months ended June 30, 2022, cost of sales at Mulatos District
includes $22.3 million non-cash inventory net realizable value adjustment.
(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 inclu de an allocation of corporate and administrative and share based
compensation expenses.
(4) Includes capitalized exploration at Young -Davidson of $1.3 million and $2.3 million for the three and six months ended June 30, 2022 ($1.5 million and $2.5 million
for the three and six months ended June 30, 2021).
(5) Includes capitalized exploration at Island Gold of $4.1 million and $9.2 million for the three and six months ended June 30, 2022 ($3.9 million and $8.4 million for the
three and six months ended June 30, 2021).
(6) Includes capitalized exploration at Mulatos District of $0.2 million for the three and six months ended June 30, 2022 ($1.0 million for the three and six months ended
June 30, 2021).
(7) The Mulatos District includes both the Mulatos pit, as well as La Yaqui Grande.
TRADING SYMBOL: TSX:AGI NYSE:AGI
5 | Alamos Gold Inc
Environment, Social and Governance Summary Performance
Health and Safety
• Recordable injury frequency rate1,2 of 1.50, an 8% decrease from the first quarter of 2022
• Lost time injury frequency rate1 of 0.08, an 11% decrease from the first quarter of 2022
• Competed in the Ontario Mine Rescue Competition, with Young-Davidson’s Gary Bennett winning the Individual
Technician Competition
During the second quarter of 2022, the recordable injury frequency ra te decreased with 18 recordable injuries,
consistent with the first quarter of 2022 but with more hours worked. One lost time injury was reported in the quarter,
consistent with the first quarter of 2022, though at a lower frequency rate due to additional hours worked. 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 he lp 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 respo nd to changing
conditions associated with COVID -19. 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.
Environment
• Announced its Company target of a 30% reduction in absolute GHG emissions by 2030 from the 2020/2021
average baseline year
• Zero significant environmental incidents in the second quarter of 2022 and year-to-date
• One minor fine at Mulatos related to a regulatory non -compliance at the mine camp for using an unlicensed
contractor for recycling of used cooking oil. This oversight was due to a recent regulation change in Mexico
• Work permits received for Island Gold for the construction of the shaft site access road and creek crossing
• Advanced both federal and provincial permitting for the Lynn Lake Project
19 minor spills occurred during the first quarter, including 16 at Island Gold and 3 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.
GHG Emissions Reduction Target
In June 2022, the Company released its target of a 30% reduction in absolute GHG emissions by 2030. This target
includes scope 1 and scope 2 GHG emissions, inclusive of all GHG emissions covered by the Kyoto Protocol. This is
a significant milestone in Alamos’ sustainability journey and considered a credible target by defi nition of the Carbon
Disclosure Project (“CDP”).
Alamos is already an industry leader in GHG emission intensity with an average of 0.38 tCO2e per ounce of gold
produced across its three operating mines (base year 2020/2021), 43% lower than the mining industry average of
0.67 tCO2e per ounce of gold. The 30% absolute reduction in GHG emissions will decrease Alamos’ emission
intensity by 55%. This includes the development of the Lynn Lake project, which is expected to begin producing
within the target period.
TRADING SYMBOL: TSX:AGI NYSE:AGI
6 | Alamos Gold Inc
As part of the Company’s emission reduction strategy, Alamos developed an Energy and Greenhouse Gas
Management Standard in support of its Sustainability Performance Management Framework. This included
completing Energy and Carbon Management System assessments at its operating sites to develop a baseline for its
existing Energy Management programs. Alamos reviewed and costed over 30 different GHG emission reduction
opportunities across the organization and utilized a Marginal Abatement Cost Curve to prioritize the projects that will
support the achievement of its emission reduction target.
Options investigated included renewable energy and clean grid capacity, green fleet (hybrid or battery electric
vehicles), electrification of process, and conversion to cleaner fuels. Electric conveyance systems were installed
during the lower mine expansion at the Young-Davidson Mine reducing the Company’s reliance on diesel
consumption and the Company is working to connect to grid power at Mulatos to offset diesel po wer generation.
The Company is also considering increasing use of biodiesel vs. conventional diesel at all operations, and replacing
propane with compressed natural gas for mine-air heaters at underground operations.
The Company’s target to reduce GHG emissions is in support of Canada’s Paris Accord Commitment and the World
Gold Council’s (WGC) commitment for members to adopt the recommendations of the Task Force on Climate-
Related Financial Disclosure (TCFD).
Community
• Continued Indigenous community engage ment, including the signing of a Community Benefits Agreement with
the Michipicoten First Nation for Island Gold on April 4, 2022
• Various community donations across all operations including funding for emergency vehicles and medical
equipment to the Distri ct of Timiskiming Paramedic Service, the Temiskaming Hospital Foundation, and the
municipality of Sahuaripa
• Sponsored a basketball camp with the Kirkland Lake Swamp Donkeys basketball club and the Matachewan and
Beaverhouse First Nations
• Installation of solar street lighting in the village of Matarachi, Mexico
• Continued support for local students in Sahuaripa, Matarachi and Hermosillo, with 70 students supported through
the Company’s Scholarship Program
Alamos believes that excellence in sustainability provides a net benefit to all stakeholders. The Company continues
to engage with local communities to understand local challenges and priorities, and to offer support during the COVID-
19 pandemic. Ongoing investments in local infrastructure, health care, education, cultural and community programs
have continued through the COVID-19 pandemic, with appropriate health and safety protocols.
Governance and Disclosure
• Published Lynn Lake Gold Project website to increase transparency and disclosure for local stakeholders
interested in the project and associated opportunities
• Recipient of the Casco De Plata safety award by t he Mining Chamber of Mexico (CAMIMEX) in recognition of
outstanding health and safety performance and governance at Mulatos
Alamos maintains the highest standards of corporate governance to ensure that corporate decision -making reflects
its values, includi ng 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, resulting in changes to previously reported
recordable injury rates.
TRADING SYMBOL: TSX:AGI NYSE:AGI
7 | Alamos Gold Inc
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 projects (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 adm inistrative
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 allocatio n 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 delivered on two key long -term objectives during the second quarter which have solidified its strong
outlook. This included achieving initial low -cost production at La Yaqui Grande and announcing the Phase 3+
Expansion of Island Gold, which will create a larger, more profitable and valuable operation.
Construction of La Yaqui Grande was completed in June, ahead of schedule and marking a significant transition for
the Mulatos District. La Yaqui Grande is expected to drive Mulatos District costs lower in the second half of the year
and generate significant free cash flow over the next five years. La Yaqui Grande represents another in a long line of
discoveries and high-return projects developed within the Mulatos District that have continued to extend the mine life.
Despite the inflationary environment, the impact of COVID-19, and several scope changes, the total construction cost
of $161 million was within 13% of the July 2020 estimate, demonstrating the Company's ability to execute in a
challenging environment.
In addition, the Company announced a Phase 3+ Expansion of Island Gold, wh ich will result in a step change in
production, with mining rates increasing to 2,400 tpd from the current rate of 1,200 tpd. This is expected to more than
double gold production to average 287,000 ounces per year at industry low mine -site all-in sustaining costs of $576
per ounce starting in 2026 upon completion of the shaft. The larger, longer -life operation reflects the significant
increase in Mineral Reserve and Resources since the Phase 3 study was completed in 2020, supporting a 43%
increase in mineab le resources to 4.6 million ounces of gold grading 10.59 g/t Au. Given strong ongoing cash flow
from operations, the majority of the Phase 3+ Expansion capital is expected to be self -funded by Island Gold.
The Company provided inaugural three -year product ion 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 a ssociated with the
comprehensive 2022 guidance and three-year production, cost and capital outlook.
The Company produced 202,800 ounces in the first half of the year, and with stronger production expected in the
second half driven by the ramp up of La Yaqu i Grande, the Company remains well positioned to meet full year
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8 | Alamos Gold Inc
production guidance of between 440,000 and 480,000 ounces. Third quarter production is expected to increase to
between 115,000 and 125,000 ounces, with a further increase expected in the fourth quarter. Consistent with full year
guidance, total cash costs are expected to decrease in the second half of the year compared to the first half with the
ramp up of low-cost production at La Yaqui Grande, higher grades at Island Gold, and the weaker Canadian dollar.
At Young-Davidson, mining rates of 8,1 60 tpd exceeded targeted rates for the fourth straight quarter, driving strong
first half production of 98,300 ounces and mine-site free cash flow of $54.0 million. With the solid performance through
the first half of the year, Young-Davidson is on track to achieve full year production and cost guidance. The operation
generated a record $100 million in mine -site free cash flow in 2021. With the strong ongoing performance, Young -
Davidson is expected to generate similar mine-site free cash flow in 2022 and over the long term.
Island Gold produced 61,800 ounces in the first half of the year, including a 52% increase in second quarter production
to 37,300 ounces at significantly lower costs relative to the firs t quarter reflecting higher grades and tonnes mined
and processed. With production expected to be higher in the second half of the year, Island Gold remains on track to
achieve full year guidance. Construction activities on the Phase 3+ Expansion are ramping up with shaft site clearing
ongoing, and the pre -sink expected to commence in August. Capital spending is expected to also increase in the
second half of the year to be consistent with full year guidance of between $180 and $200 million (excluding
exploration).
The exploration budget at Island Gold is $22 million in 2022 with the focus on following up on another successful
drilling campaign in 2021 that drove an 8% increase in high -grade Mineral Reserves and Resources to 5.1 million
ounces of gold. This ongoing growth was incorporated into the Phase 3+ Expansion Study released in June.
Combined production from the Mulatos District totaled 42,700 ounces in the first half of 2022, including 5,000 ounces
from the recently completed La Yaqui Grande projec t. With operations ramping up at La Yaqui Grande in the third
quarter and increasing grades from the El Salto portion of the Mulatos pit in the fourth quarter, production from the
Mulatos District is expected to increase significantly through the remainder of the year. As previously disclosed, total
cash costs and mine-site AISC were well above annual guidance during the first half of 2022, but expected to trend
significantly lower during the second half of the year as La Yaqui Grande represents a larger pr oportion of Mulatos
District production.
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 latter part of 2022, following which the Company expects to release an updated feasibility
study.
The Company's liquidity position remains strong, ending the second quarter with $121.5 million of cash and cash
equivalents, $22.5 million in equity securities, and no debt. Additionally, the Company has a $500 million undrawn
credit facility, providing total liquidity of $621.5 million.
As part of the Company's balanced approach to growth and capital allocation, the current focus is on the Phase 3+
Expansion at Island Gold. With no significant capital expected to be spent on developing Lynn Lake until the Phase
3+ Expansion is well underway, the Company remains well positioned to fund this growth 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.