Alamos Reports First Quarter 2019 Results
Alamos Reports First Quarter 2019 Results
All amounts are in United States dollars, unless otherwise stated.
TORONTO, May 01, 2019 -- Alamos Gold Inc. ( TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its
financial results for the quarter ended March 31, 2019.
“Alamos had a solid start to 2019, with strong performances at each operation. This included another record quarter of
production from Island Gold, achieving budgeted mining rates at Young-Davidson, producing our two millionth ounce of gold at
Mulatos and reducing consolidated cash costs by seven percent compared to a year ago. With the strong first quarter
performance, we remain on track to achieve full year production and cost guidance,” said John A. McCluskey, President and
Chief Executive Officer.
“Our various growth initiatives remain on schedule with the lower mine expansion at Young-Davidson and development of the
Cerro Pelon project progressing well in the quarter. In addition, construction activities at Kirazlı will be ramping up through the
year having received the Operating Permit during the quarter. These projects will be drivers of strong free cash flow growth
starting in the second half of 2020 which will in turn support growing returns to our shareholders,” Mr. McCluskey added.
First Quarter 2019
• Reported 125,300 ounces of gold production, reflecting strong performances from each site, including record quarterly
gold production of 35,600 ounces and record quarterly free cash flow1 of $16.6 million from Island Gold
• Produced the two millionth ounce of gold at Mulatos in March 2019, marking the end of the 5% royalty that has been
paid since the start of production in 2005
• Achieved underground mining rates of 6,500 tonnes per day at Young-Davidson, and produced 45,000 ounces of gold,
both consistent with annual guidance
• Sold 119,705 ounces of gold at an average realized price of $1,304 per ounce, in-line with the average London PM Fix
for the quarter, for revenues of $156.1 million. Gold production exceeded gold sales with a portion of first quarter
production sold subsequent to quarter end
• Total cash costs 1 of $732 per ounce, all-in sustaining costs ("AISC") 1 of $957 per ounce, and cost of sales of $1,061
per ounce were in line with annual guidance. Total cash costs were 5% lower than the fourth quarter of 2018 and 7%
lower than the first quarter of 2018 driven by low cost production growth at Island Gold
• Reported adjusted net earnings 1 of $10.3 million, or $0.03 per share 1, reflecting adjustments for unrealized foreign
exchange gains recorded within both deferred taxes and foreign exchange of $4.3 million, and other gains totaling $2.2
million
• Realized net earnings of $16.8 million, or $0.04 per share
• Generated cash flow from operating activities of $42.4 million ($61.7 million, or $0.16 per share, before changes in
working capital1)
• Ended the quarter with no debt and cash and cash equivalents of $180.6 million
• Repurchased and canceled 2,565,752 common shares at a cost of $10.6 million, or $4.14 per share under its Normal
Course Issuer Bid ("NCIB") announced in December 2018
• Announced a doubling of the annual dividend, with a $0.01 per share dividend to be paid quarterly in 2019 (up from
$0.01 per share semi-annually previously). The first quarterly dividend, paid on March 29, 2019, totaled $3.9 million
• Received the Operating Permit for the Kirazlı project in Turkey, and has been granted all the major permits required for
the start of construction
• Subsequent to quarter-end, sold non-core royalties to Metalla Royalty & Streaming Ltd. ("Metalla") for proceeds of $8.0
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.
Highlight Summary
Three Months Ended March 31,
2019 2018
Financial Results (in millions)
Operating revenues $156.1 $173.1
Cost of sales (1) $127.0 $144.7
Earnings from operations $18.7 $18.5
Net earnings $16.8 $0.6
Adjusted net earnings (2) $10.3 $12.3
Cash provided by operations before working capital and cash taxes(2) $61.7 $62.6
Cash provided by operating activities $42.4 $58.8
Capital expenditures (sustaining) (2) $16.1 $10.7
Capital expenditures (growth) (2) $34.1 $36.6
Capital expenditures (capitalized exploration) (3) $3.1 $4.2
Operating Results
Gold production (ounces) 125,300 128,900
Gold sales (ounces) 119,705 130,045
Per Ounce Data
Average realized gold price $1,304 $1,331
Average spot gold price (London PM Fix) $1,304 $1,329
Cost of sales per ounce of gold sold (includes amortization) (1) $1,061 $1,113
Total cash costs per ounce of gold sold (2) $732 $789
All-in sustaining costs per ounce of gold sold (2) $957 $935
Share Data
Earnings per share, basic $0.04 $0.00
Adjusted earnings per share, basic (2) $0.03 $0.03
Weighted average common shares outstanding (basic) (000’s) 389,735 389,254
Financial Position (in millions)
Cash and cash equivalents (4) $180.6 $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.
(4) Comparative cash and cash equivalents balance as at December 31, 2018.
Three Months Ended March 31,
2019 2018
Gold production (ounces)
Young-Davidson 45,000 41,000
Mulatos 38,900 46,000
Island Gold 35,600 28,100
El Chanate (1) 5,800 13,800
Gold sales (ounces)
Young-Davidson 43,996 44,790
Mulatos 36,089 44,659
Island Gold 33,585 27,503
El Chanate (1) 6,035 13,093
Cost of sales (in millions)(2)
Young-Davidson $56.9 $57.0
Mulatos $33.8 $43.6
Island Gold $28.6 $27.5
El Chanate $7.7 $16.6
Cost of sales per ounce of gold sold (includes amortization)
Young-Davidson $1,293 $1,273
Mulatos $937 $976
Island Gold $852 $1,000
El Chanate $1,276 $1,268
Total cash costs per ounce of gold sold (3)
Young-Davidson $839 $824
Mulatos $743 $786
Island Gold $497 $553
El Chanate $1,193 $1,176
Mine-site all-in sustaining costs per ounce of gold sold (3),(4)
Young-Davidson $1,068 $994
Mulatos $809 $842
Island Gold $649 $633
El Chanate $1,193 $1,191
Capital expenditures (sustaining, growth and capitalized exploration) (in millions)(3)
Young-Davidson $22.3 $22.9
Mulatos(5) $12.6 $7.2
Island Gold (6) $12.4 $13.9
El Chanate $ — $0.1
Other $6.0 $7.4
(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 $nil for the three months ended March 31, 2019 ($1.1 million for the three
months ended March 31, 2018).
(6) Includes capitalized exploration at Island Gold of $3.1 million for the three months ended March 31, 2019 ($3.1 million for
the three months ended March 31, 2018).
Outlook and Strategy
2019 Guidance
Young-
Davidson Mulatos
Island
Gold El Chanate Turkey Other (2) Total
Gold production (000’s ounces) 180-190 150-160 135-145 15-25 480-520
Cost of sales, including
amortization (in millions)(4) $226 $165 $120 $26 — — $537
Cost of sales, including
amortization ($ per ounce)(4) $1,220 $1,065 $855 $1,300 — — $1,075
Total cash costs ($ per ounce)(1) $750-790 $820-860 $460-500 $1,200 — — $710-750
All-in sustaining costs
($ per ounce)(1) — — $920-960
Mine-site all-in sustaining costs
($ per ounce)(1),(3) $940-980 $860-900 $730-770 $1,200 — — —
Amortization costs
($ per ounce)(1) $450 $225 $375(6) $100 — — $345
Capital expenditures (in millions)
Sustaining capital(1) $35-40 $5 $35-40 — — — $75-85
Growth capital(1) $45-50 $45-50 (5) $15-20 — $75 $35 (2) $215-230
Total capital expenditures (1) $80-90 $50-55 $50-60 — $75 $35 $290-315
(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 capitalized exploration at all operating sites and development projects (excluding Turkey which is separately
disclosed).
(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.
(5) Includes capital spending at Cerro Pelon and La Yaqui Grande of approximately $33 million
(6) Amortization per ounce was updated for Island Gold, reflecting the 2018 Mineral Reserves and Resource Statement
released in February 2019.
The Company’s long-term strategic objective is to generate increasing cash flow through low-cost production growth from its
existing operations and portfolio of development projects. Since 2014, Alamos has transformed from a single asset producer
with 140,000 ounces of annualized production to producing over 500,000 ounces in 2018. This transformational growth has
been accomplished while also improving margins through lower operating costs. Looking forward, the Company anticipates a
substantial reduction in growth capital in 2020 and beyond and a further reduction in costs, which will lead to strong free cash
flow growth.
The Company is on track to achieve 2019 guidance with a strong first quarter performance, including production of 125,300
ounces at lower than budgeted total cash costs of $732 per ounce. The Company expects production and total cash costs to
be in a similar range in the second quarter with all-in sustaining costs expected to increase reflecting the timing of sustaining
capital spending. Costs are expected to decline in the second half of 2019 driving stronger mine-site free cash flow towards the
end of the year.
The near-term focus at Young-Davidson remains on maximizing efficiency from the upper mine infrastructure, while completing
development and construction of the lower mine. Gold production in the first quarter of 45,000 ounces and mining rates of
6,540 tpd were consistent with guidance. Young-Davidson is expected to produce between 180,000 to 190,000 ounces in
2019. Total cash costs and mine-site all-in sustaining costs are expected to decrease 6% compared to 2018, driven by higher
underground mining rates and grades mined.
As the lower mine expansion nears completion, approximately three months of downtime of the Northgate shaft is required to
facilitate the tie-in of the upper and lower mines. Accordingly, and as previously guided, gold production from Young-Davidson
is expected to be lower in the first half of 2020. Following completion of the tie-in, underground mining rates are expected to
ramp up above 7,500 tpd in the second half of 2020. This is expected to drive annual gold production above 200,000 ounces
per year in 2021 and beyond. This production increase combined with declining costs and capital spending, is expected to
result in strong free cash flow growth from Young-Davidson starting in the second half of 2020.
Island Gold started the year strong with record quarterly production of 35,600 ounces, up 23% from the previous record set in
the fourth quarter of 2018. Further, Island Gold generated $16.6 million in free cash flow in the first quarter, net of all capital
and exploration spending, reflecting the high-grade nature of the Island Gold deposit. Island Gold is expected to produce
between 135,000 to 145,000 ounces in 2019, a 33% increase from 2018. The increase in production reflects higher grades and
throughput with the completion of the Phase I expansion last year. Combined with decreasing costs, Island Gold is expected
to generate strong free cash flow growth in 2019, net of a continued significant investment of $19 million in exploration to
further expand Mineral Reserves and Resources.
The Phase I expansion at Island Gold was completed in 2018, expanding the mill to a design capacity of approximately 1,200
tpd. The current mine infrastructure can support similar mining rates; however, the operation is currently permitted to operate
at an average annual rate of 1,100 tpd. With a mine and mill that can support higher throughput rates, the Company is in the
process of permitting a Phase II expansion to 1,200 tpd which is expected to be complete by the end of 2019. In parallel, the
Company is evaluating a Phase III expansion of the operation beyond 1,200 tpd.
Total production from the Mulatos District was on budget in the first quarter and is expected to be between 150,000 to 160,000
ounces of gold in 2019, consistent with long term guidance provided last year. Mine-site all-in sustaining costs are expected to
range between $860 and $900 per ounce, and reflect the end of the 5% royalty which was achieved in March 2019.
Construction of the higher grade, high return Cerro Pelon project is advancing on schedule with initial low-cost production
expected in 2020.
Mining activities ceased at El Chanate in the fourth quarter of 2018 and the operation has transitioned to residual leaching
which is anticipated to result in a declining rate of production through 2019. Mine-site all-in sustaining costs are expected to
average $1,200 per ounce in 2019, with approximately 25% of those costs having been already incurred.
With the receipt of the Operating Permit at Kirazlı, construction activities will be ramping up through the remainder of the year
driving the bulk of development capital spending in 2019. The majority of the remaining development capital spending will be
comprised of capitalized exploration at Island Gold and exploration, permitting and development activities at Lynn Lake.
The 2019 global exploration budget is $33 million, with $19 million allocated for exploration at Island Gold. Mulatos and Lynn
Lake remain the other two areas of focus with $6 million budgeted for each.
With approximately $580 million of cash and available liquidity, no debt, and growing cash flow from its operations, the
Company is well positioned to fund its internal growth initiatives.
First Quarter 2019 Results
Young-Davidson Financial and Operational Review
Three Months Ended March 31,
2019 2018
Gold production (ounces) 45,000 41,000
Gold sales (ounces) 43,996 44,790
Financial Review (in millions)
Operating Revenues $57.4 $59.5
Cost of sales (1) $56.9 $57.0
Earnings from operations $0.5 $2.5
Cash provided by operating activities $22.9 $27.4
Capital expenditures (sustaining) (2) $10.0 $7.6
Capital expenditures (growth) (2) $12.3 $15.3
Mine-site free cash flow (2) $0.6 $4.5
Cost of sales, including amortization per ounce of gold sold (1) $1,293 $1,273
Total cash costs per ounce of gold sold (2) $839 $824
Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $1,068 $994
Underground Operations
Tonnes of ore mined 588,634 585,060
Tonnes of ore mined per day ("tpd") 6,540 6,501
Average grade of gold (4) 2.54 2.35
Metres developed 2,900 3,144
Mill Operations
Tonnes of ore processed 609,927 669,287
Tonnes of ore processed per day 6,777 7,437
Average grade of gold (4) 2.47 2.22
Contained ounces milled 48,515 46,193
Average recovery rate 90% 90%
(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 45,000 ounces of gold, 10% higher than the comparative quarter of 2018, reflecting higher grades
mined, partially offset by lower tonnes milled in the quarter. The operation is on track to achieve 2019 production and cost
guidance.
Underground mining rates of 6,540 tpd were consistent with the comparative period, and in-line with 2019 guidance. Mining
rates are expected to remain at a similar level until the lower-mine tie-in is completed in the first half of 2020. Underground
grades mined of 2.54 g/t Au were lower than annual guidance due to mine sequencing but improved 8% relative to the first
quarter of 2018.
Mill throughput of 609,927 tonnes, or 6,777 tpd, was lower than the comparative quarter and annual guidance due to deferral of
processing frozen low-grade stockpile to warmer months. As the low-grade stockpiles thaw, mill throughput is expected to
increase to average 7,800 tpd until the stockpiles are depleted in the third quarter, with mill throughput expected to drop to
6,500 tpd for the remainder of the year. Mill recoveries of 90% in the quarter were in line with guidance.
Financial Review
First quarter revenues of $57.4 million were slightly below the prior year quarter, reflecting a lower realized gold price.
Cost of sales, which includes mining and processing costs, royalties, and amortization expense of $56.9 million were
consistent with the comparative quarter of 2018, as were underground mining costs of approximately CAD$52 per tonne.
Amortization of $454 per ounce was also consistent with the prior year period of $449 per ounce.
Total cash costs of $839 per ounce in the first quarter were consistent with the comparative period, but were above annual
guidance as a result of lower grades mined, and higher than anticipated underground maintenance costs.
Mine-site AISC were $1,068 per ounce in the first quarter, up 7% from the first quarter of 2018, reflecting the timing of
sustaining capital expenditures. Full year total cash costs and mine-site AISC are both expected to be within 2019 guidance
as grades increase and sustaining capital spending decreases throughout the year.
Capital expenditures were $22.3 million in the first quarter. This included $10.0 million of sustaining capital and $12.3 million of
growth capital. Major capital spending in the first quarter was focused on lower mine construction and lateral development in
the upper and lower mines.
Young-Davidson generated mine-site free cash flow of $0.6 million in the first quarter, lower than the same period of 2018 due
to a lower realized gold price and working capital payments. Young-Davidson continues to self-finance the lower mine
expansion.
Island Gold Financial and Operational Review
Three Months Ended March 31,
2019 2018
Gold production (ounces) 35,600 28,100
Gold sales (ounces) 33,585 27,503
Financial Review (in millions)
Operating Revenues $43.8 $36.6
Cost of sales (1) $28.6 $27.5
Earnings from operations $15.0 $9.0
Cash provided by operating activities $29.0 $23.7
Capital expenditures (sustaining) (2) $5.1 $2.2
Capital expenditures (growth) (2) $4.2 $8.6
Capital expenditures (capitalized exploration) (2) $3.1 $3.1
Mine-site free cash flow (2) $16.6 $9.8
Cost of sales, including amortization per ounce of gold sold (1) $852 $1,000
Total cash costs per ounce of gold sold (2) $497 $553
Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $649 $633
Underground Operations
Tonnes of ore mined 97,513 84,655
Tonnes of ore mined per day ("tpd") 1,083 941
Average grade of gold (4) 11.40 11.06
Metres developed 1,557 1,555
Mill Operations
Tonnes of ore processed 101,997 82,105
Tonnes of ore processed per day 1,133 912
Average grade of gold (4) 11.11 11.07
Contained ounces milled 36,441 29,224
Average recovery rate 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 a record 35,600 ounces in the first quarter, a 27% increase from the comparative period driven by higher
mining and milling rates. The operation achieved record gold production and record free cash flow of $16.6 million,
demonstrating the profitability of this high-grade operation.
Underground mining rates increased to 1,083 tpd in the first quarter. This marked a 15% improvement from the first quarter of
2018 as mining rates were increased to match the expanded mill capacity. Underground mining rates are expected to average
1,100 tpd in 2019. Underground grades mined averaged 11.40 g/t Au in the first quarter, in line with guidance.
Mill throughput increased to 1,133 tpd in the first quarter, a 24% increase compared to the prior year quarter, reflecting the
completion of the Phase I expansion of the mill in 2018. Milling rates exceeded mining rates, as tonnes mined in the quarter
were supplemented with existing surface stockpiles. Mill recoveries were 97% for the first quarter, in line with the prior year
and guidance.
Financial Review
Island Gold generated revenues of $43.8 million in the first quarter reflecting record ounces sold. Revenues increased by $7.2
million from the prior year period, or 20% reflecting a 22% increase in ounces sold.
Cost of sales, which includes mining and processing costs, royalties, and amortization expense of $28.6 million, were
consistent with the comparative period, as more ounces sold were offset by lower mining costs and lower amortization driving
down cost of sales per ounce by 15%.
Total cash costs were $497 per ounce in the first quarter, a 10% improvement from the comparative quarter. Higher mining
rates in 2019 resulted in lower underground mining costs per tonne. Total cash costs were consistent with guidance, as
mining rates and underground grades were in line with budget.
Mine-site AISC of $649 per ounce in the first quarter were below the guidance range of $730 to $770 per ounce, reflecting the
timing of sustaining capital. The Company incurred $5.1 million of sustaining capital in the first quarter, or 14% of full year
guidance (based on mid-point). Sustaining capital will increase in subsequent quarters of 2019.
Total capital expenditures were $12.4 million in the first quarter, with spending focused on lateral development, mining
equipment, and capitalized exploration. Capital spending was comprised of $5.1 million of sustaining capital and $7.3 million of
growth capital (inclusive of capitalized exploration).
Island Gold generated mine-site free cash flow of $16.6 million during the first quarter driven by record gold production, strong
operating margins, and lower capital spending. Island Gold is expected to generate strong free cash flow in 2019, net of a
continued significant investment of $19 million in exploration to further expand Mineral Reserves and Resources.
Mulatos Financial and Operational Review
Three Months Ended March 31,
2019 2018
Gold production (ounces) 38,900 46,000
Gold sales (ounces) 36,089 44,659
Financial Review (in millions)
Operating Revenues $47.1 $59.6
Cost of sales (1) $33.8 $43.6
Earnings from operations $12.4 $12.7
Cash provided by operating activities $0.6 $16.1
Capital expenditures (sustaining) (2) $1.0 $0.8
Capital expenditures (growth) (2) $11.6 $5.3
Capital expenditures (capitalized exploration) (2) $— $1.1
Mine-site free cash flow ($12.0) $8.9
Cost of sales, including amortization per ounce of gold sold (1) $937 $976
Total cash costs per ounce of gold sold (2) $743 $786
Mine site all-in sustaining costs per ounce of gold sold (2),(3) $809 $842
Open Pit & Underground Operations
Tonnes of ore mined - open pit (4) 1,835,733 2,189,735
Total waste mined - open pit 1,977,839 1,998,605
Total tonnes mined - open pit 3,813,572 4,870,381
Waste-to-ore ratio (operating) 0.51 0.91
Tonnes of ore mined - underground — 17,623
Crushing and Heap Leach Operations
Tonnes of ore stacked 1,875,556 1,750,471
Average grade of gold processed (5) 0.98 0.84
Contained ounces stacked 59,174 47,358
Mill Operations
Tonnes of high grade ore milled — 30,389
Average grade of gold processed (5) — 8.11
Contained ounces milled — 7,917
Total contained ounces stacked and milled 59,174 55,275
Recovery ratio (ratio of ounces produced to contained ounces stacked and milled) 66% 83%
Ore crushed per day (tonnes) - combined 20,800 19,800
(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 ore stockpiled during the quarter.
(5) Grams per tonne of gold ("g/t Au").
Mulatos produced 38,900 ounces in the first quarter of 2019, in-line with annual guidance. This was down from the prior year
period with mining from the San Carlos underground deposit having ceased in the third quarter of 2018. Mulatos is on track to
achieve production and cost guidance for the year.
Total tonnes mined in the first quarter were 22% lower than the prior year quarter, due to an unexpected pit slope movement in
the fourth quarter of 2018 of the El Salto area of the open pit which temporarily impacted access to the Mulatos pit. The
Company is currently mining from both the Mulatos and Victor open pits. In the first quarter, the Company completed pre-
stripping of the San Carlos pit and expects to commence mining ore in the second quarter.
Total crusher throughput averaged 20,800 tpd for a total of 1,875,556 tonnes stacked in the first quarter at a grade of 0.98 g/t
Au. Grades mined were higher than guidance as the Company resequenced mining activities in the Mulatos pit. Grades are
expected to normalize to guided levels through the remainder of the year.
The recovery ratio of ounces produced to contained ounces stacked was 66% in the quarter. The Company expects the
recovery ratio to average 70% in 2019.
Financial Review
First quarter revenues of $47.1 million were $12.5 million lower than the prior year quarter, primarily due to lower concentrate
ounces sold in 2019 with the completion of mining at the San Carlos underground deposit in September of 2018.
Cost of sales, which includes mining and processing costs, royalties, and amortization expense, were $33.8 million in the first
quarter, lower than the prior year period due to lower total tonnes mined in the open pit and fewer ounces sold. Amortization of
$194 per ounce was in line with the prior year and below guidance.
Total cash costs of $743 per ounce in the first quarter were lower than the prior year quarter, and significantly below guided
levels. This outperformance on costs was the result of higher grades stacked in the quarter, a lower operating waste to ore
ratio, and low-cost ounces sold from concentrate. During the first quarter, the Company recovered approximately 2,000 ounces
in concentrate from the mill that were previously not expected to be recovered and had minimal associated inventory costs.
This had the impact of driving total cash costs at Mulatos down significantly in the quarter. The Company does not expect
cash costs to remain at these lower levels through the remainder of the year and maintains total cash cost guidance of $820
to $860 for the year.
Mine-site AISC of $809 per ounce in the first quarter were lower than the $842 per ounce reported in the prior year quarter, due
to timing of sustaining capital spending and lower cash costs. The Company does not expect mine-site AISC to remain at
these lower levels through the remainder of the year, and maintains guidance of $860 to $900 for the year.
Mulatos reported negative free cash-flow of $12.0 million in the first quarter, given higher growth capital spending on
construction of Cerro Pelon and San Carlos pre-stripping activities. Mulatos paid the annual mining tax of $4.1 million and did
not collect value-added taxes in the first quarter, both of which contributed to the cash out-flow.
El Chanate Financial and Operational Review
Three Months Ended March 31,
2019 2018
Gold production (ounces) 5,800 13,800
Gold sales (ounces) 6,035 13,093
Financial Review (in millions)
Operating Revenues $7.8 $17.4
Cost of sales (1) $7.7 $16.6
Earnings from operations $0.1 $0.8
Cash provided by operating activities $1.2 $1.2
Capital expenditures $ — $0.1
Mine-site free cash flow (2) $1.2 $1.1
Cost of sales, including amortization per ounce of gold sold (1) $1,276 $1,268
Total cash costs per ounce of gold sold (2) $1,193 $1,176
Mine site all-in sustaining costs per ounce of gold sold (2),(3) $1,193 $1,191
(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.