AGI.TO · 2020-04-29 12:00:00

Alamos Reports First Quarter 2020 Results

Financials

TORONTO, April 29, 2020 -- Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its

financial results for the quarter ended March 31, 2020.

“We had a solid start to the year amidst a challenging environment with the COVID-19 pandemic. With strong operational

performances at Island Gold and Mulatos, we exceeded the top end of our first quarter production guidance while completing

several critical path items on the lower mine expansion at Young-Davidson,” said John A. McCluskey, President and Chief

Executive Officer.

“Despite the temporary challenges with COVID-19, Alamos remains well positioned for a strong second half of the year. We

expect to start ramping up operations at Island Gold in a safe manner in early May and will do the same at Mulatos once the

government suspension has been lifted. We are making solid progress on the Phase III expansion study at Island Gold and the

lower mine expansion at Young-Davidson with both expected to be completed in the middle of this year. We expect both will

be significant catalysts for the Company. Combined with a robust balance sheet and strong free cash flow growth starting in

the second half of this year, the outlook for Alamos has never been stronger,” Mr. McCluskey added.

First Quarter 2020

• Produced 110,800 ounces of gold, driven by strong performances at Island Gold and Mulatos

• Island Gold produced 38,800 ounces of gold and generated quarterly mine-site free cash flow1 of $19.6 million

• Achieved record underground mining rates of 1,240 tonnes per day ("tpd") in the first quarter at Island Gold, a 14%

improvement over the prior year period

• Mulatos produced 42,600 ounces of gold and generated $14.1 million of mine-site free cash flow1

• In response to COVID-19, proactively implemented preventative measures across all operations; to date, the Company

has not had any confirmed cases of COVID-19 among any of its employees or contractors

• Commenced the tie-in of the upper and lower mines at Young-Davidson and completed several critical path items during

and subsequent to the quarter. This included connecting the upper and lower mine ramp system and connecting the

upper and lower portions of the Northgate shaft through removal of the rock pentice. The tie-in is anticipated to be

completed in July 2020, a slight delay from June reflecting labour and productivity constraints related to COVID-19

• Sold 111,854 ounces of gold at an average realized price of $1,582 per ounce for revenues of $176.9 million

• Cash flow from operating activities of $56.6 million ($81.7 million, or $0.21 per share, before changes in working

capital1)

• Consolidated total cash costs 1 of $759 per ounce and all-in sustaining costs ("AISC") 1 of $1,010 per ounce were both at

the low end of 2020 annual guidance, driven by lower costs at Mulatos and Island Gold

• Reported adjusted net earnings1 of $29.4 million, or $0.08 per share 1, which includes adjustments for unrealized foreign

exchange losses of $41.9 million, of which $36.8 million is recorded within deferred taxes, partially offset by other one-

time gains of $0.2 million

• Realized a net loss of $12.3 million, or $0.03 per share

• Drew $100.0 million from the Company's credit facility, leaving $400.0 million undrawn at March 31, 2020

• Ended the quarter with cash and cash equivalents of $214.7 million and equity securities of $15.6 million

• Repurchased a 3% net smelter return ("NSR") royalty payable on the majority of Mineral Reserves and Resources at

Island Gold for cash consideration of $54.8 million. This has reduced the effective royalty rate from 4.4% to 2.2% on

Mineral Reserves, and has reduced 2020 total cash costs at Island Gold by approximately $45 per ounce

• Paid a quarterly dividend of $5.9 million, representing a 50% increase in the quarterly dividend to an annual rate of $0.06

per share, and adopted a Dividend Reinvestment and Share Purchase Plan ("DRIP")

• Repurchased 1,133,561 common shares at a cost of $5.5 million, or $4.90 per share, under the Company's Normal

Course Issuer Bid ("NCIB")

• Reported updated year-end 2019 Mineral Reserves and Resources, highlighted by a substantial increase in Mineral

Reserves and Resources at Island Gold totaling 0.9 million ounces

• Announced the temporary suspension at Island Gold on March 24, 2020 and Mulatos on April 2, 2020; subsequent to

quarter-end, withdrew 2020 guidance

(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,

2020 2019

Financial Results (in millions)

Operating revenues $176.9 $156.1

Cost of sales (1) $120.3 $127.0

Earnings from operations $46.2 $18.7

Earnings before income taxes $40.5 $20.6

Net (loss) earnings ($12.3) $16.8

Adjusted net earnings (2) $29.4 $10.3

Earnings before interest, depreciation and amortization (2) $76.7 $60.5

Cash provided by operations before working capital and cash taxes(2) $81.7 $62.1

Cash provided by operating activities $56.6 $42.4

Capital expenditures (sustaining) (2) $17.5 $16.1

Capital expenditures (growth) (2) (3) $41.3 $34.1

Capital expenditures (capitalized exploration) (4) $4.5 $3.1

Operating Results

Gold production (ounces) 110,800 125,300

Gold sales (ounces) 111,854 119,705

Per Ounce Data

Average realized gold price $1,582 $1,304

Average spot gold price (London PM Fix) $1,583 $1,304

Cost of sales per ounce of gold sold (includes amortization) (1) $1,076 $1,061

Total cash costs per ounce of gold sold (2) $759 $732

All-in sustaining costs per ounce of gold sold (2) $1,010 $957

Share Data

(Loss) earnings per share, basic and diluted ($0.03) $0.04

Adjusted earnings per share, basic and diluted(2) $0.08 $0.03

Weighted average common shares outstanding (basic) (000’s) 391,341 389,735

Financial Position (in millions)

Cash and cash equivalents (5) $214.7 $182.8

Long-term debt (5) $100.0 $—

(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 growth capital from operating sites and excludes the Island Gold royalty repurchase of $54.8 million.

(4) Includes capitalized exploration at Mulatos and Island Gold.

(5) Comparative cash and cash equivalents and long-term debt balance as at December 31, 2019.

Three Months Ended March 31,

2020 2019

Gold production (ounces)

Young-Davidson 28,700 45,000

Mulatos 42,600 38,900

Island Gold 38,800 35,600

El Chanate (1) 700 5,800

Gold sales (ounces)

Young-Davidson 28,905 43,996

Mulatos 43,822 36,089

Island Gold 39,127 33,585

El Chanate (1) — 6,035

Cost of sales (in millions)(2)

Young-Davidson $43.8 $56.9

Mulatos $46.0 $33.8

Island Gold $30.5 $28.6

El Chanate (1) $— $7.7

Cost of sales per ounce of gold sold (includes amortization)

Young-Davidson $1,515 $1,293

Mulatos $1,050 $937

Island Gold $780 $852

El Chanate (1) $— $1,276

Total cash costs per ounce of gold sold (3)

Young-Davidson $1,093 $839

Mulatos $812 $743

Island Gold $452 $497

El Chanate (1) $— $1,193

Mine-site all-in sustaining costs per ounce of gold sold (3),(4)

Young-Davidson $1,242 $1,068

Mulatos $958 $809

Island Gold $670 $649

El Chanate (1) $— $1,193

Capital expenditures (sustaining, growth and capitalized exploration) (in millions)(3)

Young-Davidson $27.0 $22.3

Mulatos(5) $7.4 $12.6

Island Gold (6) $22.1 $12.4

Other $6.8 $6.0

(1) El Chanate transitioned to the reclamation phase of the mine life in the fourth quarter of 2019. Incremental production is a

result of rinsing the leach pad. Gold sales from El Chanate in 2020 are not included in revenue and cost of sales.

(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 $0.5 for the three months ended March 31, 2020 (for the three months ended

March 31, 2019 - $nil).

(6) Includes capitalized exploration at Island Gold of $4.0 million for the three months ended March 31, 2020 (for the three

months ended March 31, 2019 - $3.1 million), and excludes the royalty repurchase of $54.8 million.

Management's Response to the COVID-19 Pandemic

The World Health Organization declared COVID-19 a pandemic on March 11, 2020. The Company responded rapidly and

proactively to COVID-19 and has implemented several initiatives to help protect the health and safety of our employees, their

families and the communities in which we operate. To date, Alamos has not had any confirmed cases of COVID-19 among

any of its employees or contractors.

Specifically, each of our operating mine sites has activated established crisis management plans and developed site-specific

plans that enable them to meet and respond to changing conditions associated with COVID-19. The Company is adopting the

advice of public health authorities and adhering to government regulations with respect to COVID-19 in the jurisdictions in

which it operates.

The following measures have been instituted across the Company to prevent the potential spread of the virus:

• Medical screening for all personnel prior to entry to site for symptoms of COVID-19

• Training on proper hand hygiene and self protection

• Remote work options have been implemented for eligible employees

• Mandatory use of PPE for cleaners, nursing staff and security personnel

• Rigid camp and site hygiene protocols have been instituted and are being followed

• Social distancing practices have been implemented for all meetings, huddles and transportation

• Elimination of all non-essential business travel

• Required 14-day quarantine for any employees returning from out of country travel

Impact on Operations

In order to protect nearby communities and align with government requirements, two of the Company's mines have been

placed temporarily on care and maintenance. These mines are positioned to safely and quickly resume normal operations

once restrictions are lifted.

At Island Gold, operations were suspended on March 25, 2020 given the unique set up of the operation with a large portion of

the workforce operating on a fly-in, fly-out basis and being housed within a camp located directly within the local community. A

number of essential employees remain on site to provide security, water management and other environmental protection

activities. The Company expects to begin a phased restart of the operations in early May 2020.

Operations at Mulatos were suspended in early April following a mandate by the Mexican government to suspend all non-

essential businesses in response to the COVID-19 crisis. The original suspension period has been extended to May 31, 2020;

however, the government is reviewing the possibility of lifting restrictions in certain regions on May 18, 2020, provided those

regions remain without positive cases. Essential employees remain on site to continue processing and other critical site

activities. The Company will look to restart mining, crushing and stacking ore on the leach pad at the conclusion of the

government mandated suspension. Although mining activities were suspended in April, the Company continues to recover gold

from the leach pad given the significant amount of contained ounces stacked in the first quarter.

To date, operating activities at Young-Davidson have not been significantly impacted with mining and processing activities and

work on the lower mine expansion ongoing. However, as a result of labour and productivity constraints resulting from the above

noted health and safety measures, the lower mine expansion project is now expected to be completed in July 2020, a slight

delay from previous guidance of June 2020.

Impact on 2020 Guidance

Given the downtime at both Island Gold and Mulatos, and the potential for further voluntary or government-mandated business

interruptions, the Company withdrew its 2020 production, cost and capital guidance on April 2, 2020.

Outlook and Strategy

2020 Guidance for Reference Purposes (Withdrawn in April 2020)

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 $116 $168 — $491

Cost of sales, including

amortization ($ per ounce)(4) $1,360 $840 $1,085 — $1,103

Total cash costs ($ per ounce)(1)(5) $910-950 $480-520 $840-880 — $757-797

All-in sustaining costs ($ per ounce)(1)(5) $1,007-1,047

Mine-site all-in sustaining costs ($ per ounce)(1)(3)(5) $1,110-1,150 $740-780 $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.

(5) On March 16, 2020, the Company updated total cash cost and AISC guidance to reflect the repurchase and cancellation of

a royalty at Island Gold

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.

With the strong start to 2020, the Company exceeded the top end of first quarter 2020 guidance with production of 110,800

ounces. In addition, total cash costs and all-in sustaining costs in the first quarter were at the low end of annual guidance

issued in December 2019, driving strong margins and cash flow. However, given the temporary suspension of operations at

Mulatos and Island Gold, the Company made the decision to withdraw its 2020 production and cost guidance on April 2, 2020.

Despite the temporary challenges associated with COVID-19, the Company's strong outlook remains intact with several

significant near term positive catalysts. These include the Phase III expansion study of Island Gold which is expected to be

competed mid-2020 and showcase a larger, very profitable, long-life operation; the completion of the lower mine expansion at

Young-Davidson in July; and the transition to strong company-wide free cash flow starting in the second half of 2020.

Island Gold and Mulatos are well positioned for a quick and safe resumption of operations. The Company expects to begin a

phased restart of operations at Island Gold in early May 2020. At Mulatos, operations remain suspended as per the mandate

by the Mexican government to suspend all non-essential businesses. The suspension has been extended to May 31, 2020;

however, the government is reviewing the possibility of lifting restrictions in certain regions that have not been affected on May

18, 2020. The Company has scaled down mining and other activities and continues to recover gold from the leach pad given

the significant leach pad inventory. The Company is not aware of any confirmed cases of COVID-19 in the region surrounding

Mulatos and will look to restart full operations once the government suspension is lifted. Following the resumption of normal

operating activities at both Island Gold and Mulatos, the Company will provide updated 2020 guidance.

At Young-Davidson, the lower mine expansion is in the final stages with the tie-in having commenced in February 2020.

Several critical path items have recently been completed including the installation of the crusher, the breakthrough of the upper

and lower mine ramp system and connecting the upper and lower portions of the Northgate shaft through removal of the rock

pentice. The lower mine tie-in is now expected to be completed in July 2020, given some labour and productivity constraints

related to COVID-19.

During this previously guided downtime of the Northgate shaft, the Company continues to truck ore to surface from the upper

mine at a rate of 3,000 tpd. Following completion of the tie-in in July, underground mining rates are anticipated to increase to

7,500 tpd by the end of 2020. This is expected to drive production higher and costs significantly lower at Young-Davidson in

the second half of 2020.

The Phase III expansion study at Island Gold is scheduled to be completed by mid-2020. The expansion 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 showcase Island Gold as a larger, more profitable,

long-life operation.

The surface and underground exploration program at Island Gold continued through most of the first quarter but was

temporarily suspended. The 2020 program is 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.

At Mulatos, the Company has progressed detailed engineering and project design for La Yaqui Grande, and expects to make

a construction decision on the 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.

The Company's liquidity remains strong, ending the quarter with $214.7 million of cash and cash equivalents. This reflects the

repurchase of the Island Gold royalty in March for $54.8 million and the drawdown of $100.0 million on the Company’s $500.0

million revolving credit facility. The Company has no debt other than the $100.0 million drawn on the revolving facility and is

well positioned to fund its internal growth initiatives. The Company expects to transition to strong free cash flow generation in

the second half of 2020.

First Quarter 2020 Results

Young-Davidson Financial and Operational Review

Three Months Ended March 31,

2020 2019

Gold production (ounces) 28,700 45,000

Gold sales (ounces) 28,905 43,996

Financial Review (in millions)

Operating Revenues $45.7 $57.4

Cost of sales (1) $43.8 $56.9

Earnings from operations $1.9 $0.5

Cash provided by operating activities $8.1 $22.9

Capital expenditures (sustaining) (2) $4.2 $10.0

Capital expenditures (growth) (2) $22.8 $12.3

Mine-site free cash flow (2) ($18.9) $0.6

Cost of sales, including amortization per ounce of gold sold (1) $1,515 $1,293

Total cash costs per ounce of gold sold (2) $1,093 $839

Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $1,242 $1,068

Underground Operations

Tonnes of ore mined 390,367 588,634

Tonnes of ore mined per day 4,290 6,540

Average grade of gold (4) 2.17 2.54

Metres developed 3,202 2,900

Mill Operations

Tonnes of ore processed 464,744 609,927

Tonnes of ore processed per day 5,107 6,777

Average grade of gold (4) 1.93 2.47

Contained ounces milled 28,851 48,515

Average recovery rate 91% 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 28,700 ounces of gold in the first quarter of 2020, a decrease from the same period in 2019 due to

lower tonnes mined and processed as a result of shutting down the Northgate shaft in early February to complete the lower

mine construction and tie-in. As previously guided, ore was trucked to surface from the upper mine during the downtime of the

Northgate shaft which resulted in lower tonnes mined during February and March.

Underground mining rates averaged 4,290 tpd in the first quarter, with January mining rates in line with the prior year period at

6,700 tpd, lowering to 3,000 tpd in the months of February and March using the ramp system. Tonnes mined in February and

March exceeded budgeted rates of 2,500 tpd.

Mill throughput was 5,107 tpd in the first quarter, a decrease from the same period of 2019 due to the lower mining rates in

February and March of this year. Mill throughput was supplemented by existing lower grade stockpiles in the quarter, which

have essentially been exhausted at the end of the quarter.

Mining activities in the first quarter focused on remnant stopes in the upper part of the mine to facilitate trucking up the ramp.

The average mined grade was 2.17 g/t Au in the quarter.

Lower Mine Construction and Tie-In

Substantial progress on the lower mine expansion was made in the first quarter of 2020, despite the personnel challenges

resulting from COVID-19 discussed previously. The main activities included the following:

• Completed the main ramp system to the lower mine infrastructure

• 8940 level loading pocket, including the conveyor and ore/waste bins, completed and ready for commissioning

• 8930 level ore and waste loadout substantially completed

• Installation of the hangers and trays for the main conveyor from the crusher loadout level to the top of the shaft bins are

two-thirds complete

• Crusher installed and ready for commissioning

• Skips, ropes and shaft bottom steel has been removed from the mid shaft loading pocket

• Pentice excavation drilled off and blasted, and ground support completed by the end of April

As a result of COVID-19-related labour and productivity challenges, the tie-in is now expected to be completed in July 2020.

All supplies and equipment required to complete the tie-in are on site. Remaining activities to be completed in the second

quarter include the following:

• Completion of the 9025 rockbreaker station and coarse ore bin

• Permanent installation and changeover of new ropes and installation of new skips

• Completion of the 8930 loadout, including conveyor drive

Lower mine crusher

A photo accompanying this announcement is available at

https://www.globenewswire.com/NewsRoom/AttachmentNg/41234b15-f8f8-4540-9647-7643964f6d5d

Financial Review

First quarter revenues of $45.7 million were 20% lower than the prior year quarter, reflecting a 34% decrease in ounces sold,

partially offset by a higher realized gold price. Ounces sold were lower due to lower mining rates in February and March during

the temporary shutdown of the Northgate shaft to enable completion of the lower mine tie-in.

Cost of sales (which includes mining and processing costs, royalties, and amortization expense) of $43.8 million in the first

quarter were lower than the comparative quarter in 2019, due to lower mining and processing rates during the tie-in of the upper

and lower mine. Underground mining costs increased to CAD$77 per tonne as result of a combination of increased costs

relating to hauling rather than skipping ore to surface and the impact of fixed costs on lower mining rates.

Total cash costs of $1,093 per ounce in the first quarter were higher than the comparative period last year due to higher mining

costs per tonne, and lower grades mined. Mine-site AISC of $1,242 per ounce in the first quarter were higher than the

comparative quarter in 2019, reflecting the impact of higher total cash costs. Sustaining capital spending in the quarter was

lower than the prior year period, as the focus in the first quarter of 2020 was the lower mine construction and tie-in.

Capital expenditures were $27.0 million in the first quarter. This included $4.2 million of sustaining capital and $22.8 million of

growth capital. Growth capital spending included lower mine construction, as well as work on the north dam and east dam for

the TIA 1 tailings project.

Consistent with planned downtime and capital spending on the lower mine expansion, mine-site free cash flow at Young-

Davidson was negative $18.9 million in the first quarter. With declining capital spending following the completion of the lower

mine expansion in July 2020, and a corresponding increase in gold production and lower operating costs as mining rates ramp

up, 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 March 31,

2020 2019

Gold production (ounces) 38,800 35,600

Gold sales (ounces) 39,127 33,585

Financial Review (in millions)

Operating Revenues $61.9 $43.8

Cost of sales (1) $30.5 $28.6

Earnings from operations $31.2 $15.0

Cash provided by operating activities $41.7 $29.0

Capital expenditures (sustaining) (2) $8.5 $5.1

Capital expenditures (growth) (2) $9.6 $4.2

Capital expenditures (capitalized exploration) (2) $4.0 $3.1

Mine-site free cash flow (2) $19.6 $16.6

Cost of sales, including amortization per ounce of gold sold (1) $780 $852

Total cash costs per ounce of gold sold (2) $452 $497

Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $670 $649

Underground Operations

Tonnes of ore mined 112,881 97,513

Tonnes of ore mined per day ("tpd") 1,240 1,083

Average grade of gold (4) 11.69 11.40

Metres developed 1,952 1,557

Mill Operations

Tonnes of ore processed 105,927 101,997

Tonnes of ore processed per day 1,164 1,133

Average grade of gold (4) 11.73 11.11

Contained ounces milled 39,945 36,441

Average recovery rate 97% 97%

(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 38,800 ounces in the first quarter, a 9% increase from the comparative period in 2019, despite losing

approximately one week of mining and processing as the mine suspended operations on March 25, 2020 in response to

COVID-19.

Underground mining rates were 1,240 tpd in the first quarter, a 14% improvement compared to the prior year period and above

guidance of 1,200 tpd, despite the one week downtime at the end of the quarter. Underground grades mined averaged 11.69 g/t

Au in the quarter, or 3% higher than the comparative quarter and higher than guidance, due to mine sequencing.

Mill throughput of 1,164 tpd in the first quarter was higher than the prior year period as a result of higher tonnes mined. Prior

to the temporary suspension, milling rates were 1,261 tpd, ahead of guidance. Mill recoveries were 97% in the first quarter, in

line with the prior year quarter and guidance.

Financial Review

Island Gold generated record revenues of $61.9 million in the first quarter, an increase of 41% compared to the prior year

period, reflecting both an increase in ounces sold and a higher realized gold price.

Cost of sales (includes mining and processing costs, royalties, and amortization expense) of $30.5 million in the first quarter

were 7% higher than the comparative period in 2019, reflecting more ounces sold, offset by lower unit mining costs. On a per

ounce basis, cost of sales decreased 8%, driven by higher grades mined and lower amortization charges. Amortization per

ounce decreased compared to 2019 as a result of additional ounces reported in the 2019 Mineral Reserves and Resources

statement.

Total cash costs were $452 per ounce in the first quarter, a 9% improvement from the comparative quarter last year, driven by

higher grades mined partially offset by higher mining costs. In addition, the Company was notified during the quarter that it has

been approved for the Northern Industrial Electrical Rebate (NIER), which is expected to reduce electricity costs by

approximately 20% going forward. Mine-site AISC of $670 per ounce in the first quarter were 3% higher than the prior year

period due to the timing of sustaining capital expenditures.

During the quarter, the Company acquired and canceled a 3% NSR royalty payable on a majority of production from the Island

Gold mine for cash consideration of $54.8 million. The royalty was applicable to all future gold production from the Goudreau

Lake claims, which comprise the majority of the Island Gold deposit. As of December 31, 2019, these claims contained 0.9

million ounces of Mineral Reserves, representing 71% of Island Gold’s total Mineral Reserves, and 1.1 million ounces of

Inferred Mineral Resources. The acquisition of the royalty is expected to decrease 2020 total cash costs by $45 per ounce,

based on a $1,700 per ounce gold price. In addition, the acquisition reduces the effective NSR royalty rate on Island Gold’s

Mineral Reserves to 2.2% from 4.4%.

Total capital expenditures, excluding the royalty repurchase, were $22.1 million in the first quarter. Spending was focused on

lateral development, camp improvements, tailings construction, and the Phase III study. This included $8.5 million of

sustaining capital and $13.6 million of growth capital. Growth capital is inclusive of $4.0 million of capitalized exploration.

Island Gold generated mine-site free cash flow of $19.6 million during the first quarter, excluding the royalty repurchase, driven

by strong gold production and increased operating margins. The Company expects to resume production activities in a phased

approach starting in early May.

Mulatos Financial and Operational Review

Three Months Ended March 31,

2020 2019

Gold production (ounces) 42,600 38,900

Gold sales (ounces) 43,822 36,089

Financial Review (in millions)

Operating Revenues $69.3 $47.1

Cost of sales (1) $46.0 $33.8

Earnings from operations $22.0 $12.4

Cash provided by operating activities $21.5 $0.6

Capital expenditures (sustaining) (2) $4.8 $1.0

Capital expenditures (growth) (2) $2.1 $11.6

Capital expenditures (capitalized exploration) (2) $0.5 $—

Mine-site free cash flow (2) $14.1 ($12.0)

Cost of sales, including amortization per ounce of gold sold (1) $1,050 $937

Total cash costs per ounce of gold sold (2) $812 $743

Mine site all-in sustaining costs per ounce of gold sold (2),(3) $958 $809

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