Alamos Reports Second Quarter 2018 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 Reports Second Quarter 2018 Results
Toronto, Ontario (August 1, 2018) - Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today
reported its financial results for the second quarter ended June 30, 2018 and reviewed its operating, exploration and
development activities.
“With near record production in the second quarter, we came in slightly ahead of expectations and remain well
positioned to achieve full year guidance. This reflected another strong outperformance from Mulatos and Island Gold,
with production guidance for both mines increased for the second consecutive quarter ,” said John A. McCluskey,
President and Chief Executive Officer.
“We’re also making excellent progress on the exploration and development fronts. At Island Gold, the mill expansion
is nearing completion and ongoing exploration success continues to demonstrate further resource growth. We also
achieved a major breakthrough at Kirazlı, securing the GSM permit allowing for the start of full scale construction.
With a strong cash position, no debt, and growing cash flow from operations, we are well positioned to fund this
growth and continue to deliver shareholder value.”
Second Quarter 2018 Highlights
Produced 126,500 ounces of gold, ahead of guidance of 125,000 ounces and 19% higher than the second
quarter of 2017
Increased production guidance at Island Gold for the second time this year to a range of between 100,000
to 110,000 ounces, an 11% increase from original guidance (based on the mid-point of guidance)
Increased production guidance at Mulatos for the second time this year to a range of between 170,000 to
180,000 ounces, a 13% increase from original guidance (based on the mid-point of guidance)
Maintained 2018 Company-wide production guidance of 490,000 to 530,000 ounces of gold, with increased
guidance at both Mulatos and Island Gold offset by decreased guidance at Young-Davidson. Company-
wide all-in sustaining cost guidance for the year has been maintained at $950 per ounce with lower costs
anticipated in the second half of 2018
Sold 129,272 ounces of gold at an average realized price of $1,307 per ounce for revenues of $168.9
million. Cost of sales of $1,160 per ounce, total cash costs1 of $832 per ounce and all-in sustaining costs
("AISC")1 of $996 per ounce were all higher than full year guidance as a result of lower production from
Young-Davidson in the quarter
Reported adjusted net earnings1 of $4.9 million or $0.01 per share1, reflecting adjustments for unrealized
foreign exchange losses recorded within both deferred taxes and foreign exchange of $15.3 million, as well
as other one-time items
Realized a net loss of $8.9 million, or $0.02 per share
Generated cash flow from operating activities of $62.5 million ($54.7 million or $0.14 per share, before
changes in working capital1), reflecting strong quarterly gold production. In addition, the Company
generated $22.4 million in mine-site free cash flow1, and $9.1 million of company-wide free-cash flow1 in the
quarter, both ahead of budget
Increased cash and cash equivalents to $235.1 million up from $231.8 million as of March 31, 2018. The
Company remains debt free
Paid a semi-annual dividend of $0.01 per share, or $3.9 million, to shareholders on April 30, 2018
As outlined in May, recent exploration results at Island Gold continue to exceed expectations with a
significant increase in Mineral Resources anticipated. The Company will be providing an interim Mineral
Reserve and Resource update for Island Gold in the third quarter
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Subsequent to quarter-end, announced the receipt of the GSM (Business Opening and Operation) permit
and commencement of full construction activities at the Kirazlı project in Turkey
(1) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release for a description and calculation of these measures.
Highlight Summary
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Financial Results (in millions)
Operating revenues $168.9 $131.3 $342.0 $252.3
Cost of sales (1) $150.0 $109.5 $294.7 $219.6
Earnings from operations $9.6 $15.8 $28.1 $18.0
Net (loss) earnings ($8.9 ) $2.4 ($8.3 ) $2.5
Adjusted net earnings (2) $4.9 $9.8 $17.2 $4.7
Cash provided by operations before working capital and
cash taxes(2) $54.7 $45.1 $117.3 $79.3
Cash provided by operating activities $62.5 $51.4 $121.3 $71.5
Capital expenditures (sustaining) (2) $12.1 $11.1 $22.8 $20.4
Capital expenditures (growth) (2) $35.7 $38.2 $72.3 $60.1
Capital expenditures (capitalized exploration) (3) $5.6 $2.2 $9.8 $4.6
Operating Results
Gold production (ounces) (4) 126,500 105,900 255,400 202,100
Gold sales (ounces) 129,272 104,023 259,317 202,778
Per Ounce Data
Average realized gold price $1,307 $1,262 $1,319 $1,244
Average spot gold price (London PM Fix) $1,306 $1,257 $1,318 $1,238
Cost of sales per ounce of gold sold
(includes amortization) (1) $1,160 $1,053 $1,136 $1,083
Total cash costs per ounce of gold sold (2) $832 $784 $811 $805
All-in sustaining costs per ounce of gold sold (2) $996 $942 $966 $977
Share Data
Earnings per share, basic ($0.02 ) $0.01 ($0.02 ) $0.01
Adjusted earnings per share, basic (2) $0.01 $0.03 $0.04 $0.02
Weighted average common shares outstanding (basic)
(000’s) 389,602 299,189 389,429 292,008
Financial Position (in millions)
Cash and cash equivalents (5) $235.1 $200.8
(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 and Mulatos and Island Gold.
(4) Gold production from Island Gold has been included in this table for the period subsequent to November 23, 2017 only. Gold pr oduction from Island Gold for the
three and six months ended June 30, 2017 was 26,110 and 49,882 ounces respectively.
(5) Comparative Cash and cash equivalents balance as at December 31, 2017.
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Three Months Ended June 30, Six Months Ended June 30,
2018 2017(1) 2018 2017(1)
Gold production (ounces)
Young-Davidson 39,100 47,300 80,100 87,700
Mulatos 50,600 41,000 96,600 81,000
Island Gold (1) 26,700 — 54,800 —
El Chanate 10,100 17,600 23,900 33,400
Gold sales (ounces)
Young-Davidson 42,006 46,368 86,796 90,195
Mulatos 49,326 40,265 93,985 78,940
Island Gold (1) 27,257 — 54,760 —
El Chanate 10,683 17,390 23,776 33,643
Cost of sales (in millions)(2)
Young-Davidson $56.7 $51.6 $113.7 $101.9
Mulatos $49.2 $36.3 $92.8 $76.3
Island Gold (1) $28.0 — $55.5 —
El Chanate $16.1 $21.6 $32.7 $41.4
Cost of sales per ounce of gold sold (includes amortization)
Young-Davidson $1,350 $1,113 $1,310 $1,130
Mulatos $997 $902 $987 $967
Island Gold (1) $1,027 — $1,014 —
El Chanate $1,507 $1,242 $1,375 $1,231
Total cash costs per ounce of gold sold (3)
Young-Davidson $890 $677 $856 $693
Mulatos $795 $735 $791 $780
Island Gold (1) $587 — $570 —
El Chanate $1,404 $1,185 $1,279 $1,165
Mine-site all-in sustaining costs per ounce of gold sold (3),(4)
Young-Davidson $1,083 $895 $1,037 $874
Mulatos $854 $777 $848 $847
Island Gold (1) $668 — $650 —
El Chanate $1,442 $1,208 $1,304 $1,198
Capital expenditures (sustaining, growth and capitalized exploration) (in millions)(3)
Young-Davidson $18.5 $22.7 $41.4 $41.3
Mulatos(5) $9.5 $14.6 $16.7 $26.0
Island Gold (1),(6) $17.6 — $31.5 —
El Chanate $0.2 $0.3 $0.3 $0.9
Other $7.6 $13.9 $15.0 $16.9
(1) Operating and financial results from Island Gold are included in Alamos’ consolidated financial statements for the period sub sequent to November 23, 2017. Gold
production from Island Gold for the three and six months ended June 30, 2017 was 26,110 and 49,882 ounces respectively.
(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 Mula tos of $0.9 million and $2.0 million for the three and six months ended June 30, 2018 ($2.2 million and $4.6 million for the
three and six months ended June 30, 2017).
(6) Includes capitalized exploration at Island Gold of $4.7 million and $7.8 million for the three and six months ended June 30, 2018.
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Outlook and Strategy
2018 Guidance
Total
Young-
Davidson Mulatos
Island
Gold
El
Chanate Turkey (5) Other (2) Original Revised
Gold production (000’s ounces)
Revised Guidance 180-190 170-180 100-110 40-50 — — 490-530
Original Guidance 200-210 150-160 90-100 40-50 — — 480-520
Cost of sales, including
amortization (in millions)(4),(6) $208 $175 $108 $58 — — $536 $549
Cost of sales, including
amortization ($ per ounce)(4),(6)
$1,125 $1,000 $1,025 $1,285 — — $1,075 $1,075
Total cash costs ($ per ounce)(1),(6) $675 $800 $575 $1,200 — — $740 $740
All-in sustaining costs
($ per ounce)(1),(6)
— — $950 $950
Mine-site all-in sustaining costs
($ per ounce)(1),(3),(6)
$850 $900 $825 $1,200 — — — —
Amortization costs
($ per ounce)(1)
$450 $200 $450 $85 — — $335 $335
Capital expenditures (in millions)
Sustaining capital(1) $35-40 $8-10 $25-27 — — — $68-77 $68-77
Growth capital(1) $35-40 $18-20 $25-28 — $50-60 $46 (2) $224-234
$174-194
Total capital expenditures(1) $70-80 $26-30 $50-55 — $50-60 $46 $292-$311
$242-$271
(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.
(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) Capital guidance at Kirazlı reduced to $50-60 million from the original budget of $100 million.
(6) Company-wide total cash costs, and all -in sustaining costs guidance remains unchanged. The Company has not revised guidance for total cash costs, and mine -
site all-in sustaining costs at individual mine sites.
The Company continues to deliver on its strategic objectives of increasing cash flow from operations while advancing
its portfolio of low -cost development projects. Gold production in the second quarter of 126,500 ounces exceeded
guidance and increased 19% from the second quarter of 2017. Given the strong performance in the first half of the
year, the Company is well positioned to achieve its previously increased full year production guidance of 490,000 to
530,000 ounces.
Company-wide production guidance has been maintained, with increased production guidance at both Island Gold
and Mulatos offsetting a reduction at Young-Davidson. Global all-in sustaining cost guidance of $950 per ounce has
been maintained with lower than guided costs at Island Gold and Mulatos expected to offset higher costs at Young -
Davidson for the full year. Costs are expected to trend lower in the second half of 2018.
Gold production in the third quarter is expected to range between 120,000 and 125,000 ounces at lo wer all -in
sustaining costs than in the second quarter. Fourth quarter gold production is expected to increase reflecting the
completion of the mill expansion at Island Gold and higher production at Young-Davidson.
Young-Davidson produced 39,100 ounces in the second quarter. This result was below expectations reflecting eight
days of downtime of the Northgate hoist and eleven days of downtime in the mill. As a result of the unplanned
downtime for maintenance of both the Northgate hoist and the mill, as well as lower than budgeted throughput in the
first half of the year, the Company is revising production guidance for Young-Davidson to a range of between 180,000
and 190,000 ounces. With the maintenance completed in late June, both the Northgate hoist and mil l were fully
operational in early July which is expected to drive stronger underground mining and milling rates in the second half
of 2018. This, combined with higher underground grades, is expected to drive stronger production and lower costs in
the second half of 2018.
Island Gold exceeded budget again in the second quarter, producing 26,700 ounces and bringing first half production
to 54,800 ounces. Given the outperformance in both the first and second quarters, the Company is raising 2018
production guidance at Island Gold for the second time this year to a range of between 100,000 and 110,000 ounces,
an 11% increase from original guidance (based on the mid -point). The Phase I expansion of the Island Gold mill to
1,100 tpd remains on track and is expecte d to be completed in September. This is anticipated to drive stronger
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production and lower costs in 2019 and beyond. Accordingly, the Company expects significant free cash flow growth
in 2019.
In parallel to the Phase I mill expansion, the Company is pursu ing an aggressive exploration program at Island Gold
which has been successful in driving nearly a 400% increase in Mineral Reserves and a 60% increase in the Mineral
Reserve grade since 2014. As reported in May, the 2018 exploration program has continued to extend high -grade
gold mineralization along-strike and down-plunge from existing Mineral Reserves and Resources across three main
areas of focus.
Exploration results at Island Gold continue to exceed expectations with a significant increase in Mineral Resources
anticipated. The Company will be providing an interim Mineral Reserve and Resource update for Island Gold in the
third quarter. Ongoing exploration success will be incorporated into an evaluation of the most effective and economic
approach to a Phase II expansion of the operation beyond 1,100 tpd.
Total production from the Mulatos district (including La Yaqui Phase I) increased to 50,600 ounces in the second
quarter, again exceeding budget and bringing first half production to 96,600 ounces. As a result of continued strong
performance from the heap leach pad and extended production from underground at San Carlos, Mulatos is now
expected to produce between 170,000 to 180,000 ounces in 2018, a 13% increase from the mid -point of original
guidance. With mill production winding down in the third quarter of 2018, the Company expects 2019 production to
return to the previously guided range of 150,000 to 160,000 ounces per year, reflecting the end of production from
San Carlos.
El Chanate produced 10,100 ounces in the second quarter and is expected to produce 40,000 to 50,000 ounces for
the full year. This is down from 2017 reflecting lower mining rates with mining activities expected to cease early in the
fourth quarter. Given the long leach cycle at El Chanate, the Company expects to benefit from ongoing gold production
beyond 2018 through residual leaching. This will be lower cost and higher margin production, with mining activities
completed, and is expected to drive higher mine-site free cash flow from the operation.
The Company expects combined annual gold production of at least 500,000 ounces from its existing operations in
2019 and 2020 with low cost production growth from Island Gold replacing production from El Chanate. Consolidated
all-in sustaining costs are expected to decrease in 2019 reflecting the completion of the Phase I expansion at Island
Gold and the end of the 5% royalty at Mulatos, with a further decline expected in 2020 reflecting higher underground
mining rates at Young-Davidson. Increased production combined with declining operating costs is expected to result
in strong free cash flow growth over the next three years.
On July 25, 2018, the Company was granted the GSM (Business Opening and Operation) permit required for the
construction of its Kirazlı project. To date, construction has been focused on the surrounding infrastructure projects;
however, with receipt of the GSM, full -scale construction activities will commence over the next two months. The
Company has estimated spending fo r the remainder of the year of between $40 to $50 million, bringing total 2018
capital spending to between $50 and $60 million. The remainder of the $152 million initial capital budget for Kirazlı is
expected to be spent in 2019 and the first half of 2020, with first production expected in the second half of 2020.
In addition to capital spending in Turkey, a total of $46 million is budgeted for development at Cerro Pelon, La Yaqui
Grande and Lynn Lake as well as capitalized exploration at all sites. The tot al exploration budget of $36 million is
primarily focused on following up on the ongoing success at Island Gold.
The Company is well positioned to fund this growth having significantly de -risked its balance sheet in 2017. The
Company is debt free with growing cash flow from its operations and over $640 million of cash and available liquidity
under the Company's credit facility.
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Second Quarter 2018 Results
Young-Davidson Operational and Financial Review
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Gold production (ounces) 39,100 47,300 80,100 87,700
Gold sales (ounces) 42,006 46,368 86,796 90,195
Financial Review (in millions)
Operating Revenues $55.1 $58.5 $114.6 $112.1
Cost of sales (1) $56.7 $51.6 $113.7 $101.9
(Loss) earnings from operations ($1.6 ) $6.9 $0.9 $10.2
Cash provided by operating activities $22.5 $27.3 $49.9 $45.8
Capital expenditures (sustaining) (2) $7.9 $9.9 $15.5 $16.0
Capital expenditures (growth) (2) $10.6 $12.8 $25.9 $25.3
Mine-site free cash flow (2) $4.0 $4.6 $8.5 $4.5
Cost of sales, including amortization per ounce of gold sold (1) $1,350 $1,113 $1,310 $1,130
Total cash costs per ounce of gold sold (2) $890 $677 $856 $693
Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $1,083 $895 $1,037 $874
Underground Operations
Tonnes of ore mined 553,883 580,351 1,138,943 1,156,370
Tonnes of ore mined per day ("tpd") 6,087 6,377 6,293 6,389
Average grade of gold (4) 2.35 2.60 2.36 2.58
Metres developed 3,079 3,425 6,223 6,667
Mill Operations
Tonnes of ore processed 598,196 629,470 1,267,483 1,324,094
Tonnes of ore processed per day 6,574 6,917 7,003 7,315
Average grade of gold (4) 2.17 2.45 2.20 2.31
Contained ounces milled 41,798 49,619 87,992 98,393
Average recovery rate 92 % 92 % 91 % 91 %
(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 .
Total cash costs and mine-site AISC are exclusive of net-realizable value adjustments.
(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 39,100 ounces of gold in the second quarter of 2018, lower than the comparative quarter
of 2017 due to unscheduled downtime of both the Northgate hoist and the mill, and lower grades mined.
During the quarter, the underground operations were impacted by an eight day shutdown of the Northgate hoist. The
Company had previously scheduled a four day shutdown to change the head ropes on the Northgate hoist in July;
however, this was moved to June to correspond with an unplanned shutdown required to replace a bea ring on the
hoist drum which failed prematurely. During the shutdown, the Company was unable to hoist ore for a period of eight
days, which impacted throughput and production levels for the quarter. The maintenance was completed at the end
of June and mining operations are expected to return to budgeted levels in the third quarter.
Underground grades mined of 2.35 g/t Au for the second quarter were in-line with the first quarter, but lower than the
prior year quarter primarily as a result of mine sequencing. As previously guided, the Company is expecting stronger
production in the second half of the year with grades and underground mining rates expected to increase through the
remainder of the year.
During the second quarter, 598,196 tonnes or 6,574 tpd, were processed through the mill with grades averaging 2.17
g/t Au. Tonnes milled were lower than budget as a result of the eleven-day shutdown of the mill to replace liners and
for repairs to the soleplate anchor bolts. The liner change was planned for July, but was moved up to coincide with
the other maintenance required to the mill, and to correspond with the timing of the Northgate hoist downtime. During
this period, the Company built up underground stockpiles of approximately 40,000 tonnes, which will be processed
during the second half of 2018.
Mill recoveries of 92% were in line with expectations and the prior year period.
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As a result of unplanned the downtime in the second quarter and lower than budgeted throughput in the first half of
the year, the Com pany is amending production guidance at Young -Davidson to between 180,000 and 190,000
ounces. The Company expects stronger throughput and production in the second half of the year.
Financial Review
For the quarter ended June 30, 2018, revenues of $55.1 million were $3.4 million lower than the comparative quarter
of 2017, due to less ounces sold, partially offset by a higher realized gold price. For the first half of 2018, revenues of
$114.6 million were $2.5 million higher than the prior year, attributable to a higher realized gold price, offset by lower
ounces sold.
Cost of sales, which reflects mining and processing costs, royalties, and amortization expense, of $56.7 million were
higher than the comparative quarter due to higher mining and processing costs. Cost of sales for the first half of 2018
were $113.7 million, an increase of $11.8 million due to higher mining and processing costs and amortization.
Total cash costs in the second quarter were $890 per ounce, an increase of 31% from the second quarter of 2017
due to lower grades processed and a higher mining cost per tonne, reflecting the impact of lower throughput on fixed
costs. Total cash costs of $856 per ounce for the six-month period were 24% higher than the prior year period. Second
quarter mine-site AISC were $1,083 per ounce, 21% higher than the prior year quarter reflecting higher total cash
costs, partially offset by lower sustaining capital. Mine-site AISC for the six-month period were $1,037 or 19% higher
than the prior year period due to similar factors.
Capital expenditures were in -line with budget at $18.5 million in the second quarter, including $7.9 million for
sustaining capital and $10.6 million for growth capital. Total capital expenditures were 19% lower than the same
quarter of 2017. Capital spending for the second quarter was focused primarily on lateral development in the upper
and lower mines, and lower mine infrastructure. For the six -month period, capital expenditures of $41.4 million were
consistent with the prior year period.
Young-Davidson generated mine -site free cash flow of $4.0 million in the second quarter, consistent with the prior
year quarter and the first quarter of 2018, as lower capital expenditures were offset by lower operating cash flows.
Year-to-date free cash flow of $8.5 million was higher than the prior year, primarily reflecting a higher gold price. The
Company expects mine -site free cash flow to grow in subsequent quarters driven by stronger production and
operating margins.
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Island Gold Operational and Financial Review
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 (1) 2018 2017 (1)
Gold production (ounces) (1) 26,700 — 54,800 —
Gold sales (ounces) (1) 27,257 — 54,760 —
Financial Review (in millions)
Operating Revenues $35.7 $— $72.3 $—
Cost of sales (2) $28.0 $— $55.5 $—
Earnings from operations $7.7 $— $16.7 $—
Cash provided by operating activities $22.0 $— $45.7 $—
Capital expenditures (sustaining) (3) $2.2 $— $4.4 $—
Capital expenditures (growth) (3) $10.7 $— $19.3 $—
Capital expenditures (capitalized exploration) (3) $4.7 $— $7.8 $—
Mine-site free cash flow (3) $4.4 $— $14.2 $—
Cost of sales, including amortization per ounce of gold sold (2) $1,027 $— $1,014 $—
Total cash costs per ounce of gold sold (3) $587 $— $570 $—
Mine-site all-in sustaining costs per ounce of gold sold (3),(4) $668 $— $650 $—
Underground Operations
Tonnes of ore mined 82,097 104,439 166,752 196,149
Tonnes of ore mined per day ("tpd") 902 1,148 921 1,084
Average grade of gold (5) 7.34 10.28 9.23 9.51
Metres developed 1,771 1,773 3,327 3,856
Mill Operations
Tonnes of ore processed 88,776 85,578 170,881 168,943
Tonnes of ore processed per day 976 940 944 933
Average grade of gold (5) 8.71 9.73 9.84 9.46
Contained ounces milled 24,861 26,760 54,085 51,354
Average recovery rate 97 % 98 % 96 % 97 %
(1) Financial results from Island Gold are included in Alamos’ consolidated financial statements for the period subsequent to November 23, 2017. Gold production from Island Gold for the th ree
and six months ended June 30, 2017 was 26,110 and 49,882 ounces.
(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.
Total cash costs and mine-site AISC are exclusive of net-realizable value adjustments.
(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) Grams per tonne of gold ("g/t Au").
Second quarter gold production of 26,700 ounces was above budget, and consistent with the prior year quarter. With
year-to-date production of 54,800 ounces well ahead of budget, the Company is increasing Island Gold's 2018
production guidance for the second tim e this year to a range of 100,000 to 110,000 ounces, an 11% increase from
original guidance.
The Company mined 82,097 tonnes of ore from underground in the second quarter of 2018, or 902 tpd, lower than
the prior year quarter, though consistent with the first quarter of 2018. Underground mining rates are expected to
ramp up in the latter part of 2018 concurrent with the completion of the mill expansion to 1,100 tpd. As guided,
underground grades mined of 7.34 g/t Au in the second quarter were lower than t he first quarter due to mine
sequencing.
Mill throughput for the second quarter was 88,776 tonnes, or 976 tpd, an increase from 940 tpd in the prior year
quarter. Milled grades averaged 8.71 g/t Au, consistent with full year guidance of 8.3 to 8.9 g/t Au. Milled grades were
higher than grades mined with existing high-grade stockpiles supplementing mill feed. Mill throughput is expected to
remain in a similar range in the third quarter and ramp up during the fourth quarter following the completion of the mill
expansion to 1,100 tpd in September.
Financial Review
With the Company acquiring Island Gold on November 23, 2017, financial information prior to the acquisition date
has not been included in the comparative table above.
Island Gold generated revenues of $35.7 million in the second quarter, lower than the first quarter of 2018, reflecting
lower realized gold prices. Revenues for the six-month period were $72.3 million on sales of 54,760 ounces of gold.