Alamos Reports First Quarter 2017 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 First Quarter 2017 Results
Toronto, Ontario ( May 4 , 201 7) - Alamos Gold Inc. (TSX:AGI; NYSE:AGI ) (“Alamos” or the “Company”) today
reported its financial results for the first quarter ended March 31, 2017 and reviewed its operating, exploration and
development activities.
“We had a solid start to the year operationally and with stronger production and lower costs expected through the
rest of 2017, we are on track to achieve full year guidance across all metrics. We expect this to drive significant
free cash flow growth from our operations, especially in the second half of 2017 as we benefit from higher
throughput rates at Young -Davidson and initial production from La Yaqui,” said John A. McCluskey, President and
Chief Executive Officer.
“We made excellent progress surfacing value within our portfolio of development assets in the quarter. Construction
of La Yaqui Phase I is on track and we continued to grow La Yaqui Grande , reporting an initial reserve of over 0.5
million ounces. We delivered two positive feasibility studies on our projects in Turkey and expect results from a third
feasibility study on Lynn Lake in the third quarter. We also strengthened our balance sheet. We are now debt free
and with a strong cash position, are well positioned to deliver on this growth,” Mr. McCluskey added.
First Quarter 2017 Highlights
Produced 96,200 ounces of gold at total cash costs 1 of $827 per ounce and all-in sustaining costs ("AISC")1
of $1,014 per ounce. Stronger quarterly production and lower costs are expected through the remainder of
the year consistent with full year guidance
Sold 98,755 ounces of gold at an average realized price of $1,225 per ounce for revenues of $121.0 million
Realized net earnings of $0.1 million, or $0.00 per share, which included an unrealized foreign exchange
gain of $5.9 million ($0.02 per share)
Generated cash flow from operating activities before changes in working capital1 of $34.2 million, or $0.12
per share
Completed an equity financing pursuant to which 31,450,000 common shares were issued at a price
of $7.95 per share, for gross proceeds of $250.0 million
Declared a semi-annual dividend of $0.01 per common share, or $3.0 million, paid to shareholders on April
28, 2017
Advanced construction of La Yaqui Phase I with initial production on track for the second half of 2017
Increased global Proven and Probable mineral reserves by 31%, or 1.8 million ounces, to total 7.7 million
ounces of gold, reflecting a significant increase in mineral reserves at La Yaqui and the declaration of initial
mineral reserves at Kirazlı and Ağı Dağı
Received the Forestry Permits for the development of the Kirazlı gold project
Reported positive feasibility studies for the Kirazlı and Aği Daği gold projects and a preliminary economic
study on the Çamyurt gold project
Subsequent to the First Quarter 2017
Completed the redemption of the $315.0 million 7.75% Senior Secured Seco nd Lien Notes (the "Notes")
due in 2020
T R A D I N G S Y M B O L : T S X : A G I N Y S E : A G I
2 | Alamos Gold Inc
(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 March 31,
2017 2016
Financial Results (in millions)
Operating revenues $121.0 $104.3
Cost of sales (1) $110.1 $99.5
Earnings (loss) from operations $2.2 ($2.3 )
Net earnings $0.1 $9.7
Cash provided by operations before changes in working capital (2) $34.2 $27.6
Cash provided by operating activities $20.1 $23.8
Capital expenditures (sustaining) (2) $9.3 $10.5
Capital expenditures (growth) (2),(3) $24.3 $22.8
Operating Results
Gold production (ounces) 96,200 94,632
Gold sales (ounces) 98,755 90,989
Per Ounce Data
Average realized gold price $1,225 $1,146
Average spot gold price (London PM Fix) $1,219 $1,183
Cost of sales per ounce of gold sold (includes amortization) (1) $1,115 $1,094
Total cash costs per ounce of gold sold (2) $827 $782
All-in sustaining costs per ounce of gold sold (2) $1,014 $986
Share Data
Earnings per share, basic and diluted $0.00 $0.04
Weighted average common shares outstanding (basic) (000’s) 284,748 262,397
Financial Position (in millions)
Cash and cash equivalents $479.2 $273.8
Total debt and equipment financing obligations $304.2 $319.3
(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.
T R A D I N G S Y M B O L : T S X : A G I N Y S E : A G I
3 | Alamos Gold Inc
Three Months Ended March 31,
2017 2016
Gold production (ounces)
Young-Davidson 40,400 39,065
Mulatos 40,000 37,600
El Chanate 15,800 17,967
Gold sales (ounces)
Young-Davidson 43,827 39,734
Mulatos 38,675 32,732
El Chanate 16,253 18,523
Cost of sales (in millions)(1)
Young-Davidson $50.3 $42.0
Mulatos $40.0 $34.4
El Chanate $19.8 $23.1
Cost of sales per ounce of gold sold (includes amortization)
Young-Davidson $1,148 $1,057
Mulatos $1,034 $1,051
El Chanate $1,218 $1,247
Total cash costs per ounce of gold sold (2)
Young-Davidson $710 $616
Mulatos $827 $811
El Chanate $1,144 $1,086
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
Young-Davidson $851 $846
Mulatos $920 $878
El Chanate $1,187 $1,095
Capital expenditures (growth and sustaining) (in millions)(2)
Young-Davidson $18.6 $24.0
Mulatos(4) $11.4 $4.4
El Chanate $0.6 $0.1
Other $3.0 $4.8
(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 capitalized exploration and La Yaqui Phase I development.
T R A D I N G S Y M B O L : T S X : A G I N Y S E : A G I
4 | Alamos Gold Inc
Outlook and Strategy
Young-
Davidson Mulatos El Chanate Development Total
Gold production (000’s ounces) 200-210 150-160 50-60 — 400-430
Cost of sales, including amortization (in millions)(4) $215 $157 $70 — $442
Cost of sales, including amortization ($ per ounce)(4) $1,050 $1,015 $1,265 — $1,065
Total cash costs ($ per ounce)(1) $625 $815 $1,200 — $765
All-in sustaining costs ($ per ounce)(1) — $940
Mine-site all-in sustaining costs ($ per ounce)(1),(3) $775 $890 $1,200 — —
Capital expenditures (in millions)
Sustaining capital(1) $30-35 $8-10 $2 — $40-47
Growth capital(1) $40-45 $25-30 (2) — $35 $100-110
Total capital expenditures(1) $70-80 $33-40 $2 $35 $140-$157
(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) Excludes capitalized exploration.
(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
The Company's focus is on maximizing cash flow from its operations through increased production, margin
expansion, and capital discipline, while advancing its portfolio of low-cost development projects.
Gold production is expected to range between 400,000 to 430,000 ounces at AISC of $940 per ounce in 2017.
Production is expected to increase through the year at decreasing AISC, consistent with full year guidance.
Total capital spending for the Company’s operating mines is expected to range between $105 and $122 million in
2017, a reduction from $128 million in 2016, even after factoring in $12 million of development spending f or La
Yaqui Phase I. Exploration remains a focus for the Company with a 2017 global exploration budget of $24 million, of
which $17 million is expected to be spent at Mulatos.
At Young-Davidson, gold production is expected to increase to range between 200,000 and 210,000 ounces, driven
by stronger underground mining rates. The MCM waste pass system is expected to be complete mid -year which will
support higher underground throughput rates in the second half of 2017. Additionally, the installation of a pe bble
crusher to the mill circuit is expected to be complete by the end of the third quarter driving increased mill
throughput.
Total cash costs at Young-Davidson are expected to average $625 per ounce of gold sold in 2017. Mine -site all-in
sustaining costs are expected to average $775 per ounce, a 14% decrease from 2016 reflecting higher
underground mining rates, ongoing productivity improvements and lower sustaining capital spending. Cash costs
and mine-site all-in sustaining costs are expected to decrease through the year as production ramps up, consistent
with full year guidance. Capital spending of $18.6 million in the first quarter was on pace with full year 2017
guidance of $70 to $80 million, including $30 to $35 million of sustaining capital.
Mulatos is expected to produce 150,000 to 160,000 ounces of gold in 2017. Higher margins are expected in 2017
as mine-site all-in sustaining costs are expected to decline to $890 per ounce. Capital spending is expected to total
$33 to $40 million, which includes $12 million for the development of La Yaqui Phase I, and $8 to $10 million of
sustaining capital. Development of La Yaqui Phase I is on schedule for initial production in the second half of 2017.
Development activities in the first quarter were focused o n construction of the independent heap leach pad, pre -
stripping activities, and stockpiling ore from the open pit. The project remains on schedule and on budget.
In parallel to the development of La Yaqui Phase I, the Company is continuing with an aggress ive exploration
program at La Yaqui Grande and surrounding deposits in the Mulatos district. The Company remains focused on
expanding its footprint at Mulatos, with approximately $17 million budgeted for exploration in 2017. This spending
will be focused on La Yaqui Grande, Cerro Pelon, Los Bajios, and El Refugio deposits within the Mulatos district.
El Chanate is expected to produce 50,000 to 60,000 ounces of gold in 2017 at mine -site all-in sustaining costs of
$1,200 per ounce. As a mature, higher cost operation, the Company has hedged approximately 80% of El
Chanate’s 2017 gold production through gold collar contracts which ensure a minimum gold price of $1,225 per
ounce and participation up to a price of $1,450 per ounce. The Company expects the operat ion to generate
significant free cash flow through residual leaching at the conclusion of its mine life.
Development spending in 2017 remains focused on the Company's highest priority targets. The Company received
the Forestry Permits for Kirazlı in the fi rst quarter, and is pursuing the GSM (Business Opening and Operation)
permit. The Company's Board of Directors recently approved capital spending up to $30 million for Kirazlı in 2017 in
T R A D I N G S Y M B O L : T S X : A G I N Y S E : A G I
5 | Alamos Gold Inc
order to complete detailed engineering and commence early constructio n activities on longer lead time items, such
as the water reservoir. The timing of the spending is dependent on receipt of the GSM permit. The Company is
also continuing to progress towards completing a feasibility study for the Lynn Lake project in the third quarter of
2017.
With the completion of the equity financing in February and subsequent repayment of the $315 million Notes in
April, the Company is now debt free and has significantly de -risked its balance sheet. With a substantial cash
position and additional liquidity available under its revolving credit facility, the Company is well positioned to fund its
strong pipeline of growth projects.
First Quarter 2017 Results
Young-Davidson Operational and Financial Review
Three Months Ended March 31,
2017 2016
Gold production (ounces) 40,400 39,065
Gold sales (ounces) 43,827 39,734
Financial Review (in millions)
Operating Revenues $53.6 $45.9
Cost of sales (1) $50.3 $42.0
Earnings from operations $3.3 $3.9
Cash provided by operating activities, before changes in working capital (2) $22.5 $21.5
Cash provided by operating activities $18.5 $21.8
Capital expenditures (sustaining) (2) $6.1 $9.0
Capital expenditures (growth) (2) $12.5 $15.0
Free cash flow, before changes in working capital (2) $3.9 ($2.5 )
Free cash flow (2) ($0.1 ) ($2.2 )
Cost of sales, including amortization per ounce of gold sold (1) $1,148 $1,057
Total cash costs per ounce of gold sold (2) $710 $616
Mine-site all-in sustaining costs per ounce of gold sold (2),(3) $851 $846
Underground Operations
Tonnes of ore mined 576,019 525,597
Tonnes of ore mined per day ("tpd") 6,400 5,776
Average grade of gold (4) 2.56 2.57
Metres developed 3,242 3,490
Unit mining costs per tonne $36 $31
Unit mining costs per tonne (CAD$) $47 $42
Mill Operations
Tonnes of ore processed 694,624 668,136
Tonnes of ore processed per day 7,718 7,342
Average grade of gold (4) 2.18 2.08
Contained ounces milled 48,774 44,760
Average recovery rate 89 % 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.
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 40,400 ounces of gold in the first quarter of 2017, 3% higher than the same period of
2016. The increase reflects improved mil l throughput and higher processed grades as underground ore continues
to make up an increasing proportion of mill feed. This was partially offset by slightly lower recoveries and timing
differences with a buildup of approximately 3,000 ounces of gold in in ventory within the mill circuit. These ounces
will be recovered over the coming months. Underground mining rates are expected to ramp up throughout 2017,
driving quarterly production higher and total cash costs lower.
The Company mined 576,019 tonnes of or e from underground in the first quarter of 2017, or 6,400 tpd.
Underground mining rates were at the lower end of the guidance range of 6,500 and 7,500 tpd, as development
T R A D I N G S Y M B O L : T S X : A G I N Y S E : A G I
6 | Alamos Gold Inc
and waste tonnes were caught up in the quarter. Underground mining rates improved lat er in the quarter, and are
expected to trend higher through the year with the completion of the MCM waste pass early in the third quarter of
2017.
Underground mined grades in the first quarter were 2.56 g/t Au and in -line with the prior year period. Mined grades
were slightly lower than reserve grades due to mine sequencing. Grades are expected to increase in the second
quarter with higher-grade stopes scheduled to be mined. Consistent with guidance, underground mining grades are
expected to vary as much as plus or minus 10% relative to reserve grades in 2017, depending on the quarter.
During the first quarter of 2017, 694,624 tonnes, or 7,718 tpd were processed through the mill with grades
averaging 2.18 g/t Au. Processed grades are expected to increase in the second quarter of 2017 and throughout
the remainder of the year as higher -grade stopes are mined and underground mining rates ramp up. Mill recoveries
were consistent with the first quarter of 2016, with higher recoveries expected through the remainde r of the year.
Financial Review
For the three months ended March 31, 2017, revenue of $53.6 million was $7.7 million or 17% higher than the prior -
year period due to higher realized gold prices and higher gold sales. Cost of sales of $50.3 million was $8.3 million
higher than the prior year period, driven by an increase in mining costs, amortization expense and the strengthening
Canadian dollar. Cost of sales include mining and processing costs, royalties and amortization expense.
Total cash costs in the fir st quarter were $710 per ounce, representing a 15% increase from the first quarter of
2016. This increase was attributable to higher mill consumables and an increase in underground mining costs.
Underground unit mining costs were $36 per tonne in the fir st quarter, 16% higher than the prior year period. The
increased mining costs reflect a higher proportion of operating development compared to capital development,
resulting in a higher allocation to operating costs rather than sustaining capital. In addit ion, the strengthening
Canadian dollar in 2017 had the impact of increasing total cash costs. The higher allocation of costs to operating
had no impact on mine -site all-in sustaining costs, which were $851 per ounce and consistent with the prior year
period as sustaining capital spending was lower. Both cash costs and mine -site all-in sustaining costs are expected
to trend lower in 2017 as gold production increases due to a combination of higher underground mining rates,
higher-grade ore being mined, and the pebble crusher becoming operational.
Capital expenditures totaled $18.6 million in the quarter down $5.4 million from 2016. Capital spending in the first
quarter was primarily on lateral development, underground mobile equipment and engineering of the pebble
crusher. Of the total capital expenditures, $6.1 million related to sustaining capital and $12.5 million related to
growth capital. Capital spending at Young -Davidson is expected to total between $70 and $80 million in 2017, a
significant reduction from 2016 levels.
Young-Davidson generated positive free cash flow before working capital of $3.9 million during the first quarter of
2017. After working capital, Young-Davidson was free cash flow neutral reflecting a draw down of accounts payable.
Higher underground mining rates and grades are expected to drive stronger production and free cash flow growth
through the remainder of 2017, most notably in the second half of the year.
T R A D I N G S Y M B O L : T S X : A G I N Y S E : A G I
7 | Alamos Gold Inc
Mulatos Operational and Financial Review
Three Months Ended March 31,
2017 2016
Gold production (ounces) 40,000 37,600
Gold sales (ounces) 38,675 32,732
Financial Review (in millions)
Operating Revenues $47.6 $37.9
Cost of sales (1) $40.0 $34.4
Earnings from operations $6.7 $3.2
Cash provided by operating activities, before changes in working capital and taxes received (2) $14.9 $10.9
Cash provided by operating activities $9.1 $7.0
Capital expenditures (sustaining) (2) $2.6 $1.4
Capital expenditures (Mulatos growth) (2),(6) $3.5 $3.0
Capital expenditures (La Yaqui Phase I growth) (2) $5.3 —
Free cash flow, before changes in working capital and excluding La Yaqui capital expenditures (2) $8.8 $6.5
Free cash flow, excluding La Yaqui capital expenditures (2) $3.0 $2.6
Cost of sales, including amortization per ounce of gold sold (1) $1,034 $1,051
Total cash costs per ounce of gold sold (2) $827 $811
Mine site all-in sustaining costs per ounce of gold sold (2),(3) $920 $878
Open Pit & Underground Operations
Tonnes of ore mined - open pit (4) 1,810,642 1,508,036
Total waste mined - open pit 1,890,744 2,257,385
Total tonnes mined - open pit 3,701,386 3,765,421
Waste-to-ore ratio (operating) 1.04 1.50
Tonnes of ore mined - underground 28,355 42,823
Crushing and Heap Leach Operations
Tonnes of ore crushed and placed on the heap leach pad 1,686,961 1,597,280
Average grade of gold processed (5) 0.86 0.82
Contained ounces stacked on the heap leach pad 46,731 42,225
Mill Operations
Tonnes of high grade ore milled 35,764 38,899
Average grade of gold processed (5) 8.88 14.94
Contained ounces milled 10,204 18,686
Total contained ounces stacked and milled 56,935 60,911
Recovery ratio (ratio of ounces produced to contained ounces stacked and milled) 70 % 62 %
Ore crushed per day (tonnes) - combined 19,100 18,000
(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) Includes ore stockpiled during the quarter.
(5) Grams per tonne of gold ("g/t Au").
(6) Includes capitalized exploration, of $2.4 million.
Mulatos produced 40,000 ounces of gold in the first quarter of 2017, a 6% increase from the prior year period. The
increase was driven by higher production from the heap leach operation as more tonnes and higher grades were
stacked during the quarter, partially offset by lower mill production.
The open pit operations performed well during the first quarter with total tonnes moved and grades mined in line
with guidance. The waste -to-ore ratio was at the higher end of the range of 2017 guidance, though down sharply
from a year ago. The waste -to-ore ratio is expected to trend lower throughout the year. Total crusher throughput
T R A D I N G S Y M B O L : T S X : A G I N Y S E : A G I
8 | Alamos Gold Inc
averaged 19,100 tpd, a 6% improvement over the same period of 2016. A total of 1,686,961 tonnes were stacked
at a grade o f 0.86 g/t Au in the first quarter, an improvement over the prior year period and consistent with
guidance.
Underground tonnes mined from San Carlos during the quarter were lower than the same period of 2016 with the
deposit expected to reach the end of it s current mineral reserve life mid -2017. In the first quarter of 2017, 35,764
tonnes were milled at an average grade of 8.88 g/t Au. Grades milled were slightly above full year guidance though
down from a year ago resulting in lower mill production. Tonnes processed through the mill exceeded tonnes mined
from underground as high grade stockpiles were drawn down to feed the mill. The Company has approximately
40,000 tonnes remaining in high grade stockpiles that will supplement mill production in the second half of 2017.
The Company has implemented an underground exploration program in the eastern zone of the underground
deposit with the aim of extending the mine life at San Carlos beyond the end of 2017.
The ratio of ounces produced to contained ounces stac ked and milled (or recovery ratio) was 70% in the quarter
compared to 62% in the prior year period, attributable to improved recoveries from the mill circuit.
Financial Review
For the three months ended March 31, 2017, revenue of $47.6 million was $9.7 mil lion, or 26% higher than the
prior-year period. This increase reflects more ounces sold, as well as the benefit of higher realized gold prices. For
the three months ended March 31, 2017, cost of sales of $40.0 million were higher than the prior -year period driven
by longer haulage distances, a higher proportion of production from the heap leach, and increased royalties as a
result of higher revenue.
Total cash costs of $827 per ounce in the first quarter were higher than $811 per ounce in the prior year per iod,
reflecting higher mining costs and less production from the mill which is lower cost production. Total cash costs are
expected to decrease through the year reflecting a lower waste -to-ore ratio and initial low cost production from La
Yaqui Phase I. M ine-site all-in sustaining costs in the quarter were $920 per ounce, or $42 higher than the prior
year period as a result of higher sustaining capital and exploration costs.
Mulatos had another strong quarter, generating $8.8 million in free cash flow bef ore working capital, excluding $5.3
million of construction and development spending at La Yaqui Phase I. The site's free cash flow reflects higher gold
sales and realized gold prices. The Company expects strong free cash flow growth in the second half of 2017 with
initial production from La Yaqui Phase I.