Alamos Gold Reports Fourth Quarter 2021 Production and Provides Three-Year Production and Operating Guidance High-return organic growth to drive production higher at significantly lower costs over the next three years
ALAMOS GOLD INC.
Brookfield Place, 181 Bay Street, Suite 3910, P.O. Box #823
Toronto, Ontario, Canada M5J 2T3
Telephone: (416) 368-9932 or 1 (866) 788-8801
All amounts are in United States dollars, unless otherwise stated.
F O R I M M E D I A T E R E L E A S E
W E B S I T E : w w w . a l a m o s g o l d . c o m 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
Alamos Gold Reports Fourth Quarter 2021 Production and Provides Three-Year
Production and Operating Guidance
High-return organic growth to drive production higher at significantly lower costs over
the next three years
Toronto, Ontario (January 17, 2022) – Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or
the “Company”) today reported fourth quarter and annual 2021 production. The Company also
provided three-year production and operating guidance.
“With stronger production in the fourth quarter, we met our revised full year 2021 guidance.
This was driven by strong performances through the year from both Young-Davidson and
Island Gold, with the former achieving record mining rates and free cash flow. This offset a
challenging year at Mulatos as we work through a transitional phase with higher costs until La
Yaqui Grande comes online in the second half of 2022. This temporary increase in costs at
Mulatos and industry-wide inflation are the key drivers of higher consolidated costs in 2022,
though we expect a significant improvement in costs in 2023 and beyond,” said John A.
McCluskey, President and Chief Executive Officer.
“We are pleased to be providing our inaugural three-year guidance which outlines our strong
outlook. Our key high-return growth projects remain on track and are expected to support
higher production at substantially lower costs in the years ahead. The completion of La Yaqui
Grande will be the key near-term driver of lower costs, and Island Gold will be the primary
driver of significantly lower costs over the longer term with the Phase III expansion. These
high-return reinvestments are fully funded and form a key part of our sustainable business
model that can support growing returns to our stakeholders over the long term,” Mr.
McCluskey added.
Fourth Quarter and Full Year 2021 Operating Highlights
• Met 2021 annual production guidance: production of 457,200 ounces of gold in
2021 was in line with revised production guidance and represented a 7% increase
from 2020. This included fourth quarter production of 112,500 ounces, an increase
from the third quarter, with strong performances at Island Gold and Young-Davidson
offsetting lower production from Mulatos
• Costs expected to meet 2021 guidance: total cash costs and all-in sustaining costs
for 2021 have not been finalized but are expected to be consistent with revised full
year guidance of $790 to $810 per ounce and $1,120 to $1,140 per ounce,
respectively
• Record revenues: sold 112,966 ounces of gold in the fourth quarter at an average
realized price of $1,797 per ounce for revenues of $203 million. Full year sales totaled
457,517 ounces of gold at an average realized price of $1,800 per ounce for record
revenues of $824 million
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Three Year Guidance Overview1 – Operating Mines
• Stable production in 2022 with 4% growth expected in 2023: production is
expected to be between 440,000 and 480,000 ounces in 2022, consistent with 2021,
and increase approximately 4% (based on the mid-point of guidance) to between
460,000 and 500,000 ounces in 2023 and 2024. The completion of the Phase III
expansion at Island Gold is expected to drive a further increase in production in 2025
with additional growth potential from Lynn Lake
• Total cash cost guidance of $875 to $925 per ounce in 2022, improving
substantially to $650 to $750 per ounce in 2024: costs are expected to increase in
2022, reflecting industry-wide cost inflation and temporarily higher costs at Mulatos.
Costs at Mulatos and on a consolidated basis are expected to decrease starting in the
second half of 2022 with the commencement of low-cost production from La Yaqui
Grande. Island Gold is expected to contribute to lower costs in 2024, along with a
further reduction in costs following the expected completion of the Phase III expansion
in 2025
• All-in sustaining cost (“AISC”) guidance of $1,190 to $1,240 per ounce in 2022,
improving to $950 to $1,050 per ounce in 2024: consistent with total cash costs,
AISC are expected to decrease approximately 18% from 2022 to 2024 (based on the
mid-point of guidance), reflecting lower costs at Mulatos and Island Gold. AISC are
expected to decrease further in 2025 with the completion of the Phase III expansion at
Island Gold
• Total capital guidance, excluding capitalized exploration, of $305 to $345 million
in 2022: this includes $290 to $330 million of capital at producing mines and is down
slightly from 2021 guidance with lower capital at La Yaqui Grande and Young-
Davidson more than offsetting the ramp up in spending on the Phase III expansion at
Island Gold. Capital spending for producing mines is expected to decrease
approximately 23% in 2023 to between $220 and $260 million, reflecting the
completion of construction of La Yaqui Grande, and remain at similar levels in 2024.
Total capital is expected to decline further following the completion of the Phase III
expansion at Island Gold in 2025. The total capital budget for 2022 includes:
o Sustaining capital guidance of $90 to $105 million: down approximately
17% from 2021, reflecting lower sustaining capital at Mulatos. Sustaining
capital is expected to remain at similar levels through 2024
o Growth capital guidance for producing mines of $200 to $225 million:
consistent with 2021 with the majority related to the Phase III expansion at
Island Gold and completing construction at La Yaqui Grande
• Exploration budget of $40 million: with more than half allocated to following up on
ongoing exploration success at Island Gold
• Fully funded growth: the Phase III expansion at Island Gold and La Yaqui Grande
are expected to be funded through ongoing cash flow and existing cash. The Company
expects to generate positive free cash flow in the second half of the year as costs and
capital spending decrease with the start of production at La Yaqui Grande
• Strong ongoing returns to shareholders: including the existing $0.10 per share
annualized dividend (paid quarterly) and planned share repurchases under the Normal
Course Issuer Bid. In 2021, the Company returned approximately $51 million to
shareholders between dividends and share repurchases, representing a combined
yield of approximately 1.8% at current share prices
1 Guidance statements in this release are forward-looking information. See the Assumptions and Sensitives section of this release along with the
cautionary note at the end of this release.
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Upcoming 2022 catalysts
• 2021 year-end Mineral Reserve and Resource update: February 2022
• La Yaqui Grande commercial production: Q3 2022
• Island Gold Phase III expansion updated mine plan: mid-2022. This will incorporate
the significant growth in high-grade Mineral Reserves and Resources since the
completion of the July 2020 study into an optimized mine plan which is expected to
enhance already attractive economics and the value of the operation
• Lynn Lake completion of permitting and construction decision: H2 2022
Fourth Quarter and Full Year 2021 Operating Results
Q4 2021 Q4 2020 2021 2020(2)
Revised 2021
Guidance(1)
Gold production (ounces)
Young-Davidson 51,900 48,000 195,000 136,200 190,000 – 205,000
Island Gold 37,500 41,200 140,900 139,000 130,000 – 145,000
Mulatos 23,100 31,200 121,300 150,800 135,000 – 145,000
Total gold production 112,500 120,400 457,200 426,800 455,000 – 495,000
(1) 2021 production guidance for Mulatos was revised lower on October 27, 2021. Production guidance for Young -Davidson and Island Gold was
unchanged from initial 2021 guidance.
(2) 2020 total production included 800 ounces from El Chanate.
2022 Guidance
2022 Guidance 2021 Revised
Guidance (5)
Young-Davidson Island Gold Mulatos Other (2) Total Total
Gold production (000 oz) 185 - 200 125 - 135 130 - 145 440 – 480 457 (actual)
Cost of sales, including
amortization ($ millions)(3) $610
Cost of sales, including
amortization ($/oz)(3) $1,325
Total cash costs ($/oz)(1)(5) $850 - 900 $550 - 600 $1,225 - 1,275 — $875 - 925 $790 - 810
All-in sustaining costs ($/oz)(1)(5) $1,190 - 1,240 $1,120 - 1,140
Mine-site all-in sustaining costs
($/oz)(1)(4)(5) $1,125 - 1,175 $850 - 900 $1,325 - 1,375 —
Capital expenditures ($ millions)
Sustaining capital(1) $50 - 55 $35 - 40 $5 - 10 — $90 - 105 $110 - 125
Growth capital(1) $5 - 10 $145 - 160 $50 - 55 $15 $215 - 240 $210 - 225
Total Sustaining and Growth
Capital(1) $55 – 65 $180 – 200 $55 – 65 $15 $305 - 345 $320 - 350
Capitalized exploration(1) $4 $20 — $3 $27 $34
Total capital expenditures and
capitalized exploration(1) $59 - 69 $200 - 220 $55 - 65 $18 $332 - 372 $354 - 384
(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release for a description of these measures.
(2) Includes growth capital and capitalized exploration at the Company's development projects (Lynn Lake and Esperanza).
(3) Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of total cash
cost guidance.
(4) 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.
(5) 2021 production and cost guidance revised on October 27, 2021.
Gold production in 2022 is expected to remain at similar levels as 2021 and weighted towards
the second half of the year (55% of total production) given the anticipated start of production
at La Yaqui Grande mid-year. Total cash costs and AISC are expected to decrease through
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the year and be significantly lower in the second half of 2022, reflecting the start of low-cost
production from La Yaqui Grande.
Full year AISC are expected to increase approximately $85 per ounce, or 8% from 2021
(based on the mid-point of guidance). The primary driver of the increase is approximately 5%
cost inflation, which is being experienced industry-wide, and a temporary increase in costs at
Mulatos as the operation transitions from mining of higher-cost Mulatos and stockpiled ore, to
the higher grade and lower cost La Yaqui Grande mine. This temporary increase in costs at
Mulatos is partially offset by lower sustaining capital at the operation with the stripping of the
El Salto portion of the main Mulatos pit largely completed in 2021.
Cost guidance continues to include COVID-19 testing and other related health and safety
costs across all three operating mines. Full year production and cost guidance assumes no
significant operational interruptions due to COVID-19.
Capital spending is expected to be higher during the first half of the 2022 and trend lower
during the second half of the year following the completion of construction of La Yaqui
Grande. Approximately 60% of the 2022 capital budget is expected to be spent during the first
half of the year.
2022 – 2024 Guidance: Operating Mines
2022 2023 2024
Gold Production
Young-Davidson 000 oz 185 – 200 185 – 200 185 – 200
Island Gold 000 oz 125 – 135 115 – 125 140 – 155
Mulatos 000 oz 130 – 145 160 – 175 135 – 145
Total gold production 000 oz 440 – 480 460 – 500 460 – 500
Total cash costs(1) $/oz $875 – 925 $775 – 875 $650 – 750
All-in Sustaining costs(1),(2) $/oz $1,190 – 1,240 $1,075 – 1,175 $950 – 1,050
Sustaining capital(1),(3) $ millions $90 – 105 $95 – 110 $95 – 110
Growth capital(1),(3) $ millions $200 – 225 $125 – 150 $135 – 160
Total sustaining & growth capital(1),(3)
(Operating mines; ex. Exploration) $ millions $290 – 330 $220 – 260 $230 – 270
(1) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release for a description of these measures.
(2) All-in sustaining cost guidance for 2023 and 2024 includes the same assumptions for G&A and stock based compensation as included in 2022.
(3) Sustaining and growth capital guidance is for producing mines and excludes capital for Lynn Lake and other development projects, and
capitalized exploration.
(4) 2023 and 2024 Cost of sales guidance has not been provided given amortization charges are based on reserves and resources at the end of
each of these years and cannot be reasonably estimated at this time.
Gold production is expected to increase approximately 4% in 2023, driven by higher
production from the Mulatos District given a full year of production from La Yaqui Grande, as
well as ongoing production from the main Mulatos operation. Company-wide gold production
is expected to remain at similar levels in 2024 with higher production from Island Gold
offsetting lower production from Mulatos.
Total cash costs and AISC are expected to decrease 8% and 7%, respectively, in 2023,
reflecting significantly lower costs at Mulatos with La Yaqui Grande ramped up and operating
for the full year. A more significant improvement in costs is expected in 2024 with a further
decrease in costs at Mulatos, with La Yaqui Grande providing the majority of production, and
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lower costs at Island Gold, reflecting the mining and processing of higher grades. Total cash
cost and AISC are expected to decrease 22% and 18%, respectively, between 2022 and
2024. Both are expected to decrease further following the completion of the Phase III
expansion at Island Gold in 2025.
Capital spending at existing operations (excluding Lynn Lake and other development projects)
is expected to decrease 23% in 2023, primarily driven by lower capital at Mulatos following the
completion of construction at La Yaqui Grande in 2022. Capital spending at existing
operations is expected to remain at similar levels in 2024 and decrease substantially following
the completion of the Phase III expansion at Island Gold in 2025. Sustaining capital spending
at existing operations is expected to remain relatively stable over the next several years at
approximately $90 to $110 million per year.
440-480 460-500 460-500
~$1,215
~$1,125
~$1,000
-100
100
300
500
700
900
1100
1300
0
100
200
300
400
500
600
700
2022E 2023E 2024E
Production (000 oz)
Young-Davidson Island Gold Mulatos AISC ($/oz)
$290-330
$220-260 $230-270
$0
$50
$100
$150
$200
$250
$300
2022E 2023E 2024E
Capital ($M)
Sustaining capital Growth capital
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Young-Davidson
Young-Davidson
Q3 YTD
2021 Q4 2021 2021A 2021 Revised
Guidance (3) 2022 Guidance
Gold production 000 oz 143 52 195 190 – 205 185 – 200
Total cash costs(1) $/oz $873 - - ~$850 $850-900
Mine-site AISC(1),(2) $/oz $1,093 - - ~$1,060 $1,125-1,175
Tonnes of ore processed tpd 7,912 7,861 7,899 7,500-8,000 8,000
Grade processed g/t Au 2.25 2.47 2.31 2.20-2.65 2.15-2.35
Average recovery rate % 92% 91% 91% 90-92% 90-92%
Sustaining capital(1) $ millions $31 - - $40-45 $50-55
Growth capital(1) $ millions $29 - - $25-30 $5-10
Total sustaining & growth
capital(1) (ex. exploration) $ millions $60 - - $65-75 $55-65
Capitalized exploration(1) $ millions $4 - - $7 $4
(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release and the Q3 2021 MD&A for a description
and calculation of these measures.
(2) 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.
(3) 2021 cost guidance was revised on October 27, 2021. Production guidance was unchanged
Gold production at Young-Davidson in 2022 is expected to be consistent with 2021, reflecting
similar grades and mining and processing rates. Following the completion of the lower mine
expansion in July 2020, underground mining rates increased to average a record 7,889 tpd in
2021, including a record 8,128 tpd in the second half of 2021. Mining and processing rates are
expected to average design rates of 8,000 tpd going forward.
Grades mined and processed are expected to range between 2.15 and 2.35 grams per tonne
of gold (“g/t Au”) in 2022 and remain at similar levels through 2024. Grades mined are
expected to increase thereafter, as YD West becomes more of a significant contributor to
production.
Total cash costs and mine-site AISC are expected to increase from 2021, primarily reflecting
industry-wide cost inflation, partially offset by operational improvements. Costs are expected
to remain at similar levels over the next three years.
Capital spending in 2022 (excluding exploration) is expected to range between $55 and $65
million, a decrease from 2021 with construction of the new life of mine tailings facility (“TIA 1”)
completed in the fourth quarter of 2021. Capital spending is expected to remain at similar
levels in 2023 and decrease slightly in 2024.
Young-Davidson is expected to generate record mine-site free cash flow of approximately
$100 million in 2021, driven by higher production, lower costs and lower capital with the
completion of the lower mine expansion. At a $1,750 per ounce gold price, the operation is
expected to generate similar mine-site free cash flow in 2022 and over the long term.
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Island Gold
Island Gold
Q3 YTD
2021 Q4 2021 2021A 2021 Revised
Guidance (3) 2022 Guidance
Gold production 000 oz 103 38 141 130 – 145 125 – 135
Total cash costs(1) $/oz $512 - - ~$525 $550-600
Mine-site AISC(1),(2) $/oz $860 - - ~$865 $850-900
Tonnes of ore processed tpd 1,174 1,247 1,193 1,200 1,200
Grade processed g/t Au 10.29 10.51 10.35 9.0-11.0 8.8-10.8
Average recovery rate % 96% 96% 96% 96-97% 96-97%
Sustaining capital(1) $ millions $36 - - $40-45 $35-40
Growth capital(1) & capital
advances $ millions $43 - - $80-85 $145-160
Total sustaining & growth
capital(1) (ex. exploration) $ millions $79 - - $120-130 $180-200
Capitalized exploration(1) $ millions $14 - - $20 $20
(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release and the Q3 2021 MD&A for a description
and calculation of these measures.
(2) 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.
(3) 2021 cost guidance was revised on October 27, 2021. Production guidance was unchanged
Gold production at Island Gold is expected to decrease slightly in 2022, reflecting lower
planned grades which is consistent with the Mineral Reserve grade and the Phase III
expansion study released in 2020 (“Phase III Study”). Mining and processing rates are
expected to be consistent with 2021 and average 1,200 tpd. As outlined in the Phase III
Study, grades mined are expected to decrease below the average Mineral Reserve grade in
2023 followed by an increase above the average Mineral Reserve grade in 2024 driving
production higher.
Total cash costs and mine-site AISC are expected to increase in 2022, reflecting slightly lower
grades and industry-wide cost inflation. Costs are also higher than outlined in the Phase III
Study, reflecting inflation and the stronger Canadian dollar. The study assumed a USD/CAD
foreign exchange rate of $0.75:1 compared to a rate of $0.80:1 assumed in the 2022 budget.
Costs are expected to increase slightly in 2023, followed by a decrease in 2024, reflecting
higher grades. A more substantial decrease is expected following the completion of the Phase
III expansion in 2025.
Capital spending at Island Gold (excluding exploration) is expected to be between $180 and
$200 million in 2022. As outlined in the study, construction activities and capital spending on
the Phase III expansion are expected to increase in 2022. Permitting for the expansion is
expected to be completed during the first half of the year. Shaft site surface works,
construction of the hoisting plant and preparation of the shaft sink will be a major focus with
the pre-sink of the shaft expected to start mid-2022. Consistent with the study, capital
spending is expected to decrease slightly in 2023 and 2024 before decreasing closer to
sustaining levels following the completion of the expansion in 2025.
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Mulatos District
Mulatos
Q3 YTD
2021 Q4 2021 2021A 2021 Revised
Guidance (3)
2022
Guidance H1 2022 H2 2022
Gold production 000 oz 98 23 121 135 – 145 130 – 145 45 – 50 85 – 95
Total cash costs(1) $/oz $913 - - ~$1,000 $1,225-1,275 ~$1,500 ~$1,125
Mine-site AISC(1),(2) $/oz $1,097 - - ~$1,235 $1,325-1,375 ~$1,675 ~$1,175
Tonnes of ore stacked -
Mulatos crusher tpd 19,500 19,100 19,400 21,000 17,000
Tonnes of ore stacked -
La Yaqui Grande tpd - 10,000
Grades stacked g/t Au 1.04 0.85 0.99 0.8-1.2 0.7-1.0
Combined recovery ratio % 55% 48% 54% 60% 65-70%
Sustaining capital(1) $ millions $15 - - $30-35 $5-10
Growth capital(1) & capital
advances $ millions $79 - - $95-100 $50-55
Total sustaining & growth
capital(1) (ex. exploration) $ millions $93 - - $125-135 $55-65
Capitalized exploration(1) $ millions $1 - - - -
(1) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release and the Q3 2021 MD&A for a description
and calculation of these measures.
(2) 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.
(3) 2021 guidance was revised on October 27, 2021.
Combined gold production from the Mulatos District (including La Yaqui Grande) is expected
to be between 130,000 and 145,000 ounces in 2022. This represents a 13% increase from
2021 (based on the mid-point of guidance) as the second half of 2021 was impacted by longer
than anticipated recovery times from stockpiled ore stacked in the latter part of the year. With
the Cerro Pelon deposit depleted during the fourth quarter of 2021, stockpiled ore will be a
more significant contributor to gold production during the first half of 2022.
Given the longer leach cycle and additional reagents required to process this ore, as well as
lower grades from the El Salto portion of the Mulatos pit early in the year, gold production is
expected to be lower during the first half of 2022 at significantly higher costs. With the start of
production from La Yaqui Grande in the third quarter and increasing grades from El Salto,
approximately 65% of 2022 production is expected in the second half of the year at
substantially lower costs.
Grades stacked are expected to range between 0.7 and 1.0 g/t Au and trend higher through
the year, reflecting the contribution of higher grade La Yaqui Grande ore in the second half of
the year.
Total cash costs and mine-site AISC are expected to be well above annual guidance during
the first half of 2022 and trend significantly lower during the second half of the year, driven by
low-cost production growth from La Yaqui Grande.
Gold production is expected to increase to a range of 160,000 to 175,000 ounces in 2023 with
costs decreasing significantly from 2022, driven by a full year of production from La Yaqui
Grande. La Yaqui Grande is expected to be the primary source of production in 2024 with
combined production in the range of 135,000 to 145,000 ounces and resulting in a further
improvement in costs.