Record production and strong margin expansion drive record financial performance including free cash flow of $62 million
TORONTO, July 26, 2023 (GLOBE NEWSWIRE) -- Alamos Gold Inc. (TSX:AGI; :AGI) (“Alamos” or the “Company”) today reported its financial results for the quarter ended June 30, 2023.
“We delivered a record performance in the second quarter on multiple fronts. Operationally, we produced a record 136,000 ounces, exceeding quarterly guidance, at costs consistent with annual guidance. This was driven by another excellent quarter from La Yaqui Grande which contributed to the highest production and free cash flow from the Mulatos District in more than 10 years. With the solid first half, we are well positioned to achieve our full year production and cost guidance,” said John A. McCluskey, President and Chief Executive Officer.
“The strong production growth and margin expansion led to a record quarter financially across a number of metrics including record revenue and operating cash flow. We also generated record free cash flow of $62 million while continuing to advance our growth initiatives that will in turn support further free cash flow growth. The Phase 3+ Expansion at Island Gold remains on track with construction of the shaft surface infrastructure well underway, and the updated Feasibility Study for the Lynn Lake project is in the final stages of completion. Both projects are key components of our strong outlook, with the capacity to nearly double our rate of production in Canada at significantly lower costs,” Mr. McCluskey added.
Second Quarter 2023
- Produced a record 136,000 ounces of gold, exceeding quarterly guidance of 120,000 to 130,000 ounces. This represented a 31% increase from the second quarter of 2022 and 6% increase from the first quarter of 2023 driven by strong production growth from the Mulatos District. The Company remains well positioned to achieve 2023 annual guidance
- Record free cash flow1 of $61.6 million reflecting strong operating results and margin expansion, as well as benefiting from the collection of sales tax receivables in Canada that had been temporarily delayed in the first quarter. The Company expects to continue generating strong free cash flow over the next several years while funding the Phase 3+ Expansion at Island Gold
- Generated record cash flow from operating activities of $141.8 million ($138.3 million, or $0.35 per share, before changes in working capital1)
- The Mulatos District produced 60,300 ounces, a 19% increase from the first quarter of 2023, and the highest level in 10 years, reflecting another solid quarter from La Yaqui Grande. The strong performance drove a 28% increase in mine-site free cash flow from the first quarter of 2023 to $47.0 million, bringing the first half total to $83.8 million
- Young-Davidson continues to perform well, producing 45,200 ounces, consistent with the first quarter of 2023, and generating record mine-site free cash flow1 of $35.4 million. Through the first half of the year, Young-Davidson generated $51.7 million of mine-site free cash flow and remains on track to generate over $100 million for the third consecutive year
- Island Gold produced 30,500 ounces and continues to self-finance the majority of the Phase 3+ Expansion. The Expansion is progressing well with the construction of the hoist house largely complete, the headframe well underway, and shaft sinking on track to start in the fourth quarter of 2023
- Sold 131,952 ounces of gold at an average realized price of $1,978 per ounce, for record quarterly revenues of $261.0 million. The average realized gold price was $2 per ounce above the London PM fix for the quarter
- Total cash costs1 of $847 per ounce were consistent with annual guidance, and all-in sustaining costs ("AISC"1) of $1,112 per ounce were below the low end of guidance and down 5% from the first quarter of 2023, reflecting low-cost production growth from La Yaqui Grande and lower sustaining capital
- Realized adjusted net earnings1 of $59.3 million, or $0.15 per share. Adjusted net earnings includes adjustments for unrealized foreign exchange gains recorded within both deferred taxes and foreign exchange of $13.4 million, and other gains totaling $2.4 million. Reported net earnings were $75.1 million, or $0.19 per share
- Paid a quarterly dividend of $9.9 million, or $0.025 per share (annualized rate of $0.10 per share)
- Cash and cash equivalents increased to $188.6 million, up from $133.8 million at the end of the first quarter, reflecting strong free cash flow. The Company remains debt free
- Completed the acquisition of Manitou Gold on May 23, 2023, adding significant exploration potential across the Michipicoten Greenstone Belt by more than tripling the regional land package adjacent to and along strike from Island Gold
- Provided an exploration update at Mulatos, further extending high-grade mineralization beyond Mineral Reserves and Resources at Puerto Del Aire ("PDA") and intersected a wide interval of significant gold mineralization at the Capulin regional target
- Provided an exploration update at Island Gold, extending high-grade mineralization across the deposit including within recently defined hanging wall and footwall zones in proximity to existing underground infrastructure
- Completed an Impact Benefit Agreement and signing ceremony with Marcel Colomb First Nation for the Lynn Lake project in Manitoba, Canada
- Publication of Alamos’ inaugural Climate Change Report, outlining corporate governance around climate-related risks and opportunities
(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 June 30, | Six Months Ended June 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Financial Results (in millions) | ||||||||||||
| Operating revenues | $261.0 | $191.2 | $512.5 | $375.7 | ||||||||
| Cost of sales (1) | $157.8 | $151.9 | $313.0 | $287.4 | ||||||||
| Earnings from operations | $88.6 | $25.7 | $163.6 | $20.0 | ||||||||
| Earnings before income taxes | $92.1 | $30.2 | $164.3 | $15.9 | ||||||||
| Net earnings (loss) | $75.1 | $6.4 | $123.5 | ($2.1 | ) | |||||||
| Adjusted net earnings (2) | $59.3 | $29.3 | $104.7 | $47.3 | ||||||||
| Earnings before interest, depreciation and amortization (2) | $138.9 | $92.0 | $258.8 | $154.9 | ||||||||
| Cash provided by operations before working capital and taxes paid(2) | $138.3 | $85.3 | $265.5 | $156.2 | ||||||||
| Cash provided by operating activities | $141.8 | $75.7 | $236.1 | $122.2 | ||||||||
| Capital expenditures (sustaining) (2) | $23.4 | $20.1 | $50.3 | $42.7 | ||||||||
| Capital expenditures (growth) (2) (3) | $49.8 | $43.3 | $101.8 | $101.9 | ||||||||
| Capital expenditures (capitalized exploration) (4) | $7.0 | $5.6 | $11.9 | $11.7 | ||||||||
| Free cash flow (2) | $61.6 | $6.7 | $72.1 | ($34.1 | ) | |||||||
| Operating Results | ||||||||||||
| Gold production (ounces) | 136,000 | 103,900 | 264,400 | 202,800 | ||||||||
| Gold sales (ounces) | 131,952 | 102,164 | 264,620 | 200,630 | ||||||||
| Per Ounce Data | ||||||||||||
| Average realized gold price | $1,978 | $1,871 | $1,937 | $1,873 | ||||||||
| Average spot gold price (London PM Fix) | $1,976 | $1,871 | $1,933 | $1,874 | ||||||||
| Cost of sales per ounce of gold sold (includes amortization) (1) | $1,196 | $1,487 | $1,183 | $1,432 | ||||||||
| Total cash costs per ounce of gold sold (2) | $847 | $895 | $834 | $943 | ||||||||
| All-in sustaining costs per ounce of gold sold (2) | $1,112 | $1,170 | $1,144 | $1,264 | ||||||||
| Share Data | ||||||||||||
| Earnings (loss) per share, basic and diluted | $0.19 | $0.02 | $0.31 | ($0.01 | ) | |||||||
| Adjusted earnings per share, basic and diluted(2) | $0.15 | $0.07 | $0.27 | $0.12 | ||||||||
| Weighted average common shares outstanding (basic) (000’s) | 395,346 | 391,761 | 394,657 | 391,837 | ||||||||
| Financial Position (in millions) | ||||||||||||
| Cash and cash equivalents(5) | $188.6 | $129.8 | ||||||||||
(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 growth capital from operating sites.
(4) Includes capitalized exploration at Island Gold, Young-Davidson and Mulatos District.
(5) Comparative cash and cash equivalents balance as at December 31, 2022.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Gold production (ounces) | ||||||||||||
| Young-Davidson | 45,200 | 46,400 | 90,200 | 98,300 | ||||||||
| Island Gold | 30,500 | 37,300 | 63,400 | 61,800 | ||||||||
| Mulatos District(7) | 60,300 | 20,200 | 110,800 | 42,700 | ||||||||
| Gold sales (ounces) | ||||||||||||
| Young-Davidson | 43,570 | 46,662 | 89,246 | 98,187 | ||||||||
| Island Gold | 28,183 | 36,797 | 61,910 | 60,165 | ||||||||
| Mulatos District | 60,199 | 18,705 | 113,464 | 42,278 | ||||||||
| Cost of sales (in millions)(1) | ||||||||||||
| Young-Davidson | $59.3 | $59.8 | $121.2 | $124.4 | ||||||||
| Island Gold | $27.6 | $32.0 | $58.5 | $56.2 | ||||||||
| Mulatos District | $70.9 | $60.1 | $133.3 | $106.8 | ||||||||
| Cost of sales per ounce of gold sold (includes amortization) (1) | ||||||||||||
| Young-Davidson | $1,361 | $1,282 | $1,358 | $1,267 | ||||||||
| Island Gold | $979 | $870 | ||||||||||
