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, Jan. 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.
2022-2024 Production and AISC Guidance
2022-2024 Capital 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
Three Year Guidance Overview 1 – 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:
- 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
- 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
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.
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
Read More: https://www.alamosgold.com/news-and-events/news/news-details/2022/Alamos-Gold-Reports-Fourth-Quarter-2021-Production-and-Provides-Three-Year-Production-and-Operating-Guidance/default.aspx