Alamos Gold Reports Fourth Quarter and Year-End 2019 Results
Record operating cash flow of $86 million in the fourth quarter and $297 million in 2019
TORONTO, Feb. 19, 2020 — Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its financial results for the quarter and year ended December 31, 2019.
“We reported a solid fourth quarter and 2019. We met our production guidance for the fifth consecutive year, and we met our cost guidance with a 10% reduction in total cash costs from a year ago. Stronger gold prices and lower costs drove a 40% increase in operating cash flow,” said John A. McCluskey, President and Chief Executive Officer.
“We expect 2020 will be a transformational year for Alamos driven by several significant catalysts. On the back of another substantial increase in Mineral Reserves and Resources at Island Gold it is clear the ore body is evolving into a world class deposit. A Phase III expansion study will be completed in the second quarter and is expected to showcase a larger, highly profitable and longer-life operation. The lower mine expansion at Young-Davidson is on track for completion in June after which we expect to transition to strong free cash flow growth,” Mr. McCluskey added.
Fourth Quarter 2019
- Produced 122,100 ounces of gold, consistent with guidance, driven by strong performances at Young-Davidson and Island Gold
- Island Gold produced 38,600 ounces of gold and generated mine-site free cash flow1 of $9.4 million
- Young-Davidson produced 48,000 ounces of gold and achieved underground mining rates of 7,000 tonnes per day (“tpd”), exceeding budgeted mining rates for the fourth consecutive quarter and marking the second highest quarterly mining rate ever. Construction of the lower mine expansion remains on schedule with the tie-in of the upper and lower mines on track for completion in June 2020
- Sold 127,148 ounces of gold at an average realized price of $1,463 per ounce for record revenues of $186.0 million
- Record cash flow from operating activities of $77.8 million (and a record $85.7 million, or $0.22 per share, before changes in working capital1), reflecting higher gold prices and operating margins
- Consolidated total cash costs1 of $722 per ounce were in line with annual guidance and 6% lower than the fourth quarter of 2018, driven by low cost production growth at Island Gold
- All-in sustaining costs (“AISC”)1 decreased slightly from the fourth quarter of 2018 to $972 per ounce, reflecting the timing of capital spending. Full year AISC of $951 per ounce were in line with guidance
- Reported adjusted net earnings1 of $32.1 million, or $0.08 per share1, include adjustments for unrealized foreign exchange gains recorded within deferred taxes of $8.6 million, partially offset by other one-time losses and tax adjustments totaling $2.7 million
- Realized net earnings of $38.0 million, or $0.10 per share
- Ended the quarter with no debt, cash and cash equivalents of $182.8 million, and equity securities of $22.8 million
- Completed construction of the Cerro Pelon mine ahead of schedule and achieved initial production in the fourth quarter
- Announced a 50% increase to the quarterly dividend, commencing in the first quarter of 2020
Full Year 2019
- Produced 494,500 ounces of gold, meeting production guidance for the fifth consecutive year
- Island Gold exceeded guidance with record production of 150,400 ounces, driving record mine-site free cash flow1 of $64.5 million
- Sold 494,702 ounces of gold at an average realized price of $1,381 per ounce for record revenues of $683.1 million
- Total cash costs1 of $720 per ounce and AISC1 of $951 per ounce were both in line with guidance. Cost of sales of $1,054 per ounce were 2% below guidance reflecting lower amortization charges
- Realized adjusted net earnings1 of $83.5 million, or $0.21 per share1, a 326% increase compared to 2018. Adjusted net earnings include adjustments for unrealized foreign exchange gains recorded within both deferred taxes and foreign exchange of $13.5 million, partially offset by other items totaling $0.9 million
- Reported net earnings of $96.1 million, or $0.25 per share
- Record cash flow from operating activities of $260.4 million ($296.9 million, or $0.76 per share, before changes in working capital1, a 40% increase from 2018)
- Generated total mine-site free cash flow of $61.7 million1 with strong cash flow more than funding the lower mine expansion at Young-Davidson, exploration activities at Island Gold, and construction of Cerro Pelon
- Reported year end 2019 Mineral Reserves of 9.7 million ounces, a slight increase over 2018 with additions at Island Gold, La Yaqui Grande and Kirazlı more than offsetting mining depletion (2)
- Ongoing exploration success at Island Gold drove a 21% increase in Mineral Reserves and 46% increase in Inferred Mineral Resources from the end of 2018 for a combined increase of nearly one million ounces
- Received permit approval for the Phase II expansion of Island Gold to 1,200 tpd in May 2019
- Completed permitting of the La Yaqui Grande project in Mexico in July 2019
- Announced the suspension of construction activities at the Kirazlı project in Turkey pending the renewal of the Company’s mining concessions which expired on October 13, 2019
- Received the “Best Corporate Social Responsibility Practice 2019” award from the Mexican Center for Philanthropy (Cemefi) and the Alliance for Corporate Social Responsibility in Mexico (AliaRSE) for the Company’s voluntary relocation program of residents from Mulatos to Matarachi in Mexico
- Repurchased 2.7 million shares at a cost of $11.4 million, or $4.17 per share under the Normal Course Issuer Bid (“NCIB”)
- Paid $15.6 million in dividends, double the amount paid in 2018
- Sold non-core royalties to Metalla Royalty & Streaming Ltd. (“Metalla”) for 2.1 million shares of Metalla, currently valued at $12.4 million
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.
(2) Refer to press release dated February 18, 2020 entitled: “Alamos Gold Reports Mineral Reserves and Resources for the Year-Ended 2019”.
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