Alamos Gold Reports Second Quarter 2024 Results

2024-07-31

TSX - Toronto Stock Exchange · Gold · Canada

Record production and lower costs drive record free cash flow of $107 million

All amounts are in United States dollars, unless otherwise stated.

TORONTO, July 31, 2024 (GLOBE NEWSWIRE) -- Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its financial results for the quarter ended June 30, 2024.

“Alamos delivered a record performance in the second quarter. Production exceeded quarterly guidance, increasing to a record 139,100 ounces. Combined with lower costs, this drove a number of financial records including free cash flow of $107 million,” said John A. McCluskey, President and Chief Executive Officer. “We also continue to create value through exploration and our various growth initiatives. The Phase 3+ Expansion is progressing well, and the integration of Island Gold with our recently acquired Magino mine is well underway. We expect the integration of the two operations to drive substantial synergies and unlock significant longer-term upside potential supported by the broad-based exploration success we are seeing across the Island Gold District. We remain well positioned to achieve full year guidance, and deliver significant production growth, at declining costs over the next several years,” Mr. McCluskey added.

Second Quarter 2024 Operational and Financial Highlights

Produced a record 139,100 ounces of gold, exceeding quarterly guidance of 123,000 to 133,000 ounces, driven by strong performances from Island Gold and La Yaqui Grande. With the solid first half performance, the Company is well positioned to achieve full year production and cost guidance Sold 140,923 ounces of gold at an average realized price of $2,336 per ounce, generating record quarterly revenue of $332.6 million. This represented a 27% increase from the second quarter of 2023 and marked the second consecutive quarter of record revenue Record free cash flow 1 of $106.9 million, reflecting strong mine-site free cash flow from all three operations, including quarterly free cash flow of $69.9 million at Mulatos and record quarterly free cash flow from Young-Davidson of $40.1 million. This was a significant increase from consolidated free cash flow of $24.4 million in the first quarter of 2024, while continuing to fund the Phase 3+ Expansion at Island Gold Record cash flow from operating activities of $194.5 million (including $190.6 million, or $0.48 per share before changes in working capital 1 ), an 80% increase from the first quarter of 2024 reflecting strong operating performance and margin expansion Cost of sales of $172.6 million or $1,225 per ounce were in line with full year guidance Total cash costs 1 of $830 per ounce and all-in sustaining costs ("AISC" 1 ) of $1,096 per ounce decreased 9% and 13%, respectively, from the first quarter of 2024, driven by higher grades at both Island Gold and Young-Davidson Adjusted net earnings 1 for the second quarter were $96.9 million, or $0.24 per share 1 . Adjusted net earnings includes adjustments for net unrealized foreign exchange losses recorded within deferred taxes and foreign exchange of $15.9 million, and other adjustments, net of taxes totaling $10.9 million. Reported net earnings were $70.1 million, or $0.18 per share Cash and cash equivalents increased 31% from the first quarter of 2024 to $313.6 million on June 30, 2024. This was net of a $36.9 million private placement into Argonaut Gold ("Argonaut") in April, and ongoing investment in the Phase 3+ Expansion. The Company was debt-free as the end of the second quarter. Subsequent to quarter-end, the Company drew down $250 million on its credit facility to extinguish Argonaut's term loan, revolving credit facility and gold prepaid advance of 10,000 ounces, all inherited as part of the acquisition Paid dividends of $10.0 million, or $0.025 per share for the quarter Provided an exploration update at Young-Davidson having intersected a new style of higher-grade gold mineralization from the mid mine, in zones within the hanging wall of the Young-Davidson deposit. These zones are located between 10 and up to 200 metres (“m”) south of existing infrastructure and Mineral Reserves and Resources, highlighting the upside potential with grades intersected well above the current Mineral Reserve grade of 2.31 g/t of gold Announced the completion of the acquisition of Argonaut on July 12, 2024. As part of the acquisition, Alamos acquired Argonaut’s Magino mine, located adjacent to Alamos’ Island Gold mine in Ontario, Canada. Argonaut’s assets in the United States and Mexico have been spun out as a newly created junior gold producer named Florida Canyon Gold Inc. (“Florida Canyon Gold”) of which the Company owns an equity interest of 19.9% Completed a gold sale prepayment agreement (“gold prepayment”) on July 15, 2024 for total consideration of $116 million in exchange for the delivery of 49,384 ounces in 2025. The proceeds of the gold prepayment were used to eliminate gold forward sale contracts, previously entered into by Argonaut, totaling 179,417 ounces in 2024 and 2025 with an average price of $1,838 per ounce. The transaction has eliminated more than half of the Argonaut hedge book and associated mark-to-market liability, while providing significantly increased exposure to rising gold prices Provided a comprehensive exploration update at Island Gold where exploration drilling continues to extend high-grade gold mineralization across the Island Gold Deposit, as well as within several hanging wall and footwall structures. Delineation and definition drilling has also defined wide, higher-grade zones within the Island East area. The success on both fronts is expected to drive further growth in high-grade Mineral Reserves and Resources with the 2024 year end update Published Alamos’ 2023 ESG Report, outlining the Company’s progress on its ESG performance

(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.

H ighlight Summary

| | Three Months Ended June 30, | Six Months Ended June 30, | | | | | | | | | 2024 | 2023 | 2024 | 2023 | | | | | | Financial Results (in millions) | | | | | | | | | | Operating revenues | $332.6 | $261.0 | $610.2 | $512.5 | | | | | | Cost of sales (1) | $172.6 | $157.8 | $346.2 | $313.0 | | | | | | Earnings from operations | $138.8 | $88.6 | $220.2 | $163.6 | | | | | | Earnings before income taxes | $128.2 | $92.1 | $203.8 | $164.3 | | | | | | Net earnings | $70.1 | $75.1 | $112.2 | $123.5 | | | | | | Adjusted net earnings ( 2) | $96.9 | $59.3 | $148.1 | $104.7 | | | | | | Earnings before interest, taxes, depreciation and amortization (2) | $180.5 | $138.9 | $306.2 | $258.8 | | | | | | Cash provided by operations before working capital and taxes paid (2) | $190.6 | $138.3 | $325.5 | $265.5 | | | | | | Cash provided by operating activities | $194.5 | $141.8 | $303.4 | $236.1 | | | | | | Capital expenditures (sustaining) (2) | $20.9 | $23.4 | $47.4 | $50.3 | | | | | | Capital expenditures (growth) (2) | $58.8 | $49.8 | $110.4 | $101.8 | | | | | | Capital expenditures (capitalized exploration) | $7.9 | $7.0 | $14.3 | $11.9 | | | | | | Free cash flow (2) | $106.9 | $61.6 | $131.3 | $72.1 | | | | | | Operating Results | | | | | | | | | | Gold production (ounces) | | 139,100 | | 136,000 | | 274,800 | | 264,400 | | Gold sales (ounces) | | 140,923 | | 131,952 | | 273,772 | | 264,620 | | Per Ounce Data | | | | | | | | | | Average realized gold price | $2,336 | $1,978 | $2,207 | $1,937 | | | | | | Average spot gold price (London PM Fix) | $2,338 | $1,976 | $2,208 | $1,933 | | | | | | Cost of sales per ounce of gold sold (includes amortization) (1) | $1,225 | $1,196 | $1,265 | $1,183 | | | | | | Total cash costs per ounce of gold sold (2) | $830 | $847 | $869 | $834 | | | | | | All-in sustaining costs per ounce of gold sold (2) | $1,096 | $1,112 | $1,178 | $1,144 | | | | | | Share Data | | | | | | | | | | Earnings per share, basic | $0.18 | $0.19 | $0.28 | $0.31 | | | | | | Earnings per share, diluted | $0.17 | $0.19 | $0.28 | $0.31 | | | | | | Adjusted earnings per share, basic (2) | $0.24 | $0.15 | $0.37 | $0.27 | | | | | | Weighted average common shares outstanding (basic) (000’s) | | 398,275 | | 395,346 | | 397,546 | | 394,657 | | Financial Position (in millions) | | | | | | | | | | Cash and cash equivalents | | | $313.6 | $224.8 | | | | | | | | | | | | | | |

| | Three Months Ended June 30, | Six Months Ended June 30, | | | | | | | | | | 2024 | | 2023 | | 2024 | | 2023 | | Gold production (ounces) | | | | | | | | | | Young-Davidson | | 44,000 | | 45,200 | | 84,100 | | 90,200 | | Island Gold | | 41,700 | | 30,500 | | 75,100 | | 63,400 | | Mulatos District (7) | | 53,400 | | 60,300 | | 115,600 | | 110,800 | | Gold sales (ounces) | | | | | | | | | | Young-Davidson | | 45,057 | | 43,570 | | 84,867 | | 89,246 | | Island Gold | | 39,766 | | 28,183 | | 73,896 | | 61,910 | | Mulatos District | | 56,100 | | 60,199 | | 115,009 | | 113,464 | | Cost of sales (in millions) (1) | | | | | | | | | | Young-Davidson | $66.7 | $59.3 | $132.1 | $121.2 | | | | | | Island Gold | $30.7 | $27.6 | $64.1 | $58.5 | | | | | | Mulatos District | $75.2 | $70.9 | $150.0 | $133.3 | | | | | | Cost of sales per ounce of gold sold (includes amortization) (1) | | | | | | | | | | Young-Davidson | $1,480 | $1,361 | $1,557 | $1,358 | | | | | | Island Gold | $772 | $979 | $867 | $945 | | | | | | Mulatos District | $1,340 | $1,178 | $1,304 | $1,175 | | | | | | Total cash costs per ounce of gold sold (2) | | | | | | | | | | Young-Davidson | $1,030 | $955 | $1,104 | $948 | | | | | | Island Gold | $493 | $678 | $591 | $651 | | | | | | Mulatos District | $907 | $847 | $873 | $843 | | | | | | Mine-site all-in sustaining costs per ounce of gold sold (2),(3) | | | | | | | | | | Young-Davidson | $1,203 | $1,212 | $1,334 | $1,222 | | | | | | Island Gold | $805 | $1,072 | $943 | $1,016 | | | | | | Mulatos District | $963 | $894 | $933 | $903 | | | | | | Capital expenditures (sustaining, growth, and capitalized exploration) (in millions ) (2) | | | | | | | | | | Young-Davidson (4) | $19.0 | $13.5 | $39.2 | $30.9 | | | | | | Island Gold (5) | $56.1 | $54.7 | $110.7 | $111.7 | | | | | | Mulatos District (6) | $7.8 | $6.5 | $11.7 | $12.2 | | | | | | Other | $4.7 | $5.5 | $10.5 | $9.2 | | | | | | | | | | | | | | |

(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) 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 at Young-Davidson of $1.4 million and $2.4 million for the three and six months ended June 30, 2024 ($1.2 million and $2.6 million for the three and six months ended June 30, 2023). (5) Includes capitalized exploration at Island Gold of $3.4 million and $6.9 million for the three and six months ended June 30, 2024 ($3.0 million and $5.4 million for the three and six months ended June 30, 2023). (6) Includes capitalized exploration at Mulatos District of $3.1 million and $5.0 million for the three and six months ended June 30, 2024 ($2.8 million and $3.9 million for the three and six months ended June 30, 2023). (7) The Mulatos District includes La Yaqui Grande and Mulatos.

Environment, Social and Governance Summary Performance

Health and Safety

Total recordable injury frequency rate 1 ("TRIFR") of 1.76 in the second quarter, down from 1.79 in the first quarter Lost time injury frequency rate 1 ("LTIFR") of 0.20 in the second quarter as compared to nil in the first quarter Year-to-date TRIFR of 1.78 and LTIFR of 0.10

During the second quarter of 2024, Alamos had 18 recordable injuries across its sites including two lost time injuries (“LTI”).

Alamos strives to maintain a safe, healthy working environment for all, with a strong safety culture where everyone is continually reminded of the importance of keeping themselves and their colleagues healthy and injury-free. The Company’s overarching commitment is to have all employees and contractors return Home Safe Every Day.

Environment

Zero significant environmental incidents and two minor reportable events in the second quarter of 2024 Received approval from the province for a routine tailings raise at the Island Gold and Young-Davidson Mines Received Environmental Compliance Approval Air and Noise from the Ministry of Environment, Conservation and Parks at Island Gold Continued reclamation activities at Mulatos for the Cerro Pelon, El Victor and San Carlos pits

The two minor reportable events during the quarter involved an oil spill (1,000 litres) following the accidental puncture of a container, and a dust concern due to strong winds, at the Young-Davidson mine. The area of the oil spill was contained and remediated with no anticipated long-term effects for either event.

The Company is committed to preserving the long-term health and viability of the natural environment that surrounds its operations and projects. This includes investing in new initiatives to reduce our environmental footprint with the goal of minimizing the environmental impacts of our activities and offsetting any impacts that cannot be fully mitigated or rehabilitated.

Community

Ongoing donations, medical support and infrastructure investments were provided to local communities, including:

Various sponsorships to support local youth sports teams and community events, and donations to local charities and organizations around the Company's mines Continued to advance a long-term power project at Island Gold in partnership with Batchewana First Nation Continued to provide local community support including road maintenance, dust suppression, and water distribution to Matarachi and surrounding areas around the Mulatos Mine

The Company believes that excellence in sustainability provides a net benefit to all stakeholders. The Company continues to engage with local communities to understand local challenges and priorities. Ongoing investments in local infrastructure, health care, education, cultural and community programs remain a focus of the Company.

Governance and Disclosure

Published Alamos' 2023 Environmental, Social and Governance ("ESG") Report, outlining the Company's progress on its ESG performance across its operations, projects and offices Mulatos was awarded the Empresa Socialmente Responsable award for the 16 th consecutive year in recognition of the mine’s ethical and sustainable practices Published Alamos’ 2023 Report on Conformance to the Responsible Gold Mining Principles ("RGMP"s) in accordance with the World Gold Council’s RGMP framework Published Alamos’ inaugural 2023 Report on Modern Slavery in accordance with Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act Published Alamos’ Extractive Sector Transparency Measures Act 2023 Annual Report, outlining payments made to governments in Canada and abroad related to our activities on a country and project basis

The Company maintains the highest standards of corporate governance to ensure that corporate decision-making reflects its values, including the Company’s commitment to sustainable development.

(1) Frequency rate is calculated as incidents per 200,000 hours worked.

Outlook and Strategy

| 2024 Guidance - excludes Magino (4) | | | | | | | | Young-Davidson | Island Gold | Mulatos | Lynn Lake | Total | | Gold production ( 000's ounces) | 180 - 195 | 145 - 160 | 160 - 170 | | 485 - 525 | | Cost of sales, including amortization _(in millions) _(3) | | | | | $ 620 | | Cost of sales, including amortization _($ per ounce) _(3) | | | | | $ 1,225 | | Total cash costs _($ per ounce) _(1) | $950 - $1,000 | $550 - $600 | $925 - $975 | — | $825 - $875 | | All-in sustaining costs _($ per ounce) _(1) | | | | | $1,125 - $1,175 | | Mine-site all-in sustaining costs _($ per ounce) _(1)(2) | $1,175 - $1,225 | $875 - $925 | $1,000 - $1,050 | — | | | Capital expenditures (in millions) | | | | | | | Sustaining capita l (1) | $40 - $45 | $50 - $55 | $3 - $5 | — | $93 - $105 | | Growth capital (1) | $20 - $25 | $210 - $230 | $2 - $5 | — | $232 - $260 | | Total Sustaining and Growth Capita l (1) - producing mines | $60 - $70 | $260 - $285 | $5 - $10 | — | $325 - $365 | | Growth capital - development projects | | | | $25 | $ 25 | | Capitalized exploration (1) | $10 | $13 | $9 | $9 | $ 41 | | Total capital expenditures and capitalized exploration (1) | $70 - $80 | $273 - $298 | $14 - $19 | $ 34 | $391 - $431 | | | | | | | |

(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) 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) 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) 2024 Guidance does not include the Magino Mine with the acquisition closing in July. Updated guidance is expected to be provided in September 2024.

The Company’s objective is to operate a sustainable business model that supports growing returns to all stakeholders over the long-term, through growing production, expanding margins, and increasing profitability. This includes a balanced approach to capital allocation focused on generating strong ongoing free cash flow while re-investing in high-return internal growth opportunities, and supporting higher returns to shareholders.

The Company's outstanding operational and financial performance continued in the second quarter of 2024, achieving a number of new records. This included record production of 139,100 ounces, which exceeded quarterly guidance, at substantially lower costs reflecting strong performances at all three operations. With the solid first half performance, the Company is well positioned to achieve full year production and cost guidance issued in January 2024. Updated 2024 guidance, incorporating the recently acquired Magino mine, is expected to be released in September 2024.

Record production and rising gold prices drove record revenue in the quarter. In addition, lower costs generated a significant increase in operating margins, driving operating cash flow and free cash flow sharply higher to new records. Free cash flow increased to $106.9 million in the second quarter, up more than 300% from the first quarter of 2024 while continuing to fund the Phase 3+ Expansion at Island Gold. The expansion is progressing well and remains on track to be completed during the first half of 2026, which will be a significant driver of further free cash flow growth over the longer-term through growing production and declining costs.

With the completion of the acquisition of Argonaut earlier this month, the integration of the Magino and Island Gold mines is well underway. Given their close proximity, the integration of the two operations is expected to create one of the largest and lowest cost gold mines in Canada and drive pre-tax synergies of approximately $515 million over the life of the mine through the use of shared infrastructure. This includes immediate capital savings with the mill and tailings expansions at Island Gold no longer required, and significant ongoing operating savings through the use of the larger and more efficient Magino mill. This not only de-risks the Phase 3+ Expansion, but also creates opportunities for further expansions of the combined Island Gold and Magino operations.