Alamos Gold Closes 2018 on a Strong Note With Higher Production and Lower Costs
Alamos Gold Inc. today reported its financial results for the quarter and year ended December 31, 2018.
“Alamos closed 2018 on a high note with record production from Island Gold and a stronger performance from Young-Davidson driving production higher and costs lower in the fourth quarter. This contributed to an 18% increase in full year production to 505,000 ounces, meeting guidance and achieving a new record. We expect similar production in 2019 at lower costs contributing to stronger margins and financial performance,” said John A. McCluskey, President and Chief Executive Officer.
“We also advanced various growth initiatives at our existing operations. This was highlighted by the completion of the Phase I expansion and the addition of nearly one million ounces of mineral reserves and resources at Island Gold, which will support future expansions. We also advanced construction of the lower mine expansion at Young-Davidson. Combined with declining costs at Mulatos, we expect these initiatives to drive strong free cash flow growth starting in the second half of 2020. Aligned with our strong outlook and focus on returning value to shareholders, we have doubled our annual dividend and have been active in buying back stock,” Mr. McCluskey added.
Fourth Quarter 2018 Highlights
Alamos reported it produced 125,600 ounces of gold, an increase from the third quarter reflecting a stronger performance from Young-Davidson and record quarterly production from Island Gold.
The company sold a record 131,161 ounces of gold at an average realized price of $1,244 per ounce, $17 above the average London PM Fix, for revenues of $163.1 million
Total cash costs decreased to $770 per ounce, the lowest in 2018 reflecting improved performance at Young-Davidson; all-in sustaining costs ("AISC") of $983 per ounce also decreased from the third quarter.
Cost of sales of $1,579 per ounce were higher than guidance reflecting a non-cash inventory impairment charge at El Chanate of $64.0 million, or $488 per ounce
Reported adjusted net earnings of $4.3 million, or $0.01 per share1, which includes one-time adjustments for a $64.0 million ($49.9 million after-tax) non-cash inventory impairment charge at El Chanate, as well as unrealized foreign exchange losses recorded within both deferred taxes and foreign exchange of $15.8 million, and other items totaling $10.1 million
Realized a net loss of $71.5 million, or $0.18 per share. Generated cash flow from operating activities1 of $47.4 million ($52.8 million, or $0.14 per share, before changes in working capital1), an increase from the third quarter primarily reflecting lower costs, higher gold sales and a higher realized gold price.
Ended the quarter with no debt and cash and cash equivalents of $206.0 million
Announced a normal course issuer bid permitting Alamos to purchase for cancellation up to 25,513,043 common shares, representing 10% of the Company’s public float.
Received the Schedule 2 Amendment from the Federal government for a new tailings facility at Young-Davidson, securing tailings capacity for all existing Mineral Reserves and Resources
Successfully obtained permits for the high return Cerro Pelon project in Mexico and commenced full scale construction
Full year 2018 Highlights
Met the mid-point of guidance with record production of 505,000 ounces of gold, representing an 18% increase from the previous record in 2017
Achieved increased production guidance at both Island Gold and Mulatos, with guidance having been revised higher twice at both operations in 2018
Sold a record 509,879 ounces of gold at an average realized price of $1,278 per ounce for record revenues of $651.8 million
Total cash costs1 of $802 and AISC of $989 per ounce were in line with revised cost guidance. Cost of sales of $1,254 per ounce were above guidance reflecting the non-cash inventory impairment charge at El Chanate
Reported adjusted net earnings1 of $19.6 million, or $0.05 per share1 which includes one-time adjustments for the El Chanate non-cash inventory impairment, as well as unrealized foreign exchange losses recorded within both deferred taxes and foreign exchange of $33.2 million, and other items totaling $9.1 million
Realized a net loss of $72.6 million, or $0.19 per share
Reported record cash flow from operating activities1 of $213.9 million ($211.7 million, or $0.54 per share, before changes in working capital1), a 15% increase from 2017
Generated positive free cash flow at each of the Company's operations for total mine-site free cash flow of $56.4 million
Continued exploration success at Island Gold, driving a 14% increase in Mineral Reserves, 76% increase in Measured and Indicated Mineral Resources and 73% increase in Inferred Mineral Resources at Island Gold, compared to the end of 2017
Successfully commissioned the Phase I expansion at Island Gold on schedule in the third quarter, increasing mill capacity to 1,100 tonnes per day
Liquidated the Company's equity positions in AuRico Metals and Corex Gold, generating proceeds of $24.9 million and realizing a gain of $14.3 million reported in retained earnings (deficit)
Subsequent to Year-End
The Company re-purchased and canceled 2,444,352 common shares at a cost of $10.0 million, or $4.07 per share under its Normal Course Issuer Bid
Announced a doubling of the annual dividend, with a $0.01 per share dividend to be paid quarterly in 2019 (up from $0.01 semi-annually previously). The first quarterly dividend of $0.01 per share will be payable to shareholders of record on March 15, 2019, to be paid on March 29, 2019
For more information: https://www.alamosgold.com
Photo from Alamos Gold