Alamos Reports Second Quarter 2020 Results

Alamos Reports Second Quarter 2020 Results

by ahnationtalk on August 5, 202063 Views

TORONTO, July 29, 2020 — Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its financial results for the quarter ended June 30, 2020.

“The second quarter of 2020 will be remembered as one of the most challenging times in our history given the COVID-19 pandemic. We started the quarter with two of our operations being temporarily suspended, but we adapted well and by June both Island Gold and Mulatos had safely returned to normal operating levels,” said John A. McCluskey, President and Chief Executive Officer.

At the same time we made good progress on several catalysts that form key parts of what is a transformational year for Alamos. These include the completion of the lower mine expansion at Young-Davidson earlier this month, the announcement of a Phase III expansion of Island Gold, and a construction decision on the La Yaqui Grande project.  These have greatly enhanced the long-term outlook for each of our operating mines. We look forward to creating additional value for our stakeholders in the second half of 2020 with higher production and lower costs expected to drive strong free cash flow growth,” Mr. McCluskey added.

Second Quarter 2020

  • Produced 78,400 ounces of gold, with production impacted by the previously guided downtime of the Northgate shaft at Young-Davidson and temporary suspension of operations at Island Gold and Mulatos due to COVID-19. Mulatos and Island Gold resumed operations in May with both returning to normal operating levels in June
  • Mulatos produced 35,900 ounces of gold and generated mine-site free cash flow1 of $19.3 million, with the operation benefiting from the ongoing recovery of gold from the leach pad during the temporary suspension
  • Island Gold produced 19,400 ounces of gold and generated mine-site free cash flow1 of $9.2 million. Production was lower than previous quarters due to the temporary suspension of operations which began the last week of March. After a phased ramp up in May, mining and milling rates increased to average more than 1,200 tpd for the month of June
  • Advanced the tie-in of the upper and lower mines at Young-Davidson, successfully commissioning the Northgate shaft and new lower mine infrastructure in July. Underground mining rates increased to 6,500 tpd by the end of July and are expected to ramp up to 7,500 tpd by the end of 2020
  • Sold 74,605 ounces of gold at an average realized price of $1,692 per ounce for revenues of $126.2 million
  • Generated cash flow from operating activities of $49.6 million ($44.7 million, or $0.11 per share, before changes in working capital1)
  • Consolidated total cash costs1 of $933 per ounce and all-in sustaining costs (“AISC”)1 of $1,276 per ounce were both temporarily higher, due to higher costs at Young-Davidson during the lower mine tie-in. AISC were higher than usual as a result of the impact of the 79% increase in the Company’s share price on the revaluation of outstanding stock-based awards. In addition, sustaining capital was allocated to lower ounces of gold sold given the above noted temporary suspensions. Total cash costs and AISC are expected to decrease significantly in the second half of 2020
  • Realized net earnings of $11.7 million, or $0.03 per share
  • Reported adjusted net earnings1 of $9.8 million, or $0.03 per share1, which includes adjustments for unrealized foreign exchange gains of $10.3 million recorded within deferred taxes, partially offset by COVID-19 costs of $6.5 million related to the suspension of operations at Island Gold and Mulatos, and other one-time losses of $1.9 million
  • Ended the quarter with cash and cash equivalents of $201.3 million and equity securities of $30.2 million
  • Paid a quarterly dividend of $5.9 million and repurchased 527,100 common shares at a cost of $2.6 million, or $5.05 per share, under the Company’s Normal Course Issuer Bid (“NCIB”). To date in 2020, the Company has returned $17.3 million to shareholders in the form of dividends and share repurchases

Subsequent to the Second Quarter:

  • Reported results of the positive Phase III Expansion Study conducted on Island Gold, which is expected to drive a 72% increase in average annual production to 236,000 ounces and a 30% decrease in mine-site AISC to $534 per ounce at the operation
  • Announced a construction decision on the high-return La Yaqui Grande project, which generates a 58% after-tax internal rate of return (“IRR”) at a $1,750 gold price and is expected to significantly reduce Mulatos District AISC starting in 2022

(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,
2020 2019 2020 2019
Financial Results (in millions)
Operating revenues $ 126.2 $ 168.1 $ 303.1 $ 324.2
Cost of sales (1) $ 103.3 $ 131.1 $ 223.6 $ 258.1
Earnings from operations $ 12.1 $ 28.2 $ 58.3 $ 46.9
Earnings before income taxes $ 6.0 $ 27.1 $ 46.5 $ 47.7
Net earnings (loss) $ 11.7 $ 23.6 ($ 0.6 ) $ 40.4
Adjusted net earnings (2) $ 9.8 $ 17.7 $ 39.2 $ 28.0
Earnings before interest, depreciation and amortization (2) $ 40.9 $ 69.1 $ 117.6 $ 129.6
Cash provided by operations before working capital and cash taxes(2) $ 44.7 $ 68.6 $ 126.4 $ 131.2
Cash provided by operating activities $ 49.6 $ 72.3 $ 106.2 $ 114.7
Capital expenditures (sustaining) (2) $ 14.4 $ 19.6 $ 31.9 $ 35.7
Capital expenditures (growth) (2) (3) $ 38.8 $ 47.2 $ 80.1 $ 81.3
Capital expenditures (capitalized exploration) (4) $ 1.4 $ 4.3 $ 5.9 $ 7.4
Operating Results
Gold production (ounces) 78,400 125,200 189,300 250,500
Gold sales (ounces) 74,605 128,457 186,459 248,162
Per Ounce Data
Average realized gold price $ 1,692 $ 1,309 $ 1,626 $ 1,306
Average spot gold price (London PM Fix) $ 1,711 $ 1,309 $ 1,647 $ 1,307
Cost of sales per ounce of gold sold (includes amortization) (1) $ 1,385 $ 1,021 $ 1,199 $ 1,040
Total cash costs per ounce of gold sold (2) $ 933 $ 699 $ 829 $ 715
All-in sustaining costs per ounce of gold sold (2) $ 1,276 $ 926 $ 1,117 $ 941
Share Data
Earnings (loss) per share, basic and diluted $ 0.03 $ 0.06 $ 0.00 $ 0.10
Adjusted earnings per share, basic and diluted(2) $ 0.03 $ 0.05 $ 0.10 $ 0.07
Weighted average common shares outstanding (basic) (000’s) 391,076 389,218 391,208 389,475
Financial Position (in millions)
Cash and cash equivalents (5) $ 201.3 $ 182.8
Long-term debt (5) $ 100.0 $

(1) Cost of sales includes mining and processing costs, royalties, and amortization expense. For the three months and six months ended June 30, 2020, cost of sales also includes COVID-19 costs of $6.5 million
(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 and excludes the Island Gold royalty repurchase of $54.8 million in March 2020
(4) Includes capitalized exploration at Mulatos and Island Gold
(5) Comparative cash and cash equivalents and Long-term debt balance as at December 31, 2019

Read More: https://www.alamosgold.com/news-and-events/news/news-details/2020/Alamos-Reports-Second-Quarter-2020-Results/default.aspx
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