TORONTO--(BUSINESS WIRE)--Nov. 14, 2005--Alamos Gold Inc. (Alamos) (TSX:
AGI -
News) announces results
of operations and updates progress on mine development at Mulatos and
exploration activities within its Salamandra group of concessions.
All figures in United States dollars unless otherwise stated.
Highlights Third Quarter 2005:
During the three months ended September 30, 2005, Alamos:
- Poured its first gold dore bar on July 22 weighing in at 3.65
kg (117 ounces);
- Produced 2,130 ounces of gold in dore and sold 1,000 ounces of
refined gold for $440,913;
- Delivered 377,000 tonnes of uncrushed run-of-mine ore grading
1.1 grams per tonne (g/t) to the leach pad;
- Incurred expenditures of $6.6 million on mine development at
the Mulatos Project and $8.5 million on plant and mining equipment;
- Incurred exploration and development expenditures of: $0.5
million on exploration at El Salto/Mina Vieja zones adjacent to the
Phase I Estrella Pit, $0.6 million on Escondida/El Victor zone
underground drift development, and $0.3 million on exploration
activities and drilling at El Jaspe, El Realito and Los Bajios;
- Secured a $10 million revolving credit facility;
- Incurred a net loss of $2.0 million ($.03 per share).
Subsequent to quarter end Alamos:
- Entered into a letter agreement to dispose of the La Fortuna
property in exchange for consideration valued at approximately $1.7
million and a 1% net smelter royalty ("NSR").
Results of Operations
Loss for third quarter 2005 was $2.0 million ($0.03 per share)
compared with $0.4 million for the comparable period in 2004 ($0.01
per share). Loss for the nine months ended September 30, 2005 was
$5.4 million ($0.07 per share) compared with $2.3 million in 2004
($0.04 per share). Results for the third quarter included initial
gold production from the Estrella Pit at its Mulatos gold mine
located in Sonora, Mexico. Alamos is not operating at commercial
rates nor does it anticipate doing so until first quarter 2006.
Alamos commenced mining operations on a run-of-mine basis at the
Estrella Pit, loading 377,000 tonnes of ore grading 1.1 g/t on the
leach pad. Crushing and conveying operations at the feasibility rate
of 10,000 tonnes of ore per day will not commence until after crusher
and conveyer assembly in December 2005. Ore to the leach pad came
from the Estrella Pit at a planned waste-to-ore ratio of 5.4:1 and
from colluvial material from the base of the Estrella deposit. Waste
was hauled to the conveyer site to provide fill for final grading.
The gold recovery plant operated routinely to recover 2,130 ounces
gold in dore in the quarter, of which 1,000 ounces was refined and
sold for proceeds of $440,913; there was no production revenue for
the comparable periods in 2004.
Unit operating costs per tonne of ore and per ounce of production
were significantly higher than that which Alamos expects to achieve
when the crusher/conveyer systems are completed and throughput is at
the design rate. Factors adversely affecting unit costs for the
quarter included a higher than feasibility level waste-to-ore ratio
as waste was given priority as a source of construction fill for the
conveyor route. In addition, longer haul distances were experienced
in the quarter and will continue until the conveyer system is
completed in December 2005. The cash costs incurred to produce the
first 1,000 ounces of refined gold sold was $299.69 per ounce.
Corporate and administrative costs were $0.5 million for third
quarter 2005 ($0.5 million for the same period in 2004) and $2.2
million for the nine months ended September 30, 2005 (2004: $1.6
million). Other significant expenses and costs for the third quarter
included interest expense ($587,388), accretion expense ($412,746)
and financing costs ($113,867) mainly relating to the February 2005
convertible debenture issue, partially offset by interest income
($218,404) earned on Alamos' cash balances. Alamos also incurred a
foreign exchange loss in the quarter of $579,246 mainly attributable
to its convertible debenture liability, which is denominated in
Canadian dollars. There was no stock based compensation cost recorded
in third quarter 2005.
Capital Resources and Liquidity
Alamos had $16.7 million cash on hand at the end of September 30,
2005, plus an additional $1.2 million from which to pay accrued
interest on the convertible debenture due February 15, 2006.
Excluding these items, its working capital position was $11.0
million. Alamos had $5.2 million in amounts receivable represented
mainly by value added taxes recoverable in Mexico, which Alamos
expects will be recovered in fourth quarter 2005. Inventory of $3.5
million represents the cost incurred for in-process gold production,
as ore in stockpiles, on the leach pad or gold/silver dore awaiting
refining. Alamos anticipates that there will be additional working
capital requirements for in-process costs as the company ramps up
production in fourth quarter 2005 and first quarter 2006.
At September 30, 2005 the estimated cost to complete Mulatos
Phase I construction was less than $17 million, most of which will be
spent in fourth quarter 2005. In addition, Alamos has also committed
to acquiring up to nine new and used 100-ton haul trucks, of which an
additional amount of $5.7 million remains to be spent. A portion of
the truck purchase is anticipated to be funded through asset-based
financing. Alamos plans to finance mine construction, in-process
inventory costs (until gold production operates at a break-even
level), and additional mine capacity by utilizing its cash position,
$10 million line of credit and periodic gold sales.
Development at Mulatos Project
Most essential development work at Mulatos, including the
crusher/conveying system and enlarging the leach pad area will be
completed in fourth quarter 2005. The budget for construction was $73
million. Based on the scope of work prescribed by the feasibility
study, costs incurred at the end of September 2005 were $61 million
out of a projected cost to complete of approximately $78 million.
Most areas of construction, after allocations from contingency, were
near budget levels except for the crusher/conveyer, which was used
when acquired and required additional refurbishing.
Exploration
Exploration focused on the El Salto/Mina Vieja infill and
step-out drilling to develop additional reserves adjacent to the
Estrella Pit. Results were recently released showing growth in
estimated measured and indicated resources. Approximately 1,100
meters of underground development drifting through mineralized zones
with excellent continuity has been completed in the Escondida-El
Victor areas. A core rig is currently drilling from underground with
1,035 meters completed to date. A second underground rig is scheduled
to arrive in the fourth quarter. Regional exploration work continued
at El Jaspe and Los Bajios targeting newly identified mineralization.
There are currently three drill rigs on site.
Outlook
Alamos is well positioned to commence commercial operations at
Mulatos in the first quarter of 2006. It has recently announced
resource additions adjacent to the Estrella Pit at El Salto/Mina
Vieja and expects to add resource and reserve ounces at Escondida and
El Victor as a result of the underground drill program currently
underway. Alamos is also conducting extensive exploration work on its
21,300 hectare Salamandra group of concessions where nine project
areas have been identified for follow-up work.
Interim Financial Statements for September 30, 2005 are attached
to this release, which should be read in conjunction with Notes to
the Financial Statements and Management's Discussion and Analysis for
third quarter of 2005 which is filed by Alamos at www.sedar.com.
Conference call - Release of Financial Information
Financial results for the period ended September 30, 2005 will be
released on or before November 14, 2005. Alamos will host a
conference call to discuss operating and exploration results on
Tuesday, November 15, 2005 at 8:00 am PST/11:00 a.m. EST.
You may access the call by calling the operator at 416-695-6120
or toll free 1-800-766-6630 prior to the scheduled start time. A
playback version of the call will be available for one week after the
call at 416-695-5275 or North America toll free 1-888-509-0082.
Alamos' common shares are traded on the Toronto Stock Exchange
under the symbol "AGI" and convertible debentures under the symbol
AGI.DB".
Safe Harbor Statement under the United States Private Securities
Litigation Act of 1995: Statement in this release that are
forward-looking, including statements relating to the future recovery
of the Mulatos mine, are subject to various risks and uncertainties
concerning the specific factors identified about in the Company's
periodic filings with the Ontario Securities Commission and the U. S.
Securities Exchange Commission. Such information contained herein
represents management's best judgment as of the date hereof based on
information currently available. The Company does not intend to
update this information and disclaims any legal liability to the
contrary.
ALAMOS GOLD INC.
CONSOLIDATED BALANCE SHEETS
(Stated in United States dollars)
(Unaudited - prepared by management)
September 30 December 31
2005 2004
----------------------------------
A S S E T S
Current Assets
Cash and cash equivalents $ 16,728,593 $ 13,127,463
Restricted cash 1,210,860 -
Short-term investments - 15,000,000
Unrealized gains on foreign
exchange contracts 1,204,491 -
Amounts receivable 5,191,451 112,117
Advances and prepaid expenses 4,356,672 1,733,284
Inventory 3,506,499 -
----------------------------------
32,198,566 29,972,864
Deferred financing charges 1,323,606 -
Property, plant and equipment 81,874,960 43,900,941
Undeveloped mineral
properties 3,412,025 2,005,229
----------------------------------
$118,809,157 $ 75,879,034
----------------------------------
----------------------------------
L I A B I L I T I E S
Current Liabilities
Accounts payable and accrued
liabilities 3,245,179 943,319
----------------------------------
Convertible debentures 33,055,052 -
Asset retirement obligations 373,000 50,000
S H A R E H O L D E R S' E Q U I T Y
Share capital 87,511,605 86,170,028
Warrants 265,000 -
Convertible debentures 9,983,025 -
Contributed surplus 2,955,036 1,877,036
Deficit (18,578,740) (13,161,349)
----------------------------------
82,135,926 74,885,715
----------------------------------
$118,809,157 $ 75,879,034
----------------------------------
----------------------------------
See notes to consolidated financial statements
ALAMOS GOLD INC.
Consolidated Statements of Operations and Deficit
(Stated in United States dollars) (unaudited)
For the three months For the nine months ended
ended September 30 September 30
--------------------------------------------------------
2005 2004 2005 2004
OPERATING
REVENUES
Gold sales $ 440,913 $ - $ 440,913 $ -
--------------------------------------------------------
OPERATING
EXPENSES
Mining and
processing 299,693 - 299,693 -
Amortization 84,063 16,851 200,723 43,907
Accretion
of asset
retirement
obligations 4,000 - 9,000 -
Administrative
and
corporate
expenses 530,675 465,718 2,213,534 1,617,769
Stock
based
compensation - - 927,000 551,965
--------------------------------------------------------
918,431 482,569 3,649,950 2,213,641
LOSS FROM
OPERATIONS (477,518) (482,569) (3,209,037) (2,213,641)
FINANCIAL
REVENUES
AND
EXPENSES
Interest
income 218,404 63,422 823,098 128,770
Interest
expense (587,388) (64,257) (1,205,102) (193,593)
Financing
costs (113,867) - (201,832) -
Accretion
of
convertible
debenture
discount (412,746) - (866,083) -
Foreign
exchange
(loss)
gain (579,246) 82,946 (758,435) (16,540)
--------------------------------------------------------
Loss for
the period (1,952,361) (400,458) (5,417,391) (2,295,004)
Deficit,
beginning
of the
period (16,626,379) (11,283,671) (13,161,349) (9,389,125)
--------------------------------------------------------
Deficit,
end of the
period $(18,578,740) $(11,684,129) $(18,578,740) $(11,684,129)
--------------------------------------------------------
--------------------------------------------------------
Loss per
share $ (0.03) $ (0.01) $ (0.07) $ (0.04)
--------------------------------------------------------
--------------------------------------------------------
See notes to consolidated financial statements
ALAMOS GOLD INC
Consolidated Statements of Cash Flows
(Stated in United States dollars) (unaudited)
For the three For the nine
month period month period
September 30 September 30
ended ended
---------------------- --------------------------
2005 2004 2005 2004
Cash (used for)
provided by:
Operating Activities
Loss for the period $(1,952,361) $(400,458) $(5,417,391) $(2,295,004)
Adjustments for
items not involving
cash:
Amortization 84,063 16,851 200,723 43,907
Accretion of asset
retirement obligations 4,000 - 9,000 -
Foreign exchange
(gain) loss on
debenture 1,578,258 - 1,984,016 -
Unrealized gain on
foreign exchange
contracts (1,204,491) - (1,204,491) -
Accretion of
debenture discount 412,746 - 866,083 -
Amortization of
deferred financing
costs 113,867 - 214,867 -
Foreign exchange
gain on note payable - 122,000 60,388
Stock-based
compensation - - 927,000 551,965
(963,918) (261,607) (2,420,193) ( 1,638,744)
---------------------- --------------------------
Changes in non-cash
working capital
components:
Amounts receivable 361,063 (130,892) 30,899 (167,859)
Inventory (2,319,897) - (2,865,989) -
Prepaid expenses (88,587) (115,618) (65,900) (123,486)
Accounts payable and
accrued liabilities (836,284) 92,477 18,203 (207,620)
---------------------- --------------------------
(3,847,623) (415,640) (5,302,980) (2,137,709)
---------------------- --------------------------
Investing Activities
Short-term investments - - 15,000,000 -
Contractor advances and
deposits (158,373) (625,569) (2,557,488) (999,505)
Undeveloped mineral
properties (453,983) (266,080) (1,406,796) (268,353)
Property, plant and
equipment (16,095,188)(6,432,453) (40,997,849) (14,041,618)
---------------------- --------------------------
(16,707,544)(7,324,102) (29,962,133) (15,309,476)
---------------------- --------------------------
Financing
Activities
Proceeds from
issuance of
convertible
debentures - - 40,306,300 -
Deferred financing
costs 26,211 (245,000) (1,689,473) (245,000)
Proceeds from the
issue of common
shares 248,349 5,970,926 1,341,577 28,373,490
---------------------- --------------------------
274,560 5,725,926 39,958,404 28,128,490
---------------------- --------------------------
Restricted cash 1,262,853 681,347 (1,092,161) 681,347
Net (decrease)
increase in cash
and cash
equivalents (19,017,754)(1,332,469) 3,601,130 11,362,652
Cash and cash
equivalents
- beginning of
period 35,746,347 21,676,696 13,127,463 8,981,575
---------------------- --------------------------
Cash and cash
equivalents
- end of period $16,728,593 $20,344,227 $16,728,593 $20,344,227
---------------------- --------------------------
---------------------- --------------------------
See notes to consolidated financial statements
ALAMOS GOLD INC.
CONSOLIDATED STATEMENTS OF UNDEVELOPED MINERAL PROPERTIES
(Stated in United States dollars) (unaudited)
December Expend- December Expenditures September
31, itures 31, September 30,
2003 2004 2004 30, 2005 2005
---------------------------------------------------------------------
Active
Projects
Drilling - $ 534,457 $ 534,457 $ 412,285 $ 946,742
Assaying - 127,166 127,166 56,920 184,086
Geology - 86,789 86,789 101,250 188,039
Administration - 113,449 113,449 15,474 128,923
Equipment - 18,170 18,170 46,058 64,228
Underground
development - - - 670,799 670,799
Other
costs - 114,560 114,560 104,010 218,570
---------------------------------------------------------------------
- 994,591 994,591 1,406,796 2,401,387
---------------------------------------------------------------------
---------------------------------------------------------------------
Inactive
Project
La Fortuna
Property
Acquisition 295,300 - 295,300 - 295,300
Exploration:
Analytical 28,714 - 28,714 - 28,714
Field work
and
supplies 347,776 - 347,776 - 347,776
Geological 226,336 - 226,336 - 226,336
Claims
maintenance 75,043 2,273 77,316 - 77,316
Travel and
accommo-
dation 35,196 - 35,196 - 35,196
---------------------------------------------------------------------
1,008,365 2,273 1,010,638 - 1,010,638
---------------------------------------------------------------------
$1,008,365 $996,864 $2,005,229 $1,406,796 $3,412,025
---------------------------------------------------------------------
See notes to consolidated financial statements
The TSX has not reviewed and does not accept responsibility for th
e adequacy or accuracy of this release.
Alamos Gold Inc. (TSX:AGI - News)
Contact:
Alamos Gold Inc.
John A. McCluskey
President and Chief Executive Officer
416-368-9932 x203
Toll-free: 1-866-788-8801
OR
Alamos Gold Inc.
Victoria Vargas
Investor Relations
416-368-9932 x201
Toll-free: 1-866-788-8801
Email: vvargas@alamosgold.com
Source: Alamos Gold Inc.