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Alamos Reports Third Quarter 2018 Results

11/01/2018

TORONTO, Nov. 01, 2018 (GLOBE NEWSWIRE) -- Alamos Gold Inc. (TSX:AGI; NYSE:AGI) (“Alamos” or the “Company”) today reported its financial results for the third quarter ended September 30, 2018 and reviewed its operating, exploration and development activities.

“We made excellent progress in the third quarter towards both our near and long-term objectives. We met our quarterly production guidance and remain well positioned to achieve full year guidance. We completed the Phase I expansion at Island Gold on schedule and are having ongoing success on the exploration front which has translated into significant Mineral Reserve and Resource growth in the year since we acquired the mine. We’re also advancing on the lower mine expansion at Young-Davidson which will unlock the full potential of the mine and drive significant free cash flow growth,” said John A. McCluskey, President and Chief Executive Officer.

Third Quarter 2018 Highlights

  • Produced 124,000 ounces of gold, consistent with quarterly guidance of 120,000 to 125,000 ounces, and 16% above the third quarter of 2017, reflecting the inclusion of production from Island Gold
  • Gold production for the first nine months of 2018 achieved a record 379,400 ounces, a 23% increase from the same period in 2017. The Company remains well positioned to achieve full-year production guidance of 490,000 to 530,000 ounces
  • Sold 119,401 ounces of gold in the third quarter at an average realized price of $1,229 per ounce, $16 per ounce above the average London PM Fix, for revenues of $146.7 million. Revenues declined relative to the second quarter reflecting lower gold sales and a $78 per ounce decline in the realized gold price
  • Cost of sales of $1,152 per ounce, total cash costs1 of $817 per ounce and all-in sustaining costs ("AISC")1 of $1,048 per ounce were higher than full year guidance reflecting lower mining rates at Young-Davidson, higher costs at El Chanate and planned higher sustaining capital at Island Gold
  • Given higher than budgeted costs at Young-Davidson and El Chanate through the first nine months of 2018, the Company is revising its full year consolidated total cash cost guidance from $740 to $810 per ounce and AISC guidance from $950 to $990 per ounce
  • Realized net earnings of $7.2 million, or $0.02 per share
  • Reported an adjusted net loss1 of $1.9 million or $0.00 per share1, primarily reflecting adjustments for unrealized foreign exchange gains recorded within both deferred taxes and foreign exchange of $8.7 million
  • Generated cash flow from operating activities of $45.2 million ($41.6 million, or $0.11 per share, before changes in working capital1), a decrease from the second quarter primarily reflecting a lower realized gold price and lower gold sales
  • Ended the quarter with no debt and cash and cash equivalents of $224.8 million
  • Announced a significant increase in Mineral Reserves and Resources at Island Gold as of June 30, 2018
  • Successfully commissioned the Phase I expansion at Island Gold on schedule, increasing mill capacity to 1,100 tonnes per day
  • Paid a semi-annual dividend of $0.01 per common share, or $3.9 million, to shareholders on October 30, 2018, representing the Company's 18th consecutive semi-annual dividend
(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 September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
Financial Results (in millions)        
Operating revenues $146.7   $128.8   $488.7   $381.1  
Cost of sales (1) $137.6   $100.6   $432.3   $320.2  
Earnings from operations $0.6   $20.9   $28.7   $38.9  
Net earnings (loss) $7.2   $28.8   ($1.1 ) $31.3  
Adjusted net (loss) earnings (2) ($1.9 ) $13.7   $15.3   $18.4  
Cash provided by operations before working capital and cash taxes(2) $41.6   $51.3   $158.9   $130.6  
Cash provided by operating activities $45.2   $43.4   $166.5   $114.9  
Capital expenditures (sustaining) (2) $19.6   $10.8   $42.4   $31.2  
Capital expenditures (growth) (2) $30.5   $26.2   $102.8   $86.2  
Capital expenditures (capitalized exploration) (3) $5.0   $1.2   $14.8   $5.9  
Operating Results        
Gold production (ounces) (4)   124,000     107,000     379,400     309,100  
Gold sales (ounces)   119,401     100,551     378,718     303,329  
Per Ounce Data        
Average realized gold price $1,229   $1,281   $1,290   $1,256  
Average spot gold price (London PM Fix) $1,213   $1,278   $1,282   $1,251  
Cost of sales per ounce of gold sold
 (includes amortization) (1)
$1,152   $1,000   $1,141   $1,056  
Total cash costs per ounce of gold sold (2) $817   $720   $813   $777  
All-in sustaining costs per ounce of gold sold (2) $1,048   $884   $992   $946  
Share Data        
Earnings per share, basic $0.02   $0.10   $0.00   $0.11  
Adjusted earnings per share, basic (2) $0.00   $0.05   $0.04   $0.06  
Weighted average common shares outstanding (basic) (000’s)   389,854     300,448     389,572     294,853  
Financial Position (in millions)        
Cash and cash equivalents (5)     $224.8   $200.8  

 

(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) Includes capitalized exploration at Mulatos and Island Gold.
(4) Gold production from Island Gold has been included in this table for the period subsequent to November 23, 2017 only. Gold production from Island Gold for the three and nine months ended September 30, 2017 was 26,659 and 76,541 ounces respectively.
(5) Comparative Cash and cash equivalents balance as at December 31, 2017.
   

 

     
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017 (1)   2018     2017 (1)
Gold production (ounces)        
Young-Davidson   49,000     55,800     129,100     143,500  
Mulatos   43,300     36,300     139,900     117,300  
Island Gold (1)   22,000         76,800      
El Chanate   9,700     14,900     33,600     48,300  
Gold sales (ounces)        
Young-Davidson   46,853     55,267     133,649     145,462  
Mulatos   42,300     30,330     136,285     109,270  
Island Gold (1)   20,561         75,321      
El Chanate   9,687     14,954     33,463     48,597  
Cost of sales (in millions)(2)        
Young-Davidson $59.8   $53.4   $173.5   $155.3  
Mulatos $41.9   $29.0   $134.7   $105.3  
Island Gold (1) $22.3       $77.8      
El Chanate $13.6   $18.2   $46.3   $59.6  
Cost of sales per ounce of gold sold (includes amortization)      
Young-Davidson $1,276   $966   $1,298   $1,068  
Mulatos $991   $956   $988   $964  
Island Gold (1) $1,085       $1,033      
El Chanate $1,404   $1,217   $1,384   $1,226  
Total cash costs per ounce of gold sold (3)        
Young-Davidson $824   $572   $845   $647  
Mulatos $771   $785   $784   $782  
Island Gold (1) $671       $597      
El Chanate $1,301   $1,137   $1,285   $1,156  
Mine-site all-in sustaining costs per ounce of gold sold (3),(4)      
Young-Davidson $1,029   $744   $1,034   $824  
Mulatos $846   $864   $847   $852  
Island Gold (1) $1,051       $759      
El Chanate $1,332   $1,164   $1,312   $1,187  
Capital expenditures (sustaining, growth and capitalized exploration) (in millions)(3)    
Young-Davidson $22.1   $22.0   $63.5   $63.3  
Mulatos(5) $6.8   $8.9   $23.5   $34.9  
Island Gold (1),(6) $17.8       $49.3      
El Chanate $0.2   $0.3   $0.5   $1.2  
Other $8.2   $7.0   $23.2   $23.9  

 

(1) Operating and financial results from Island Gold are included in Alamos’ consolidated financial statements for the period subsequent to November 23, 2017. Gold production from Island Gold for the three and nine months ended September 30, 2017 was 26,659 and 76,541 ounces, respectively.
(2) Cost of sales includes mining and processing costs, royalties and amortization.
(3) 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.
(4) 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.
(5) Includes capitalized exploration at Mulatos of $0.3 million and $2.3 million for the three and nine months ended September 30, 2018 ($1.2 million and $5.9 million for the three and nine months ended September 30, 2017).
(6) Includes capitalized exploration at Island Gold of $4.7 million and $12.5 million for the three and nine months ended September 30, 2018.
   

Outlook and Strategy

  2018 Guidance   Total
  Young-
Davidson
Mulatos Island
Gold
El
Chanate
Turkey (5) Other (2) Original Current
Gold production (000’s ounces)                
  Current Guidance 180-190 170-180 100-110 40-50  —  —   490-530
  Original Guidance 200-210 150-160 90-100 40-50  —  — 480-520  
Cost of sales, including 
  amortization
  (in millions) (4),(6)
$208 $175 $108 $58  —  — $536 $ 549
Cost of sales, including
  amortization
  ($ per ounce) (4),(6)
$1,125 $1,000 $1,025 $1,285  —  — $1,075 $ 1,145
Total cash costs ($ per ounce) (1),(6) $675 $800 $575 $1,200  —  — $740 $ 810
All-in sustaining costs 
 ($ per ounce) (1), (6)
         —  — $950 $ 990
Mine-site all-in sustaining costs 
  ($ per ounce) (1),(3), (6)
$850 $900 $825 $1,200  —  —  —  
Amortization costs
 ($ per ounce) (1)
$450 $200 $450 $85  —  — $335 $ 335
Capital expenditures  (in millions)                
Sustaining capital(1) $35-40 $8-10 $25-27  —  — $68-77 $68-77
Growth capital(1) $35-40 $18-20 $25-28 $25   $46 (2) $224-234
$149-159
Total capital expenditures(1) $70-80 $26-30 $50-55 $25 $46 $292-$311 $217-$236

 

(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) Includes capitalized exploration at all operating sites and development projects.
(3) 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.
(4) Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of guidance.
(5) Capital guidance at Kirazlı has been reduced to $25 million from the original budget of $100 million.
(6) Company-wide cost of sales, total cash costs, and all-in sustaining costs guidance have been updated from original guidance. The Company has not revised guidance for cost of sales, total cash costs, and mine-site all-in sustaining costs at individual mine sites.
   

The Company continues to deliver on its strategic objectives of increasing cash flow from operations while advancing its portfolio of low-cost development projects. Gold production in the third quarter of 124,000 ounces was at the top end of the Company’s forecast of between 120,000 and 125,000 ounces, and represented a 16% increase relative to the third quarter of 2017, reflecting the inclusion of production from Island Gold. With record production of 379,400 ounces through the first nine months of 2018, the Company is well positioned to achieve full year production guidance of 490,000 to 530,000 ounces, which was increased earlier in the year.

Gold production in the fourth quarter is expected to increase slightly relative to the third quarter at lower total cash costs and AISC, bringing full-year production above 500,000 ounces. The reduction in costs is expected to be driven by higher grades and throughput at both Young-Davidson and Island Gold.

Total cash costs of $817 per ounce and AISC of $1,048 per ounce were higher than budget in the third quarter, driven primarily by higher costs at Young-Davidson and El Chanate, as well as planned higher sustaining capital at Island Gold. As a result of higher than budgeted costs at Young-Davidson and El Chanate through the first three quarters, the Company has increased 2018 total cash cost guidance from $740 to $810 per ounce, and AISC guidance from $950 to $990 per ounce. The Company expects lower costs in 2019.

Young-Davidson produced 49,000 ounces in the third quarter, a 25% increase from the second quarter. The operation is on track to achieve revised guidance of between 180,000 and 190,000 ounces for the year.

The near-term focus at Young-Davidson remains on maximizing efficiency from the upper mine infrastructure, while completing development and construction of the lower mine. The upper mine infrastructure was designed for 6,000 tpd and has been operated at up to 7,200 tpd in the fourth quarter of 2017, but has averaged 6,500 tpd over the past two years. The lower mine infrastructure, which will be used over the long term, is designed for 8,000 tpd. Construction of the lower mine and tie-in to the upper mine is  scheduled to be completed in the first half of 2020.

Young-Davidson is expected to be operating from the lower mine in the second half of 2020, after which higher underground mining rates will drive production higher and operating costs lower. Combined with a significant reduction in capital, this will result in substantial free cash flow growth. Until such time, gold production, operating costs and capital spending are expected to remain at levels consistent with the past two years. Young-Davidson has generated $48 million of positive free cash flow over the past two years and will continue to fund the lower mine construction from operating cash flow.

Island Gold produced 22,000 ounces in the third quarter, consistent with budget. With year-to-date production of 76,800 ounces, the operation is well positioned to meet its 2018 production guidance of between 100,000 and 110,000 ounces, an 11% increase from original guidance (based on the mid-point).

The Phase I expansion of the Island Gold mill to 1,100 tpd was completed on schedule in September. The mill was successfully  commissioned with throughput increasing to average approximately 1,100 tpd in September and October. Higher milling rates and grades are expected to drive stronger production and lower costs in 2019 and beyond. The Company expects a 30% increase in gold production and significant free cash flow growth at Island Gold in 2019.

Exploration results at Island Gold continue to exceed expectations with a significant increase in Mineral Reserves and Resources announced in the third quarter of 2018. Since the acquisition of Island Gold in November 2017, Mineral Reserves have increased 365,000 ounces, before mining depletion, with Mineral Reserve grades also increasing 17% to 10.69 g/t Au as the deposit continues to grow in size and quality. Measured and Indicated Mineral Resources have also increased 130,000 ounces while Inferred Mineral Resources have increased 184,000 ounces. Ongoing exploration success will be incorporated into an evaluation of the most effective and economic approach to a further expansion of the operation beyond 1,100 tpd.

Total production from the Mulatos district (including La Yaqui Phase I) was 43,300 ounces in the third quarter, exceeding budget for the third consecutive quarter. Production decreased from the second quarter of 2018 as expected, with underground mining at San Carlos coming to an end. With year-to-date production of 139,900 ounces, Mulatos is well positioned to meet its increased 2018 production guidance of between 170,000 and 180,000 ounces, representing a 13% increase from the mid-point of original guidance. The Company expects 2019 production to return to the previously guided range of 150,000 to 160,000 ounces per year.

El Chanate produced 9,700 ounces in the third quarter, and remains on track to meet production guidance of 40,000 to 50,000 ounces for the full year. This is down from 2017 reflecting lower mining rates with mining activities having ceased on October 30, 2018. Given the long leach cycle at El Chanate, the Company expects to benefit from ongoing gold production beyond 2018 through residual leaching.

The Company expects combined annual gold production of approximately 500,000 ounces in 2019 and 2020 with low cost production growth from Island Gold replacing higher cost production from El Chanate. Consolidated all-in sustaining costs are expected to decrease in 2019 reflecting the completion of the Phase I expansion at Island Gold and the end of the 5% royalty at Mulatos, with a further decline expected following the completion of the lower mine tie-in at Young-Davidson in 2020.

On July 25, 2018, the Company was granted the GSM (Business Opening and Operation) permit required for the construction of its Kirazlı project. To date, construction has been focused on the infrastructure projects required to support the mine development. The Company now estimates spending $25 million in 2018. This is down from the previous estimate as the Company delayed finalization of the mining services and earthworks contract pending clarity on recent amendments to a decree in Turkey requiring that certain contracts be denominated in Turkish Lira. The Company has now assessed the applicability of these changes and believes this decree is applicable to our mining services and earthworks contract. This contract is now being finalized, with construction activities expected to ramp up through the end of this year. The remainder of the $152 million initial capital budget for Kirazlı is expected to be spent in 2019 and 2020, with first production expected in the second half of 2020.

In addition to capital spending in Turkey, the Company has invested $5.2 million in development expenditures at Cerro Pelon, La Yaqui Grande and Lynn Lake thus far in 2018. Exploration spending of $27.0 million to date has been focused primarily at Island Gold.

With over $625 million of cash and available liquidity, no debt, and growing cash flow from its operations, the Company is well positioned to fund its growth.

Young-Davidson Financial and Operational Review

  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
Gold production (ounces)   49,000     55,800     129,100     143,500  
Gold sales (ounces)   46,853     55,267     133,649     145,462  
Financial Review (in millions)        
Operating Revenues $57.3   $70.8   $171.9   $182.9  
Cost of sales (1) $59.8   $53.4   $173.5   $155.3  
(Loss) earnings from operations ($2.5 ) $17.4   ($1.6 ) $27.6  
Cash provided by operating activities $24.0   $35.3   $73.9   $81.1  
Capital expenditures (sustaining) (2) $9.5   $9.4   $25.0   $25.4  
Capital expenditures (growth) (2) $12.6   $12.6   $38.5   $37.9  
Mine-site free cash flow (2) $1.9   $13.3   $10.4   $17.8  
Cost of sales, including amortization per ounce of gold sold (1) $1,276   $966   $1,298   $1,068  
Total cash costs per ounce of gold sold (2) $824   $572   $845   $647  
Mine-site all-in sustaining costs per ounce of gold sold  (2),(3) $1,029   $744   $1,034   $824  
Underground Operations        
Tonnes of ore mined   552,500     602,072     1,691,443     1,758,442  
Tonnes of ore mined per day ("tpd")   6,005     6,544     6,196     6,441  
Average grade of gold (4)   2.59     2.89     2.44     2.69  
Metres developed   2,811     3,344     9,034     10,011  
Mill Operations        
Tonnes of ore processed   670,912     694,900     1,938,395     2,018,994  
Tonnes of ore processed per day   7,293     7,553     7,100     7,396  
Average grade of gold (4)   2.43     2.65     2.28     2.43  
Contained ounces milled   52,517     59,230     140,509     157,623  
Average recovery rate   93 %   93 %   92 %   91 %

 

(1) Cost of sales includes mining and processing costs, royalties and amortization.
(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.  Total cash costs and mine-site AISC are exclusive of net-realizable value adjustments.
(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) Grams per tonne of gold ("g/t Au").
   

Young-Davidson produced 49,000 ounces of gold in the third quarter of 2018, lower than the comparative quarter of 2017; however, a 25% improvement from the second quarter of 2018 driven by higher milling rates and underground grades mined. This improvement has continued into October with production of 18,000 ounces for the month driven by higher grades and underground mining rates.

Underground mining rates of 6,005 tpd were below budgeted levels in the third quarter. During the second quarter mill shutdown, underground ore was stockpiled, which was subsequently processed, and supplemented ore mined in the quarter. During July, mining rates were impacted by forest fires in proximity to the mine which impacted air quality and resulted in cancelled shifts and three days of downtime. In addition, power outages due to extreme weather caused another two days of downtime to both the mine and mill. This downtime impacted mining rates by approximately 400 tpd over the quarter. Mining rates improved in the latter part of the quarter and in October to average 6,500 tpd. Underground mining rates are expected to increase substantially following the completion of the lower mine tie-in in 2020.

Underground grades mined of 2.59 g/t Au for the third quarter increased 10% from the second quarter of 2018. The Company expects a further improvement in grades mined in the fourth quarter.

During the third quarter, 670,912 tonnes, or 7,293 tpd, were processed through the mill with grades averaging 2.43 g/t Au, representing a 12% increase from the second quarter of 2018. Mill throughput was below budgeted levels, primarily due to the mill shutdown in the early part of the quarter.

Mill recoveries of 93% were in line with expectations and the prior year period.

The Company remains on track to meet the updated production guidance at Young-Davidson of between 180,000 and 190,000 ounces, with the fourth quarter expected to be the strongest of the year.

Financial Review

For the third quarter ended September 30, 2018, revenues of $57.3 million were $13.5 million lower than the comparative quarter, due to lower ounces sold and a lower realized gold price. Year-to-date 2018 revenues of $171.9 million were $11.0 million lower than the prior year with lower ounces sold partially offset by a higher realized gold price.

Cost of sales, which reflects mining and processing costs, royalties, and amortization expense of $59.8 million were higher than the comparative quarter of 2017 reflecting higher mining and processing costs. Year-to-date cost of sales were $173.5 million, an increase of $18.2 million due to higher mining and processing costs and amortization charges.

Total cash costs in the third quarter were $824 per ounce, a 44% increase from the third quarter of 2017 due to lower grades processed and a higher mining cost per tonne.  Mining costs of CAD $54 per tonne in the quarter were above budget, reflecting the impact of lower throughput on fixed costs, as well as higher diesel and maintenance costs. Total cash costs of $845 per ounce for the nine-month period were 31% higher than the prior year period.

Mine-site AISC were $1,029 per ounce in the third quarter, 38% higher than the prior year quarter reflecting higher total cash costs and higher sustaining capital.  Mine-site AISC for the nine-month period were $1,034 or 25% higher than the prior year period. Mine-site AISC have been above guidance throughout 2018 as a result of higher per-unit mining and milling costs, as well as the impact of higher sustaining capital on lower ounce production.

Capital expenditures were $22.1 million in the third quarter, including $9.5 million for sustaining capital and $12.6 million for growth capital, consistent with the same quarter of 2017. Major capital spending during the quarter included lateral development in the upper and lower mines, as well as expenditures on the water treatment plant. Capital expenditures of $63.5 million for the nine-month period were consistent with the prior year period and guidance.

Young-Davidson generated mine-site free cash flow of $1.9 million in the third quarter, lower than the prior year quarter, primarily due to lower gold sales and gross margins. Year-to-date free cash flow of $10.4 million was lower due to gold sales and higher costs.

Island Gold Financial and Operational Review

  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017 (1)     2018     2017 (1)  
Gold production (ounces) (1)   22,000         76,800      
Gold sales (ounces) (1)   20,561         75,321      
Financial Review (in millions)        
Operating Revenues $25.3     $—   $97.6     $—  
Cost of sales (2) $22.3     $—   $77.8     $—  
Earnings from operations $2.7     $—   $19.4     $—  
Cash provided by operating activities $13.9     $—   $59.6     $—  
Capital expenditures (sustaining) (3) $7.8     $—   $12.2     $—  
Capital expenditures (growth) (3) $5.3     $—   $24.6     $—  
Capital expenditures (capitalized exploration) (3) $4.7     $—   $12.5     $—  
Mine-site free cash flow (3) ($3.9 )   $—   $10.3     $—  
Cost of sales, including amortization per ounce of gold sold (2) $1,085     $—   $1,033     $—  
Total cash costs per ounce of gold sold (3) $671     $—   $597     $—  
Mine-site all-in sustaining costs per ounce of gold sold  (3),(4) $1,051     $—   $759     $—  
Underground Operations        
Tonnes of ore mined   74,892     84,405     241,644     280,555  
Tonnes of ore mined per day ("tpd")   814     917     885     1,028  
Average grade of gold (5)   8.96     9.16     9.12     9.41  
Metres developed   1,591     1,383     4,917     5,239  
Mill Operations        
Tonnes of ore processed   93,454     85,101     264,335     254,044  
Tonnes of ore processed per day   1,016     925     968     931  
Average grade of gold (5)   8.22     10.04     9.27     9.65  
Contained ounces milled   24,708     27,470     78,793     78,818  
Average recovery rate   96 %   97 %   97 %   97 %

 

(1) Financial results from Island Gold are included in Alamos’ consolidated financial statements for the period subsequent to November 23, 2017. Gold production from Island Gold for the three and nine-months ended September 30, 2017 was 26,659 and 76,541 ounces.
(2) Cost of sales includes mining and processing costs, royalties and amortization.
(3) 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.  Total cash costs and mine-site AISC are exclusive of net-realizable value adjustments.
(4) 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.
(5) Grams per tonne of gold ("g/t Au").
   

Island Gold produced 22,000 ounces in the third quarter bringing year-to-date production to 76,800 ounces, well ahead of budget. The Company remains well positioned to achieve 2018 production guidance of 100,000 to 110,000 ounces which was increased earlier in the year from original guidance of 90,000 to 100,000 ounces.

Underground mining rates in the third quarter of 74,892 tonnes or 814 tpd were impacted by low contractor production drilling performance, as well as a scheduled one-week shutdown of the ramp. Underground mining rates improved later in the quarter, averaging approximately 1,100 tpd in September as well as October and are expected to remain at similar levels going forward, to match the expanded mill capacity. Underground grades mined of 8.96 g/t Au were higher than the second quarter and slightly above budget.

Mill throughput for the third quarter was 93,454 tonnes, or 1,016 tpd, an increase from 976 tpd in the second quarter and 925 tpd in the prior year quarter. The Phase I expansion was completed and commissioned during the month of September, with October mill throughput averaging over 1,100 tpd. Milled grades averaged 8.22 g/t Au, 18% lower than the prior year quarter, but consistent with the budget.

Financial Review

With the Company acquiring Island Gold on November 23, 2017, financial information prior to the acquisition date has not been included in the comparative table above.

Island Gold generated revenues of $25.3 million in the third quarter, lower than the first two quarters of 2018, resulting from lower ounces sold during the quarter. Revenues for the nine-month period were $97.6 million.

Cost of sales in the third quarter and nine-month period were $22.3 million and $77.8 million, respectively. Cost of sales includes ongoing amortization charges related to the purchase price of the asset, which increases amortization to approximately $450 per ounce based on current Mineral Reserves and Resources.

Total cash costs of $671 per ounce were higher than the prior quarter, reflecting lower tonnes mined and lower grades. On a year-to-date basis, total cash costs of $597 per ounce are in-line with annual guidance of $575 per ounce. Total cash costs are expected to decrease in the fourth quarter reflecting higher milled grades and mining rates.

Mine-site AISC of $1,051 per ounce were also higher than annual guidance of $825 primarily reflecting lower ounces sold during the quarter, and the timing of sustaining capital, as spending was well below budget for the first half of the year. Full year mine-site AISC of $759 per ounce remains below full year guidance.

Capital expenditures totaled $17.8 million in the third quarter, with spending focused primarily on lateral development, mining equipment, completion of the mill expansion, as well as capitalized exploration. Total capital expenditures in the third quarter included $7.8 million of sustaining capital and $10.0 million of growth capital (inclusive of capitalized exploration). Year-to-date capital expenditures totaled $49.3 million, including capitalized exploration, and are expected to be in line with guidance for the full year.

Mine-site free cash flow was negative $3.9 million during the third quarter due to timing of capital spending. On a year-to-date basis, Island Gold has generated mine-site free cash flow of $10.3 million driven by stronger than budgeted production and operating margins.

Mulatos Financial and Operational Review

  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
Gold production (ounces)   43,300     36,300     139,900     117,300  
Gold sales (ounces)   42,300     30,330     136,285     109,270  
Financial Review (in millions)        
Operating Revenues $51.5   $38.9   $175.2   $137.4  
Cost of sales (1) $41.9   $29.0   $134.7   $105.3  
Earnings from operations $8.0   $7.6   $33.9   $27.2  
Cash provided by operating activities $16.1   $13.1   $56.3   $42.0  
Capital expenditures (sustaining) (2) $2.1   $1.1   $4.7   $4.6  
Capital expenditures (growth) (2) $4.4   $4.9   $16.5   $11.9  
Capital expenditures (capitalized exploration) (2) $0.3   $1.2   $2.3   $5.9  
La Yaqui Phase I construction cost (2)   $—   $1.7     $—   $12.5  
Mine-site free cash flow, excluding La Yaqui construction costs (2) $9.3   $5.9   $32.8   $19.6  
Cost of sales, including amortization per ounce of gold sold (1) $991   $956   $988   $964  
Total cash costs per ounce of gold sold (2) $771   $785   $784   $782  
Mine site all-in sustaining costs per ounce of gold sold (2),(3) $846   $864   $847   $852  
Open Pit & Underground Operations        
Tonnes of ore mined - open pit (4)   1,904,534     2,340,817     6,360,911     5,910,627  
Total waste mined - open pit   1,108,953     1,461,098     4,958,609     4,723,985  
Total tonnes mined - open pit   3,490,021     4,217,795     13,000,643     11,050,492  
Waste-to-ore ratio (operating)   0.58     0.62     0.78     0.80  
Tonnes of ore mined - underground   9,280     19,694     45,258     77,463  
Crushing and Heap Leach Operations        
Tonnes of ore stacked   1,465,876     1,748,328     5,018,456     5,050,642  
Average grade of gold processed (5)   0.96     0.96     0.89     0.92  
Contained ounces stacked   45,043     53,690     143,310     149,980  
Mill Operations        
Tonnes of high grade ore milled   29,806     30,769     91,680     101,879  
Average grade of gold processed (5)   6.07     10.05     6.70     9.81  
Contained ounces milled   5,815     9,938     19,744     32,140  
Total contained ounces stacked and milled   50,858     63,628     163,054     182,120  
Recovery ratio (ratio of ounces produced to contained ounces stacked and milled)   85 %   57 %   86 %   64 %
Ore crushed per day (tonnes) - combined   16,300     19,300     18,700     18,900  

 

(1) Cost of sales includes mining and processing costs, royalties and amortization.
(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.  Total cash costs and mine-site AISC are exclusive of net-realizable value adjustments.
(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 ore stockpiled during the quarter.
(5) Grams per tonne of gold ("g/t Au").
   

Mulatos produced 43,300 ounces in the third quarter, another stronger than expected performance driven by higher heap leach recoveries as well as continued mill production from the underground San Carlos mine.

With year-to-date production of 139,900 ounces, the Mulatos mine is on track to meet its increased production guidance of 170,000 to 180,000 ounces (original guidance was 150,000 to 160,000 ounces).

Total crusher throughput averaged 16,300 tpd for a total of 1,465,876 tonnes stacked in the third quarter at a grade of 0.96 g/t Au. This was lower than annual guidance and the prior year period due to temporary contractor personnel availability issues which limited mining rates. These issues were resolved in September. The waste-to-ore ratio of 0.58:1 was lower than the prior year quarter and guidance.

In the third quarter, 29,806 tonnes of ore from the San Carlos underground mine were milled at an average grade of 6.07 g/t Au. As guided in the second quarter, mining activities at San Carlos ceased during the third quarter, with the mine operating    approximately six months longer than expected at the beginning of the year. With no further production from the high grade mill, the Company expects fourth quarter production to be down from the third quarter. The Company expects 2019 production to return to the previously guided range of 150,000 to 160,000 ounces per year.

The recovery ratio of ounces produced to contained ounces stacked and milled was 85% in the quarter compared to 57% in the prior year period and guidance of 75%. The higher recoveries are mainly the result of lower stacking rates in the quarter and stronger than budgeted recoveries at La Yaqui Phase I.

Financial Review

For the three months ended September 30, 2018, revenues of $51.5 million were 32% higher than the prior year quarter, driven by a 39% increase in ounces sold, partially offset by lower realized gold prices. Revenues for the nine-month period were $175.2 million, 28% higher than the prior year period due to higher ounces sold and higher realized gold prices.

Cost of sales of $41.9 million and $134.7 million for the three and nine-month periods, respectively, were higher than the prior year periods reflecting higher total tonnes moved and increased amortization related to mining at La Yaqui Phase I.

Total cash costs of $771 per ounce in the third quarter were slightly lower than $785 per ounce in the prior year quarter, resulting from a lower strip ratio. Total cash costs for the nine-month period of $784 per ounce were consistent with the $782 per ounce reported in the prior year period.

Mine-site AISC in the quarter of $846 per ounce were lower than the $864 per ounce reported in the prior year quarter, as lower cash costs were partially offset by higher sustaining capital during the quarter. Mine-site AISC for the nine-month period of $847 per ounce were consistent with the prior year period and have remained below guidance of $900 per ounce throughout the year.

Mulatos generated mine-site free cash flow of $9.3 million for the quarter and has generated $32.8 million year-to-date, both well ahead of budget, driven by stronger than expected production, higher gold prices and lower costs. Mulatos has generated strong cash flow in 2018, part of which has been invested in advancing the La Yaqui Grande and Cerro Pelon deposits through permitting, as well as funding ongoing exploration activities.

El Chanate Financial and Operational Review

  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
Gold production (ounces)   9,700     14,900     33,600     48,300  
Gold sales (ounces)   9,687     14,954     33,463     48,597  
Financial Review (in millions)        
Operating Revenues $12.6   $19.1   $44.0   $60.8  
Cost of sales (1) $13.6   $18.2   $46.3   $59.6  
(Loss) earnings from operations ($1.0 ) $0.9   ($2.3 ) $1.2  
Cash (used by) provided by operating activities ($2.6 ) $2.0   ($1.8 ) $4.2  
Capital expenditures $0.2   $0.3   $0.5   $1.2  
Mine-site free cash flow (2)
($2.8 ) $1.7   ($2.3 ) $3.0  
Cost of sales, including amortization per ounce of gold sold (1) $1,404   $1,217   $1,384   $1,226  
Total cash costs per ounce of gold sold (2) $1,301   $1,137   $1,285   $1,156  
Mine site all-in sustaining costs per ounce of gold sold (2),(3) $1,332   $1,164   $1,312   $1,187  
Open Pit Operations        
Tonnes of ore mined   1,316,936     1,625,109     2,569,013     3,579,459  
Total tonnes mined   2,893,428     5,191,704     8,157,062     18,490,606  
Waste-to-ore ratio (operating)   1.20     2.19     2.18     4.17  
Average grade of gold (4)   0.52     0.48     0.55     0.47  
Crushing and Heap Leach Operations        
Total tonnes of ore stacked   1,233,200     1,537,874     2,493,120     3,548,207  
Average grade of gold (4)   0.52     0.48     0.55     0.50  
Total contained ounces stacked   20,617     23,733     44,086     57,039  
Ore crushed and run-of-mine ore stacked per day (tonnes) - combined   13,400     16,700     9,100     13,000  

 

(1)  Cost of sales includes mining and processing costs, royalties and amortization
(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.  Total cash costs and mine-site AISC are exclusive of net-realizable value adjustments.
(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) Grams per tonne of gold ("g/t Au").
   

El Chanate produced 9,700 ounces of gold in the third quarter of 2018, down from 14,900 ounces in the prior year quarter, reflecting  lower stacking rates as mining activities wind down. The Company ceased mining on October 30, 2018, with residual leaching continuing through 2019.

Financial Review

Third quarter revenues of $12.6 million were lower than the prior year quarter due to fewer ounces sold as the mining activities  wind down. Revenues for the nine-month period were $44.0 million compared to $60.8 million in the prior year period.

Total cash costs per ounce of $1,301 for the third quarter and $1,285 for the nine-month period were higher than the respective prior year periods, reflecting lower ounces stacked in the period and higher processing costs. Mine-site AISC per ounce were $1,332 for the quarter and $1,312 for the nine-month period, higher than the respective prior year periods.

Mine-site free cash flow was negative $2.8 million in the quarter and negative $2.3 million year-to-date. El Chanate is expected to realize higher cash flows from residual leaching starting in the fourth quarter of 2018. Given El Chanate's higher cost structure, the Company has hedged El Chanate's fourth quarter 2018 gold production through gold collar contracts, ensuring a minimum gold price of $1,290 and participation up to a price of $1,479 per ounce.

Third Quarter 2018 Development Activities

Kirazlı (Çanakkale, Turkey)

On July 25, 2018, the Company received the GSM (Business Opening and Operation) permit, and now has all the major permits required for the start of construction of Kirazlı.

The initial capital estimate for Kirazlı is $152 million of which approximately $25 million is expected to be invested in 2018. This has declined from recent estimates reflecting delays in finalizing the mining services and earthworks contract. In September 2018, the Turkish government issued amendments to Decree 32 that required certain service contracts be denominated in Turkish Lira. The Company has now assessed the applicability of these changes and believes this decree is applicable to our mining services and earthworks contract. This contract is now being finalized, with construction activities expected to ramp up through the end of this year. The remaining initial capital will be spent in 2019 and first half of 2020. The Company expects initial production from Kirazlı in the second half of 2020.

Development activities during the third quarter were focused on the power line construction, road relocation and construction of the water reservoir. The road construction was completed during the quarter, with the water reservoir construction expected to be completed in early 2019. For the three and nine months ended September 30, 2018, development expenditures at Kirazlı were $4.8 million and $14.7 million, respectively.

As outlined in the 2017 Feasibility Study, Kirazlı has a 44% after-tax internal rate of return and is expected to produce over 100,000 ounces of gold during its first full year of production at mine-site all-in sustaining costs of less than $400 per ounce. The Company expects to benefit from the devaluation of the Turkish Lira on costs, given the Feasibility Study was completed at a TL:USD exchange rate of 2.9:1 compared to the current TL:USD exchange rate of 5.5:1.

Mulatos District (Sonora, Mexico)

La Yaqui Grande and Cerro Pelon

The environmental impact assessment (“MIA”) for Cerro Pelon was submitted during the second quarter with approval expected by the end of the year. The Cerro Pelon deposit is located approximately three kilometres from the existing Mulatos operation. Given its proximity to Mulatos’ infrastructure, ore from the Cerro Pelon open pit will be trucked to the existing heap leach circuit for crushing and processing. Following receipt of the permits, construction and pre-stripping activities are expected to take approximately 18 months with initial production expected in 2020. Recently completed work includes the design of the waste rock dump, haulage road and crushing circuit which will be located at the Mulatos mine.

La Yaqui Grande’s capital budget for 2018 is focused on permitting and project engineering. The MIA is expected to be completed and submitted by the end of 2018 with construction and pre-stripping activities commencing in the latter part of 2019 and production in 2021. Similar to La Yaqui Phase I, La Yaqui Grande will be developed as a standalone, open pit, heap leach operation.

The Company has invested $1.5 million on permitting and engineering activities at these projects in the third quarter, and $3.4 million year-to-date.

Lynn Lake (Manitoba, Canada)

The Company released a positive Feasibility Study on the Lynn Lake project in December 2017 outlining average annual production of 143,000 ounces over a 10 year mine life (170,000 ounces over its first six years) at average mine-site all-in sustaining costs of $745 per ounce.

The 2018 capital budget comprises spending for both development activities and exploration. Development spending has been focused on value engineering initiatives and baseline work in support of the Environmental Impact Study (“EIS”) for the project that will be submitted to satisfy federal and provincial environmental assessment requirements. The permitting process is expected to take approximately two years followed by two years of construction.

During the third quarter, the Company continued the review of value engineering initiatives to enhance the project’s economics, including modifications to the overall site layout, structures and foundations for the process plant, and review of camp location. Development spending in the third quarter of $0.7 million related to project optimization activities, and $1.8 million year-to-date.

Third Quarter 2018 Exploration Activities

Island Gold (Ontario, Canada)

The 2018 exploration program is targeting three main areas along the two kilometre Island Main Zone. The focus is on expanding the down-plunge and lateral extensions of the deposit with the objective of adding new near-mine Mineral Resources.

Drill holes in the Main and Western Extension areas are testing high-grade, east-plunging shoots below existing Mineral Reserves and Resources. Drill holes in the Eastern Extension are exploring for additional plunging shoots along strike beyond existing Mineral Reserves and Resources.

In May 2018, the exploration budget was increased 20% to $18 million. This includes 45,000 metres ("m") of surface directional exploration drilling, up from 33,000 m. The 2018 program also includes 30,000 m of underground exploration drilling, 35,000 m of underground delineation drilling, and 15,000 m of regional exploration drilling.

The underground delineation drilling program is focused on converting Inferred Mineral Resources into Indicated Mineral Resources. This drilling is being conducted primarily from the 620 and 840 levels.

Surface exploration drilling

Surface exploration drilling totaled 17,512 m during the third quarter of 2018, with 16 holes completed as part of the directional drilling campaign which totaled 14,831 m. The directional drilling targeted areas peripheral to the Inferred Mineral Resource blocks below the 1,000 m level, with drill hole spacing ranging from 75 m to 100 m. The area being targeted by the surface directional drill program extends approximately 2,000 m in strike length between the 1,000 m and 1,500 m elevation below surface.

The surface directional drilling programs will continue in 2018 with a focus on defining new Inferred Mineral Resources.

A 12,000 m regional exploration drill program commenced in September to drill test targets along the Goudreau Deformation Zone to the west of the main Island Gold Mine deposit. Drilling is also planned to test a previous high-grade intercept of 9.71 g/t Au (cut) over 5.95 m below the Kremzar gold deposit. At the end of the quarter, 2,681 m were drilled as part of this program.

Underground exploration drilling

During the third quarter of 2018, a total of 6,476 m of underground exploration diamond drilling was completed in 24 holes from the 620 and 840 levels. The objective of the underground drilling is to identify new Mineral Resources close to existing Mineral Resource or Reserve blocks.

Total capitalized exploration expenditures at Island Gold during the third quarter of 2018 were $4.7 million, with year-to-date capitalized exploration expenditures of $12.5 million.

Mulatos District (Sonora, Mexico)

The Company has a large exploration package covering 28,777 hectares with the majority of past exploration efforts focused around the Mulatos mine. Over the last three years, exploration has moved beyond the main Mulatos pit area and focused on prospects throughout the wider district. After significant exploration success at La Yaqui Grande over the past few years, the focus in 2018 has shifted to other parts of the district including El Carricito, El Halcon and El Jaspe.

In the third quarter of 2018, the Company invested $2.0 million in exploration activities within the Mulatos District, of which $0.3 million was capitalized and the remainder expensed. This included 4,174 m of diamond drilling focused on El Carricito. Year-to-date, the Company has spent $9.0 million, of which $2.3 million was capitalized.

At El Carricito the drill program is testing anomalous alteration and structural targets identified by mapping in the first half of 2018.

Lynn Lake (Manitoba, Canada)

The regional exploration program,  including till sampling, mapping, and prospecting, continued in the third quarter. The observations and results from the regional exploration program will be integrated with the Lynn Lake database and  interpreted in conjunction with the results of the airborne gravity gradiometer (AGG) and magnetic survey with the objective of generating a pipeline of prospective targets across the Lynn Lake Greenstone Belt.

Spending in the third quarter totaled $2.0 million, bringing the year-to-date expenditures to $3.7 million.

Review of Third Quarter Financial Results

During the third quarter of 2018, the Company sold 119,401 ounces of gold for total revenue of $146.7 million, a 14% increase compared to the prior year period. This was primarily driven by the Island Gold acquisition, which contributed 20,561 ounces, or $25.3 million in gold sales for the quarter, offset by a lower realized price of $1,229 per ounce compared to $1,281 per ounce in the prior year period (a $5.2 million impact). The Company's realized gold price of $1,229 per ounce was $16 per ounce higher than the London PM fix of $1,213.

For the third quarter of 2018, cost of sales were $137.6 million, compared to $100.6 million in the prior-year period.

Mining and processing costs were $92.8 million compared to $69.2 million in the prior-year period. The increased costs were mainly the result of the addition of Island Gold, which added $12.5 million of mining and processing costs in the period, as well as higher per-unit operating costs at Young-Davidson.

Consolidated total cash costs for the quarter were $817 per ounce, compared to $720 in the prior year period. The increase was driven by higher total cash costs at Young-Davidson and El Chanate, partially offset by the addition of lower cost production from Island Gold.

In the third quarter, AISC per ounce increased to $1,048 from $884 in the prior year period. This was primarily driven by higher total cash costs, and the timing of sustaining capital spending at Island Gold.

Royalty expense was $4.8 million in the third quarter, compared to $3.2 million in the prior year period, primarily due to the addition of Island Gold production, and a higher number of ounces sold at Mulatos.

Amortization of $40.0 million in the quarter was higher than the prior year period expense of $28.2 million. Amortization was $335 per ounce, up from $280 per ounce in the prior year period, though consistent with the second quarter of 2018 and guidance. This reflected higher amortization at all operating sites and the addition of Island Gold which carries a higher amortization per ounce charge.

The Company recognized earnings from operations of $0.6 million in the quarter, compared to $20.9 million in the same period of 2017, as a result of increased operating costs at Young-Davidson and higher amortization charges at Island Gold, partially offset by stronger operating margins at Mulatos.

The Company reported net earnings of $7.2 million in the quarter, compared to net earnings of $28.8 million in the same period of 2017. Net earnings in the period were impacted by foreign exchange movements related to the strengthening of Canadian dollar and Mexican Peso, which generated a foreign exchange gain of $0.7 million, as well as foreign exchange gain of $8.0 million recorded within deferred income taxes.

Associated Documents

This press release should be read in conjunction with the Company’s interim consolidated financial statements for the three-month period ended September 30, 2018 and associated Management’s Discussion and Analysis (“MD&A”), which are available from the Company's website, www.alamosgold.com, in the "Investors" section under "Reports and Financials", and on SEDAR (www.sedar.com) and EDGAR (www.sec.gov).

Reminder of Third Quarter 2018 Results Conference Call

The Company's senior management will host a conference call on Friday, November 2, 2018 at 11:00 am ET to discuss the first quarter 2018 results.

Participants may join the conference call by dialling (416) 340-2216 or (800) 273-9672 for calls within Canada and the United States, or via webcast at www.alamosgold.com.

A playback will be available until November 29, 2018 by dialling (905) 694-9451 or (800) 408-3053 within Canada and the United States. The pass code is 4683388#. The webcast will be archived at www.alamosgold.com.

Qualified Persons

Chris Bostwick, FAusIMM, Alamos’ Vice President, Technical Services, who is a qualified person within the meaning of National Instrument 43-101 ("Qualified Person"), has reviewed and approved the scientific and technical information contained in this press release.

About Alamos

Alamos is a Canadian-based intermediate gold producer with diversified production from four operating mines in North America. This includes the Young-Davidson and Island Gold mines in northern Ontario, Canada and the Mulatos and El Chanate mines in Sonora State, Mexico. Additionally, the Company has a significant portfolio of development stage projects in Canada, Mexico, Turkey, and the United States. Alamos employs more than 1,700 people and is committed to the highest standards of sustainable development. The Company’s shares are traded on the TSX and NYSE under the symbol “AGI”.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Scott K. Parsons
Vice-President, Investor Relations
(416) 368-9932 x 5439

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

The TSX and NYSE have not reviewed and do not accept responsibility for the adequacy or accuracy of this release.              

Cautionary Note

This press release contains statements that constitute forward-looking information as defined under applicable Canadian and U.S. securities laws.  All statements in this press release, other than statements of historical fact, which address events, results, outcomes or development that the Company expects to occur are, or may be deemed to be forward-looking statements. Forward-looking statements are generally, but not always, identified by the use of forward-looking terminology such as "expect", "believe", "anticipate”, “intends", "estimates", "forecast", "budget", “contemplate”, “continue”, “plan” or variations of such words and phrases and similar expressions or statements that certain actions, events or results “may", "could", "would", "might" or "will" be taken, occur or be achieved.

Forward-looking statements include information as to strategy, plans or future financial or operating performance, such as the Company’s expansion plans, project timelines, production plans and expected sustainable productivity increases, expected increases in mining activities and corresponding cost efficiencies, expected drilling targets, expected sustaining costs, expected improvements in cash flows and margins, expectations of changes in capital expenditures, forecasted cash shortfalls and the Company’s ability to fund them, cost estimates, projected exploration results, reserve and resource estimates, expected production rates and use of the stockpile inventory, expected recoveries, sufficiency of working capital for future commitments and other statements that express management’s expectations or estimates of future performance.

Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by the Company at the time of making such statements, are inherently subject to significant business, economic, legal, political and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements.

Such factors and assumptions underlying the forward-looking statements in this document include, but are not limited to: changes to current estimates of mineral reserves and resources; changes to production estimates (which assume accuracy of projected ore grade, mining rates, recovery timing and recovery rate estimates and may be impacted by unscheduled maintenance, labour and contractor availability and other operating or technical difficulties); fluctuations in the price of gold; changes in foreign exchange rates (particularly the Canadian dollar, Mexican peso, Turkish Lira and U.S. dollar); the impact of inflation; employee and community relations; litigation; disruptions affecting operations; availability of and increased costs associated with mining inputs and labour; development delays at the Young-Davidson mine; inherent risks associated with mining and mineral processing; the risk that the  Company’s mines may not perform as planned; uncertainty with the Company’s ability to secure additional capital to execute its business plans; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses, permits and authorizations for  the Company’s development and operating  assets; contests over title to properties; changes in national and local government legislation (including tax legislation) in Canada, Mexico, Turkey, the United States and other jurisdictions in which the Company does or may carry on business in the future; risk of loss due to sabotage and civil disturbances; the impact of global liquidity and credit availability and the values of assets and liabilities based on projected future cash flows; risks arising from holding derivative instruments; and business opportunities that may be pursued by the Company

Additional risk factors and details with respect to risk factors affecting the Company are set out in the Company’s latest Annual Information Form and MD&A, each under the heading “Risk Factors”, available on the SEDAR website at www.sedar.com. The foregoing should be reviewed in conjunction with the information found in this news release.

The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Cautionary Note to U.S. Investors Concerning Measured, Indicated and Inferred Resources

The Company is required to prepare its resource estimates in accordance with standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in Canadian National Instrument 43-101. These standards are materially different from the standards generally permitted in reports filed with the United States Securities and Exchange Commission. When describing resources we use the terms "measured", "indicated" or "inferred” resources which are not recognized by the United States Securities and Exchange Commission.  The estimation of measured resources and indicated resources involve greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves. U.S. investors are cautioned not to assume that any part of measured or indicated resources will ever be converted into economically or legally mineable proven or probable reserves. The estimation of inferred resources may not form the basis of a feasibility or other economic studies and involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.

Non-GAAP Measures and Additional GAAP Measures

The Company has included certain non-GAAP financial measures to supplement its Consolidated Financial Statements, which are presented in accordance with IFRS, including the following:

  • adjusted net earnings and adjusted earnings per share;

  • cash flow from operating activities before changes in working capital and taxes received;

  • Company-wide free cash flow;

  • total mine-site free cash flow;

  • mine-site free cash flow;

  • total cash cost per ounce of gold sold;

  • all-in sustaining cost ("AISC") per ounce of gold sold;

  • mine-site all-in sustaining cost ("Mine-site AISC") per ounce of gold sold;

  • sustaining and non-sustaining capital expenditures; and

  • earnings before interest, taxes, depreciation, and amortization

The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Management's determination of the components of non-GAAP and additional measures are evaluated on a periodic basis influenced by new items and transactions, a review of investor uses and new regulations as applicable. Any changes in to the measures are dully noted and retrospectively applied as applicable.

Adjusted Net Earnings and Adjusted Earnings per Share

“Adjusted net earnings” and “adjusted earnings per share” are non-GAAP financial measures with no standard meaning under IFRS which exclude the following from net earnings:

  • Foreign exchange gain (loss)

  • Items included in other gain (loss)

  • Certain non-reoccurring items

  • Foreign exchange gain (loss) recorded in deferred tax expense

Net earnings have been adjusted, including the associated tax impact, for the group of costs in “Other loss” on the consolidated statement of comprehensive income. Transactions within this grouping are: the fair value changes on non-hedged derivatives; the renunciation of flow-through exploration expenditures; and loss on disposal of assets. The adjusted entries are also impacted for tax to the extent that the underlying entries are impacted for tax in the unadjusted net earnings.

The Company uses adjusted net earnings for its own internal purposes. Management’s internal budgets and forecasts and public guidance do not reflect the items which have been excluded from the determination of adjusted net earnings. Consequently, the presentation of adjusted net earnings enables shareholders to better understand the underlying operating performance of the core mining business through the eyes of management. Management periodically evaluates the components of adjusted net earnings based on an internal assessment of performance measures that are useful for evaluating the operating performance of our business and a review of the non-GAAP measures used by mining industry analysts and other mining companies.

Adjusted net earnings is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of operating profit or cash flows from operations as determined under IFRS. The following table reconciles this non-GAAP measure to the most directly comparable IFRS measure.

         
(in millions)        
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
Net Earnings (Loss) $7.2   $28.8   ($1.1 ) $31.3  
Adjustments:        
Foreign exchange (gain) loss   (0.7 )   (0.7 )   2.7     (10.1 )
Other gain   (0.4 )   (1.3 )   (1.7 )   (2.2 )
Unrealized foreign exchange loss (gain) recorded in deferred tax expense   (8.0 )   (13.1 )   14.7     (22.2 )
Loss on redemption of senior secured notes               29.1  
Other income and mining tax adjustments (1)           0.7     (7.5 )
Adjusted net earnings ($1.9 ) $13.7   $15.3   $18.4  
Adjusted earnings per share - basic   $—   $0.05   $0.04   $0.06  

 

(1) This reflects the recognition of previously unrecognized capital losses, and the tax impact on adjusted earnings.
   

Cash Flow from Operating Activities before Changes in Working Capital and Cash Taxes

“Cash flow from operating activities before changes in working capital and cash taxes” is a non-GAAP performance measure that could provide an indication of the Company’s ability to generate cash flows from operations, and is calculated by adding back the change in working capital and taxes received to “Cash provided by (used in) operating activities” as presented on the Company’s consolidated statements of cash flows. “Cash flow from operating activities before changes in working capital” is a non-GAAP financial measure with no standard meaning under IFRS.

The following table reconciles the non-GAAP measure to the consolidated statements of cash flows.

         
(in millions)        
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
Cash flow from operating activities $45.2   $43.4   $166.5   $114.9  
Add back: Changes in working capital and cash taxes   (3.6 )   7.9     (7.6 )   15.7  
Cash flow from operating activities before changes in working capital and cash taxes $ 41.6   $ 51.3   $ 158.9   $ 130.6  
                         

Company-wide Free Cash Flow

“Company-wide free cash flow" is a non-GAAP performance measure calculated from the consolidated operating cash flow, less consolidated mineral property, plant and equipment expenditures. The Company believes this to be a useful indicator of our ability to operate without reliance on additional borrowing or usage of existing cash company-wide. Company-wide free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other mining companies. Company-wide free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

         
(in millions)        
  Three Months Ended September 30, Nine months ended September 30,
    2018     2017     2018     2017  
Cash flow from operating activities $45.2   $43.4   $166.5   $114.9  
Less: mineral property, plant and equipment expenditures   (55.1 )   (38.2 )   (160.0 )   (123.3 )
Company-wide free cash flow ($9.9 ) $ 5.2   $ 6.5   ($8.4 )
                         

Mine-site Free Cash Flow

"Mine-site free cash flow" is a non-GAAP financial performance measure calculated as cash flow from mine-site operating activities, less mineral property, plant and equipment expenditures. The Company believes this to be a useful indicator of our ability to operate without reliance on additional borrowing or usage of existing cash. Mine-site free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other mining companies. Mine-site free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

         
Total Mine-Site Free Cash Flow        
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions)        
Cash flow from operating activities $45.2   $43.4   $166.5   $114.9  
Less: operating cash flow used by non-mine site activity   (6.2 )   (7.0 )   (21.5 )   (12.4 )
Cash flow from operating mine-sites $ 51.4   $ 50.4   $ 188.0   $ 127.3  
         
Mineral property, plant and equipment expenditure $55.1   $38.2   $160.0   $123.3  
Less: capital expenditures from development projects, and corporate (1)   (8.2 )   (8.7 )   (23.2 )   (36.4 )
Capital expenditure from mine-sites $ 46.9   $ 29.5   $ 136.8   $ 86.9  
         
Total mine-site free cash flow $ 4.5   $ 20.9   $ 51.2   $ 40.4  

 

(1) The comparative periods include capital expenditures related to La Yaqui Phase I of $1.7 million and 12.5 million for the three and nine months ended September 30, 2017.
   

   

         
Young-Davidson Mine-Site Free Cash Flow        
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions)        
Cash flow from operating activities $24.0   $35.3   $73.9   $81.1  
Mineral property, plant and equipment expenditure   (22.1 )   (22.0 )   (63.5 )   (63.3 )
Mine-site free cash flow $ 1.9   $ 13.3   $ 10.4   $ 17.8  
                         

 

         
Mulatos Mine-Site Free Cash Flow        
  Three Months Ended September 30, Nine Months Ended September 30,
    2018   2017   2018   2017
(in millions)        
Cash flow from operating activities $16.1   $13.1   $56.3   $42.0  
Mineral property, plant and equipment expenditure   (6.8 )   (8.9 )   (23.5 )   (34.9 )
Less: La Yaqui Phase I construction cost       1.7         12.5  
Mulatos mineral property, plant and equipment expenditure ($6.8 ) ($7.2 ) ($23.5 ) ($22.4 )
Mine-site free cash flow $ 9.3   $ 5.9   $ 32.8   $ 19.6  
                         

 

         
Island Gold Mine-Site Free Cash Flow        
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions)        
Cash flow from operating activities $13.9       $59.6      
Mineral property, plant and equipment expenditure   (17.8 )       (49.3 )    
Mine-site free cash flow ($3.9 )   $—   $ 10.3     $—  
                         

 

         
El Chanate Mine-Site Free Cash Flow        
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions)        
Cash flow from operating activities ($2.6 ) $2.0   ($1.8 ) $4.2  
Mineral property, plant and equipment expenditure   (0.2 )   (0.3 )   (0.5 )   (1.2 )
Mine-site free cash flow ($2.8 ) $ 1.7   ($2.3 ) $ 3.0  
                         

Total Cash Costs per ounce

Total cash costs per ounce is a non-GAAP term typically used by gold mining companies to assess the level of gross margin available to the Company by subtracting these costs from the unit price realized during the period. This non-GAAP term is also used to assess the ability of a mining company to generate cash flow from operations. Total cash costs per ounce includes mining and processing costs plus applicable royalties, and net of by-product revenue and net realizable value adjustments. Total cash costs per ounce is exclusive of exploration costs.

Total cash costs per ounce is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.

All-in Sustaining Costs per ounce and Mine-site All-in Sustaining Costs

The Company adopted an “all-in sustaining costs per ounce” non-GAAP performance measure in accordance with the World Gold Council published in June 2013.  The Company believes the measure more fully defines the total costs associated with producing gold; however, this performance measure has no standardized meaning.  Accordingly, there may be some variation in the method of computation of “all-in sustaining costs per ounce” as determined by the Company compared with other mining companies. In this context, “all-in sustaining costs per ounce” for the consolidated Company reflects total mining and processing costs, corporate and administrative costs, share-based compensation, exploration costs, sustaining capital, and other operating costs.

For the purposes of calculating "mine-site all-in sustaining costs" at the individual mine-sites, the Company does not include an allocation of corporate and administrative costs and share-based compensation, as detailed in the reconciliations below.

Sustaining capital expenditures are expenditures that do not increase annual gold ounce production at a mine site and excludes all expenditures at the Company’s development projects as well as certain expenditures at the Company’s operating sites that are deemed expansionary in nature. For each mine-site reconciliation, corporate and administrative costs, and non-site specific costs are not included in the all-in sustaining cost per ounce calculation.

All-in sustaining costs per gold ounce is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.

Total Cash Costs and All-in Sustaining Costs per Ounce Reconciliation Tables

The following tables reconciles these non-GAAP measures to the most directly comparable IFRS measures on a Company-wide and individual mine-site basis.

     
Total Cash Costs and AISC Reconciliation - Company-wide    
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions, except ounces and per ounce figures)        
Mining and processing $92.8   $69.2   $291.0   $225.0  
Royalties   4.8     3.2     16.8     10.7  
Total cash costs $97.6   $72.4   $307.8   $235.7  
Gold ounces sold   119,401     100,551     378,718     303,329  
Total cash costs per ounce $ 817   $ 720   $ 813   $ 777  
         
Total cash costs $97.6   $72.4   $307.8   $235.7  
Corporate and administrative(1)   4.9     3.6     13.9     10.9  
Sustaining capital expenditures(2)   19.6     10.8     42.4     31.2  
Share-based compensation   1.2     1.1     5.3     5.1  
Sustaining exploration   1.1     1.1     3.9     2.9  
Accretion of decommissioning liabilities   0.7     0.7     2.2     2.0  
Realized gains on FX options       (0.8 )       (0.8 )
Total all-in sustaining costs $125.1   $88.9   $375.5   $287.0  
Gold ounces sold   119,401     100,551     378,718     303,329  
All-in sustaining costs per ounce $ 1,048   $ 884   $ 992   $ 946  

 

(1) Corporate and administrative expenses exclude expenses incurred at development properties.
(2) Sustaining capital expenditures are defined as those expenditures which do not increase annual gold ounce production at a mine site and exclude all expenditures at growth projects and certain expenditures at operating sites which are deemed expansionary in nature. Total sustaining capital for the period is as follows:
   

   

  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions)        
Capital expenditures per cash flow statement $55.1   $38.2   $160.0   $123.3  
Less: non-sustaining capital expenditures at:        
Young-Davidson   (12.6 )   (12.6 )   (38.5 )   (37.9 )
Mulatos   (4.7 )   (7.8 )   (18.8 )   (30.3 )
Island Gold   (10.0 )       (37.1 )    
Corporate and other   (8.2 )   (7.0 )   (23.2 )   (23.9 )
  $19.6   $10.8   $42.4   $31.2  
                         

 

     
Young-Davidson Total Cash Costs and Mine-site AISC Reconciliation    
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions, except ounces and per ounce figures)        
Mining and processing $37.8   $30.4   $110.3   $90.8  
Royalties   0.8     1.2     2.6     3.3  
Total cash costs $38.6   $31.6   $112.9   $94.1  
Gold ounces sold   46,853     55,267     133,649     145,462  
Total cash costs per ounce $ 824   $ 572   $ 845   $ 647  
         
Total cash costs $38.6   $31.6   $112.9   $94.1  
Sustaining capital expenditures   9.5     9.4     25.0     25.4  
Exploration       0.1     0.1     0.3  
Accretion of decommissioning liabilities   0.1         0.2     0.1  
Total all-in sustaining costs $48.2   $41.1   $138.2   $119.9  
Gold ounces sold   46,853     55,267     133,649     145,462  
Mine-site all-in sustaining costs per ounce $ 1,029   $ 744   $ 1,034   $ 824  
                         

 

     
Mulatos Total Cash Costs and Mine-site AISC Reconciliation    
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions, except ounces and per ounce figures)        
Mining and processing $29.9   $21.8   $97.2   $78.0  
Royalties   2.7     2.0     9.7     7.4  
Total cash costs $32.6   $23.8   $106.9   $85.4  
Gold ounces sold   42,300     30,330     136,285     109,270  
Total cash costs per ounce $ 771   $ 785   $ 784   $ 782  
         
Total cash costs $32.6   $23.8   $106.9   $85.4  
Sustaining capital expenditures   2.1     1.1     4.7     4.6  
Exploration   0.6     0.7     2.3     1.5  
Accretion of decommissioning liabilities   0.5     0.6     1.6     1.6  
Total all-in sustaining costs $35.8   $26.2   $115.5   $93.1  
Gold ounces sold   42,300     30,330     136,285     109,270  
Mine-site all-in sustaining costs per ounce
$ 846   $ 864   $ 847   $ 852  
                         

 

     
Island Gold Total Cash Costs and Mine-site AISC Reconciliation    
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions, except ounces and per ounce figures)        
Mining and processing $12.5     $—   $40.5     $—  
Royalties   1.3         4.5      
Total cash costs $13.8     $—   $45.0     $—  
Gold ounces sold   20,561         75,321      
Total cash costs per ounce $ 671     $—   $ 597     $—  
         
Total cash costs $13.8     $—   $45.0     $—  
Sustaining capital expenditures   7.8         12.2      
Total all-in sustaining costs $21.6     $—   $57.2     $—  
Gold ounces sold   20,561         75,321      
Mine-site all-in sustaining costs per ounce
$ 1,051     $—   $ 759     $—  
                         

 

     
El Chanate Total Cash Costs and Mine-site AISC Reconciliation    
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
(in millions, except ounces and per ounce figures)        
Mining and processing $12.6   $17.0   $43.0   $56.2  
Total cash costs $12.6   $17.0   $43.0   $56.2  
Gold ounces sold   9,687     14,954     33,463     48,597  
Total cash costs per ounce $ 1,301   $ 1,137   $ 1,285   $ 1,156  
         
Total cash costs $12.6   $17.0   $43.0   $56.2  
Sustaining capital expenditures   0.2     0.3     0.5     1.2  
Accretion of decommissioning liabilities   0.1     0.1     0.4     0.3  
Total all-in sustaining costs $12.9   $17.4   $43.9   $57.7  
Gold ounces sold   9,687     14,954     33,463     48,597  
Mine-site all-in sustaining costs per ounce
$ 1,332   $ 1,164   $ 1,312   $ 1,187  
                         

Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”)

EBITDA represents net earnings before interest, taxes, depreciation, and amortization. EBITDA is an indicator of the Company’s ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures.

EBITDA does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

The following is a reconciliation of EBITDA to the consolidated financial statements:

         
(in millions)        
  Three Months Ended September 30, Nine Months Ended September 30,
    2018     2017     2018     2017  
Net earnings (loss) $7.2   $28.8   ($1.1 ) $31.3  
Add back:        
Finance expense   1.0     0.8     2.8     5.5  
Amortization   40.0     28.2     124.5     84.5  
Loss on redemption of senior secured notes               29.1  
Deferred income tax (recovery) expense   (10.7 )   (8.2 )   8.1     (22.3 )
Current income tax expense   4.2     1.5     17.9     7.6  
EBITDA $ 41.7   $ 51.1   $ 152.2   $ 135.7  
                         

Additional GAAP Measures

Additional GAAP measures are presented on the face of the Company’s consolidated statements of comprehensive income and are not meant to be a substitute for other subtotals or totals presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures.  The following additional GAAP measures are used and are intended to provide an indication of the Company’s mine and operating performance:

  • Earnings from operations - represents the amount of earnings before net finance income/expense, foreign exchange gain/loss, other income/loss, loss on redemption of senior secured notes and income tax expense
 
Unaudited Consolidated Statements of Financial Position, Comprehensive
Income, and Cash Flow
 
ALAMOS GOLD INC.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited - stated in millions of United States dollars)
 
    September 30, 2018       December 31, 2017  
A S S E T S      
Current Assets      
Cash and cash equivalents $224.8     $200.8  
Equity securities   5.6       35.8  
Amounts receivable   31.4       41.0  
Inventory   149.9       161.2  
Other current assets   17.6       14.4  
Total Current Assets   429.3       453.2  
       
Non-Current Assets      
Long-term inventory   61.7       68.7  
Mineral property, plant and equipment   2,798.7       2,753.4  
Other non-current assets   43.7       45.0  
Total Assets $ 3,333.4     $ 3,320.3  
       
L I A B I L I T I E S      
Current Liabilities      
Accounts payable and accrued liabilities $115.4     $101.0  
Income taxes payable   9.5       12.2  
Dividends payable   3.9        
Total Current Liabilities   128.8       113.2  
       
Non-Current Liabilities      
Deferred income taxes   484.5       477.0  
Decommissioning liabilities   46.3       44.6  
Other non-current liabilities   2.2       4.3  
Total Liabilities   661.8       639.1  
       
E Q U I T Y      
Share capital $3,693.9     $3,691.7  
Contributed surplus   94.6       89.5  
Warrants   3.9       4.0  
Accumulated other comprehensive (loss) income   (7.4 )     13.0  
Deficit   (1,113.4 )     (1,117.0 )
Total Equity   2,671.6       2,681.2  
Total Liabilities and Equity $ 3,333.4     $ 3,320.3  
               

 

 
ALAMOS GOLD INC.
Condensed Interim Consolidated Statements of Comprehensive (Loss) Income
(Unaudited - stated in millions of United States dollars, except share and per share amounts)
 
  For three months ended   For nine months ended
  September 30,   September 30,   September 30,   September 30,
   2018
   2017
   2018
   2017
OPERATING REVENUES $146.7     $128.8     $488.7     $381.1  
               
COST OF SALES              
Mining and processing   92.8       69.2       291.0       225.0  
Royalties   4.8       3.2       16.8       10.7  
Amortization   40.0       28.2       124.5       84.5  
    137.6       100.6       432.3       320.2  
EXPENSES              
Exploration   2.4       2.6       8.5       3.4  
Corporate and administrative   4.9       3.6       13.9       10.9  
Share-based compensation   1.2       1.1       5.3       5.1  
    146.1       107.9       460.0       339.6  
EARNINGS FROM OPERATIONS   0.6       20.9       28.7       38.9  
               
OTHER EXPENSES              
Finance expense   (1.0 )     (0.8 )     (2.8 )     (5.5 )
Foreign exchange (loss) gain   0.7       0.7       (2.7 )     10.1  
Other gain   0.4       1.3       1.7       2.2  
Loss on redemption of senior secured notes                     (29.1 )
EARNINGS (LOSS) BEFORE INCOME TAXES $ 0.7     $ 22.1     $ 24.9     $ 16.6  
               
INCOME TAXES              
Current income tax expense   (4.2 )     (1.5 )     (17.9 )     (7.6 )
Deferred income tax (expense) recovery   10.7       8.2       (8.1 )     22.3  
NET (LOSS) EARNINGS $ 7.2     $ 28.8     ($1.1 )   $ 31.3  
               
Items that may be subsequently reclassified to net earnings:              
(Loss) gain on currency hedging instruments, net of taxes   2.5       3.8       (2.9 )     5.7  
Items that will not be reclassified to net earnings:              
Unrealized (loss) gain on equity securities, net of taxes   (3.5 )     (1.1 )     (5.0 )     2.7  
Total other comprehensive (loss) income $1 .0     $2 .8     ($7.9 )   $10 .1  
COMPREHENSIVE (LOSS) INCOME $6 .2     $ 31.6     ($9.0 )   $41 .4  
               
(LOSS) EARNINGS PER SHARE              
– basic $ 0.02     $ 0.10     $ 0.00     $ 0.11  
– diluted $ 0.02     $ 0.09     $ 0.00     $ 0.10  
Weighted average number of common shares outstanding (000's)              
– basic   389,854       300,448       389,572       294,853  
– diluted   394,546       303,888       389,572       298,506  
                               

 

 
ALAMOS GOLD INC.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited - stated in millions of United States dollars)
 
  For three months ended   For nine months ended
  September 30,   September 30,   September 30,   September 30,
   2018
   2017
   2018
   2017
CASH PROVIDED BY (USED IN):              
OPERATING ACTIVITIES              
Net earnings (loss) for the period $7.2     $28.8     ($1.1 )   $31.3  
Adjustments for items not involving cash:              
Amortization   40.0       28.2       124.5       84.5  
Foreign exchange (gain) loss    (0.7 )     (0.7 )     2.7       (10.1 )
Current income tax expense   4.2       1.5       17.9       7.6  
Deferred income tax (recovery) expense    (10.7 )     (8.2 )     8.1       (22.3 )
Share-based compensation   1.2       1.1       5.3       5.1  
Finance expense   1.0       1.1       2.8       7.7  
Loss on redemption of senior secured notes         0.0             29.1  
Other items   (0.6 )     (0.5 )     (1.3 )     (2.3 )
Changes in working capital and cash taxes   3.6       (7.9 )     7.6       (15.7 )
    45.2       43.4       166.5       114.9  
INVESTING ACTIVITIES              
Mineral property, plant and equipment   (55.1 )     (38.2 )     (160.0 )     (123.3 )
Proceeds from sale of equity securities               24.9        
Purchase of Lynn Lake gold project royalty                     (6.7 )
Other                     3.6  
    (55.1 )     (38.2 )     (135.1 )     (126.4 )
FINANCING ACTIVITIES              
Net proceeds from equity financing                     239.1  
Repayment of senior secured notes                     (327.2 )
Repayment of equipment financing obligations   (1.0 )     (1.1 )     (3.2 )     (3.5 )
Interest paid         0.0             (12.2 )
Proceeds from the exercise of options and warrants   0.6       0.6       1.7       3.4  
Dividends paid   0.0             (3.9 )     (3.0 )
Proceeds from issuance of flow-through shares         11.7       0.0       11.7  
    (1.2 )     9.1       (6.2 )     (93.8 )
Effect of exchange rates on cash and cash equivalents   0.8       1.0       (1.2 )     2.1  
Net (decrease) increase in cash and cash equivalents   (10.3 )     15.3       24.0       (103.2 )
Cash and cash equivalents - beginning of period   235.1       133.7       200.8       252.2  
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 224.8     $ 149.0     $ 224.8     $ 149.0  

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Source: Alamos Gold Inc.

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Please note the information presented is deemed representative at the time of its original release. Changes in historical information may occur due to adjustments in accounting and reporting standards & procedures.

Non-GAAP Information

In addition to disclosing results determined in accordance with GAAP, AGI may also disclose certain non-GAAP and pro forma non-GAAP results of operations, including certain ratios, operational and miscellaneous data, as well as net income, diluted earnings per share, operating expenses, and operating income that make certain adjustments or exclude certain charges and gains that are outlined in the schedules included in this website. Management believes that this non-GAAP and pro forma non-GAAP information provides investors with additional information to assess AGI operating performance by making certain adjustments or excluding costs or gains and assists investors in comparing our operating performance to prior periods. Management uses this non-GAAP and pro forma non-GAAP information, along with GAAP information, in evaluating its historical operating performance. AGI and Virtua also take no responsibility for third party pricing data provided for informational purposes and certain ratio results formulated from the provided third party pricing data.

The non-GAAP information is not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. The non-GAAP information should not be viewed as a substitute for, or superior to, other data prepared in accordance with GAAP.

Disclaimer

Reconciliation of non-GAAP and additional GAAP measures

General Disclaimer

Alamos Gold Inc. ("Alamos" or the “Company”), has taken all reasonable care in producing and publishing information contained in this website, and will endeavour to do so regularly. Material on this site may contain technical or other inaccuracies, omissions, or typographic errors, for which Alamos assumes no responsibility. Alamos does not warrant or make any representations regarding the use, validity, accuracy, completeness, or reliability of any claims, statements, or information on this site. Under no circumstances, including but not limited to, negligence, shall Alamos be liable for any direct, indirect, special, incidental, consequential, or other damages, including but not limited to, loss of programs, loss of data, loss of use of computer or other systems, or loss of profits, whether or not advised of the possibility of damage, arising from your use, or inability to use, the material on this site. The information is not a substitute for independent professional advice before making any investment decisions. Furthermore, you may not modify or reproduce in any form, electronic or otherwise, any information on this site, except for personal use, unless you have obtained our express written permission. The TSX and NYSE have not reviewed and do not accept responsibility for the adequacy or accuracy of information on this website.

Cautionary Notes – Forward Looking Statements

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Certain statements in this website are “forward-looking statements”, including within the meaning of the United States Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this website, including without limitation statements regarding forecast gold production, gold grades, recoveries, waste-to-ore ratios, total cash costs, potential mineralization and reserves, exploration results, and future plans and objectives of Alamos, are forward-looking statements based on forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management that involve various risks and uncertainties. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be “forward-looking statements.” Alamos cautions that forward-looking information involves known and unknown risks, uncertainties and other factors that may cause Alamos' actual results, performance or achievements to be materially different from those expressed or implied by such information, including, but not limited to, gold and silver price volatility; fluctuations in foreign exchange rates and interest rates; the impact of any hedging activities; discrepancies between actual and estimated production, between actual and estimated reserves and resources or between actual and estimated metallurgical recoveries; costs of production; capital expenditure requirements; the costs and timing of construction and development of new deposits; and the success of exploration and permitting activities. In addition, the factors described or referred to in the section entitled “Risk Factors” in both Alamos Gold Inc.’s Annual Information Form for the year ended December 31, 2014 and the Annual Information Form for the year ended December 31, 2014 of AuRico Gold Inc., (each a predecessor to Alamos Gold Inc.), along with each of these entities’ subsequent public filings available on the SEDAR website at www.sedar.com, should be reviewed in conjunction with the information found in this website. Although Alamos has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in forward-looking information, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management’s expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking information.

Note to U.S. Investors

Alamos prepares its disclosure in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. Terms relating to mineral resources in this website are defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources and Mineral Reserves. The United States Securities and Exchange Commission (the “SEC”) permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Alamos may use certain terms, such as “measured mineral resources”, “indicated mineral resources”, “inferred mineral resources” and “probable mineral reserves” that the SEC does not recognize (these terms may be used in this website and are included in the public filings of Alamos, which have been filed with the SEC and the securities commissions or similar authorities in Canada).

Cautionary non-GAAP Measures and Additional GAAP Measures

Note that for purposes of this section, GAAP refers to IFRS. The Company believes that investors use certain non-GAAP and additional GAAP measures as indicators to assess gold mining companies. They are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.
Additional GAAP measures that are presented on the face of the Company’s consolidated statements of comprehensive income include “Mine operating costs”, “Earnings from mine operations” and “Earnings from operations”. These measures are intended to provide an indication of the Company’s mine and operating performance. “Cash flow from operating activities before changes in non-cash working capital” is a non-GAAP performance measure that could provide an indication of the Company’s ability to generate cash flows from operations, and is calculated by adding back the change in non-cash working capital to “Cash provided by (used in) operating activities” as presented on the Company’s consolidated statements of cash flows. “Free cash flow” is a non-GAAP performance measure that is calculated as cash flows from operations net of cash flows invested in mineral property, plant and equipment and exploration and evaluation assets as presented on the Company’s consolidated statements of cash flows and that would provide an indication of the Company’s ability to generate cash flows from its mineral projects. Return on Equity is defined as Earnings from Continuing Operations divided by the average Total Equity for the current and previous year. “Mining cost per tonne of ore” and “Cost per tonne of ore” are non-GAAP performance measures that could provide an indication of the mining and processing efficiency and effectiveness of the mine. These measures are calculated by dividing the relevant mining and processing costs and total costs by the tonnes of ore processed in the period. “Cost per tonne of ore” is usually affected by operating efficiencies and waste-to-ore ratios in the period. “Cash operating costs per ounce”, “total cash costs per ounce” and “all-in sustaining costs per ounce” as used in this analysis are non-GAAP terms typically used by gold mining companies to assess the level of gross margin available to the Company by subtracting these costs from the unit price realized during the period. These non-GAAP terms are also used to assess the ability of a mining company to generate cash flow from operations. There may be some variation in the method of computation of these metrics as determined by the Company compared with other mining companies. In this context, “cash operating costs per ounce” reflects the cash operating costs allocated from in-process and dore inventory associated with ounces of gold sold in the period. “Cash operating costs per ounce” may vary from one period to another due to operating efficiencies, waste-to-ore ratios, grade of ore processed and gold recovery rates in the period. “Total cash costs per ounce” includes “cash operating costs per ounce” plus applicable royalties. Cash operating costs per ounce and total cash costs per ounce are exclusive of exploration costs. “All-in sustaining costs per ounce” include total cash costs, exploration, corporate and administrative, share based compensation and sustaining capital costs. Non-GAAP and additional GAAP measures do not have a standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures presented by other companies. For a reconciliation of non-GAAP and GAAP measures, please refer to Alamos’ Managements’ Discussion and Analysis as presented on SEDAR and the Company’s website.

Technical Information

Except as otherwise noted herein, Chris Bostwick, FAusIMM, Alamos Gold’s Vice President, Technical Services, has reviewed and approved the scientific and technical information contained in this website. Chris Bostwick is a Qualified Person within the meaning of Canadian Securities Administrator’s National Instrument 43-101. For more information, please refer to the Alamos Gold Inc. and AuRico Gold Inc. 2014 Annual Information Forms and the technical reports referenced therein and in this website, available on SEDAR (www.sedar.com).

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