Alamos Gold Q4 2024 Earnings Call Transcript

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Provided by Quartr
February 20, 2025
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Operator

Good morning. I'll now turn the call over to Scott Parsons, Alamos' Senior Vice President of Corporate Development and Investor Relations. Please go ahead.

Scott Parsons
Scott Parsons
Senior Vice President of Corporate Development & Investor Relations at Alamos Gold

Thank you, operator, and thanks to everyone for attending Alamos' fourth quarter twenty twenty four conference call. In addition to myself, we have on the line today John McCluskey, President and Chief Executive Officer Greg Fischer, Chief Financial Officer Luke Hymond, Chief Operating Officer and Scott R. G. Parsons, our Vice President of Exploration. We will be referring to a presentation during the conference call that is available through the webcast and on our website.

Scott Parsons
Scott Parsons
Senior Vice President of Corporate Development & Investor Relations at Alamos Gold

I would also like to remind everyone that our presentation will be followed by a Q and A session. As we will be making forward looking statements during the call, please refer to the cautionary notes included in the presentation, news release and MD and A as well as the risk factors set out in our annual information form. Technical information in this presentation has been reviewed and approved by Chris Boswick, our Senior Vice President of Technical Services and a qualified person. Also, please bear in mind that all of the dollar amounts mentioned in this conference call are in U. S. Dollars unless otherwise noted.

Scott Parsons
Scott Parsons
Senior Vice President of Corporate Development & Investor Relations at Alamos Gold

Now, John will provide you with an overview of the quarter.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

Thank you, Scott. Twenty twenty four was a year of accomplishments for Alamos. We acquired the Magino mine adjacent to our high grade island gold operation, a key step towards creating one of Canada's largest and lowest cost gold mines. We expanded into Quebec through the acquisition of the highly prospective Kikavik project and we continued advancing our high return self funded organic growth initiatives. Alamos has also had a record operational and financial year, including record revenue, cash flow from operations and free cash flow.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

Production increased seven percent to 567,000 ounces, meeting full year guidance, which was increased subsequent to the Magino acquisition. We also set a new record for annual production for the second consecutive year. Our costs were also in line with guidance and combined with a robust gold price, we generated a record free cash flow of $272,000,000 This strong financial performance was net of funding for the Phase III expansion and a substantial exploration program. With ongoing free cash flow, $327,000,000 in cash and total liquidity of over 800,000,000 we remain well positioned to internally fund one of the best growth profiles in the sector. Turning to Slide four.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

In January, we released our three year guidance outlining 7% production growth in 2025 to approximately 605,000 ounces. This production growth is expected to continue into 2026 and to approximately 700,000 ounces into 2027. This represents 24% production growth over the next three years with all in sustaining costs expected to decrease 8% over the same timeframe, driven by low cost growth and the completion of Phase III expansion at Island Gold. Lynn Lake is another key part of our growth plan, having announced a construction decision last month. With development activities ramping up this quarter, we expect initial production in the first half of twenty twenty eight.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

The completion of the Lynn Lake project is expected to drive annual production to Island Gold District further, taking consolidated annual production closer to 1,000,000 ounces. All of this growth is in Canada. It's all fully funded and it is all lower cost driving substantial free cash flow growth in the years to come. We made significant progress across our growth projects in 2024. At Island Gold, the shaft sink is approximately 75% complete, having reached a depth of 1,000 meters last week.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

The overall Phase III expansion is progressing well and remains on track for completion in the first half of twenty twenty six. In September, we released the results of an internal economic study on the PDA project, highlighting an attractive low cost, high return project that will extend the mine life of the Milados District until at least 02/1935. With approval of the amended environmental permit received in January, we expect to ramp up construction activities towards the middle of this year with first production expected in mid-twenty twenty seven. Last week, we released the results of an internal economic study on the burnt timber and liquid deposits outlining another low capital high return project. As satellite deposits to the Lynn Lake project, burnt timber and liquid are expected to significantly extend the mine life of Lynn Lake, support higher longer term rates of production and enhance already strong economics.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

As outlined earlier this week, we had another year of tremendous exploration success with our global reserve increasing 31% to 14,000,000 ounces, marking the sixth consecutive year of growth. This reflected the acquisition of Magino and the initial reserve at Burton Timber and Linquidd and another year of substantial high grade additions at Island Gold. Combined reserves and resources at Island Gold increased 9% to 6,700,000 ounces and at significantly higher grades. This growth will be incorporated in the Island Gold District life of mine plan to be released in mid-twenty twenty five and expansion study in the fourth quarter. Given the significant increase in grades, the Phase three study was completed in since the Phase three study was completed in 2022, we expect this to support higher rates of production over the longer term.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

I'll now turn the call over to our CFO, Greg Fischer, to review our financial performance. Greg?

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

Thank you, John. On to Slide six, we sold 141,000 ounces of gold in the fourth quarter at an average realized price of $2,632 per ounce for revenues of $376,000,000 For the full year, we sold 560,000 ounces at a realized price of $2,379 per ounce for record revenues of just over $1,300,000,000 up 32% from 2023, driven by record production and higher realized gold prices. Fourth quarter total cash cost of $981 per ounce and all in sustaining cost of $13.33 dollars per ounce were consistent with our quarterly guidance. For the year, total cash cost of $927 per ounce and all in sustaining costs of $12.81 dollars per ounce were both in line with annual guidance. Operating cash flow before changes in non cash working capital was $2.00 $8,000,000 in the fourth quarter or $0.49 per share. For the full year, operating cash flow before changes in non cash working capital increased 40% to a record $726,000,000 or $1.78 per share. Our reported net earnings were $88,000,000 in the fourth quarter or $0.21 per share. This included $20,000,000 in foreign exchange losses and $12,000,000 in other losses, offset by other tax adjustments of $16,000,000 Excluding these items, our adjusted net earnings were

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

$103,000,000 or $0.25 per share. Our full year adjusted net earnings were $329,000,000 or $0.81 per share. Capital spending in the quarter totaled $144,000,000 and includes $35,000,000 of sustaining capital and lease payments, $101,000,000 of growth capital and $8,000,000 of capitalized exploration. For the full year, total capital expenditures of $428,000,000 including growth capital of $280,000,000 was in line with guidance. Free cash flow in the quarter totaled $54,000,000 and a record $272,000,000 for the full year, net of all spending on the Phase III plus expansion and our largest exploration program to date.

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

Both the Mulatos District and Yonge Davidson generated record mine site free cash flow of $240,000,000 and $141,000,000 respectively. The strong free cash flow generation at Mulatos was net of cash taxes of $82,000,000 paid in 2024. We expect to pay a similar amount in 2025 given the strong profitability of the Milados District. This includes a twenty twenty four year end tax payment of approximately $45,000,000 due in the first quarter of twenty twenty five. Reflecting our strong free cash flow, our cash position grew 46% from the end of twenty twenty three to end the year at $327,000,000 Additionally, we amended and upsized our credit facility this month from $500,000,000 to $750,000,000 increasing our financial capacity on more attractive terms, reflecting our growth as a company.

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

With solid ongoing free cash flow at current gold prices and total liquidity of over $800,000,000 we remain well positioned to fund our growth initiatives. I will now turn the call over to our COO, Luc Guillemant to provide an overview of our operations.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

Thank you, Greg. Moving to Slide seven. The Island Gold Mine produced 39,400 ounces in the fourth quarter and a record 155,000 ounces for the year, achieving the top end of 2024 guidance driven by higher grades mined. For the full year, total cash costs were in line with guidance and mine site all in sustaining costs were slightly below the low end of guidance due to timing of sustaining capital spending. The operation continues to self fund the Phase III plus expansion and exploration program with $12,000,000 of free cash flow generated in 2024, a remarkable accomplishment considering that over $260,000,000 was spent on capital and exploration during the year.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

Production from the Island Gold District is expected to increase 50% in 2025 and costs decrease driven by higher mining rates at Island Gold and a full year production from Agino at higher throughput rates. At current gold prices, the Island Gold District is expected to continue generating free cash flow while funding the Phase III plus expansion and another significant exploration program in 2025. Over to Slide eight, Magino produced 16,200 ounces in the fourth quarter, a slight decline over the previous quarter as downtime to replace the primary crusher was longer than anticipated. Costs improved quarter over quarter and are expected to decrease further in 2025 as the operation ramps up to steady state levels. A number of optimization initiatives were implemented within the Magino mill during the second half of twenty twenty four.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

These included the replacement of the secondary crusher in the third quarter and the primary crusher and Grizzly panels in the fourth quarter. We saw premature wear on both crushers and rather than repairing them, we took the time to replace them with units we utilize at our other operations and note can support higher throughput rates going forward. These improvements were completed by year end and we are seeing the benefit in the first quarter. We expect mill throughput to increase to approximately 11,200 tonnes per day by the end of this quarter, at which point Island Gold ore will be trucked and processed to the larger, more cost effective Magino mill. Given the significantly lower processing costs within the Magino mill, this is going to drive significant synergies and operating costs lower.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

Moving to Slide nine. We continue to make progress on the Phase three plus expansion and achieved a significant milestone on the shaft sink last November, reaching the first shaft station breakthrough at the eight forty meter level. We are currently at the 1,000 meter level and on track to be at the ultimate depth of thirteen seventy three meters in the third quarter of this year. The installation of the bin house steel is completed with cladding underway. Work on the Magino Hall Road continues to progress with overall completion expected next month.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

This will be utilized to transport ore from the Island Gold Portal to the Magino mill. Construction of the PACE plant is ongoing with foundation work more than 85% complete. Over to Slide 10. As of year end, we spent and committed 72% of the total Phase III plus expansion capital of $796,000,000 and the project remains on time and within the budgeted and within the updated budget. 2025 will be the final full year of spending with capital expected to drop considerably in 2026.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

Over to Slide 11. The Young Davidson mine produced 45,700 ounces in the fourth quarter at cost below the low end of the guidance range. Throughput rates were back to the 8,000 ton per day level for the quarter, consistent with expectations. For the full year, production totaled 174,000 ounces, slightly below the guidance range due to temporary or lower scoop availability earlier in the year and lower grades mined. For the full year, total cash costs were within the guidance range, while mine site all in sustaining costs were slightly above the top end of the guidance range, reflecting higher sustaining capital per ounce.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

Yonge Davidson generated record mine site free cash flow for the year of $141,000,000 The fourth consecutive year, the operation has generated over $100,000,000 in free cash flow. With a fourteen year reserve life, Yonge Davidson is well positioned to generate similar levels of free cash flow over the long term. Production is expected to increase to between 365,000 ounces in 2025 with costs also increasing primarily due to ongoing labor inflation in Ontario. Production costs are expected to be at similar levels in both 2026 and 2027. Over to Slide 12.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

The Milatos District continues to exceed expectations and was a key contributor to our outperformance during the year. Production was 38,900 ounces in the fourth quarter and 205,000 ounces for the full year, 5% above the top end of guidance, reflecting the strong ongoing performance from Layaki Grande. As guided, cost increased in the fourth quarter, reflecting the stacking of lower grade ore from Layaki Grande. Costs for the full year were at the low end of the guidance range due to strong operational performance. This drove record mine site free cash flow of $240,000,000 for the year.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

For 2025, production from the Olavs District is expected to be between 270,000 ounces at similar costs to 2024. The operation is expected to continue generating strong free cash flow while self funding the development of PDA. Over to Slide 13, we declared an initial reserve at Burnt Timber And Linquith of over 900,000 ounces and incorporated that into an internal economic study that was released last week. The two deposits are in proximity to the Lynn Lake project and will serve as a source of additional mill feed starting in year 12, deferring lower grade stockpiles until later in the mine plan. This is expected to extend the mine life of the Lynn Lake project to twenty seven years, increase longer term production rates by 60% and enhance the economics as a low capital, high return satellite project.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

At $2,200 per ounce gold price and a Canadian exchange rate of $0.75 the study showed a strong after tax IRR of 54% and NPV of approximately $180,000,000 At closer to spot prices, the IRR increases to 83% and NPV closer to $300,000,000 This provides additional value on top of the already robust economics the Lynn Lake project carries on a standalone basis. Lastly, there is significant upside potential across the large underexplored Lynn Lake Greenstone Belt. This includes a number of targets that we have already identified across the district and see excellent opportunities to continue to define and develop additional satellite deposits to feed the centralized mill. I will now turn the call over to our VP of Exploration, Scott Parsons.

Scott R. G. Parsons
Scott R. G. Parsons
Vice President of Exploration at Alamos Gold

Thank you, Luke. Moving to Slide 14. We had another successful year on the exploration front across our assets. Global reserves increased 31% to 14,000,000 ounces of gold, driven by the inclusion of Magino, declaration of an initial 900,000 ounce reserve that burned timber in Lakewood and another year of significant growth at Island Gold. Overall, grades decreased to 1.45 grams per tonne, reflecting the addition of relatively lower grade reserves from Magino for Timber at Linkwood, partially offset by the growth in significantly higher grade reserves at Island Gold.

Scott R. G. Parsons
Scott R. G. Parsons
Vice President of Exploration at Alamos Gold

Excluding Magino, reserves grew by 12% to 11,900,000 ounces and slightly lower grades of 1.62 grams per tonne, reflecting ongoing exploration success. Global measured and indicated resources increased 50% to 6,600,000 ounces with addition of Magino being the main contributor. Excluding Magino, measured and indicated resources increased 6% to 4,700,000 ounces, reflecting additions at Burnt Timber and Linkwood as well as an initial resource at Cerro Polon. Global inferred resources decreased 2% to 7,100,000 ounces with the addition of Magino offsetting the successful conversion of resources to reserves at Bernd Timber and Linkwood. Over to Slide 15.

Scott R. G. Parsons
Scott R. G. Parsons
Vice President of Exploration at Alamos Gold

At Island Gold, we had another year of exceptional exploration success. Island Gold's reserves increased 32% to 2,300,000 ounces with grades increasing 11% to 11.4 grams per tonne. This was net of depletion of the 157,000 ounces mined in 2024 at grades averaging 12.5 grams per tonne, reflecting the addition of even higher grade ounces. This marks the twelfth consecutive year of growth. Total reserves and resources also increased 9% to 6,700,000 ounces, including a 13% increase in inferred resource grades to 16.5 grams per ton.

Scott R. G. Parsons
Scott R. G. Parsons
Vice President of Exploration at Alamos Gold

This represented the ninth consecutive year of growth with reserves and resource grades increasing substantially over that timeframe. Island Gold continues to establish itself as one of the highest grade and fastest growing deposits in the world. Since acquiring Island Gold in 2017, combined reserves and resources have increased over 260% with reserve grades increasing 24% and inferred resource grades increasing 53%. Through highly effective exploration programs, this growth has occurred at attractive discovery costs, averaging $13 per ounce over the past year and five years. Over to Slide 16.

Scott R. G. Parsons
Scott R. G. Parsons
Vice President of Exploration at Alamos Gold

The increase in reserves was driven by the conversion of existing resources and the discovery of new reserves across the main structure. The biggest contributor was the addition of 533,000 ounces in the middle portion of Island East within a large reserve block that contains 1,100,000 ounces grading 12.9 grams per tonne. This large reserve block is located above an even larger and substantially higher grade inferred resource block in the lower portion of Island East, which contains 1,900,000 ounces, grading 20.8 grams per tonne. As additional exploration drifts are established in the lower mine infrastructure, providing better access for drilling from underground, the conversion of these significantly higher grade resources is expected to drive further growth in higher grade reserves. This is supported by a resource conversion rate, which has averaged more than 90% across the deposit.

Scott R. G. Parsons
Scott R. G. Parsons
Vice President of Exploration at Alamos Gold

The Island Gold main structure is open laterally and at depth with some of the best intercepts drilled to date in the lower portion of Island East and with high grade mineralization intersects below existing resources, this long term pace of growth is expected to continue. Over to Slide 17. Island Gold's pace of growth is supporting a larger and more valuable operation. By 2020, reserves and resources had doubled to 3,700,000 ounces, supporting the planned Phase three expansion to 2,000 tonnes per day. By 2022, the deposit had expanded nearly 40% to 5,100,000 ounces, which was the basis for this Phase three plus expansion to 2,400 tonnes a day.

Scott R. G. Parsons
Scott R. G. Parsons
Vice President of Exploration at Alamos Gold

Since the release of the Phase III plus study, ongoing exploration success has driven a further 31% or 1,600,000 ounce increase in combined reserves and resources to total 6,700,000 ounces, a 13% increase in reserve grades to 11.4 grams per tonne and a 22% increase in inferred resource grades to 16.5 grams per tonne. This growth will be incorporated into the Island Gold District mine plan to be released mid-twenty twenty five and the expansion study to be completed in the fourth quarter. Given the substantial increase in grades of Island Gold since the Phase III plus study, we expect this to support higher average annual rates of gold production over the long term. With that, I'll turn the call back to John.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

Thank you, Scott. Twenty twenty four was an exceptional year for Alamos and our outlook has never been stronger. We have sector leading growth, strong ongoing free cash flow while funding this growth, all underpinned by long life operations and politically stable jurisdictions. That concludes our formal presentation. I'm Now I'm going to turn the call over to the operator to open it for your questions.

Operator

Thank you. There are no further questions at this time. This concludes this morning's call. If you have any further questions that have not been answered, please feel free to contact Mr. Scott Parsons at (416) 368-9932, extension 5439.

Scott Parsons
Scott Parsons
Senior Vice President of Corporate Development & Investor Relations at Alamos Gold

Actually, Carl, it looks like we do have one question queued up.

Operator

Yes. The first question is from Charles Edelman from Scotiabank. Please go ahead.

Charles Ehidiamhen
Senior Equity Research Analyst - Metals & Mining at Scotiabank

Thank you. Hi, John and Tim. Thanks for taking my question. And congrats on another record year. Just asking you on behalf of Odate.

Charles Ehidiamhen
Senior Equity Research Analyst - Metals & Mining at Scotiabank

So my first question here is, are you able to provide an estimate of how much of the five fifteen synergies as expected to be created in the Ireland Gold and Maginol combination have been realized so far? And how much do you expect to realize in the next one year?

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

Yes, Charles, it's Greg here. I can answer that question. So if you look back at what we had disclosed, the synergies were comprised of it was both capital and operating synergies. So in 2024 and 2025, we realized about $100,000,000 of those capital synergies and that was around not expanding the Island Mill as well as not completing the tailings lift on the Island tailings facility. The rest of the synergies will be realized over the life of the mine through the operating synergies.

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

That will be comprised of both G and A synergies as well as lower costs to operate the Magino Mill. So that really will ramp up starting in 2026 when we we've moved to the Magino Mill in 2025, but we also moved to grid power. That's when we'll see the majority of the synergies kick in and it will be over the next twenty years plus of the life of mine with respect to those synergies at about 2020 sorry, at about $25,000,000 a year.

Charles Ehidiamhen
Senior Equity Research Analyst - Metals & Mining at Scotiabank

Okay. Thank you. And maybe just sticking to the synergies, on the PAC side of things, just given where gold is currently trading out, like how far along do you think the acquired tax pools can differ cash taxes?

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

On cash taxes, I mean, the deferral at these gold prices is about two years. So we actually would have been cash taxable starting in 2025. With the acquisition and the use of the pools at Magino, we're able to defer that around two years. So probably about 2027 is when we'll start to pay significant cash taxes in Canada.

Charles Ehidiamhen
Senior Equity Research Analyst - Metals & Mining at Scotiabank

Okay. And if I just switch gears very quickly to Young Debitine, I mean, if you just look at the grades at Young Debitine for 2024, that was lower than guided ultimately. And was just wondering like could you comment on what's happening there and how we should be thinking about these going into 2025?

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

Yes. Hi, it's Luke Guillemold here. So on the grades for 2024, really over the course of the 2024 period, we just had a slight variance in the sequence of the stopes that were being mined. For the most part, we stuck to the mine plan of mining all of the stopes that we expected to mine in 2024. But there were a couple of stopes that varied from what was the original plan had, which resulted in slightly lower grade.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

But what I would say is based on the soaps that we did mine over the course of 2024, the actual results that we got based on our reconciliation relative to the block model of the soaps that we did mine was pretty well aligned. As far as moving forward into 2025, we've guided to I think our guidance is 02/2005 to 02/25 in 2025 and we expect to be within that guidance range. The mine sequence is pretty rigid. It's a disciplined approach to the mining sequence for Young Davidson. But what we're expecting in 2025 would be within that range.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

But as we continue to move forward into the subsequent years of 2026 and 2027, we would start to see some higher grades appearing on the basis of the mine plan.

Charles Ehidiamhen
Senior Equity Research Analyst - Metals & Mining at Scotiabank

Okay. And maybe just sticking with young Davidson here. I mean, if you just look at the cost like there seems to be inflationary pressures there about 13% relative to 2024 year. Are you able to explain what the cost drivers? Have you had any potential read throughs for the other Canadian operation here?

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

It's Greg here again. I mean, if you look at what's driving the increase year over year in YD's costs on a per ounce basis, like the all The first driver would be inflation, so that's about 5% and we talked about that in our guidance. The second thing, which Luke just touched on, was are the grades. We were seeing a little bit lower grades just due to sequencing in 2025, which has an impact on cost per ounce. And then the last item would be on sustaining capital. And it's really just around timing, really around the underground development and the timing of fleet replacement and rebuilds.

Greg Fisher
Greg Fisher
Chief Financial Officer at Alamos Gold

So if you step back, those three components are all impacting the costs this year versus prior year. If you look at what is applicable to other Canadian operations, it would be inflation. So it would be inflation of 54% to 5% and that's what we included in our guidance across our Canadian operations.

Charles Ehidiamhen
Senior Equity Research Analyst - Metals & Mining at Scotiabank

Okay. Thank you. That's all for

Operator

The next question is from Stephen Green from TD Securities. Please go ahead.

Steven Green
Equity Research Analyst at TD Securities

Yes, morning, everyone. Just wanted to ask a question in general on Mexico. I realize most of your growth is in Canada, but the current climate there seems to be improving just the tone from the government permits seem to be flowing. And obviously, Alnold has a long history there, good team, big land package. Is that something you're seeing on the ground that things are improving there?

Steven Green
Equity Research Analyst at TD Securities

Is that a jurisdiction you'd look to invest in further?

John McCluskey
John McCluskey
President & CEO at Alamos Gold

Hi, Stephen. It's John speaking. We do see a positive change since the most of the discussion, the commentary you were hearing prior to the election, we were working throughout 2024 on obtaining the permit for the PDA expansion. It was frankly a relatively straightforward permit for them to grant. As you know, Milados has been in production since 02/2005.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

We were going to be essentially working on that expansion within the area of our existing operating footprint, albeit going underground with a ramp from the side of the main Milados pit, where we were going to be constructing the mill was going to be again within that footprint area. We were backfilling the pit with the tailings, dry stack tailings, going into a pit. I mean, all of these things were very much in conformance with the type of project that Mexico has said that it really likes. I mean, over and above that, we're going to be producing a concentrate, which we're going to ship off-site and it means we're not going to be using any cyanide in the process. So virtually all of these aspects of the PDA development plan made it a relatively straightforward project.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

It was also important for us to get this permit in hand now because it would mean a fairly seamless transition from our open pit production coming from the La Yaqui Grande to underground production. That changeover will take place in 2027. In order to time that properly so that there was no gap in production, we more or less needed the permit in place now so we could get construction activity underway. They understood this. And I think it was communicated very well by our team in Mexico.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

And given the long and very solid track record of that operation, It's a mine that's provided terrific employment opportunities, community development. We've paid substantial amounts in taxes over the years to the Mexican government. I mean, in every possible way, this has been a beneficial enterprise as far as the Mexican government is concerned. So it stood to reason that this was a project that was very much sort of front and center given the extent of permits that are awaiting approval right now. We were very gratified, of course, to get that permit very, very early in the administration and very early in the New Year here.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

But I do think it's indicative of a better tone towards the mining industry. And I believe there's going to be more permits coming. I think you're going to see quite a number of companies start to benefit as the government accelerates its permit review and starts granting more and more permits along the way. I really I see those signs and I really hope it's going to be the case. We're going to be meeting with the Mexican delegation at the PDA conference coming up in early March.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

And all indications are that that meeting is going to be a very positive tone and they expect to deliver a good message to the mining industry.

Steven Green
Equity Research Analyst at TD Securities

Okay, great. So is this a jurisdiction then that you would look to a bit further beyond PDA?

John McCluskey
John McCluskey
President & CEO at Alamos Gold

Well, we've stayed pretty focused on Milados for a long, long time. Fortunately, it's a big district and it's given us a lot of opportunity to develop other things. I mean, in addition to the main Mulatos pit, we've developed five additional deposits over the twenty years we've been operating there. And there's still a lot of opportunity in front of us as we sort of transition away from our focus on sort of open pit heap leaching projects, largely mining near surface oxides. Now we're going for higher grade sulfide deposits.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

And our exploration budget is really allocated to delineating more reserves along those lines. And we're having some great success. We're not really looking outside of the Mulatos District right now. I think that it will be sort of a prudent sort of move on our part to just watch how things unfold over the next year. And as this administration gets its footing and starts to deliver very clear policy messages to the industry with respect to the mining industry itself and overall foreign investment coming into Mexico.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

I think with everything going on in North America right now with respect to American behavior, tariffs and so forth that are being proposed for both Canada and Mexico, my feeling is you're going to see stronger ties being built between Canada and Mexico, more investments from Canada into Mexico, more opportunities. I think that's going to happen, but I think we're going to just watch over the next year to see how things unfold.

Steven Green
Equity Research Analyst at TD Securities

Fair enough. Okay. Thanks, John. That's all I had.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

Thank you, Steve.

Operator

The next question is from a private investor, Andy Schopik. Please go ahead.

Analyst

Thank you very much for permitting me to ask a question. The question I'd like to ask concerns dividend policy given the performance of the company and the outlook for the company and the cash flows now. A $0.1 annual dividend U. S. Dollar seems little understated and I just wondered at what point you would reconsider the cash dividend policy?

John McCluskey
John McCluskey
President & CEO at Alamos Gold

Look, we have an extremely aggressive growth profile underway between now and the end of the 2020s. We're essentially funding a major expansion project at our Island Gold facility. We're building a brand new mine at Lynn Lake. We're now developing a new mill complex and a new underground mine at Armvelatos project.

Luc Guimond
Luc Guimond
Chief Operating Officer at Alamos Gold

I mean, this is

John McCluskey
John McCluskey
President & CEO at Alamos Gold

a lot of heavy lifting, but the net result is we're going to lift our production from where we started last year at around 500,000 ounces a year. We're going to lift it to close to 1,000,000 ounces a year over the next five or six years. And I think our shareholders are going to be much more focused on us executing on that growth plan, fully funding it and executing on that growth plan as opposed to us increasing the dividend. So we're not thinking about increasing the dividend at this point. The dividend is essentially, I would say, a recognition that of our intentions ultimately to pay higher returns to our shareholders, both through dividends and share buybacks.

John McCluskey
John McCluskey
President & CEO at Alamos Gold

But for the time being, our focus is very much aligned to this growth initiative and don't expect any increase in dividends in the near future.

Analyst

Okay. Thank you so much.

Operator

There are no further questions at this time. This concludes this morning's call. If you have any further questions

Executives
    • Scott Parsons
      Scott Parsons
      Senior Vice President of Corporate Development & Investor Relations
    • John McCluskey
      John McCluskey
      President & CEO
    • Greg Fisher
      Greg Fisher
      Chief Financial Officer
    • Luc Guimond
      Luc Guimond
      Chief Operating Officer
    • Scott R. G. Parsons
      Scott R. G. Parsons
      Vice President of Exploration
Analysts
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Key Takeaways

  • 2024 record results: Acquired Magino and Kikavik projects, produced 567,000 oz of gold, delivered record revenues of over $1.3 billion and generated $272 million of free cash flow.
  • Sector-leading growth outlook: Guidance targets ~605,000 oz in 2025, ~700,000 oz in 2026 and near 1 million oz by 2027–28, with all-in sustaining costs expected to drop by 8%.
  • Phase III expansion on track: Island Gold shaft sinking is ~75% complete, H1 2026 completion remains on schedule, and the district’s production is forecast to rise 50% in 2025.
  • High-return development projects: Milados PDA expansion (first production mid-2027) extends mine life to 2035, while Burnt Timber & Linkwood satellites boost Lynn Lake life to 27 years with IRRs of 54–83%.
  • Strong financial position: End-2024 cash of $327 million, $800 million total liquidity (including a $750 million credit facility) and self-funded growth through robust free cash flow.
AI Generated. May Contain Errors.
Earnings Conference Call
Alamos Gold Q4 2024
00:00 / 00:00

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