What Alamos Gold (AGI) Said on Its Q3 Earnings Call

Key Points

• Alamos Gold produced 119,000 ounces in Q3 2026 and remains on track for its revised annual guidance, with fourth-quarter production expected to rise 26% as Island Gold mining rates and grades improve.
• The company generated $76 million in free cash flow and ended the quarter with $397 million in net cash, while continuing shareholder returns and repurchasing most of the legacy Argonaut Gold hedge contracts.
• Island Gold’s Phase 3+ shaft expansion was delayed by about one quarter to mid-2027 after ground-support issues, and its projected cost increased 5% above the prior $835 million budget; longer-term projects at PDA and Lynn Lake remain broadly on schedule.

Alamos Gold NYSE: AGI reported third-quarter 2026 gold production of 119,000 ounces, with record output from the Island Gold District offsetting lower planned production at Young-Davidson. The company said it expects a 26% increase in consolidated production in the fourth quarter, driven by higher underground mining rates and grades at Island Gold, and remains on track to meet its revised annual production and cost guidance.

President and Chief Executive Officer John McCluskey said Island Gold achieved quarterly records in both underground mining and mill throughput. Underground mining averaged nearly 1,800 tons per day, while the Magino Mill processed more than 10,000 tons per day. McCluskey said higher mining rates and grades in the fourth quarter are expected to lower costs after all-in sustaining costs rose sequentially in the third quarter due to lower production and the timing of sustaining capital spending.

Financial Results and Capital Allocation

Alamos sold 118,400 ounces of gold at an average realized price of $4,258 per ounce, generating quarterly revenue of $510 million. Chief Financial Officer Greg Fisher said total cash costs were $1,375 per ounce and all-in sustaining costs were $1,956 per ounce.

Operating cash flow before changes in non-cash working capital totaled $235 million, or $0.56 per share. Reported net earnings were $166 million, or $0.40 per share, while adjusted net earnings were $184 million, or $0.44 per share. The company generated $76 million in free cash flow during the quarter after spending on growth projects and exploration.

Capital spending totaled $227 million, including $50 million in sustaining capital, $164 million in growth capital and $13 million in capitalized exploration. Fisher said spending is expected to increase in the fourth quarter as construction activity ramps up at the Lynn Lake and PDA projects.

The company ended the quarter with net cash of $397 million and subsequently received a $160 million anniversary payment in October related to the prior sale of its Turkish development assets. A final $150 million payment is due in October 2027.

• Alamos returned $22 million to shareholders during the quarter through its dividend and share repurchases.
• The company repurchased an additional $17 million of shares in October, bringing year-to-date shareholder returns to $123 million.
• It used $86 million during the quarter to repurchase and eliminate 33,000 ounces of legacy Argonaut Gold hedge contracts, followed by another 3,000 ounces in October.
• Alamos said it has repurchased 96% of the gold hedges inherited through its 2024 Argonaut Gold acquisition and expects to eliminate the remaining 14,000 ounces before their 2027 maturity.

Island Gold Expansion Delayed

While operating performance at the Island Gold District improved, the company said commissioning of its Phase 3+ shaft expansion has been delayed by about one quarter to mid-2027. During excavation of ore and waste handling bins, Alamos encountered a dike that required additional ground support.

Chief Operating Officer Luc Guimond said the issue was localized near the top of a bin and did not affect the broader expansion plan, but it required a change in construction sequencing. The company is also enhancing ground support around the loading pocket and ore and waste handling system to support long-term geotechnical stability.

As a result of the additional work and inflation, the total cost of the Phase 3+ shaft expansion is now expected to be 5% above its previous $835 million budget. Alamos expects underground mining rates to exceed 2,000 tons per day in the first half of 2027, though at lower levels than previously anticipated, with the ramp-up to 2,400 tons per day now expected in the second half of 2027.

The separate Magino mill expansion remains targeted for completion in the first quarter of 2028. Alamos said 45% of the growth capital for the Island Gold District expansion had been spent or committed as of the end of the third quarter. Guimond said the company has seen labor-related inflationary pressure but that equipment orders have generally aligned with budget expectations.

Operating Updates Across the Portfolio

The Island Gold District produced a record 68,700 ounces in the third quarter. Underground grades of 8.69 grams per ton were slightly below plan due to higher-than-expected dilution in certain stopes mined in August. Guimond said grades are expected to increase toward the upper end of the annual guidance range in the fourth quarter. The district generated $72 million of mine-site free cash flow despite expansion spending and a record exploration program.

The Magino Mill averaged a record 10,300 tons per day during the quarter, helped by maintenance improvements and a temporary crusher. Alamos plans to operate the temporary crusher until the mill is expanded to 20,000 tons per day in 2028.

Young-Davidson produced 22,700 ounces, reflecting lower planned mining rates following a June seismic event. Mining averaged 5,135 tons per day, while the mill processed nearly 7,100 tons per day as the company continued to supplement underground material with low-grade stockpiles. Guimond said the operation holds approximately 300,000 tons of stockpiled material grading about 0.3 to 0.4 grams per ton, some of which could continue to supplement mill feed in 2027.

At the Mulatos District, production totaled 27,600 ounces, including 23,400 ounces from La Yaqui Grande. Production declined from the preceding quarter because of lower grades and mining volumes, with operations affected by the rainy season and the constrained mining area at the bottom of the pit. Alamos expects stronger fourth-quarter production as grades and stacking rates improve. Open-pit mining at La Yaqui Grande is expected to conclude in the first half of 2027.

Growth Projects Remain on Schedule

Alamos spent $25 million at the PDA project during the quarter, primarily on underground development, mill structural work and construction of the crushing circuit. Initial capital remains budgeted at $165 million, and mill construction is targeted for completion in mid-2027.

However, Guimond said underground development has been slower than planned because of additional ground-support requirements and contractor performance. The company encountered a known fault system that required mesh and shotcrete support, though it has since moved into better ground conditions. Alamos expects the slower development to reduce PDA production in the second half of 2027.

At Lynn Lake, Alamos spent $40 million during the quarter and commissioned the permanent camp while advancing process-plant foundations and site infrastructure. The project remains on budget and on schedule for completion in the first half of 2029. The company expects Lynn Lake to produce an average of 186,000 ounces annually over its first 10 years.

McCluskey said the planned Island Gold shaft completion in 2027, Magino mill expansion in 2028 and Lynn Lake startup in 2029 support Alamos’ objective of producing approximately 1 million ounces annually by 2030 at lower costs.

About Alamos Gold (NYSE:AGI)

Alamos Gold Inc is a Canadian-based intermediate gold producer engaged in the exploration, development and operation of gold mines. The company produces gold doré and concentrate from its mining operations and also evaluates opportunities to expand existing assets and develop new projects.

Alamos Gold's principal operations are located in Ontario, Canada, including the Young-Davidson underground mine and the Island Gold underground mine. The company also operates the Magino open-pit mine in Ontario, which became part of its portfolio through the acquisition of Argonaut Gold.

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