AGI - Earnings call transcript Q2 2021

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Operator

Good morning. I’d like to turn the meeting over to Mr. Jamie Porter, Chief Financial Officer. Please go ahead.

Jamie Porter

Thank you, Operator and thank you to everyone for attending Alamos’ Second Quarter 2021 Conference Call.

we CEO; the Officer; Peter R.G. myself, McCluskey, today, and to and President MacPhail, addition have line on John Scott In Chief Operating our Parsons, of President Vice Exploration.

that to our session. on I a presentation would remind the be will webcast to website. presentation like that will through the referring conference We question-and-answer call everyone is also be available and by during our followed

in news mind all be dollar Vice overview. our included set please this will we presentation, are and over refer reviewed mentioned that, in by the making President notes call in you the cautionary that out form. in Technical and to amounts during it well turn call, As an as Chris been our With information forward-looking United the to to factors otherwise the a noted. presentation of John as unless annual bear provide release States qualified I’ll MD&A dollars, risk has this in and of Bostwick, please approved Services person. Technical statements the information Also, with in

John McCluskey

and a to you, total operational and guidance. welcome cost everyone. Begin by a solid sustaining and cash quarter, ounces at with of all-in performance Thank ounce In achieve costs positioned of we first our half second $X,XXX Jamie, full remain gold per XXXX the highlighted X, well we Young-Davidson of $XXX XXX,XXX of Slide ounce. and have strong year per produced

we lower expansion that to exceeding dollar. the rates meeting reflecting costs perform previously targeted and the above in the infrastructure quarter. stronger were Canadian mine since been year well, communicated, It’s quarter, Young-Davidson each continues or the guidance annual mining at a As completed

in tons in year $XXX to Looking ago, production quarter, ramp its impacted by the downtime. X,XXX to second XXX% to increase We generate cash expect the the ahead, Young-Davidson year flow half million from mining operating COVID-XX day company-wide prior related stronger XXXX. in third rate company-wide contributing the a of of up per quarter, designed we to second with

generate flow, increase Gold Young-Davidson at the Grande. to Yaqui in in and La quarter, continued ongoing offset Island which primarily free capital the solid spending cash

flow of reflecting expect production second stronger in sales. the the year, cash higher and half free company-wide gold We

growth Moving full make focusing surface construction drilling the engineering. Island regional targets. high proximity reserves of good we’re swing to focusing American activities X Exploration exploration which on the published with Slide making on year. thereafter. on up last demonstrate Grande clearly on progress in at end are Phase of of potential the was strong Development on to to upside significantly per ounces on also X, This followed Yaqui flow and In significant permitting that the which million the over in and products cheerleading ounce. $XXX XX% that free La per is up in exploration highlight Lake around will of Construction approximately and to our lower represent XXXX, ongoing approximately it achieve in at in ongoing support I year track the is pipeline projects. market North X by our advance quarter expansion We another third think sustaining Lake, cash year, enable all and success the which and grow ramp they is and by update, at the that next At to production hole detailed these all-in up we well of study the to-date, XXX,XXX strong and the upside June to as best middle Phase potential to continue and included to as quarter, to growth results plant deposits our expect we These in production from plunge at be underpin Gold, deposit decision would us will continue announced this beginning February, to These shaft. commercial to permitting existing Lynn [indiscernible] resources of the increase XXXX completed XXXX. us drilled two Lynn the grade resources outlook, down-hole in X activities expansion the costs continue infrastructure appreciate. results long-term. ounce ramped

flow comments have turn with I a CFO, and our conclude to work shareholders that, our update which than have the internally we Jamie capital over to call brief to will solid over will Porter, free more this for who capacity you to while on and fund through financial ongoing return XX% by And ample the We the quarter. dividend, past continuing generate performance more increased nearly my year. give cash

Jamie Porter

John. you, Thank

X,XXX to those ounce Moving sustaining annual due $XXX the were a all-in for with We sales cost higher ounce of of per shipments guidance, ounces gold price than reflecting budgeted mainly on costs to XXX,XXX X. sold sold Slide revenues the we Canadian realize per of million and Total gold ounces the of approximately in $X,XXX $X,XXX of at in produced the less this of ounces in cash Gold realized than dollar. quarter. quarter. timing revenue stronger July, were ounce than $XXX third per

the Canadian the foreign XXXX exchange total Canadian the by dollar cash our stronger dollar compared Difficulty] of was our In of [Technical costs of guidance XXXX, rate quarter. noted, half $XX second first per previously approximately to ounce. on the $X.XX $X.XX we’ve a increased actual As rate based in

Operator

call. It seems that Mr. disconnected the Porter has from

John McCluskey

back get wait or? on line Should to for him

Scott R.G. Parsons

back Jamie, is get Jamie getting trouble gives the though just having as try seems back and line. to It on. we’ll on a Yes, moment

step portion of the will his to I call. So

Operating off This impairment Canadian share the dollar quarter. costs Turkish We XXX% quarter. fourth second there, his in similar of year-over-year quarter, of thought before at expect flow declining after working in third reported million $X.XX levels capital a per loss just $XXX net the to the million finish million keep cash in charge this a in $XXX at impact expected which So included half similar year, to or $X.XX. is $XXX to before – remain the projects. related our in should tax we changes non-cash increased of in quarter, non-cash $XX the to second

previously to of value result million $XXX a Turkey. proceed carrying investment assets. the Republic The a announced bilateral the Turkish with against decision full As claim treaty of the of our represented

Jamie Porter

my just hear can but I’m now. you sorry, back If line me, died,

going. So I’ll keep

Scott R.G. Parsons

Jamie. ahead, go please Yes,

Jamie Porter

Thanks, Scott.

quarter, Excluding foreign capital, and in $XX million earnings million that sustaining impairment $XX million of capitalized losses spending Capital adjusted or in quarter. million second growth $XX charge, $XX and of $X the million exchange other gains share were $X.XX totaled per net capital exploration. non-cash of including the

La the tax Mexico, as we second and X in the $X Island Additionally, into increase full year capital expansion at ramp well spending, anticipate And million Grande, at capital deferred flow cash reflects guidance to third we $X quarter, Yaqui working Capital net do free to million Phase well $XXX sales expected the the the development half second advances with to largely increase this gold cash year. Yaqui which related Grande. were as in equipment, the Gold. for we second not neutral between paid to spending discussed payment consistent of the as as the La that million of half of $XXX previously is that of quarter continue We the activities the the with capital of in year, of million. were in up

paid sales. returned by We We production XXXX, $XX and XXXX flow of million our in the and quarterly $XX of in than million we’ve free more share driven expect increased and to higher so cash in the form gold shareholders of half dividend second dividends buybacks. far

year. to remain positioned with for undrawn $XX as grow continuing shareholders. $XXX $XX credit capacity. projects, debt-free and and call return more securities, I We was cash growth and in million full the Peter while internal $XXX track of are our dropped million We to quarter We ended the off fund well. to on of our to million remain equity cash, returns position know than million well the

So see... I’ll

Peter MacPhail

now, on Jamie. Yes, I’m back

Jamie Porter

our Peter it MacPhail provide for turn of over to our overview I’ll Okay. to operations COO, the quarter. an

Peter MacPhail

Thank you, Jamie.

on Slide to X. Moving

we met per And mentioned, first average the X,XXX exceeded And mining or ago. in consistently tons As mine the rates mining completed on at day, per the quarter, year half have underground In second then one year, lower John Young-Davidson target. since the tons grades. target. targeted XX,XXX rates mining of average day, expansion right exceeding rates

to $X,XXX being Another of this per million enable mining the long-term ounce. underground second sustaining Total rates quarter, horizon of and of mine the the starting cash site, in costs all per X,XXX half of increase produced site in generating gold XX,XXX mine flow. cash to free of $XXX day $XX rate we year. tons currently in is ounce costs In ounces second mining added will per

We’re guidance production the lower over of in of and and lower the to half Canadian rates expected year mine dollar, increase of above the mining underground the are the higher first in annual mining stronger remainder half to second Grades due in year. the planned and lower quarter mining the rates XXXX. driving grades the costs second

half free of site expected $XX first strong half. through in cash the With second in the the million the year, flow mine results

million gold Island of mine on ounces record in remains Gold in million cash $XXX X. XXXX. site flow Over Slide generate mine site quarter than XX,XXX free Young-Davidson generated flow. more the track free of $XX of to to cash produced

infrastructure tailing quarter of the of million guidance and and Capital growth with is facility. year, Capital the lead to procurement returning of results million In capital long the of are second the per included sustaining to to Canadian grades guidance, engineering grade Total previously ounce in at mid first remains the up focus III detailed stronger pre-sink remain for the expansion in similar mined We $XX associated first to grams budget consistent will detail ounce $XX shaft, guided at slightly million. foal encouraging June levels per the average before on of ton fourth annual early of to continues permitting batch $XX mine total discuss few expected well in to ramp and third best items. the costs the spending begin increase Exploration, process $XXX increasing the of in quarter next of per from the largely expansion year. of reflecting half both drilled approximately not full cost expected quarter. in in VP XX more completing spending Young-Davidson. Parsons, date. the higher as of shaft work Current did reserve than year. expected all disappoint XXXX moments, As seeing these of in were annual cash a and with quarter our as we’re decreased Grades Scott results Phase than $XXX Island expiration dollar. the site, results received second

to most X. of related sustaining negative costs as $XX Moving quarter, million total continued portion ounces quarter. Pelon and to Mine cash to Salto the growth guidance. half with expected of on Yaqui and $X,XXX million consistent Gold as and The year second ounce Mulatos Cerro $X produced surface the cash the quarter pit activities mine of in the site Grande XX,XXX in production full the the million. payments well pre-stripping a of Slide in focus stockpiles second was to $XXX increase pit. site free cash reflecting advances with capital supply Mulatos mine tax in La existing is respectively. in in per capital year stock the main $XX of flow ore the El all-in costs

Yaqui $XX have would million. Excluding cash site La of free flow capital, mine generated Grande Mulatos

Leach first is call to with X production X tons X continue with exploration track XX% – poured now Pre-stripping no during concrete ounce time quarter. of begin of hours ramp area of X. injuries. Grande Construction half activities over of than of lost worked construction million million circuits low-cost Yaqui the where to mined third all to in crushing remains over the La now during quarter. XXXX Grande of with Moving was complete well on activities over more XXXX. progressing the the I’ll up in million an waste Slide in overview supplying the to is and to major provide turn Scott are on the now quarter site. components crusher Yaqui La pad the

Scott R.G. Parsons

Starting of excellent Thank on Island We Young-Davidson from an a perspective quarter exploration you, briefly. and with discuss Slide I’ll which results had Peter. Young-Davidson XX. Gold, with successful

ton of syenite XXX per within in exploration within the grams the that been XXX to Over downplunge meters XXXX the mine in to previous host $X lower into a developed an XXX effective drilling The has only were from grades extended X.X add of beyond footwall gold X.X results west, with returned of focus is more This XX.X last drilling. reserves date open significant other hosted expiration which complete years along sediments. expansion. first structures south and styles at of any drill the resources the of XXXX reserves access gold grams styles a program the deposit and the Drilling Our common intercept wall that deposits. are for highlight from high-grade hanging success over the this intersected ton, XXXX. the the that Tisdale, intersecting and The significant to the Tisdale property two mineralization resources to wall, We’ve over fronts. depth within is mineralization associated the to meters, limits existing also within assemblages completing in The meters mineralization since structures potential and Young-Davidson but that several million stratigraphy now successful is across the in per budgeted first Young-Davidson time we underground that in This at higher in hanging on Slide the XX year potentially half available. of further below ultramafic With adversity. below intersecting also geologic the not having cost meters. the syenite mafic, The of at outside mineralization, a included XXXX the with a the extended our other began the includes that structure strike also drilling. high-grade of drilling and the syenite resources exists contacted syenite mineralization XX. within meters

Moving Slide to on XX.

is the ton, In drilled had hole addition drilling. lower significantly of per year X.X resources, we’ve these planned approximately shaft. In since we upside already study good the ton we’re that proximity resource all X,XXX and intercepted is to attractive the with grown Island grow outlined block to to Island large the higher-grade Gold. grams Island of the a reserves at It’s to reserves downplunge deposit of intersected dramatically the of reserve meters the By acquired total the quarter exploration an Young-Davidson, has the per economics in Since the already it, continue it ton Gold block resource to block inferred portion completed and and of excellent had X.X we on time MHXX-XX drill holes respiration. front ounces to expansion the to end results study. the XX – to average with greater doubled the XX million start date which Inferred then had in Island we Xx to over high-grade last in potential of ounces. the we the meters grown and ounces resources width Gold’s second at within III the last include X over million to results resource hole demonstrate grams per Phase Slide year, East. in best added million million grading Drill seeing XX Over XXXX. cut base XX. than from year, for XX another the of the X.X resource ongoing and deposits grams two to

significant John. among the expect highlighting being And with best and back over upside growth the open that base, Gold’s Island the I’ll results widely and exploration turn resource recent in call to the With reserve potential. with downplunge, and further ever deposit we the

John McCluskey

ask very of our your concludes calls. the part you to for I’ll operator presentation. now line the formal Scott. open That much, Thank

Operator

Instructions] Thank you. go question And Cosmos from Chiu from first CIBC. is Please [Operator the ahead.

Cosmos Chiu

here. Jamie, I John, strength my all is been dollar lot Thanks Two-parts. guess know Peter on question we you dollar. that Number and the in first Scott. there’s Canadian the one, Canadian a of

a guidance exchange your mentioned, of based on X.XX. is you As rate

it’s foreign been would Jamie, guidance been that’s updating for for closer when exchange actual question so Maybe you consider your far? So X.X. rate realized a far the to

Jamie Porter

And adjust top I on keeping good $X,XXX. of end despite the some all-in within Canadian costs to if $X,XXX I mean, year inflation relative close. the that low $XXX. end guidance to operations dollar is to in look strength mean, range. top if job a I dollar and pretty a date we’re date total running basis, relative we’re done to costs, guidance areas. our basis, year been, Yes, has the our you Cosmos. running And the we’re guidance we’re On Thanks, $XXX Canadian of cost it has well a mean, our sustaining Yes. cash our on strength, at of you at for at really

on $X costs within we’re X% costs. sustaining all-in within both So or cash and

costs quarter QX. are a at the third expecting in we similar with much grades in So costs and higher lower YD

I QX. of the we’ve chance a Canadian the guidance within despite got strength, to got end shot impact think the the top – So still at dollar our think we’ll reevaluate I still But a of of at we range. end being

Cosmos Chiu

And as course. a Jamie follow-up. then Of

have in I about the this talked past. and You

program? You of in terms terms to little have We’ve bit, potentially look dollar should volatile. talked it weaken to How exposure. about being of be in Canadian heading of in strengthened see we it? a seen take Have dollar a your very today, you of again adding sort a your terms tried hedging opportunistic opportunistic

Jamie Porter

absolutely since at much been the I last it’s together line budget and our if dollar pretty we on up we mean, put you September, recently, look Yes, until have. October. Canadian Yes. go up back straight a

perspective coverage of we dip the our increase – recent hedge of taken advantage weakness recent our program. have to So the

our only exposure the I second the end hedged. quarter, think Canadian had dollar into of we of XX% going

to up and XX% now $X.XX. $X.XX between We’re both

within protect to for of working the range to are somewhere that – the is we this second year. try half So

Cosmos Chiu

And a you of Jamie, space. we inflation about, on to kind from mentioned input Could appears look a it? or see word lot be you costs any should mining concern of the talk pressure it then a that other be labor I how inflationary and investors and for you at

Jamie Porter

Yes.

So I reference industry-wide. my think, topical it’s to inflation,

I reporting companies lot think costume inflation. of a are

done mean, Gold, at job and ahead terms both actually today. were our... of Canadian here think dollar a I Island Young-Davidson I we’ve good that

Cosmos Chiu

Hello?

Peter MacPhail

sounds off hear Can again. Peter? Cosmos, It you dropped it’s Jamie’s like me?

Cosmos Chiu

Yes. Hi, Peter.

Peter MacPhail

Yes.

it. with we’re I finish think Jamie’s to managing there, thought

we for consumables, – some have longer-term our of have We most contracts. a

thus us. So really impacting it isn’t far

go temporary that cycle is to supply we’re that revert the we a kind guess, seeing forward, I this As will in normal. of hopefully chain will tell. time

Cosmos Chiu

good you jumped well. because Great. have Yes, it’s Peter, I question that in you for a as

impact here we short-term impact on about of on Island how at projects, impacts talk – should we’ve Grande, your the Yaqui about some inflation, shaft on potential you the managing La the longer-term or As Gold? we talked potential of are it? think How inflation

Peter MacPhail

Yes.

really not I at La Grande, I’m think concerned all. Yaqui

through through We’re on halfway on getting budget, that – target halfway project. close to we’re

tons at don’t on I really see getting mining year project Island. a think increase seeing were cost ones, budgeted – in not on on we’re XX,XXX there. largely suppose. schedule, Ontario, really We’re pressures a based. Yaqui changes. had projecting Mexico we big we’re seen right rate right at still, we’re Mexico of The that’s rate. day, we really that’s to longer-term contract a budget, haven’t I in I shaft what mean, right X% in Grande – we haven’t A pre-stripping skyrocketed And going a at mining labor saw. rates is XX,XXX and La don’t this yet I sinking labor budget anything And more just

Cosmos Chiu

well. Gold to Peter Island it end Then grade block due you Could full question, how had sequencing guidance. for has both model year reconciled is your all to in maybe of lower one and here? last sort of and Young-Davidson mine comment, the it at Great. back as QX the The

Peter MacPhail

the sequencing X% quarter. standard so Yes. at solely those Thanks good kind of in industry historically the end for asking reconciliation or is operations that really question. it both get within Yes, we

what mine, that from stope minor some happen quarter, you the end put at expect sequencing quarter-to-quarter guidance the for us based So it’s our fluctuations on to low mining. just get see you recipe any range would you some running of that the to if be

Cosmos Chiu

Thanks Those Thanks. the I have. are questions again. Great.

Operator

Instructions] And Thank Securities. is you. Please Smith ahead. question next the from [Operator Haywood go Kerry from

Kerry Smith

just of there? had that construction? know Peter, situation construction on on coming Operator. the a has that you I side. Mexico, the back lot the impact you’ve Is and been Thanks, issue Maybe any COVID in real an guys forth got on for

Peter MacPhail

guys The well. extremely it are managing

site. people a have We lot of at

our all in full but you over three Sometimes, any at entire population We there employees X,XXX other at on time. of PCR X,XXX probably at And with of continue COVID well with all it’s look approaches same instituted operations. pandemic our early all that operations. and the there we are and testing time, our contractors testing there at three given this of

positive, able are that we back screen to within we’re they’re and and running we them slipped to So people keep few back would the which through. and weeks that these cases getting them screen longer way then otherwise ship past rotations site. two to or able We’ve be again. along And segregated a site back to had out prior them

lot out it managed the cases and great to the – at of of been there Mexico, there we’ve and but out camp. out workforce trip stream doing a keeping the So been a lot a cases of them in job guys within in Mexico our have of and are have

Kerry Smith

kind you or back sort at expect into of to Canadian then be once be target exit YD. XXXX? X,XXX good. ton that a of costs things the end a you get about this when stabilized target Okay, that of MD&A you maybe for number XXXX at $XX Is in $XX there at And the was day a a comment tons the mining that

Peter MacPhail

see I our rate. target a That rate our day. X,XXX tons is that is target we’ll guess at

the we’ll unit – the of well at that come for X,XXX yes. rest the but should target be see where – a tons there day in, we’re think costs is and average we I the we’ll year So and

Kerry Smith

Peter. much, very Thanks great. Okay,

Operator

no concludes Instructions] morning’s questions the [Operator are at time. you. this and call. This Ladies there Thank further gentlemen,

been If on XXX-XXX-XXXX, Scott you have Thank answered, that not further and day. to at feel have questions today XXXX. you free please call have contact great Parsons the extension any a Mr. for assisting

Alamos Gold (AGI) 29 Jul 212021 Q2 Earnings call transcript