AGI - Earnings call transcript Q2 2022

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Operator

Good morning. I would like to turn the meeting over to Mr. Jamie Porter, Chief Financial Officer.

James Porter

Thank you, operator, and thanks, everyone, for attending Alamos' Second Quarter 2022 Conference Call.

In addition to myself, we have on the line today both John McCluskey, President and CEO; and Peter MacPhail, Chief Operating Officer.

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

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

Now I'll quarter. the to turn John to it overview provide of an over

John McCluskey

reduction as our Phase detailed meeting a we production, while La growth declining We Gold. Island expansion have Thank achieving at outlook quarter by Yaqui we on welcome, Slide more you, with Jamie, first expect to time, targeted larger profitable announcing Both initiatives, also and Grande fronts, XX% and X. and short-term to the with X XXXX. a greenhouse good we production III growing emissions key supporting in second are delivering Starting on total our production call. operational had including costs. solidified gas same of everyone, the and our At strong as multiple also growing our a reduce targets June

from decreasing from in continuing ounce all-in per the with guidance, of La This reflected in including of Yaqui between ounces of sustaining XXX,XXX Grande. costs production quarter. from a Gold well expect Canadian was improvement performances up, first ounces while $XXX production quarterly XXX,XXX ounce start and the we consolidated of and strong below and were increase With La well line XXX,XXX to our costs our $X,XXX production as guidance substantially ramp to quarter. over in costs a Island quarter increase second solid Yaqui Our of total operations, third at significant cash and production as an gold Grande per gold

We in and given achieve to full cash lower La the increase guidance expect and positioned a in well cost year further total quarter Grande’s We decrease guidance fourth guidance. and Yaqui remain costs, cost production profile. substantially our

term. profitable more expansion we long term. higher X. La Gold a At Island the to III-plus and trend continue longer announced life operation. valuable and Now going will Yaqui Island and Gold of driver the lower per the key Slide looking the to that creating end over over at June, XX,XXX production day, of be tonnes is near Phase Grande larger, a of costs even

to reduce would more greener a billion also be with valuable smaller Island prices. to $X.X compared a much expansion operation mine of Following through and a XX% production larger average at existing the gold to with the and the will current become all XXXX, of significantly operation, costs from larger XX% Gold emissions the not shaft sustaining ounce a expected in gold per lower but levels contributing to mineable costs, is current XXX,XXX life-of-mine per with productive all-in completion expected valuation larger to year carbon -- by capital operation. only double resource our more expansion the than ounces

and of Slide Canada's Island Gold to gold largest into is to one This X. going mines. profitable most transform Moving

the is lowest fifth cost the operations valuable like Following largest Canada. asset Young-Davidson most the in expansion, unique of completion seventh This a the among Gold profitable. Island in gold producer will and the most be truly the and Canada,

to our with contributors Yaqui La X. costs. growing Slide and declining production to Turning strong and are outlook key Grande Gold Island

We costs by year expect per costs progressively all-in by per year next expected XXX,XXX sustaining of and XXXX. lower be at $X,XXX producing to to with ounce approximately closer ounces to gold to decrease XX%

this completion our our year Following part annual we in per of expansion, increase remains near above gold In conservative next an of more we several term, Lynn capital by call generating of that approximately now internally solid deferring fund to cash further XXX,XXX to the Phase years. over a we are ounces Jamie to year. to I'll XXX,XXX to with capacity Phase a significant expect expansion can our turn with gold and to review CFO, the growth longer-term our growth financial costs. underway, Lake Lake any growth flow the taking production II Porter, balanced per until such our of ounces on the Lynn while decrease free important the well approach III increase the is strategy performance. the production over

James Porter

Thank you, John.

of for ounce, at in of strong at ounce realized averaged were start La gold Yaqui per Moving costs price at ounce of a first Gold, from quarter, per quarter. Grande and We cash X. Island ounces and the [XXX,XXX] $XXX revenues on a $X,XXX Total dollar. significant reflecting weaker the to $XXX $X,XXX per improvement Slide million sustaining the all-in the costs Canadian sold higher grades

Yaqui share noncash Operating will we ramp-up be in low-cost first or half, with was lower million guided, of changes per $X.XX the second flow being the the working quarter. second cash our La from capital production costs largest $XX before previously than Grande in expect As half the driver.

exchange exchange and million. Mulatos. $XX Our deferred reported net adjustment a million taxes Unrealized gains other and noncash million were and recorded included in $XX foreign earnings within $X of million foreign of of $X losses inventory after-tax

and of undertaken, $XX decline higher a price costs in the inventory which the at the was carrying quarter during adjustment, gold is a a in million of the resulted its review Mulatos, noncash inventory which Given leach-pad value reduction.

of share. capital, Capital or million $XX totaled spending million including second capital growth exploration. million per of items, other capitalized of in and $X.XX and $XX earnings noncash $XX net this were the Excluding our adjusted $XX $X sustaining million million quarter,

capital With year. the expansion second of ramp-up to construction we $X quarter, the strong We in in Phase cash generated Gold, the reflecting and spending expect Young-Davidson increase Gold. Island Island performances the of the of free the million on III-plus half at flow at

$XX share production consisting $XX basis With per from Grande, year. La the Yaqui ramp-up or the half the share quarterly expect during cash quarter, to of on we dividend returned of stronger an free record shareholders buybacks. second million in and $X.XX the in a of flow $X our annualized of million We million

cash, sheet capacity. debt, and $XX a undrawn million equity credit have to no balance of with of continue securities We strong $XXX million million $XXX in

COO, MacPhail, well are fund our to to of now projects growth an overview returns We over our provide Peter shareholders. to I'll call positioned internal ongoing while the operations. to our turn supporting

Peter MacPhail

you, Jamie. Thank

Moving to Slide X.

Mill up quarters. be tonnes for exceeding mine-site mined change Young-Davidson in per X,XXX of free day had per with another throughput rates than tonnes X,XXX averaging due built tonnes in strong which of X,XXX processed This per stockpile surface, averaged $XX day, day, the design being fourth quarter. quarter of and production This tonnes in will mining to cash drove a consecutive resulted flow on future lower million. the rates mill. record planned ounces liner XX,XXX

annual the start in lower half towards the year end year, of and overall the guidance. the the Given strong costs remain the quarter to of through first

full-year per grams remains cash $XX production grades mine-site in XX Gold through grades, remained cost quarter. million annual Slide also that in year. contributed of will day. higher The second activities of of quarter, With X. Over expected with This continue track lower the produced Costs on guidance. costs per meet reflected and tonnes Phase XX. processing X,XXX increase remainder from ounces flow from a full and Young-Davidson first rates production Construction the and the consistent on up averaged year which the track XX,XXX guidance. Over down III through its the quarter substantially half ramping higher and guidance. similar Slide gold were achieve the higher this on second to to to to expansion of quarter. XX% Island the first the year, to tonne our of free

more clearing the be expected August underway XXXX. As in Combined to with the of a start profitable lower lower-cost XX% going and which shaft expansion We've is that valuable the risk pre-sink XXXX among the tailings the operation with this progress operating in Canada. expected capital made is we've with to date mine, preparation significant will and the earthworks most the and begin in and already be in work in completed. The committed. thinking this to the photos, of bulk already gold bigger fact quarter. in create site to that shaft is first expanded facility seen project an mines a is The the and expansion, than on from completed third is well production to

from Mulatos guidance. Yaqui La included XX. the District first Slide in ounces in from XX,XXX Grande. XX,XXX Moving Mulatos X,XXX half to totaled costs the at with ounces second quarter This from line and roughly Production ounces

XX% from second higher second expect with of substantially production Yaqui year of costs. year half production Mulatos expect Consistent Grande We as approximately ramping the rates significantly the at full the stacking we from lower to in La guidance, half come District the in year continue of up.

estimate, with around new capital build to construction instead project ahead of XX. primarily to is crusher Grande the of in included challenges La due in refurbishing of June, higher new at and COVID-X. of Moving expected the Chanate to a initial the million, the the a to mitigate $XXX than XXXX decision XX% Yaqui the camp scope changes. to Slide help crusher come Construction completed This Total was schedule. for El

drive X,XXX higher XX,XXX X.X ounce With half up continued cash to that, tonne, reserve John. rates early the Grande grade turn per ounces closer rates the total completion in expected ramp expectations. of cash and per free and to Grade exceeded the of flow to stacking production production stack growth With back second call of within X.X the construction of $XXX grams tonnes are of to is year. stack per and of grade to of Mulatos to costs tonne average grams day, the per expected La Yaqui I'll With significant District. design the

John McCluskey

questions. presentation. That I'll now back concludes our the the the will to open Peter. you, who formal your call turn operator, lines for Operator? Thank

Operator

Trevor from the Instructions] Turnbull is question from you. Thank And [Operator Scotiabank. first

Trevor Turnbull

on I would would if I Lynn to a fairly wondered the the you ask off at commit Phase quickly feasibility further about along wondered don't when mentioned feasibility I you're we bit, keep Lynn until contemporary delayed of you you EIS you approval. if start that the come Lake feasibility that would perhaps Island that? when lot mentioned really might hold a that just should study to with Or also Lake And the out coming be -- expect do that possible front the expect just to it after given be as wanted spending. capital significant just And III. you to as you with it after if

Peter MacPhail

working Hey, We're Trevor, on it's study in the Peter. feasibility update. parallel

build get to Sometimes have commitments with into you permitting, it. some you that

see So pretty would soon think the it, in. we after I any get But in it would with to soon out in I its could look worked permits -- thinking case we as come place. if that as

Operator

The Fahad Suisse. from is next question Credit from Tariq

Fahad Tariq

in inflationary maybe are talk about doing thing But there's -- that's with about higher pressures, the inflationary some Can you're little the release in offsets that grades any or talk pressures than better bit presentation wasn't second understand there that production press are Gold underlying about talk if bit expected. you the little positive. seeing? Island the noticed One just was the half. I I a and a

James Porter

Yes, it's Jamie here.

some Canadian hedging industry, from manage the our contracts place We've of seeing the our diesel prices. cyanide, an higher dollar. weakness from in have we ounce. And in diesel, reduce that's higher able I in has benefited the place. across about the We've mean think helped impact $XX cost by inflation we're I certainly supply benefited this long-term media I to higher of obviously been grinding mean, we've year.

fact from I Grande that mentioned, production La seeing low-cost that So with but that. on Yaqui the helped inflationary we combined offset pressures, factors we're are really bringing the

we've from well So a -- performing perspective. cost we're

X% of year, We I do, our set we our range be for budgets we'll cost will next an we mean, that. at the impacting mitigate to can what annual see, you'd expect in inflation but look to

Fahad Tariq

particularly follow-up. quick your peers about of a like just in inflation And some talking labor Okay. tightness, are labor One, Canada. and

Just that curious employees, noticing difficult also any are you're cetera? to et retaining if specific pressures

James Porter

We at have any not challenges our had specific operations.

contracted are I of that it's some our of a And peers operations. think underground But that's in overall, not that both impact we on terms challenge. our significant noted and having development a seeing drilling. with have that contractors exploration

Operator

is Securities. question from from America Bank of The Lawson Winder next

Lawson Winder

a few a have couple, I maybe questions.

have off, that LYG for So prepared La in rainy on Yaqui But congratulations getting on how first started. upcoming you just Sonora? Grande, season the

Peter MacPhail

mean almost managed we've of typically, We're that it. ends the place. through ponds July, I late through in Yes. mean and – we’ve rainy I put kind August early in season it.

your cover preg You pond. have -- with any your able operations, could got with heap-leach you event you've and you barren pond to event for that event pond, The of contingency that. manage have running sort is to your there, rain. just pond It will be pond a huge -- imagine

ore no large it you area would a plastic there big have heap-leach seen also -- there's yet. We a pictures, lot of with have a down with on the in

that falls facility. around we've on the any So water diverted that

good in we're So shape.

Lawson Winder

an I have any now you observe need since And had with excess the leach to the you've dilution rain, noticed to how cyanide? opportunity performs the mean, use or pad

John McCluskey

we've particular producing one unusual been rainfall day, first we our that what issue to well have think a on to you'll can very a very, got learned season on XXXX. from we've manage happen hand. that really in since get time, than that, It's But do. that season. there Well, effect short-term And time how well rainy other rainy down that not pretty will and I we

James Porter

to thing stacked not lot -- early deal the -- pad There's that in water a it's solutions is not not on The with, the deal very very out. other lot we're a lot It's we're of of yet, to of a ore starting just on with. heap-leach.

that all you. divert you from So other away water

Lawson Winder

I about Okay. on wanted return ask to capital.

is return of XXXX, at quite return So flow. look consistently if like, how think a capital it's on And cash that percentage to of as since ask capital wanted I just X% just flow? you guys kind I around cash of been operating operating about

James Porter

we've I measured a As a board return of have and we with see think we're percentage starting phase, of capital we're mean, in But the targets been and that. our respect metrics. our benefits flow. investment by to operating to invested cash on I annually heavy

we've over Yaqui see spitting $XXX got now. online Young-Davidson returns La quarters. annualized strong a had really X now coming IRR. We're starting has that to out million a consecutive Grande those We're -- XX%-plus year. --

increases targeting ahead. yes, in overall I'd So our years capital we're returns say in the

Lawson Winder

percentage a as But of operating flow. cash

John McCluskey

of it pin for to specifically been example, front. we low get don't that. share very with we advantage share more opportunistic prices Well, on But we've took the to active that buyback, and

see might on you so And basis in variability shareholder alone. that return some

James Porter

when at flow. cash at we're Yes, not capital flow, look Lawson, operating we free our cash looking on metrics, just return

Lawson Winder

Okay.

Lynn Finally, I on also ask wanted to Lake. just

makes fully out delayed of So it push to you've which so Lynn the CapEx so be can Lake commitment that funded internally, a as lot sense.

a has some understand expansion. about would XXXX. But to growth, to imply start is your Lake on mean shows the I heavy which which full I [indiscernible] wanted XXXX Lynn in production in as expected So it I just inquire to include slide spending -- Island looks like gold XXXX, that spending

So conceptually am XXXX be significantly draw might on where that out the a year mean I balance I sheet? have you about correct? thinking so to

James Porter

Lawson, now. yes, take that. I at in No, we're I'll not shape great mean all.

from the annually La gold flowing Phase expansion. $XXX with plus be majority annually cash Island Mexico. and we million prices, from Yaqui YD. million We're getting running, the current Now at $XXX Grande III up should funds And of

for to easily our operating in balance positive cash and expansion us facility. XXXX There a cash So We be start of down finance XXXX, free flow. late that Lynn over from next spending we're credit years. of our materially all wouldn't need or existing flow draw cash net access Lake the couple the could early

Lawson Winder

next as even So a I for little guess Lynn mean still a start frame that on earlier? the I could spending Like question, you could be reasonable mean I time Lake? year

James Porter

is months development our now, project on we of highest be. could But That's for front saying about us. been It X in return focus plus. have III Phase as the we've

well. that So Lake we forward and we going want focusing Lynn as to get start on before on that move

Operator

Kerry And is Smith Haywood Securities. question the next from from

Kerry Smith

just separate go-forward out on basis in you the terms Yaqui the plan this split pit Grande Is quarter. that then to have reporting, a Jamie, from reporting? the of La that the main on

James Porter

is, the of assess XX%, decide our and forward. mean forward, Yes, separate the Yaqui reality Yaqui Mulatos. but I the that separately is production of Kerry, on Grande we'll going cost in to blended, physical, La did to Mulatos. our but think XX% La We Grande some we I be metrics are do going going financial disclose

separate, make just But assess somewhat sense production have not that the will metrics to we'll may given be forward. them immaterial. it going So Mulatos'

Kerry Smith

listed from there idea me as cost you you to mill the to some -- Island, a that YD cost per are of of cost over can trucking to what in or that And or Okay. give tonne at over terms how that just it truck rough you ore grams --

James Porter

Kerry look trucking of Yes, cost, as about $XX over gram it truck about it's a at a ton I there. it

forward kind of are up flow over So because move lower mill on -- situation, a cash I X cost that -- we since stockpile don't tonnes the Island but process of that the wish a ounces, Island. going at sit carrying mine around expand don't a there, stockpile permitting to is sense performing day makes to years somewhat. perspective on those is bit we're they're in gain mill cost forward, you're a I we Island you have the gram X-month at XXXX. on front see been us us flow the and because it limited purchased bigger you Otherwise, you're And to if can. -- more, give head at stuff you're until -- to ago. a mill in see you we've in in grade it's a a higher on you but from moving That it's tracking where thing X,XXX to mill, had we a earlier we that you cash And like in -- mills on going it's ground actually to costs a gain operating well. -- going bit but mill just have in the we situation on

Kerry Smith

would YD that as bigger you can at obviously benefit stockpile And Right. so from help. well a

James Porter

Yes.

Kerry Smith

Okay. sure of Carricito, talked on was drilling on bunch Mulatos, peripheral [indiscernible] And West. a targets just if of that around question, done but last you about not I'm some [indiscernible], the Halcon

there think Refugio even. maybe was I

Just is wondering program is in those that or you've -- programs, that going? seen interesting if drill if the how anything

James Porter

There's stuff and Mulatos surprise big continues we really lots us. have there that around the It's a package of interesting District. land to

I'd all put to is maybe tuned, results So on say we'll have when out we stay something share.

Peter MacPhail

underground The the at to reserve is add only year, I'd we start Yes. thing XXX,XXX carried that ounces at X.X the published at that grams. of

a think second We're that look I there's evaluating that increase to the the the potential in half deposit. size year. to for of us of

Kerry Smith

Okay. right? And down that's year, pretty

Peter MacPhail

Yes.

Operator

concludes registered This further this morning's call. no questions are this at There time.

If to XXX-XXX-XXXX you have extension any been at for today. you Thank further free questions that Scott please feel Parsons have participating answered, Mr. contact XXXX. not

now your You lines. may disconnect

Alamos Gold (AGI) 28 Jul 222022 Q2 Earnings call transcript