Alamos Gold, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Acquisitions and Expansion: Acquired Magino mine adjacent to Island Gold and expanded into Quebec with the Kickapack project.
• Production Growth: 2024 production was 567,000 ounces, up 7% from 2023, meeting full-year guidance. Record revenue, cash flow from operations, and free cash flow were achieved.
• Project Progress: Phase Three expansion at Island Gold is ~75% complete with the shaft sink at 1,000 meters. Lynn Lake project construction ramping up, with initial production expected in first half of 2028. PDA project environmental permit approved, construction to wrap up mid-2024, first production mid-2027.
• Exploration Success: Global reserves increased 31% to 14 million ounces in 2024, driven by acquisition of Magino, declaration of initial reserve at Burnt Timber and Lynx, and growth at Island Gold.

Segment Performance

• Island Gold: In 2024, produced a record 155,000 ounces. Total cash costs were in line with guidance, and mine site all-in sustaining costs were slightly below the low end of guidance. Revenue contribution from Island Gold was part of the over $1.3 billion total revenue for the year.
• Magino: Fourth quarter production was 16,200 ounces, a slight decline from the previous quarter due to longer-than-anticipated downtime for primary crusher replacement. Costs improved quarter over quarter, and mill throughput was expected to increase to ~11,200 tons per day by the end of the current quarter.
• Young Davidson: Fourth quarter production was 45,700 ounces, full-year 2024 production was 174,000 ounces (slightly below guidance due to stope sequencing and lower grades). For 2025, production is expected to be between 175,000 and 190,000 ounces, with costs increasing primarily due to labor inflation.
• Milano district: Fourth quarter production was 38,900 ounces, full-year 2024 production was 205,000 ounces (5% above top end of guidance). Record mine site free cash flow of $240 million was generated in 2024.

Guidance

• Production Targets: 2025 production expected at ~605,000 ounces, 2026 ~700,000 ounces, 2027 ~900,000 ounces. This represents 24% production growth over three years.
• Cost Reductions: All-in sustaining costs expected to decrease 8% over 2024-2027 driven by low-cost growth and Phase Three expansion at Island Gold.
• Project Timelines: Lynn Lake initial production expected in first half of 2028, completing the project is expected to drive annual production to ~900,000 ounces with further cost decreases.

Risks

• Operational Risks: Crusher wear at Magino required replacement, which impacted production in the short term, but improvements were completed by year-end.
• Market Risks: Fluctuations in gold prices could impact revenue and cash flow.
• Regulatory Risks: Uncertainties in regulatory approvals, particularly in Mexico, could affect project timelines and costs.

Question and Answer

Q: Estimate of how much of the $515 million synergies expected from Island Gold and Magino combination have been realized so far and how much to realize in next one year?

A: About $100 million of capital synergies realized in 2024-2025, rest of the synergies (around $25 million per year) to be realized over the life of the mine through operating synergies starting in 2026.

Q: Tax implications of acquired tax rules and deferred cash taxes?

A: Deferral of cash taxes by ~2 years due to gold prices and pool usage at Magino, likely to start paying significant cash taxes in Canada around 2027.

Q: Young Davidson grades in 2024 and 2025 outlook?

A: Lower grades in 2024 due to stope sequencing, but 2025 production expected to be within guidance range of 175,000-190,000 ounces with disciplined mining sequence.

Q: Mexico operations and future investment?

A: Positive climate in Mexico with PDA permit obtained, focus on Milatos district for now, but看好 future investment as climate improves and ties with Canada strengthen.

Q: Dividend policy?

A: Focus on funding growth initiatives (e.g., Phase Three expansion, Lynn Lake project) so no immediate plan to increase dividend; shareholders focused on execution of growth plan.