TORONTO, June 28, 2022 (GLOBE NEWSWIRE) --
Alamos Gold Inc.
(
TSX:AGI; NYSE:AGI
) (“Alamos” or the “Company”) today reported results of the Phase 3+ Expansion Study (“P3+ Expansion Study”) conducted on its Island Gold mine, located in Ontario, Canada. The P3+ Expansion Study outlines a larger, more profitable, and valuable operation than outlined in the Phase III Expansion Study released in 2020 (“P3 2000 Study"). Based on the results of the P3+ Expansion Study, the Company is proceeding with an expansion of the operation to 2,400 tonnes per day (“tpd”).
The P3+ Expansion Study has been updated to reflect the current costing environment. All economics, costs and capital referenced in this release for the previous P3 2000 Study are based on estimates as of 2020 and do not reflect industry-wide cost and capital inflation since that time. All amounts are in United States dollars, unless otherwise stated.
Phase 3+ Expansion Study Highlights:
Higher production: average annual gold production of 287,000 ounces starting in 2026 upon completion of the shaft
-
This represents a 22% increase from the P3 2000 Study and a 121% increase from the mid-point of 2022 production guidance of 130,000 ounces
Industry low costs: consistent cost structure with the P3 2000 Study, with productivity gains and economies of scale offsetting inflation
- Average total cash costs of $432 per ounce (average $425 per ounce from 2026), consistent with the P3 2000 Study and 25% lower than the mid-point of 2022 guidance of $575 per ounce
- Average mine-site all-in sustaining costs of $610 per ounce (average $576 per ounce from 2026), a 30% decrease from the mid-point of 2022 guidance of $875 per ounce
Larger, longer-life operation supported by significantly increased Mineral Reserve and Resource
- 43% increase in mineable resource to 4.6 million ounces of gold grading 10.59 grams per tonne (“g/t Au”)
- 18 year mine life to 2039, a four year increase from the P3 2000 Study, while operating at 20% higher production rates of 2,400 tpd
Lower capital intensity: lower total capital per ounce over the life of mine
- Growth capital of $756 million and sustaining capital of $777 million, both up from the P3 2000 Study reflecting the expansion, a larger mineable resource, and industry-wide inflation
- Total capital intensity decreased 4% to $344 per ounce reflecting the larger mineable resource with increased ounces per vertical metre driving the lower capital intensity and contributing to the stronger economics
- $100 million of the increase in growth capital compared to the P3 2000 Study reflects sustaining capital that has been brought forward to the expansion period for accelerated underground development and infrastructure to support the higher mining rate
- Expansion significantly de-risked given increased detailed engineering, capital committed and projects completed to date, including the majority of earthworks
Stronger economics with expansion and larger mineable resource more than offsetting inflation to create a more valuable operation
- After-tax net present value (“NPV”) (5%) of $1.6 billion, a 25% increase from the P3 2000 Study (base case gold price assumption of $1,650 per ounce and USD/CAD foreign exchange rate of $0.78:1)
- After-tax internal rate of return (“IRR”) of 23%, up from 20% in P3 2000 Study
-
After-tax NPV (5%) of $2.0 billion, a 31% increase from the P3 2000 Study, and an after-tax IRR of 25%, at current gold prices of $1,850 per ounce
Industry low Greenhouse Gas (“GHG”) emission intensity
- 35% reduction in life of mine GHG emissions relative to the current operation, supporting the company-wide target of a 30% reduction in GHG emissions by 2030
- 31% additional reduction in emissions per ounce of gold produced from industry low levels
Fully funded, balanced approach to growth: growing free cash flow expected starting in the second half of 2022
- With no significant capital expected to be spent on Lynn Lake until the P3+ Expansion is well underway; the Company is well positioned to fund the expansion internally while generating strong free cash flow over the next several years
- The Company expects significant free cash flow growth in 2025 and beyond as production rates ramp up at Island Gold
“Island Gold continues to grow in every sense with our planned Phase 3+ Expansion driving the value of Island Gold to $2 billion at current gold prices. Mineral Reserves and Resources have increased to 5.1 million ounces, supporting the Phase 3+ increase in production rates, which will create a bigger, longer-life, more profitable and valuable operation. As a producing mine with a well-understood cost structure, this expansion is low risk from an execution perspective, and has a significantly reduced carbon footprint. The exploration story continues to unfold with a Mineral Reserve and Resource base that has nearly tripled over the past four years, and with the deposit open laterally and down-plunge, we expect Island Gold will be one of the lowest cost and most profitable mines for decades to come,” said John A. McCluskey, President and Chief Executive Officer.
| Phase 3+ Expansion Study Highlights |
Phase 3 Expansion
4
(as of January 2020) |
Phase 3+ Expansion
(as of January 2022) |
| Production | ||
| Mine life (years) | 16 (to 2035) | 18 (to 2039) |
| Project/Expansion completion date | Q2 2025 | Q1 2026 |
| Total gold production (000 ounces) | 3,104 | 4,460 |
| Average annual gold production – life of mine (000 ounces) | 201 | 255 |
| Average annual gold production – post project (000 ounces) | 236 | 287 |
| Total mill feed (000 tonnes) | 9,572 | 13,550 |
| Average gold grade (grams per tonne) | 10.45 | 10.59 |
| Recovery (%) | 96.5% | 96.5% |
| Average mill throughput (tpd) | 2,000 | 2,400 |
| Operating Costs | ||
| Total cost per tonne of mill feed 1 (C$) | $184 | $178 |
| Total cash cost – life of mine (per ounce sold) 2 ,6 | $443 | $432 |
| Total cash cost – post project (per ounce sold) 2 ,6 | $422 | $425 |
| Mine-site all-in sustaining cost – life of mine (per ounce sold) 2 ,6 | $627 | $610 |
| Mine-site all-in sustaining cost – post project (per ounce sold) 2 ,6 | $559 | $576 |
| Capital Costs (millions) | ||
| Growth (project) capital expenditure | $538 | $756 |
| Sustaining capital expenditure | $576 | $777 |
| Total capital expenditure – life of mine | $1,114 | $1,533 |
| Total capital expenditure (per ounce produced) – life of mine 6 | $359 | $344 |
| Total all-in cost (per ounce produced) – life of mine 5 ,6 | $802 | $776 |
|
Base Case Economic Analysis: $1,650 per ounce Gold Price
(USD/CAD foreign exchange rate of $0.78:1) |
||
| IRR vs current 1,200 tpd operation (after-tax) 3 | 20% | 23% |
| NPV @ 0% discount rate (millions, after-tax) | $2,057 | $2,786 |
| NPV @ 5% discount rate (millions, after-tax) | $1,303 | $1,632 |
|
Economic Analysis at $1,850 per ounce Gold Price
(USD/CAD foreign exchange rate of $0.78:1) |
||
| IRR vs current 1,200 tpd operation (after-tax) 3 | 22% | 25% |
| NPV @ 0% discount rate (millions, after-tax) | $2,416 | $3,365 |
| NPV @ 5% discount rate (millions, after-tax) | $1,533 | $2,004 |
1. Total unit cost per tonne (“t”) of ore includes royalties and silver as a by-product credit
2. Total cash costs and mine-site all-in sustaining costs include royalties and silver as a by-product credit
3. The IRR is calculated on the differential after-tax cash flow between the expansion scenarios and continuing to mine at 1,200 tpd with ramp access and with a paste fill plant
4. The 2020 P3 2000 Study has been normalized to the P3+ Expansion using a gold price of $1,800/oz and USD/CAD foreign exchange rate of $0.79:1 from 2020-2022; and gold price of $1,650/oz and USD/CAD foreign exchange rate of 0.78:1 2023 onward
5. Total all-in cost per ounce produced is calculated as total cash cost per ounce plus total capital per ounce produced over the life of mine
6. Please refer to the Cautionary Notes on non-GAAP Measures and Additional GAAP Measures
Mineable Resource
A mineable resource totaling 13.6 million tonnes, grading 10.59 g/t Au containing 4.6 million ounces of gold has been included in the Phase 3+ Expansion Study. This represents a 43% increase from the P3 2000 Study reflecting the significant growth in Mineral Reserves and Resources since 2020. The P3+ Expansion Study incorporates Mineral Reserves and approximately 87% of Measured and Indicated and Inferred Mineral Resources as of December 31, 2021.
Mineral Resources included in the P3+ Expansion Study had stoping outlines applied and then were assigned Island Gold’s standard zonal dilution and recovery rates. Stopes were evaluated against applicable cut-off grades and a mine design and sequence was generated. The inclusion of 87% of the Mineral Resource is conservative relative to the historical conversion rate of Inferred Mineral Resource to Mineral Reserve, which has averaged over 100% since 2016. This also reflects the high degree of confidence in the quality of the Mineral Resource which is part of the same structure as Mineral Reserves with a consistent style of mineralization.
Mineable Resource as of December 31, 2021
| December 31, 2021 | Undiluted Resource Used in Phase 3+ Study | Diluted & Recovered Resource Used in Phase 3+ Study | |||||||
|
Tonnes
(000) |
Grade
(g/t Au) |
Ounces
(000) |
Tonnes
(000) |
Grade
(g/t Au) |
Ounces
(000) |
Tonnes
(000) |
Grade
(g/t Au) |
Ounces
(000) |
|
| Mineral Reserves | |||||||||
| Proven | 834 | 9.33 | 250 | 834 | 9.33 | 250 | |||
| Probable | 3,278 | 10.33 | 1,088 | 3,278 | 10.33 | 1,088 | |||
| Total Reserves | 4,112 | 10.12 | 1,338 | 4,112 | 10.12 | 1,338 | |||
| Mineral Resources | |||||||||
| Measured | 20 | 4.92 | 3 | 19 | 4.92 | 3 | 21 | 4.11 | 3 |
| Indicated | 1,076 | 8.18 | 283 | 991 | 8.18 | 261 | 1,128 | 6.83 | 248 |
| Total Measured & Indicated | 1,096 | 8.12 | 286 | 1,010 | 8.12 | 264 | 1,149 | 6.78 | 251 |
| Inferred | 7,906 | 13.59 | 3,454 | 7,283 | 13.59 | 3,182 | 8,289 | 11.34 | 3,023 |
| Phase 3+ Mill Feed | 13,550 | 10.59 | 4,612 | ||||||
Economic Analysis
The Phase 3+ Expansion has an estimated base case after-tax NPV (5%) of $1.6 billion and after-tax IRR of 23% assuming a gold price of $1,650 per ounce and USD/CAD foreign exchange rate of $0.78:1.
Assuming an $1,850 per ounce gold price, the after-tax NPV (5%) increases to $2.0 billion and after-tax IRR increases to 25%. The mine plan, operating parameters and capital estimates incorporated in the P3+ Expansion Study are effective January 1, 2022. The project economics are sensitive to metal price assumptions and input costs as detailed in the tables below.
Phase 3+ Expansion After-Tax NPV (5%) Sensitivity ($ Millions)
| -10 % | -5 % | Base Case | 5 % | 10 % | ||||||
| Gold Price | $1,324 | $1,479 | $ 1,632 | $1,785 | $1,939 | |||||
| Canadian Dollar | $1,772 | $1,702 | $ 1,632 | $1,562 | $1,491 | |||||
| Capital Costs | $1,723 | $1,678 | $ 1,632 | $1,587 | $1,541 | |||||
| Operating Costs | $1,716 | $1,674 | $ 1,632 | $1,590 | $1,548 | |||||
Phase 3+ Expansion After-Tax NPV (5%) and IRR Sensitivity to Gold Price
| After tax NPV 5% (US$M) 1 | IRR (%) 2 | ||||||
| Gold price | P3+ 2400 | P3 2000 3 | P3+ 2400 | P3 2000 3 | |||
| $ 1,450 | $ 1,258 | $1,072 |
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