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Alamos Gold cruises into 2024 on record production

Apr 30, 2024

By Kevin Vincent

Low costs and high margins. If you’re an investor looking for the perfect recipe, turn to the page that says Alamos Gold.
Alamos Gold Inc. reported its financial results for the quarter and year ended December 31, 2023 and they couldn’t be happier.
“With the strong finish to the year, we delivered a record operational and financial performance in 2023,” said John A. McCluskey, President and Chief Executive Officer.
“It was a matter of investing the capital that would produce that productivity and we’ve had just a tremendous run of success,” he added in a recent television interview.
“Production increased 15% to a record 529,300 ounces, achieving the top end of our increased full year guidance. Costs were also in line with annual guidance and decreased 4% from 2022 reflecting strong performances across our operations. With the record production, lower costs, and higher gold price we set a number of financial records in 2023. Revenue increased 25% to a record $1 billion, and cash flow from operations increased 44% to a record $519 million. We also generated $124 million of free cash flow while reinvesting in growth that will support higher levels of free cash flow in the years ahead.”
“As far as our Canadian operations go, very similarly we had great performance from both Island Gold and our Young Davidson Mine. We already could see we were going to break our previous guidance and so, at the end of the third quarter, we raised our guidance and then by the end of the year, we’d actually come to the very top end of our revised guidance - so it was a great year,” added McCluskey.
“This reinvestment in high-return growth continues to create long-term value. Global Mineral Reserves increased for the fifth consecutive year with grades also increasing driven by another year of exploration success. This included higher-grade additions at Island Gold and PDA, supporting longer-life, and more valuable assets. The growth at PDA will be incorporated into a development plan to be completed later this quarter that we expect will outline a significant mine life extension at Mulatos. The Phase 3+ Expansion at Island Gold continues to advance having achieved a significant milestone with the start of shaft sinking in December. The expansion remains on track to deliver significant production growth at substantially lower costs in 2026 and beyond.”
While Young Davidson continues to be the crown jewel, Island Gold is nipping at its heels.
“One of the things that really distinguishes what we’re doing at Alamos is we’re actually bringing costs down between now and 2026. We’re one of the lowest cost producers in the sector right now, but by virtue of the expansion that we’re undertaking at Island Gold which will see us sink a shaft and expand the mill from 1,200 tons a day to 2400 tons a day we’re going to benefit from both the efficiency of the shaft, the tie into the grid-power, plus the economies of scale.”
McCluskey says when you pull all of those things together, costs drop from roughly $1,000 an ounce to roughly $600 an ounce at Island Gold. “That’s going to have a big impact on our overall production. That’ll be roughly half of 2026 production when we achieve that and that’ll be coming in at $600 adjusted for inflation all in sustaining cost, so that’ll be one of the lowest cost mines in the world and it’ll be generating roughly 300,000 ounces a year - that’s just a great story.”


Alamos acquires Argonaut Gold Positions itself as the 3rd largest gold producer in Canada


Picture of Argonaut Gold`s Magino Mine
Picture of Magino Mine -Dubreuilville Ontario Canada


Employees at Argonaut Gold northeast of Wawa woke up to a new signature on their paycheques in late March. Alamos Gold Inc. and Argonaut Gold Inc. announced that they have entered into a definitive agreement where Alamos will acquire all of the issued and outstanding shares of Argonaut.
“After considering a broad range of alternatives, we believe this transaction provides a unique opportunity to place Magino in the hands of a well-capitalized and well-run company, who will be able to realize significant synergies given the proximity of the adjacent Island Gold Mine,” said Richard Young, President and CEO of Argonaut Gold.”
“We believe with adequate capital and an optimal expansion at Magino, the mine will deliver significant value to all stakeholders. We are grateful to our team at Magino for their significant contribution and hard work during mine and mill ramp-up. Similarly, we thank our exceptional teams in Mexico and Nevada for their continued hard work throughout the years,”.
Alamos will acquire Argonaut’s Magino mine, located adjacent to its Island Gold mine in Ontario. The integration of the two operations is expected to create one of the largest and lowest cost gold mines in Canada.
Through the use of shared infrastructure, Alamos expects to unlock significant value with immediate and long-term synergies expected to total approximately US$515 million.
The addition of Magino is expected to increase Alamos’ combined gold production to over 600,000 ounces per year, with longer term production potential of over 900,000 ounces per year.
“It will add a third producing mine in Canada to our operations, meaning that 90% of our value is now based in Canada,” said Alamos CEO John McCluskey. “Argonaut’s key asset, the Magino Mine, is right next to our Island Gold Mine in northern Ontario. There are tremendous synergies combining these operations that will enable us to unlock.”
The acquisition of the Magino mine enables Alamos to realize more than $500 million in operating and capital synergies. The Argonaut and Island Gold deposits sit within 300 meters of each other across a four-kilometer strike. Combined, the two deposits contain over 11 and a half million ounces of gold reserves and resources.
“The newly constructed infrastructure at Magino, including the mill and tailings facility is impressive,” said McCluskey. “And I applaud the Argonaut team for what they’ve built. The Island Gold and Magino Mines will increase our production by over 100,000 ounces of gold per year, bringing the total for this district to over 400,000 ounces per year by 2026. This will become one of the largest and lowest cost gold mining operations in Canada.”
McCluskey says there is excellent potential to build on the exploration success at both the Island Gold and Magino deposits. Jointly he says these mines will create real value and provide tangible benefits to local communities. “We look forward to strengthening our existing partnerships with the indigenous communities and welcoming Argonauts employees to our team. I hope they will thrive with us and look forward to working together in fully realizing the benefits of integrating these two operations.”
“This is an exciting development that fits well with Alamo’s gold growth strategy. When you include our young Davidson mine and the Lynn Lake Development Project in Manitoba, our overall Canadian production will double. This will establish Alamos Gold as the third largest gold producer in Canada. My team has a fantastic track record when it comes to creating value through mergers and acquisitions. And I’m committed to making this one a success for all of our stakeholders.”


Alamos Gold's,  Luc Guimond, Chief Operating Officer will be a guest speaker at the Canadian Mining Expo, Projects in the Pipeline Conference. Register today to get your tickets before they sell out. Lunch is included. https://virtex.canadianminingexpo.com/expoactivity/activitypage/type/expoactivity_pipeline


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Tags: Northern Ontario / Operational Updates / Gold / All Articles