Alamos’s Island Gold Mine doubles mine life

Good mines and good people are the foundation of our growth in Northern Ontario said John A. McCluskey, President and Chief Executive Officer of Alamos.

By Kevin Vincent
Alamos Gold ended 2020 on a high note. The company released its first Economic Benefits Assessment of the Island Gold Mine Report, which provides an overview of the mine’s economic value and community benefits in the region.
And it’s great news.
Results show that the growing number of full-time jobs and training opportunities has positioned the mine to become an economic engine for the future of the region, including positively impacting the closest town of Dubreuilville.
The company says the trend will continue as a result of Alamos’ recent $684 million investment to expand operations at the Island Gold underground mine, including constructing a new shaft, which is expected to be completed in 2025. This expansion will double the mine life and allow it to continue operating until at least 2035.
“Good mines and good people are the foundation of our growth in Northern Ontario. When we took root in the region three years ago, we set out to hire locally, train great talent, and create tremendous value in the community, which we continue today,” said John A. McCluskey, President and Chief Executive Officer. “Our next phase of growth at Island Gold will result in new jobs and opportunities in the region, create a lasting legacy that benefits all Alamos stakeholders, and reflect our core values of safety, teamwork, environmental sustainability, commitment and integrity.”
In response to COVID-19, Alamos extended its support to the local community by providing supplies locally and funding a meal service program in Dubreuilville for persons in need, at high risk and facing economic challenges. In late March, Alamos made the decision to temporarily suspend operations at Island Gold given the unique set-up of the operation with both a large local as well as a fly-in, fly-out workforce. Alamos began safely ramping up operations at the beginning of May and returned to normal operating levels in June.

HIGHLIGHTS

· As of early 2020, Island Gold’s employees account for nearly 22% of total mining employment in the Algoma region, sustaining 379 jobs and 560 construction jobs annually over the past 3 years
· With the planned expansion of Island Gold between 2020 and 2035, activities are expected to sustain over 400 jobs annually, as well as over 3,100 construction jobs overall
· Among Island Gold employees, approximately 6% belong to Indigenous communities, which is more than twice the Ontario mining industry average of 2.4%
· Island Gold’s practice of local hiring has increased economic stability in the communities of Dubreuilville, Wawa, and White River, offering allowances and incentives to employees to move near the mine in Dubreuilville, indirectly helping to increase rural population as well as local resources and infrastructure
· The Island Gold mine also helps contribute towards the formation of a highly skilled mining workforce and the accumulation of human capital in the local communities: it employs a wide range of tradespersons, such as welders, truckers, surveyors, scoop operators, electricians, mechanics, bolters, millwrights, construction miners, geologists, blasters, conventional miners, engineers, and drillers
·  Alamos provides employees with opportunities to further develop their skills, expand their trades and attend training programs
·  Alamos offers training and education to community members to maintain a local qualified workforce and help residents acquire the qualifications for long-term employment in the mining industry
· Island Gold’s employees help augment the local economy, through a host of related activities by supporting local businesses while residing in Dubreuilville.

FIRST NATIONS PARTNERSHIPS

Alamos acknowledges that Indigenous communities constitute some of their most important partners, fully respects their protected rights, and continually looks for opportunities to generate wealth and socio-economic growth generated from mining operations within their traditional territories including through partnerships, employment, skills development, business and spin-off opportunities.
At the Island Gold mine, Alamos has a Community Benefits Agreement (“CBA”) with the Missanabie Cree First Nation. Such agreements help ensure a mutually beneficial relationship and outline a series of benefits including employment, business opportunities and financial participation from the mine. Alamos aims to maintain strong relationships with local communities to understand local challenges and priorities and continues to make contributions to education, community festivals, healthcare, and other cultural activities in the region.

2021 AND BEYOND

2021 Guidance Overview
·       Strong production growth with guidance of 470,000 to 510,000 ounces of gold: a 17% increase from 2020 guidance (based on the mid-point), driven by significantly higher production at Young-Davidson with the completion of the lower mine expansion in July 2020
·       Lower costs with total cash cost guidance of $710 to $760 per ounce: an 8% decrease from 2020 guidance (based on the mid-point) reflecting lower costs at Young-Davidson as mining rates continue to ramp up from the new lower mine infrastructure. This includes approximately $25 per ounce of COVID-19 testing and other related health and safety costs across all operations
·       All-in sustaining cost (“AISC”) guidance of $1,025 to $1,075 per ounce: consistent with 2020 guidance with lower total cash costs offset by higher sustaining capital at Mulatos, which includes $50 per ounce globally related to El Salto pre-stripping activities
·       Total capital guidance, excluding capitalized exploration, of $320 to $350 million: an increase from 2020 guidance of $185 to $215 million primarily reflecting higher capital spending on internal growth initiatives including La Yaqui Grande and the Phase III Expansion at Island Gold. This total capital budget includes:
·       Sustaining capital guidance of $110 to $125 million: a temporary increase from guidance of $80 to $95 million in 2020 to complete $25 million of stripping activities at the El Salto portion of the Mulatos pit
·       Growth capital guidance of $210 to $225 million: an increase from the 2020 guidance of $105 to $120 million in 2020 reflecting the ramp up of construction of La Yaqui Grande and the Phase III Expansion at Island Gold. This is partly offset by lower growth capital at Young-Davidson with the completion of the lower mine expansion in 2020
·       Exploration budget increased to $50 million: up from the initial 2020 exploration budget of $36 million, reflecting increased spending at Island Gold, Mulatos, and Lynn Lake, as well as Young-Davidson, with improved access for underground drilling from the lower mine
·       Strong ongoing free cash flow: La Yaqui Grande and the Phase III Expansion at Island Gold are expected to be self-funded by their respective operations at current gold prices with Young-Davidson providing strong ongoing free cash flow generation
·       Increased dividend of US$0.02 per share (US$0.08 annually) to be paid out later this month, representing a 33% increase from the previous quarter: with the higher dividend rate supported by the Company’s strong free cash flow outlook at current gold prices.

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