Alamos Q4 results fall short of expectations, replaces key reserve depletion

TORONTO (miningweekly.com) – TSX- and NYSE-listed Alamos Gold on Thursday reported fourth-quarter financial results that fell just short of analyst expectations, however, the company separately reported that it had managed to replace reserve ounces mined at its key Young-Davidson mine, in Northern Ontario.

Alamos, which had operating mines in Canada and Mexico and was expanding geographically through several projects in Turkey, reported an adjusted loss per share of $0.05, missing Wall Street analyst consensus of a loss totalling $0.04 a share.

The Toronto-headquartered miner reported a net loss for the three months ended December 31 of $60.5-million, or $0.24 a share, which included several non-cash charges, including a $25.4-million write-down of El Chanate’s heap leach inventory ($17.8 million after-tax), a $17.6-million write-down of the company’s 50% investment in the Orion exploration project, and a $5.1-million foreign exchange loss.

Alamos reported record quarterly output of 104 734 oz of gold in the fourth quarter, including 44 694 oz from Young-Davidson, 41 830 oz from Mulatos and 18 210 oz from El Chanate.

Total cash costs in the fourth quarter were $780/oz of gold sold and all-in sustaining costs were $1 073/oz of gold sold.

The company sold 104 419 oz of gold in the fourth quarter, at an average realised price of $1 109/oz, $3/oz above the average London PM Fix price, for revenues of $115.7-million. Revenues for the quarter were 64% higher year-over-year, owing to the inclusion of sales from Mulatos effective July 2, 2015.

As at December 31, Alamos reported cash and cash equivalents and available-for-sale securities of $289.6-million.

Alamos also reported year-end 2015 reserves and resources. Gold reserves declined by 5% year-on-year, however Young-Davidson reserve remained flat. The La Yaqui and Cerro Pelon deposits saw reserve increases of 11% and 21% respectively, which could help to offset a 10% decrease at the Mulatos mine and the 61 000 oz left in the underground reserve.

Consolidated measured and indicated resources (excluding reserves) increased by 20%, driven by the addition of nearly two-million ounces from Lynn Lake, in Manitoba, as the company now owns 100% of the project.

Alamos expected to produce between 370 000 oz and 400 000 oz of gold, driven by production growth from both Young-Davidson and Mulatos, at consolidated AISC of $975/oz, an 11% reduction from 2015.