Alamos Gold Reports Third Quarter 2024 Results
All amounts are in United States dollars, unless otherwise stated.
TORONTO, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Alamos Gold Inc. (TSX:AGI, NYSE:AGI) ("Alamos" or the "Company") today reported its financial results for the quarter ended September 30, 2024.
"We achieved a number of operational and financial records in the third quarter. Production increased to a record 152,000 ounces reflecting the addition of Magino and continued strong performances from Island Gold and Mulatos. With growing gold production and record gold prices, we generated record revenue and cash flow from operations before working capital, supporting strong ongoing free cash flow while funding our high-return growth initiatives," said John A. McCluskey, President and Chief Executive Officer.
"The addition of Magino has enhanced our strong outlook, increasing our near-term production rate by approximately 20%, and providing longer-term growth opportunities through expansions of the Island Gold District. We are making excellent progress on our growth projects with the Phase 3+ Expansion more than halfway complete, and the recently announced development plan for PDA outlining another low-cost, high-return project that will triple the mine life of Mulatos. Both projects are key drivers of our strong outlook, supporting growing production at declining costs over the coming years," Mr. McCluskey added.
Third Quarter 2024 Operational and Financial Highlights
Produced a record 152,000 ounces of gold, in-line with quarterly guidance and a 9% increase from the second quarter. This reflected the inclusion of the recently acquired Magino mine as well as strong ongoing performances from Island Gold and the Mulatos District. The acquisition of Argonaut Gold Inc. ("Argonaut") was completed on July 12, 2024
Increased 2024 production guidance to between 550,000 and 590,000 ounces in September 2024. This represented a 13% increase from original guidance (based on the mid-point), reflecting the inclusion of the Magino mine from July 12, 2024 onward, as well as increased guidance for the Mulatos District
Sold a record 145,204 ounces of gold at an average realized price of $2,458 per ounce, generating record quarterly revenues of $360.9 million. This represented a 41% increase from the third quarter of 2023 and marks the third consecutive quarter of record revenue. Ounces sold were 4% lower than production in the quarter due to timing, with the sale of these ounces to benefit future quarters
Generated strong ongoing free cash flow1 of $87.5 million while continuing to fund high-return growth initiatives including a record exploration budget, and the Phase 3+ Expansion at Island Gold. Reported free cash flow excludes $28.8 million of one-time payments related to the Argonaut acquisition, including transaction costs and overdue payables at Magino incurred by Argonaut but paid by Alamos post-close
Solid consolidated free cash flow performance was led by the Mulatos District which generated $66.9 million of mine-site free cash flow in the quarter, and $186.5 million year-to-date
Cash flow from operating activities was $165.5 million, including a record $192.8 million before changes in working capital1 ($0.46 per share). Cash flow from operating activities was impacted by working capital adjustments and transaction costs incurred on the acquisition of Argonaut
Cost of sales were $204.0 million or $1,405 per ounce
Total cash costs1 of $984 per ounce and all-in sustaining costs ("AISC"1) of $1,425 per ounce increased from the second quarter of 2024, reflecting the contribution of higher-cost ounces from Magino with the operation undergoing downtime to implement a number of improvements to the mill. Excluding Magino, total cash costs and AISC for the third quarter would have been $118 and $184 per ounce lower, respectively. AISC were also impacted by higher share-based compensation driven by an increase in the Company's share price during the quarter
Costs are expected to decrease slightly in the fourth quarter. The Company remains on track to achieve full year cost guidance
Adjusted net earnings1 for the third quarter were $78.1 million, or $0.19 per share1. Adjusted net earnings include adjustments for an impairment reversal on Young Davidson of $38.6 million, net of tax; unrealized losses on hedge derivatives of $21.2 million, net of tax, net unrealized foreign exchange losses recorded within deferred taxes and foreign exchange of $1.8 million; and other adjustments, net of taxes totaling $9.2 million. Reported net earnings for the quarter were $84.5 million, or $0.20 per share
Cash and cash equivalents were $291.6 million at September 30, 2024. The Company withdrew $250 million on its credit facility during the quarter, which was used to retire the credit facility, term loan, and gold prepay inherited from Argonaut. Additionally, $57.5 million of convertible notes inherited from Argonaut were retired during the quarter, resulting in a net cash outflow of $308.3 million related to Argonaut. The Company remains well positioned to fund its growth initiatives with strong ongoing free cash flow and $542 million of total liquidity
On July 15, the Company entered into a gold sale prepayment agreement for total consideration of $116 million in exchange for the delivery of 49,384 ounces in 2025. The proceeds of the gold prepayment were used to eliminate gold forward sale contracts, previously entered into by Argonaut, totaling 179,417 ounces in 2024 and 2025 with an average price of $1,838 per ounce. The transaction eliminated more than half of the Argonaut hedge book and associated mark-to-market liability
Paid dividends of $10.5 million in the quarter, or $0.025 per share
Released a development plan for the Puerto Del Aire ("PDA") project located within the Mulatos District, outlining a high-return project with an after-tax internal rate of return ("IRR") of 46% at a base case gold price assumption of $1,950 per ounce. PDA is expected to nearly triple the mine life of the Mulatos District, extending production into 2035
Outlined exploration upside to the PDA project, with high-grade mineralization extended at PDA, which is expected to support further growth in Mineral Reserves and Resources, and multiple new high-grade zones defined at Cerro Pelon
Provided a comprehensive exploration update at Island Gold, with high-grade gold mineralization extended across the Island Gold Deposit, as well as within several hanging wall and footwall structures. The ongoing success is expected to drive further growth in high-grade Mineral Reserves and Resources with the 2024 year-end update
Alamos was recognized as a TSX30, 2024 winner by the Toronto Stock Exchange. The annual ranking recognizes the 30 top performing stocks over a three-year period. Alamos' share price increased 134% over the trailing three-year period
Announced a significant contribution to The Princess Margaret Cancer Foundation to create the new Alamos Gold Chair in Gastrointestinal Surgical Oncology. The Company will contribute $2 million to support the new Chair in making a meaningful impact on cancer research aimed at better understanding, diagnosing, and treating gastrointestinal cancers
Announced the appointment of Tony Giardini to its Board of Directors, in September, as well as the appointment of Scott K. Parsons as Senior Vice President, Corporate Development and Investor Relations, and Khalid Elhaj as Vice President, Business Development and Investor Relations. Nils F. Engelstad, Senior Vice President, General Counsel, is departing the Company effective November 8, 2024 to pursue other opportunities.
(1) Refer to the "Non-GAAP Measures and Additional GAAP Measures" disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
Highlight Summary
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Financial Results (in millions)
Operating revenues
$360.9
$256.2
$971.1
$768.7
Cost of sales (1)
$204.0
$158.0
$550.2
$471.0
Earnings from operations
$183.3
$82.6
$403.5
$246.2
Earnings before income taxes
$141.2
$78.2
$345.0
$242.5
Net earnings
$84.5
$39.4
$196.7
$162.9
Adjusted net earnings (2)
$78.1
$54.5
$225.7
$159.2
Adjusted earnings before interest, taxes, depreciation and amortization (2)
$176.2
$125.4
$484.3
$383.7
Cash provided by operations before working capital and taxes paid (2)
$192.8
$133.2
$518.3
$398.7
Cash provided by operating activities
$165.5
$112.5
$468.9
$348.6
Capital expenditures (sustaining) (2)(3)
$38.1
$27.3
$85.5
$77.6
Capital expenditures (growth) (2)
$67.9
$41.9
$178.3
$143.7
Capital expenditures (capitalized exploration)
$6.2
$6.0
$20.5
$17.9
Free cash flow (2)
$87.5
$37.3
$218.8
$109.4
Operating Results
Gold production (ounces)
152,000
135,400
426,800
399,800
Gold sales (ounces)
145,204
132,633
418,976
397,253
Per Ounce Data
Average realized gold price
$2,458
$1,932
$2,294
$1,935
Average spot gold price (London PM Fix)
$2,475
$1,928
$2,296
$1,931
Cost of sales per ounce of gold sold (includes amortization) (1)
$1,405
$1,191
$1,313
$1,186
Total cash costs per ounce of gold sold (2)
$984
$835
$909
$834
All-in sustaining costs per ounce of gold sold (2)
$1,425
$1,121
$1,263
$1,136
Share Data
Earnings per share, basic
$0.20
$0.10
$0.49
$0.41
Earnings per share, diluted
$0.20
$0.10
$0.48
$0.41
Adjusted earnings per share, basic (2)
$0.19
$0.14
$0.56
$0.40
Weighted average common shares outstanding (basic) (000's)
417,147
396,117
404,127
395,149
Financial Position (in millions)
Cash and cash equivalents
$291.6
$224.8
(1) Cost of sales includes mining and processing costs, royalties, and amortization expense. (2) Refer to the "Non-GAAP Measures and Additional GAAP Measures" disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.(3) Sustaining capital expenditures include sustaining capital lease expenditures at Magino, which are not included as additions to mineral property, plant and equipment in cash flows used from investing activities.
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Gold production (ounces)
Young-Davidson
44,200
45,100
128,300
135,300
Island Gold
40,500
36,400
115,600
99,800
Magino (8)
16,800
—
16,800
—
Mulatos District (7)
50,500
53,900
166,100
164,700
Gold sales (ounces)
Young-Davidson
42,966
45,498
127,833
134,744
Island Gold
38,679
35,255
112,575
97,165
Magino (8)
14,766
—
14,766
—
Mulatos District
48,793
51,880
163,802
165,344
Cost of sales (in millions) (1)
Young-Davidson
$63.9
$62.4
$196.0
$183.6
Island Gold
$33.4
$31.3
$97.5
$89.8
Magino (8)
$38.5
—
$38.5
—
Mulatos District
$68.2
$64.3
$218.2
$197.6
Cost of sales per ounce of gold sold (includes amortization) (1)
Young-Davidson
$1,487
$1,371
$1,533
$1,363
Island Gold
$864
$888
$866
$924
Magino (8)
$2,607
—
$2,607
—
Mulatos District
$1,398
$1,239
$1,332
$1,195
Total cash costs per ounce of gold sold (2)
Young-Davidson
$1,033
$939
$1,080
$945
Island Gold
$592
$610
$592
$636
Magino (8)
$2,025
—
$2,025
—
Mulatos District
$937
$898
$892
$861
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
Young-Davidson
$1,406
$1,178
$1,358
$1,207
Island Gold
$794
$916
$892
$980
Magino (8)
$3,007
—
$3,007
—
Mulatos District
$1,002
$1,045
$954
$948
Capital expenditures (sustaining, growth, and capitalized exploration) (in millions) (2)
Young-Davidson (4)
$25.6
$12.3
$64.8
$43.2
Island Gold (5)
$62.6
$47.5
$173.3
$159.2
Magino (8)(9)
$13.9
—
$13.9
—
Mulatos District (6)
$3.1
$9.8
$14.8
$22.0
Other
$7.0
$5.6
$17.5
$14.8
(1) Cost of sales includes mining and processing costs, royalties, and amortization expense.(2) Refer to the "Non-GAAP Measures and Additional GAAP Measures" disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.(3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share-based compensation expenses.(4) Includes capitalized exploration at Young-Davidson of $1.5 million and $3.9 million for the three and nine months ended September 30, 2024 ($1.2 million and $3.8 million for the three and nine months ended September 30, 2023).(5) Includes capitalized exploration at Island Gold of $3.8 million and $10.7 million for the three and nine months ended September 30, 2024 ($2.4 million and $7.8 million for the three and nine months ended September 30, 2023). (6) Includes capitalized exploration at Mulatos District of $0.9 million and $5.9 million for the three and nine months ended September 30, 2024 ($2.4 million and $6.3 million for the three and nine months ended September 30, 2023).(7) The Mulatos District includes La Yaqui Grande and Mulatos.(8) The results for Magino are for Alamos' ownership period from July 12, 2024 to September 30, 2024.(9) Sustaining capital expenditures for Magino include certain finance leases classified as sustaining.
Environment, Social and Governance Summary Performance
Health and Safety
Total recordable injury frequency rate1 ("TRIFR") of 2.03 in the third quarter, an increase from 1.76 in the second quarter of 2024
Lost time injury frequency rate1 ("LTIFR") of 0.09 in the third quarter, as compared to 0.20 in the second quarter of 2024
Year-to-date TRIFR of 1.87 and LTIFR of 0.09
During the third quarter of 2024, Alamos had 23 recordable injuries across its sites including one lost time injury ("LTI").
Alamos strives to maintain a safe, healthy working environment for all, with a strong safety culture where everyone is continually reminded of the importance of keeping themselves and their colleagues healthy and injury-free. The Company's overarching commitment is to have all employees and contractors return Home Safe Every Day.
Environment
Zero significant environmental incidents and three minor reportable events in the third quarter of 2024
Received approval from the Ministry of Mines for the Magino Mine Closure Plan Amendment
Continued reclamation activities at Mulatos for the Cerro Pelon, El Victor and San Carlos pits
The three minor reportable events during the third quarter at Young-Davidson, including a 200 litre diesel spill, a minor spill while containing an excavator fire, and one exceedance of the daily limit of suspended solids. The areas impacted by the spills were immediately contained and subsequently remediated with no anticipated long-term effects for either event.
The Company is committed to preserving the long-term health and viability of the natural environment that surrounds its operations and projects. This includes investing in new initiatives to reduce the Company's environmental footprint with the goal of minimizing the impacts of our activities.
Community
Ongoing donations, medical support and infrastructure investments were provided to local communities, including:
A significant contribution to The Princess Margaret Cancer Foundation to create the new Alamos Gold Chair in Gastrointestinal Surgical Oncology. The Company will contribute $2 million to support the new Chair in making a meaningful impact on cancer research aimed at better understanding, diagnosing, and treating gastrointestinal cancers
Various sponsorships to support local youth sports teams, Women in Mining Canada, community events, and donations to local charities and organizations around the Company's mines including a donation for the King-Lebel Fire Department to purchase new protective gear to keep their communities safe
Continued to provide local community support including road maintenance, dust suppression, and water distribution to Matarachi and surrounding areas around the Mulatos Mine
The Company believes that excellence in sustainability provides a net benefit to all stakeholders. The Company continues to engage with local communities to understand local challenges and priorities. Ongoing investments in local infrastructure, health care, education, cultural and community programs remain a focus of the Company.
Governance and Disclosure
Published Alamos' 2023 Environmental, Social and Governance ("ESG") Report, outlining the Company's progress on its ESG performance across its operations, projects and offices
Completed Alamos' annual submission to the Carbon Disclosure Project ("CDP"), S&P's Corporate Sustainability Assessment ("CSA") and MSCI's One platform, outlining our ESG and climate performance
The Company maintains the highest standards of corporate governance to ensure that corporate decision-making reflects its values, including the Company's commitment to sustainable development.
(1) Frequency rate is calculated as incidents per 200,000 hours worked.
Outlook and Strategy
2024 Guidance(1)
Young-Davidson
Island Gold
Magino (1)
Mulatos
Lynn Lake
Total
Total Previous (5)
Gold production (000's ounces)
180 - 190
145 - 155
40-50
185 - 195
—
550 - 590
485 - 525
Cost of sales, including amortization (in millions)(4)
$745
$620
Cost of sales, including amortization ($ per ounce)(3)
$1,310
$1,225
Total cash costs ($ per ounce)(1)
$1,000 - $1,050
$550 - $600
$1,450 - $1,550
$925 -$975
—
$890 - $940
$825 - 875
All-in sustaining costs ($ per ounce)(1)
$1,250 - $1,300
$1,125 - 1,175
Mine-site all-in sustaining costs ($ per ounce)(2)(3)
$1,225 - $1,275
$875 - $925
$2,250 - $2,350
$1,000 - $1,050
—
Capital expenditures (in millions)
Sustaining capital(2)
$40 - $45
$50 - $55
$35 - $40
$3 - $5
—
$128 - $145
$93 - 105
Growth capital(2)
$20 - $25
$180 - $200
—
$2 - $5
—
$202 - $230
$232 - 260
Total Sustaining and Growth Capital (2) - producing mines
$60 - $70
$230 - $255
$35 - $40
$5 - $10
—
$330 - $375
$325 - 365
Growth capital - development projects
$25
$25
$25
Capitalized exploration(2)
$10
$13
$2
$9
$9
$43
$41
Total capital expenditures and capitalized exploration(1)
$70 - $80
$243 - $268
$37 - 42
$14 - $19
$34
$398 - $443
$391 - 431
(1) Guidance has been updated as per press release dated September 12, 2024. The guidance for the Magino mine is for Alamos' ownership period from July 12, 2024 to December 31, 2024.(2) Refer to the "Non-GAAP Measures and Additional GAAP" disclosure at the end of this press release and associated MD&A for a description of these measures.(3) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share-based compensation expenses to the mine sites. (4) Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of total cash cost guidance. (5) Previous guidance was issued on January 10, 2024 and related to Young-Davidson, Island Gold and Mulatos District only.
The Company's objective is to operate a sustainable business model that supports growing returns to all stakeholders over the long-term, through growing production, expanding margins, and increasing profitability. This includes a balanced approach to capital allocation focused on generating strong ongoing free cash flow while re-investing in high-return internal growth opportunities and supporting higher returns to shareholders.
The Company delivered another record operational and financial performance in the third quarter of 2024. Production increased 9% from the second quarter to a record 152,000 ounces, reflecting the inclusion of the recently acquired Magino mine, and strong performances from Island Gold and the Mulatos District.
Through record production, sales, and gold prices, third quarter revenues increased 9% from the second quarter and 41% from the prior year to a record $360.9 million. This contributed to strong ongoing operating margins, with $87.5 million of free cash flow generated in the quarter, and $218.8 million year-to-date while continuing to fund the Phase 3+ Expansion at Island Gold.
Production in the fourth quarter of 2024 is expected to be between 140,000 and 145,000 ounces at slightly lower costs, reflecting improved performance at Magino, offset by lower expected production at Mulatos. With a solid performance through the first nine months of the year, the Company remains well-positioned to achieve its updated full year production and cost guidance.
The integration of the Magino and Island Gold mines is well-advanced following the completion of the Argonaut acquisition in July. Given the close proximity of the Magino and Island Gold mines, the integration of the two operations is expected to create one of the largest and lowest cost gold mines in Canada and drive pre-tax synergies of approximately $515 million over the life of the mine through the use of shared infrastructure. This includes immediate capital savings, with the mill and tailings expansions at Island Gold no longer required, and significant operating savings through the use of the larger and more efficient Magino mill.
The acquisition has also de-risked the Phase 3+ Expansion, which continues to progress well. The shaft sink is down to a depth of 812 metres as of the end of October, more than halfway towards its ultimate planned depth of 1,373 metres. The expansion remains on track to be completed during the first half of 2026, which will be a significant driver of further free cash flow growth over the longer-term through increasing production and declining costs.
The integration of Island Gold and Magino has also created opportunities for further growth within the Island Gold District. Several of these opportunities were highlighted in the Island Gold District exploration update in July. Underground and surface exploration programs continue to extend high-grade mineralization beyond the extent of the main Island Gold deposit, as well as within the hanging wall and footwall. This is expected to drive another increase in high-grade Mineral Reserves and Resources at Island Gold. Near-mine exploration success also highlighted the longer-term upside opportunities to supply multiple sources of ore through the expanded Magino mill.
The Company continued to advance its other high-return internal growth opportunities during the quarter including completing the development plan for the PDA project in September. PDA is an attractive, low-cost, high-return underground project with an estimated after-tax IRR of 46% at a conservative $1,950 per ounce gold price and increasing to 73% at $2,500 per ounce. Based on its existing Mineral Reserves, PDA is expected to triple the Mulatos District mine life to 2035.
As outlined in the Mulatos District exploration update in September, there are excellent opportunities to enhance already strong economics and further extend the mine life. Drilling at PDA continues to extend high-grade mineralization and is expected to support further growth in Mineral Reserves and Resources. Additionally, drilling has defined multiple new high-grade zones below the previously mined Cerro Pelon open pit which represents a potential source of additional mill feed. An initial underground Mineral Resource at Cerro Pelon is expected with the year-end 2024 update.
The Company provided updated three-year production, operating and capital guidance in September incorporating the recently acquired Magino mine, a revised initial capital estimate for the Phase 3+ Expansion at Island Gold and initial capital estimates for PDA. Production guidance for 2024 was raised to between 550,000 and 590,000 ounces, a 13% increase from the initial guidance provided in January 2024 (based on the mid-point). The increase was driven by the inclusion of Magino, as well as increased production guidance for the Mulatos District. AISC guidance was also increased 11% relative to previous guidance, (based on the mid-point) with nearly all of the increase attributable to the inclusion of relatively higher cost production from Magino during the ramp up of the operation. Capital guidance for 2024 increased by 2% relative to previous guidance reflecting the addition of Magino, largely offset by capital savings at Island Gold through the integration of the two operations.
As previously announced, production guidance was also increased 21% for 2025, and 22% for 2026 to between 630,000 and 680,000 ounces reflecting the inclusion of Magino. AISC increased 12% on average but remains well below the industry average and are expected to decrease 10% from 2024 to between $1,100 and $1,200 per ounce in 2026. Through the development of Lynn Lake, the Company has the capacity to increase longer-term production to approximately 900,000 ounces per year with AISC decreasing below $1,100 per ounce. An evaluation of a longer-term expansion of the Magino mill to 15,000 to 20,000 tonnes per day is also underway which could support additional growth bringing production closer to one million ounces per year.
The Company remains well positioned to fund this growth internally with $291.6 million of cash and cash equivalents at the end of the third quarter, $542 million of total liquidity, and strong ongoing free cash flow. Cash and cash equivalents decreased slightly from the second quarter reflecting one-time expenditures related to the Argonaut acquisition. Additionally, the Company withdrew $250 million from its credit facility during the third quarter and used existing cash to repay the term loan, revolving credit facility, convertible debentures and gold prepaid advances, totaling $308.3 million, all inherited as part of the Argonaut acquisition.
Third Quarter 2024 Results
Young-Davidson Financial and Operational Review
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Gold production (ounces)
44,200
45,100
128,300
135,300
Gold sales (ounces)
42,966
45,498
127,833
134,744
Financial Review (in millions)
Operating Revenues
$106.0
$87.9
$294.8
$260.5
Cost of sales (1)
$63.9
$62.4
$196.0
$183.6
Earnings from operations
$98.4
$24.5
$153.8
$74.4
Cash provided by operating activities
$61.5
$43.2
$155.4
$125.8
Capital expenditures (sustaining) (2)
$15.8
$10.8
$35.1
$35.1
Capital expenditures (growth) (2)
$8.3
$0.3
$25.8
$4.3
Capital expenditures (capitalized exploration) (2)
$1.5
$1.2
$3.9
$3.8
Mine-site free cash flow (2)
$35.9
$30.9
$90.6
$82.6
Cost of sales, including amortization per ounce of gold sold (1)
$1,487
$1,371
$1,533
$1,363
Total cash costs per ounce of gold sold (2)
$1,033
$939
$1,080
$945
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
$1,406
$1,178
$1,358
$1,207
Underground Operations
Tonnes of ore mined
663,295
733,413
2,047,922
2,190,418
Tonnes of ore mined per day
7,210
7,972
7,474
8,024
Average grade of gold (4)
2.11
2.06
2.08
2.14
Metres developed
2,220
2,108
6,320
7,041
Mill Operations
Tonnes of ore processed
668,058
754,705
2,059,483
2,153,377
Tonnes of ore processed per day
7,261
8,203
7,516
7,888
Average grade of gold (4)
2.07
2.08
2.07
2.14
Contained ounces milled
44,555
50,393
136,996
148,380
Average recovery rate
92
%
90
%
91
%
90
%
(1) Cost of sales includes mining and processing costs, royalties and amortization.(2) Refer to the "Non-GAAP Measures and Additional GAAP Measures" disclosure at the end of this press release and associated MD&A for a description and calculation of these measures. (3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share-based compensation expenses. (4) Grams per tonne of gold ("g/t Au").
Operational review
Young-Davidson produced 44,200 ounces of gold in the third quarter, 2% lower than the prior year period due to lower tonnes processed. Production for the first nine months of the year totaled 128,300 ounces. With higher mining rates and grades expected to drive stronger production in the fourth quarter, Young-Davidson is expected to achieve the low-end of full year guidance.
Mining rates averaged 7,210 tonnes per day ("tpd") in the third quarter, 10% lower than the prior year period, reflecting lower scoop availability, as well as reduced paste availability during mill downtime in July. Mining rates improved in August and September and returned to guided levels of 8,000 tpd by the end of the quarter. Mining rates are expected to remain at this level through the rest of the year. Given the lower tonnes mined during the third quarter, higher-grade stopes planned for later in the quarter were deferred to the fourth quarter. Grades mined are expected to increase in the fourth quarter to be consistent with annual guidance.
Milling rates averaged 7,261 tpd in the third quarter, consistent with mining rates and 11% lower than the prior year period. Milling rates were lower in July due to a scheduled liner change and other unscheduled mill maintenance. Milling rates returned to planned levels in August and September, averaging 8,000 tpd. Mill recoveries averaged 92% in the quarter, consistent with annual guidance and slightly higher than the prior year period.
Financial Review
Revenues increased to $106.0 million in the third quarter, 21% higher than the prior year period, driven by higher realized gold prices, partially offset by lower ounces sold. Similarly, for the first nine months of the year, revenues of $294.8 million were 13% higher than the prior year period with higher realized gold prices partially offset by lower ounces sold.
Cost of sales were $63.9 million in the third quarter, marginally higher than the prior year period. For the first nine months of the year, cost of sales were $196.0 million, a 7% increase compared to the prior year period, primarily driven by labour inflation.
Total cash costs were $1,033 per ounce in the third quarter, an 10% increase compared to the prior year period as a result of higher unit mining costs impacted by lower mining rates. Total cash costs were $1,080 per ounce for the first nine months of the year, higher than the prior year period due to lower grades milled.
Mine-site AISC were $1,406 per ounce for the third quarter, above full year guidance, and a 19% increase compared to the prior year period due to higher total cash costs, as well as increased sustaining capital expenditures across lower ounces sold. For the first nine months of the year, mine-site AISC averaged $1,358 per ounce, above the prior year period, reflecting higher total cash costs. Total cash costs and AISC are expected to improve in the fourth quarter reflecting higher tonnes and grades milled.
Capital expenditures in the third quarter totaled $25.6 million, including $15.8 million of sustaining capital and $8.3 million of growth capital. Additionally, $1.5 million was invested in capitalized exploration during the quarter. Capital expenditures, inclusive of capitalized exploration, totaled $64.8 million for the first nine months of 2024.
Young-Davidson generated mine-site free cash flow of $35.9 million in the third quarter, and with $90.6 million realized through the first nine months of the year, the operation is on track to generate record free cash flow of over $100 million for the fourth consecutive year.
Island Gold Financial and Operational Review
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Gold production (ounces)
40,500
36,400
115,600
99,800
Gold sales (ounces)
38,679
35,255
112,575
97,165
Financial Review (in millions)
Operating Revenues
$95.1
$68.1
$259.2
$187.8
Cost of sales (1)
$33.4
$31.3
$97.5
$89.8
Earnings from operations
$60.4
$35.6
$157.7
$95.2
Cash provided by operating activities
$75.7
$38.3
$187.4
$125.0
Capital expenditures (sustaining) (2)
$7.7
$10.6
$33.4
$33.0
Capital expenditures (growth) (2)
$51.1
$34.5
$129.2
$118.4
Capital expenditures (capitalized exploration) (2)
$3.8
$2.4
$10.7
$7.8
Mine-site free cash flow (2)
$13.1
($9.2
)
$14.1
($34.2
)
Cost of sales, including amortization per ounce of gold sold (1)
$864
$888
$866
$924
Total cash costs per ounce of gold sold (2)
$592
$610
$592
$636
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
$794
$916
$892
$980
Underground Operations
Tonnes of ore mined
82,132
113,682
283,706
322,646
Tonnes of ore mined per day ("tpd")
893
1,236
1,035
1,182
Average grade of gold (4)
14.61
9.94
12.92
9.59
Metres developed
1,338
2,063
4,713
6,301
Mill Operations
Tonnes of ore processed
82,446
113,061
282,364
322,568
Tonnes of ore processed per day
896
1,229
1,031
1,182
Average grade of gold (4)
14.42
10.11
12.97
9.74
Contained ounces milled
38,218
36,767
117,764
101,029
Average recovery rate
99
%
97
%
98
%
97
%
(1) Cost of sales includes mining and processing costs, royalties, and amortization.(2) Refer to the "Non-GAAP Measures and Additional GAAP Measures" disclosure at the end of this press release and associated MD&A for a description and calculation of these measures. (3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share-based compensation expenses. (4) Grams per tonne of gold ("g/t Au").
Operational review
Island Gold produced 40,500 ounces in the third quarter of 2024, an 11% increase from the prior year period, driven by a significant increase in grades processed. Production for the first nine months of the year was 115,600 ounces, a 16% increase compared to the prior year period, also reflecting higher grades processed.
Underground mining rates averaged 893 tpd in the third quarter, a 28% decrease from the prior year period. As previously guided, mining rates were below annual guidance due to scheduled downtime in July to upgrade the underground ventilation infrastructure. The ventilation upgrade was successful; however, the ramp up of mining rates post completion of the upgrade in August was slower than anticipated but back to planned rates by the end of the month.
Mining rates increased to average 1,200 tpd in September and October, and are expected to remain at similar levels in the fourth quarter. The upgrade to the ventilation infrastructure was completed as part of the Phase 3+ Expansion project and will support increased development rates in the near term and higher underground mining rates over the longer term, following the completion of the expansion.
Grades mined averaged 14.61 g/t Au in the third quarter, 47% higher than in the prior year period, reflecting the increased contribution of higher-grade stopes within the 1025 mining horizon, as well as positive grade reconciliation. Grades are expected to return to within guided levels in the fourth quarter of 2024.
Mill throughput averaged 896 tpd for the quarter, consistent with the lower mining rates. Mill recoveries averaged 98.5% in the third quarter reflecting the higher grades processed.
In advance of the planned transition to a single optimized mill at the Island Gold District, 5,700 tonnes of Island Gold lower grade ore was blended with Magino ore through the Magino mill during the quarter. The batch test was successful with recoveries in-line with expectations and consistent with annual guidance for Island Gold ore of 97%. Optimization of the Magino mill is well underway with upgrades to the crushing circuit expected to be completed by year-end, after which ore from the Island Gold mine will be processed in the significantly larger and more cost-effective mill.
Financial Review
Revenues of $95.1 million in the third quarter were 40% higher than the prior year period, driven by the higher realized gold price and increase in ounces sold. Similarly, revenues of $259.2 million during the first nine months of the year were 38% higher than the prior year period.
Cost of sales of $33.4 million in the third quarter and $97.5 million for the first nine months of the year were 7% and 9% higher than the prior year period, respectively, due to the increase in gold ounces sold. On a per ounce basis, cost of sales were 3% and 6% lower in the third quarter and first nine months of 2024, respectively, as compared to the prior year periods due to higher grades processed.
Total cash costs were $592 per ounce in both the third quarter and the first nine months of the year, lower than the prior year periods and consistent with guidance. Mine-site AISC of $794 per ounce and $892 per ounce for the third quarter and first nine months of the year, respectively, were lower than the prior year periods, driven by higher grades processed. Costs for the full year are expected to be in line with annual guidance.
Total capital expenditures were $62.6 million in the third quarter, including $51.1 million of growth capital and $3.8 million of capitalized exploration. Growth capital spending remained primarily focused on the Phase 3+ Expansion shaft site infrastructure, paste plant, and shaft sinking, which advanced to a depth of 700 m by the end of the third quarter and is tracking well to plan. Additionally, following the completion of the acquisition of the Magino mine in the third quarter, detailed engineering commenced on the Magino mill expansion to 12,400 tpd. The expansion of the Magino mill is expected to be completed by mid-2026 to coincide with the completion of the Phase 3+ Expansion at Island Gold.
Mine-site free cash flow was $13.1 million for the third quarter despite the significant capital investment related to the Phase 3+ Expansion. At current gold prices, cash flow generated at Island Gold is expected to continue funding the Phase 3+ Expansion capital. The operation is expected to generate significant free cash flow from 2026 onward with the completion of the expansion.
Magino Mine Financial and Operational Review
July 12 - September 30,
2024
Gold production (ounces)
16,800
Gold sales (ounces)
14,766
Financial Review (in millions)
Operating Revenues
$37.0
Cost of sales (1)
$38.5
Loss from operations
($1.8
)
Cash used by operating activities
($13.6
)
Capital expenditures (sustaining) (2)
$8.5
Capital leases (sustaining) (2),(5)
$5.4
Capital expenditures (growth) (2)
$—
Capital expenditures (capitalized exploration) (2)
$—
Mine-site free cash flow (2),(5)
($22.1
)
Cost of sales, including amortization per ounce of gold sold (1)
$2,607
Total cash costs per ounce of gold sold (2)
$2,025
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
$3,007
Open Pit Operations
Tonnes of ore mined - open pit (4)
818,237
Tonnes of ore mined per day
10,228
Total waste mined - open pit (4)
2,882,392
Total tonnes mined - open pit
3,700,629
Waste-to-ore ratio
4.52
Average grade of gold (4)
0.90
Mill Operations
Tonnes of ore processed
550,475
Tonnes of ore processed per day
6,881
Average grade of gold processed (4)
0.92
Contained ounces milled
16,370
Average recovery rate
95
