Alamos Gold Inc.

Good morning. I would now like to turn the meeting over to Mr. Jamie Porter, Chief Financial Officer. Please go ahead, Mr. Porter.

Thank you, operator, and thanks to everyone for attending Alamos' fourth quarter and year-end 2021 conference call. In addition to myself, we have on the line today John McCluskey, President and CEO, Peter McPhail, Chief Operating Officer, and Scott R.G. Parsons, our Vice President of Exploration. To address any questions with respect to our reserve and resource update, we also have on the line today Chris Boswick, our Senior Vice President of Technical Services. We will be referring to a presentation during the conference call that's available to the webcast and on our website. I would also like to remind everyone that our presentation will be followed by a question and answer session. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, news release, and MD&A, as well as the risk factors set out in our annual information form. Technical information in this presentation has been reviewed and approved by Chris Boswick, our Vice President of Technical Services, and a qualified person. Also, please bear in mind that all of the dollar amounts mentioned in this conference call are in United States dollars, unless otherwise noted. With that, I'll turn it over to John to provide you with an overview.

Thank you very much, Jamie. And good morning, everyone, and thank you for attending the call. Starting with slide three, We closed 2021 with strong performances at our Canadian operations. Young-Davidson had a record year, achieving record mining rates and generating $100 million of free cash flow. Island Gold had another solid year operationally, generating $53 million of free cash flow, even with a ramp-up in spending on our Phase 3 expansion. This offset a challenging year at Mulatto's, with the operation working through a temporary period of lower production and higher costs, until the Yaqui Grande comes on in the third quarter. With a stronger fourth quarter, we met revised full-year guidance, producing 457,000 ounces of gold at a cash cost of $794 per ounce and all-in sustaining costs of $1,135 per ounce. Our production increased 7% from a year ago, and combined with a higher gold price and strong operating margins, we generated record operating cash flow of $411 million for the year. We had a strong year from an exploration perspective as detailed in our reserve and resource update earlier this week. Reserves increased at all three of our operations, driving a 4% increase in our global reserves to 10.3 million ounces. Grades also increased 5% as we continue to increase the quality of our overall reserve with higher grade additions at Island Gold and Mulatto's. Island Gold continues to grow and achieve the key milestone with high grade reserves and resources increasing 8% to 5.1 million ounces net of depletion. Since we acquired Island in 2017, reserves and resources have increased 3.2 million ounces net of depletion including 1.4 million ounces since the publication of the Phase III expansion study in 2020, highlighting the significant ongoing growth and upside to this operation. This growth will be incorporated into an updated Phase III mine plan to be released mid-year, and we expect that this will demonstrate a significantly more valuable operation. Now, turning to slide four, As outlined in our inaugural three-year guidance release in January, we expect stronger production at substantially lower costs in the years ahead. We're expecting similar production of approximately 460,000 ounces in 2022, with a temporary increase in all in-sustaining costs to approximately $1,215 per ounce. We expect Liaki Grande to drive lower costs in the second half of 2022. By 2024, Layaki Grande... Excuse me. You'll just bear with me for a second. By 2024, Layaki Grande and higher grades at Island Gold are expected to drive a 4% increase in production and an 18% decrease in all-in sustaining costs. to $1,000 per ounce. Combined with a 23% decline in capital spending at our operating mines in 2023 with development of Liaki Grande completed, we expect growing profitability from our operating mines over the next three years. Turning now to slide five, looking beyond 2024, we expect a further increase in production and decrease in costs. Between the completion of the Phase 3 expansion at Island Gold and development of Lynn Lake, we have the capacity to increase our rate of production to approximately 750,000 ounces at substantially lower all-in sustaining costs of $800 per ounce by 2025. With our strong balance sheet and ongoing cash flow generation, we can fund all this growth internally, all the while providing solid, ongoing returns to shareholders. Between our dividend and share buyback, we returned $51 million to shareholders in 2021. While we remained focused on our long-term growth objectives, we also expect to deliver on several key catalysts in 2022. Mid-year, we expect to provide an updated mine plan for the Island Gold operation that will showcase a significantly more valuable operation than was outlined in the Phase 3 study. Lyaki Grande remains on track to achieve commercial production and start driving our costs lower in the third quarter. Finally, we look forward to the Lynn Lake EIS approval and subsequent construction decisions in the second half of the year. I'll now turn the call over to our CFO, Jamie Porter, to review our financial performance. Jamie?

Thank you, John. Moving on to slide six. We sold 458,000 ounces of gold for record revenues of $824 million in 2021. As John noted, Young-Davidson had an excellent year, generating a record $100 million in mine site free cash flow. With the operation consistently operating at its expanded design capacity, we look forward to similar free cash flow generation over its 15-year reserve life and beyond. Fourth quarter revenues were $203 million from sales of 113,000 ounces at an average realized price of $1,798 per ounce. As previously guided, total cash costs of $843 per ounce and all unsustaining costs of $1,237 per ounce both increased from earlier in the year, reflecting the temporary increase in cost of mulattoes. For the full year, total cash costs and all unsustaining costs were in line with revised guidance. Operating cash flow before change to the non-cash working capital was $92 million or $0.23 per share in the fourth quarter. This was down 27% year-over-year, primarily reflecting lower gold price and lower gold sales. For the full year, operating cash flow before change to the non-cash working capital was a record $411 million or $1.05 per share, a 7% increase from the prior record set in 2020. Our reported net earnings of $30 million in the fourth quarter, or $0.08 per share, included an unrealized foreign exchange loss of $3 million recorded within deferred taxes in foreign exchange and other losses of $4 million. Excluding these items, our adjusted net earnings were $37 million, or $0.09 per share. Our full-year adjusted net earnings were $162 million, or $0.41 per share, representing a 3% increase relative to 2020. Capital spending totaled $92 million in the fourth quarter, including $32 million of sustaining capital, $51 million of growth capital, and $8 million of capitalized exploration. For the full year, capital expenditures and advances of $358 million were at the lower end of our guidance. Free cash flow was negative $4 million in the fourth quarter and effectively flat for the year, reflecting higher capital spending given the construction of La Yaqui Grande and the Phase III expansion to Island Gold. We expect lower capital spending in the second half of this year with the completion of construction of La Yaqui Grande. Combined with lower costs, we expect stronger free cash flow starting in the third quarter of this year. In the fourth quarter, we also repurchased a net profits interest royalty for $16 million, which applied to the majority of the reserves and resources at Island Gold. Given the significant growth of the deposit over the last several years and ongoing growth potentials, The repurchase of this royalty has significantly enhanced the long-term value of the operation. We returned $51 million to shareholders in 2021, including $39 million through dividends and $12 million via share buybacks. These returns were up 63% from 2020 and represent a combined yield of 1.8% at our current share price. We expect similar returns in 2022 to be underpinned by our ongoing dividends. which amounts to an annual rate of $0.10 per share. We will continue to look for opportunities to be active on our share buyback. We remain debt-free and ended the year with $173 million in cash, $24 million of equity securities, and $500 million of undrawn credit capacity. Strong ongoing cash flow generation combined with our solid balance sheet positions us well to fund our high-return growth projects internally. With that, I'll turn the call over to our Chief Operating Officer, Peter McPhail, to provide an overview of our operations.

Thank you, Jamie. Moving to slide 7, Young-Davidson is performing to its potential and had a strong finish to the year, producing 51,900 ounces and generating near-record mine site free cash flow of $30 million in the fourth quarter. Full-year production totaled 195,000 ounces in line with guidance, generating record mine site free cash flow of $100 million. Mining rates averaged a record 8,240 tons per day in the fourth quarter and 7,900 tons per day for the year. The operation is demonstrating it can consistently operate at its design rate of 8,000 tons per day, and we expect this to continue. Both cash costs of $775 per ounce and mine site all-interstanding costs of $1,017 per ounce in the fourth quarter continue to decrease through the year, reflecting higher grades and lower unit mining costs. On a full year basis, costs were in line with revised guidance. As previously guided, we expect similar production in 2022 up between 185 and 200,000 ounces, with total cash costs and mine site own sustaining costs increasing 3% and 7%, respectively. The cost increase primarily reflects cost inflation, partially offset by operational improvements. We expect sustaining and growth capital spending to decrease 27% to approximately $60 million in 2022, with a big part of that decrease coming through the completion of construction of our new Life and Mind tailings facility in the fourth quarter of last year. We expect Young Davidson to generate $100 million in free cash flow in 2022 and annually over the long term. Over to slide eight, Island Gold had another solid quarter, producing 37,500 ounces, a total cash cost of $575 per ounce, and mine site on sustaining cost of $871 per ounce. Full year production of 141,000 ounces was in line with the initial guidance and total cash costs and all the sustaining costs were in line with revised guidance. The operation generated 16 million of mine site free cash flow in the quarter and 53 million for the full year, net of a significant ongoing exploration spend and the ramp up in spending on phase three expansion. Looking forward to 2022, we expect Island Gold to produce 125 to 135,000 ounces, consistent with what we outlined in the Phase 3 study. As with Young-Davidson, we are expecting an increase in costs from 2021, primarily reflecting cost inflation and slightly lower planned grades. Work on the Phase 3 expansion is expected to continue to ramp up in 2022, with a corresponding increase in capital spending as outlined in the study. Permitting is expected to be completed in the first half of the year, with construction activities focused on surface works and preparation for the trash sink, with the pre-sink expected to start mid-year. We're also working on an updated mine plan to be released mid-year, which will incorporate the significant increase in reserves and resources since the Phase 3 study was completed. This updated mine plan will include an optimization of the mining sequence, given the higher-grade additions in the island east in proximity to the current infrastructure and the plan shaft. Moving on to slide 9, Mulatto's produced 23,100 ounces in the fourth quarter as the operation continued to be impacted by longer leach times for stockpiles or staff and lower production for Cerro Pallone, which was depleted in the quarter. As a result, full-year production of 121,300 ounces was lower than revised guidance. Costs were up sharply in the quarter as previously guided and were in line with revised guidance on full-year basis. Bellatos is expected to produce 130,000 to 145,000 ounces in 2022, with approximately 65% coming in the second half of the year at substantially lower costs, with the start of low-cost production from Layaki Grande. We expect all and sustaining costs to decrease 30% from the first half of the year to $1,175 per ounce in the second half, with continued improvement in 2023, reflecting a full year from Layaki Grande. Over to slide 10. As you can see from these photos, La Yaqui Grande construction is progressing very well and remains on schedule. Capital spending was $26 million in the fourth quarter, bringing the full year spend to $102 million. All required major components are now on site. Pre-stripping of the pit is well advanced. The heap leach facility is at 85% completion, and the crushing circuit is more than 90% complete. We expect to begin commissioning the circuit and stacking more in the second quarter, with the operation on track to achieve commercial production in the third quarter of this year. As we saw with LIACI Phase 1, this is a higher-grade and significantly lower-cost project that will dramatically improve the production and cost profile of mulattoes starting in the second half of this year. I'll now turn the call over to Scott Parsons, our VP Exploration, to discuss the reserve and resource update.

Scott Parsons Thank you, Peter. On slide 11, we had another excellent, successful year with respect to exploration. Reserves were more than replaced at each of our three operations. driving a 4% increase in global reserves to 10.3 million ounces, net 582,000 ounces of depletion. The overall quality of this reserve also improved, with grades increasing 5%, reflecting higher-grade additions at Island Gold and Mulattoes. The growth was driven by a 5% increase in reserves at Young-Davidson, extending its reserve life to 15 years, a 2% increase at Island Gold, with grades increasing 4%, and a 14% increase at Mulattoes, with grades increasing 32%. The higher-grade additions in Mulatto's reflect a new underground reserve at PDA, which is located adjacent to the main Mulatto's pit. Global measured and indicated resources decreased to 4.5 million ounces from 6.9 million ounces, reflecting the conversion to mineral reserves at PDA in Young-Davidson and a reduction of non-pit-constrained resources from the Mulatto's main pit. Global inferred resources were relatively flat at 7 million ounces, with grades increasing 6%, reflecting high-grade additions at Island Gold. On slide 12, Island Gold continues to grow and achieved a key milestone with combined reserves and resources increasing 8% to 5.1 million ounces of high-grade gold. Reserves increased for the ninth consecutive year to 1.3 million ounces net of depletion, with grades also increasing 4% to over 10 grams per ton. The additions were achieved through both the discovery and conversion of resources in the gap between the high-grade reserve and resources in the upper and middle portions of Island East. This new reserve block contains over 200,000 ounces, grading 12.6 grams per ton. Given its proximity to the existing underground infrastructure, there is potential to bring this higher-grade ore into the mine plan in the next three years, providing further near-term production upside. Over to slide 13. Our primary focus of Island Gold continues to be on expanding mineralization and defining new near-mine resources, and this is where we are having the most success. Inferred resources increased 8% to 3.5 million ounces, with grades decreasing slightly to 13.6 grams per ton. The majority of this increase came in the lower portion of Island East, where we added 424,000 ounces to a high-grade inferred block that now contains 2 million ounces, grading 15.5 grams per ton, all of this in proximity to the plant shaft. We also added a new inferred resource block totaling 39,000 ounces, 130 meters down plunge from this large high-grade inferred resource block. This also extended high-grade resources more than 270 meters to a depth of 1,750 meters. This high-grade block is part of the same E1E zone and remains open laterally and up and down plunge, which highlights the significant potential for further resource growth at Island Gold. On slide 14, Combined reserves and resources at island have nearly tripled from the 1.8 million ounces at the time of acquisition to now total 5.1 million ounces. This includes a 1.4 million ounce or 37% increase since the release of the Phase 3 expansion study, which we'll be incorporating into an updated mine plan to be released mid-year. We expect this will demonstrate a further increase to the value of the operation. These are high margin, high grade ounces we're adding in a very attractive discovery cost, which has averaged $11 per ounce over the last three years. Given our ongoing exploration success, we see excellent opportunities for this to continue, with $40 million budgeted for exploration in 2022, more than half of which is allocated to Island Gold. And with that, I'll turn the call back over to John.

Thank you very much, Scott. That concludes our formal presentation and I'll now turn the call back to the operator who will open the lines for your questions.

Thank you. We will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please lift your handset before making your selection. If you have a question, please press star 1 on the device's keypad. You may cancel your question at any time by pressing star two. So please press star one at this time if you have a question. There will be a brief pause while the participants register. We thank you for your patience. The first question is from Kerry Smith from Haywood Securities. Please go ahead. Your line is open.

Thanks, operator. Maybe first question for Peter. Just on the new mine plan for Ireland that's mid-year, I'm assuming you're going to still have that 2,000 ton a day mill in that plan, so you're just basically going to be bringing forward some better grade that you're finding in the island east. Is that correct?

Yeah, that would be. Yeah, we're looking at that. Kerry, we're also looking at, you know, does it make sense to, you know, to bump it up slightly? You know, so we're looking at all those things.

Okay, okay. And just on mulattoes on PDA, what is the status of bringing that underground reserve into the mine plant? Would the timing on that be, Peter?

Yeah, that's probably... three years away, you know, um, some further, uh, study work to do on it and, and, uh, uh, you know, to get that, to get that going.

Okay. And, uh, you had pretty good mining costs at YD in the corridor, but you had pretty good mining rates as well. You're in well over 8,200 tons a day. Is that 42 ton, $42 a ton Canadian? Is that kind of a the number you think you could do at 8,000 tons a day, or what would the going forward number look like?

Yeah, I'm not sure. I think we probably provided guidance on that. It's, you know, I think if you go back three years when we, you know, did that, you know, in person there. I think we were predicting 8,000 tons a day to be in the low 40s. I think, you know, with some inflation and whatnot, that creeps up to like the mid 40s. But that's where I expect it to be.

Okay. Okay. That's helpful. And just remind me, the CapEx for Lynn Lake from 27 Feasibility, can you remind me what that number was?

Oh, I don't have it in front of me.

Terry, it was roughly $350 million.

$350, okay, okay. And will you update that number when you make the construction decision, or how will you sort of look at that?

Of course, we've got to mature it. We put out an updated technical report on... you know, making a positive construction decision, and we would certainly provide an updated capital cost estimate.

Okay. Okay, that's great. I think just maybe one last question, if I could. The exploration budget is basically down $10 million from this year versus last year, and it seems like most of it, I guess, is probably an island. But is that just a function of your ability to to spend the dollars, or is it like the budget might be a bit higher there this year?

I'm curious, Scott. I can take that. The main difference from last year is at Island, we've ramped up the number of surface directional rigs we have because we've removed the underground directional drilling from the 2022 budget. So that's about a $10 million delta between The 2021 budget is the switching over to surface drilling from the underground directional drilling and continuing with underground conventional drilling as planned.

Okay. Okay, that's great. Thank you.

Thank you. Once again, please press star 1 on the device's keypad if you have a question. There are no further questions registered. Thank you. The call has now ended. Please hang up your line. Thank you for your participation.