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Alamos Gold Inc.
7/29/2021
Good morning. I would like to turn the meeting over to Mr. Jamie Porter, Chief Financial Officer. Please go ahead.
Thank you, Operator, and thank you to everyone for attending Alamos' second quarter 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. We will be referring to the presentation during the conference call that is available through 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 U.S. dollars and less otherwise noted. With that, I'll turn it over to John to provide you with an overview.
Thank you, Jamie, and welcome, everyone. I'll begin with slide three. We have a solid first half of 2021 highlighted by a strong operational performance at Young-Davidson and remain well positioned to achieve our full-year guidance. In the second quarter, we produced 114,200 ounces of gold, a total cash cost of $791 per ounce, and all its sustaining costs of $1,136 per ounce. As previously communicated, costs were above annual guidance in the quarter, reflecting the stronger Canadian dollar. It's been a year since we completed the lower mine expansion at Yelda Davidson, and that infrastructure continues to perform well, meeting or exceeding targeted mining rates each quarter. Looking ahead, we expect Young-Davidson to ramp up to its designed mining rate of 8,000 tons per day in the third quarter, contributing to stronger company-wide production in the second half of 2021. We generated company-wide offered cash flow of $97 million in the second quarter, 117% increase from a year ago, with the prior year impacted by COVID-19-related downtimes Young Davidson and Island Gold continued to generate solid, ongoing free cash flow, which offset the increase in capital spending in the quarter, primarily at the Aki Grande. We expect stronger company-wide free cash flow in the second half of the year, reflecting higher gold production and sales. Moving on to slide four, we're making good progress on our strong pipeline of North American projects, Construction is in full swing at Liaki Grande and remains on track to achieve commercial production in the third quarter of 2022. At Lynn Lake, we continue to demand permitting and expect this to be completed by the middle of next year, which would enable us to make a construction decision thereafter. Exploration activities at Lynn Lake also ramped up in the quarter, focusing on drilling in proximity to the known deposits, as well as two regional targets. Development activities continue to ramp up on the Phase 3 expansion at Island Gold, focusing on surface infrastructure, permitting, and detailed engineering. In February, we announced a 1 million ounce increase in high-grade reserves and resources as of the end of 2020, all of which is upside to the Phase 3 expansion study published last year. We followed that up in June with another exploration update which included the best-hold drill to date, the down-hold plunge from existing resources in proximity to our planned shaft. These results represent ongoing exploration success and they clearly demonstrate that this deposit will continue to grow and highlight the significant upside potential that I think the market is beginning to appreciate These projects underpin our strong outlook with a 50% production growth potential to approximately 750,000 ounces per year by 2025. That significantly lowered all its sustained costs of around $800 per ounce. This will support peer-leading free cash flow growth over the long term. We have more than ample capacity to fund this growth internally while continuing to generate solid free cash flow and return more capital to shareholders through our ongoing dividend which we have increased by nearly 70% over the past year. And with that, I will conclude my comments and turn the call over to CFO, Jamie Porter, who will give you a brief update on our financial performance for the quarter.
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