10/28/2021

speaker
Operator
Call Operator

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

speaker
Jamie Porter
Chief Financial Officer

Thank you, Operator, and thank you, everyone, for attending Alamosa's third quarter 2021 conference call. In addition to myself, we have on the line today John McCluskey, President and CEO, and Peter McPhail, Chief Operating Officer. We will be referring to a presentation during the conference call that's available through the webcast and on our website. I would also like to remind everyone that our presentation will be followed by a Q&A 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. Now I'll turn it over to John to provide you with an overview of the quarter.

speaker
John McCluskey
President and CEO

Thank you, Jamie, and good morning, everyone. I'd like to start with slide three. Our third quarter was marked by strong, ongoing performances at our Canadian operations, offset by short-term challenges at mulattoes as it enters a transitional period. Consolidated gold production of 104,700 ounces was lower than guided, While total cash costs and all-in sustaining costs were broadly in line with expectations, both were above our initial full-year guidance and reflecting the impact of stronger-than-budgeted Canadian dollar. A key highlight in the quarter was Young-Davidson averaging record mining rates of 8,000 tons per day, producing 50,000 ounces of gold and generating $29 million in free cash flow. The mine is performing very well, and we expect it to be a strong, free cash flow generator for a very long time. Mulatto's had a challenging quarter, with an above-average rainy season and slower-than-anticipated recoveries from stockpiled ore, affecting both production and costs. With Cerro Palon winding down, stockpiles will make up a larger proportion production for mulattoes until La Yaqui Grande starts supplying low-cost production in the third quarter of 2022. Given the higher costs associated with processing this stockpile door, we expect costs to increase in the fourth quarter and through the first half of next year. Mulattoes costs are expected to decrease in the second half of 2022 and will be significantly lower in 2023 as La Yaqui Grande ramps up. Looking to the fourth quarter, we expect production to increase at each of our operations, reflecting higher grades at Young-Davidson and operational improvements at Mulattoes. Nevertheless, with the third quarter production shortfall at Mulattoes, we are reducing our annual production guidance at the operations by 15,000 ounces, or 3% on a consolidated basis, to a range of 455,000 to 495,000 ounces. Production guidance for Young-Davidson and Island Gold remain unchanged, with both operations continuing to perform well and on track to achieve full-year guidance. Given the ongoing impact of the stronger Canadian dollar and higher-than-planned costs at Mulatto's, we are also increasing our consolidated total cash cost guidance to a range of $790 to $810 per ounce and all-in sustaining costs to a range of $1,120 to $1,140 per ounce. Excluding the impact of the stronger Canadian dollar, costs through the first three quarters of this year are consistent with our initial guidance. Moving to slide four, while we encountered some challenges in the third quarter, our strong long-term outlook remains intact. At Liaki Grande, construction is advancing well and remains on budget and on schedule to achieve commercial production in the third quarter of 2022. At Island Gold, the phase three expansion is progressing with the focus on permitting, detailed engineering, and contract tendering. We also continue to have success growing the deposit and adding value through the drill bit with another exploration update planned in the fourth quarter. Finally, at Lynn Lake, we continue to advance permitting and expect this to be completed by the middle of next year, which would enable us to make a construction decision thereafter. Collectively, these high-return organic growth projects support our strong outlook with production potential of 750,000 ounces per year by 2025, a significantly lower all-in sustaining cost of around $800 per ounce. Given our solid balance sheet and ongoing cash flow generation, we can fund all this growth internally while supporting strong, ongoing returns to shareholders through our dividend and share buybacks. I'll now turn the call over to our CFO, Jamie Porter, to review our financial performance.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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