10/27/2022

speaker
Operator
Conference 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 thanks to everyone for attending Alamos' third quarter 2022 conference call. In addition to myself, we have on the line today John McCluskey, our President and Chief Executive Officer, and Luc Guimond, our 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'd 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 Senior 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 an overview of the quarter.

speaker
John McCluskey
President and Chief Executive Officer

Thank you, Jamie. To start off the call, I want to introduce Luc Guimond, who was appointed Chief Operating Officer in September. Luc has a long history with Alamos, a deep knowledge of our operations, and an excellent track record leading the development and operation of a diverse range of gold mines. Luc has hit the ground running, as can be seen by his solid third quarter operational results, and we expect to continue with even stronger results as we approach the fourth quarter. I'd also like to recognize Peter McPhail for his leadership and invaluable contributions to the company as our former Chief Operating Officer. Peter oversaw our growth into an intermediate producer while driving significant improvements across our operations, such that our outlook has never been stronger. Peter retired in September, but will be staying with the company as a consultant to ensure a seamless transition. behalf of the entire alamos team i'd like to thank peter and i look forward to his ongoing contributions over the next year starting with site three we had a strong third quarter led by another solid performance from young davidson and the standout result from layaki grande in its first full quarter of operation production of 123 400 ounces of gold was near the top end of guidance and represented a 19% increase from the second quarter. Total cash costs of $868 per ounce and all-in sustaining costs of $1,178 per ounce were both below our annual guidance and down approximately 7% from the first half of the year. Young Davidson continues to be a steady performer, generating $23 million of mine site free cash flow in the quarter and on pace to generate $100 million for the second consecutive year. La Yaqui Grande is ramping up, having doubled production from the Mulatto District quarter over quarter, and is the key driver of our consolidated production growth and decrease in costs. Looking at slide four, we expect a strong performance to continue into the fourth quarter, with La Yaqui Grande driving another increase in our production to a range of 125,000 to 135,000 ounces. Despite industry-wide inflation, we also expect a further decrease in our costs in the fourth quarter, reflecting the ramp-up of low-cost production at Liaki Grande, higher grades at Island Gold, and the weaker Canadian dollar. Combined with our strong year-to-date performance, we're on track to achieve our full-year production and cost guidance. We're not immune to the inflationary cost pressures being felt across the industry, but do have several key things working in our favor, the first being the nature and location of our operations. Approximately 70% of our production is coming from underground mines in Ontario, which are less energy intensive, have smaller mobile fleets, and are connected to clean grid power, meaning we are less reliant on fossil fuels. Given the majority of our production is coming from Canada, we are also benefiting from the weaker Canadian dollar. Lastly, all of the production growth we are bringing on is lower cost. Looking at slide five, the Aki Grande will be a key driver of higher production and lower costs over the next few years. Island Gold is going to continue that trend over the long term through the phase three expansion. I was on site last week and saw the progress firsthand with the work in the shaft area really starting to take shape. The shaft has been collared precinct of the shaft is more than 90% complete and the concrete foundation work and the surface infrastructure is well underway. This expansion will be a game changer for the operation and the company. Following completion of the shaft in 2026, we expect our annual production to increase above 600,000 ounces per year with a further decrease in costs. Longer term, We have the capacity to increase our annual production to approximately 800,000 ounces per year with the development of Lynn Lake. We're taking a staged approach to developing our growth projects, and currently we're focused on Island Gold such that we can continue to fund this growth internally while generating solid free cash flow over the next several years. 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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