TORONTO (miningweekly.com) – Fast-growing Alamos Gold could start gold production from its newly acquired assets in Turkey by early 2013, CEO John McCluskey said on Tuesday.

The company is also looking for further gold acquisitions, and will consider both development-stage and producing assets, as well as potential mergers with a similar-sized company, he said in an interview at the company's Toronto head office.

Alamos, which owns and operates the Mulatos mine in Mexico, bought the Agi Dagi and Kirazli gold projects from Teck Resources and Fronteer Development Group earlier this year, for $40-million in cash and four-million shares.

Although the acquisition has only just closed, the company is well advanced on scoping studies, which it expects to have completed soon, McCluskey said.

“We did a fair amount of work as part of our due diligence process and we just kept that work going during the latter part of the negotiations and the acquisition, we never really stopped working on it.

“And so it effectively led right into a scoping study.”

The environmental-impact assessment and permitting process will likely get under way in the first quarter of 2011 and, assuming all the approvals are received, Alamos could be ready for a construction decision on the projects later in 2011.

“And so we are looking for production to come out of those projects by some time early 2013.”

PREPARED TO GET AGGRESSIVE

As far as future acquisitions go, McCluskey said he continues to look, and will be prepared to enter into hostile bidding situations if necessary to gain a lucrative asset.

Experience has shown that it can be difficult and frustrating to get potential sellers to sit down at the table and talk, he commented.

“Last year, we must have approached half a dozen different companies to discuss the possibility of a merger or an acquisition. And at the end of the day, we completed one,” McCluskey said.

“But we will get more aggressive as time goes on if it's something that we feel is undervalued, if it's something we like, and if there is no other way of going about it.”

Alamos will consider a broad range of targets, as long as the asset is primarily a gold deposit, and not in a risky political jurisdiction, he said.

“We are willing to cast a wide net...but we want to stay in regions that we consider to be politically safe.”

It could also make sense to merge with a company with a similar gold production profile as Alamos, McCluskey suggested.

“We'd theoretically look right up to a merger of equals,” he said.

“If we were to merge with a similar-sized company, we'd clearly make our way into the midtier ranks of the market with that acquisition.”

McCluskey said he would consider all types of transactions, from all-paper, which would be likely if the company bought a producing asset or merged with a rival, to all-cash, if it bought a smaller development project.

Alamos is certainly well funded, with $147-million in cash and short-term investments at March 12, plus strong cash flows from its low-cost Mexican operation.

Exploration and development work planned for this year will actually be funded entirely from cash flow, he said.

Back in Mexico, Alamos completed a project to close its crushing circuit at Mulatos late last year, which is expected to boost recoveries from the operation going forward.

The company is also looking at an eventual 33% throughput expansion at the Mulatos mill, and will have a scoping study ready on the options in the next couple of weeks.

Last year, the firm approved the development of the high-grade Escondida zone at Mulatos, which will include a 500 t/d milling operation, where high-grade ore will be processed through a gravity circuit with the mill tailings being leached on the existing heap leach pad.

Prestripping for the Escondida zone is under way and in fact slightly ahead of schedule, with first production forecast for late 2011 or early 2012, McCluskey said.

The company also has several other satellite deposits in the district, at various stages of delineation, at least a couple of which will be developed as stand-alone operations, as soon as Alamos has acquired the surface rights to the land.

The more advanced ones are relatively small, but will definitely be profitable, he said.

Alamos, which published fourth-quarter and annual results on Tuesday morning, earned $20,1-million in the last three months of 2009, compared with $9,1-million a year ago.

The company produced a best-ever 48 000 oz in the fourth quarter, at a total cash cost of around $335/oz, and beat its own forecasts for production in 2009.

This year, the Mulatos mine is expected to produce between 160 000 oz and 175 000 oz, at a total cash cost of $338/oz.

Shares in Alamos Gold rose 5% on Tuesday, to C$14,45 apiece by 16:10 in Toronto.

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