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Alamos earnings rise as Island Gold outperforms

2nd May 2018

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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VANCOUVER (miningweekly.com) – Miner Alamos Gold has swung back into the black for the first quarter, mainly as a result of a better-than-expected performance from the recently acquired Island Gold mine, in Ontario.

For the three months ended March 31, the Toronto-based company produced 129 000 oz of gold, as Island Gold put in its first full quarter since the company bought it from Richmont Mines.

Headline earnings for the period came in at $12.3-million, or $0.03 a share, which was on par with analyst forecasts, according to data provided by Thompson Reuters.

Gold sales topped 130 000 oz, with cash costs for the period falling 5% to $789/oz, and all-in sustaining costs (AISC) decreasing by 7.8% year-on-year to $935/oz.

Higher-than-expected production at Island Gold was mainly driven by higher grades at 11.1 g/t processed, and modest contributed upsides from Mulatos and El Chanate were partially offset by lower output at Young-Davidson. At the Young-Davidson mine, total cash costs were materially higher at $824/oz, compared with $710/oz a year earlier, as underground mining rates were affected by paste-fill issues.

Alamos reported that net cash improved to $232-million, from $201-million reported in the fourth quarter ended December 31, mainly reflecting the divestiture of the company’s holdings in AuRico Metals and Corex Gold, generating gross proceeds of $25-million.

Alamos increased its 2018 production guidance to 490 000 oz to 530 000 oz, from the 480 000 oz to 520 000 oz forecast previously, as Island Gold is now expected to produce between 95 000 oz and 105 000 oz, reflecting better first-quarter production from higher grades processed. Mulatos is also expected to produce 155 000 oz to 165 000 oz, up from 150 000 oz to 160 000 oz.

Alamos stated that production of about 125 000 oz was expected in the current quarter and that AISC would be slightly higher sequentially, reflecting increased sustaining capital.

In Turkey, Alamos noted that it does not expect to receive its outstanding business opening and operations permit ahead of the recently announced snap Presidential election scheduled for June 24. As a result, Alamos has revised its Kirazlı capital spending budget in 2018 to $25-million, from $100-million previously, and noted that construction activities planned for this year would probably be delayed.

Alamos noted that updated capital spending guidance may be provided once the permit is received. During the first quarter, Kirazlı activities focused on road relocation, tree clearing and power line/water reservoir construction.

The day following the release of its first-quarter earnings, Alamos equity gained as much as 6.5% on the TSX on Wednesday, to change hands at C$7.25 a share.

Edited by Creamer Media Reporter

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