TORONTO, ONTARIO, Feb 20, 2014 (Menafn – Marketwired via COMTEX) –All amounts are in United States dollars, unless otherwise stated.
Alamos Gold Inc. AGI (“Alamos” or the “Company”)today reported its financial results for the quarter and year ended December 31, 2013 and reviewed its operating, exploration and development activities.
“We had another strong year in 2013, achieving the mid-point of guidance with production of 190,000 ounces of gold and record sales of 198,200 ounces at total cash costs of 496 per ounce, below the low end of guidance. Even in the face of a lower gold price, we continued to generate strong operating margins with operating cash flow of 15.1 million and 86.6 million for the fourth quarter andfull year 2013, respectively. Removing the impact of the non-cash deferred tax charge resulting from the tax reform in Mexico and severance payments related to our transition to contract mining, we reported fourth quarter earnings of 6.0 million, or 0.05 per share,” said John A. McCluskey, President and Chief Executive Officer.
“Our Mulatos mine continues to generate cash flow and through our acquisitions of the Esperanza and Quartz Mountain projects we have assembled one of the strongest growth profiles of our peer group with projects that all work in the current gold price environment. Withover 417 million in cash and no debt, our balance sheet remains one of our greatest strengths, affording us the flexibility to not only internally fund our development pipeline but also pursue further growth and value creation opportunities,” Mr. McCluskey added.
Fourth Quarter 2013 Highlights
Financial Performance
—Sold 42,198 ounces of gold for quarterly revenues of 53.8 million
—Generated cash from operating activities before changes in non-cash
working capital of 12.7 million (0.10 per share); after changes in
non-cash working capital of 15.1 million (0.12 per share)
—Recognized a quarterly loss of 5.3 million (0.04 per share). Earnings
in the fourth quarter were impacted by a one-time, non-cash deferred tax
charge of 9.8 million (0.08 per share) resulting from the recent tax
reform in Mexico and a 1.5 million (0.01 per share) charge relating to
severance payments to be incurred as a result of the transition to
contract mining
—Cash and cash equivalents and short-term investments were 417.5 million
at December 31, 2013
Operational Performance
—Produced 39,000 ounces of gold at a cash operating cost of 566 per
ounce of gold sold (total cash costs including royalties were 624 per
ounce of gold sold)
—Achieved quarterly average crusher throughput of 17,900 tonnes per day
(“tpd”), above budget for the fifth consecutive quarter
—Continued to realize a net positive ounce reconciliation of 13%
comparing mined blocks from the global Mulatos Pit to the block model
—Commenced development of the Escondida Deep underground deposit and
completed the haul road to the El Victor and San Carlos deposits
Full Year 2013 Highlights
Financial Performance
—Sold a record 198,198 ounces of gold at an average realized price of
1,424 per ounce for revenues of 282.2 million
—Realized earnings of 38.8 million (0.30 per share) compared to
earnings of 118.0 million (0.98 per share) in 2012
—Generated cash from operating activities before changes in non-cash
working capital of 113.3 million (0.89 per basic share) compared to
178.5 million (1.49 per basic share) in 2012
—Realized proceeds of 111.1 million on the disposition of the Company’s
investment in the common shares of Aurizon Mines Limited (“Aurizon”)
—Completed the acquisition of Esperanza Resources Corporation
(“Esperanza”) for net cash consideration of 44.7 million and the
issuance of 7.2 million share purchase warrants (“warrants”) with a
five-year term and an exercise price of CAD29.48
—Completed the acquisition of Orsa Ventures Corporation (“Orsa”) for cash
consideration of 3.4 million
—Announced a normal course issuer bid (“NCIB”) and repurchased 211,300
common shares for cancellation.
—Paid a total of 25.5 million in dividends to shareholders (0.20 per
basic share). The Company has paid a total of 71.5 million in dividends
to shareholders over the past four years
Operational Performance
—Produced 190,000 ounces of gold at total cash costs (including the 5%
royalty) of 496 per ounce of gold sold, below the Company’s full year
guidance range of 500 to 520 per ounce
—Achieved record average crusher throughput of 17,900 tonnes per day
(“tpd”), above the Company’s annual guidance of 17,500 tpd
—Reported a net positive ounce reconciliation of 8% comparing mined
blocks from the global Mulatos Pit to the block model
Subsequent to year-end
—Released 2014 production guidance of 150,000 to 170,000 ounces at total
cash costs of 700 to 740 per ounce and all-in sustaining costs of 960
to 1,000 per ounce
—Repurchased and cancelled 351,500 common shares under the Company’s NCIB
for a total purchase price of 3.3 million
—————————————————————————-
Q4 2013Q4 2012YTD 2013YTD 2012
—————————————————————————-
Ounces produced39,00067,800190,000200,000
Ounces sold42,19862,516198,198197,516
Operating Revenues (000) 53,831 106,946 282,187 329,372
Earnings before income taxes (000)6,62751,943 79,504 166,925
Earnings (loss) (000) (5,274) 37,906 38,792 117,956
Earnings (loss) per share (basic)(0.04) 0.31 0.30 0.98
Cash flow from operating activities
before changes in non-cash working
capital (000) 12,73753,523 113,279 178,534
Cash flow from operating activities
(000) 15,08669,145 86,627 183,424
Cash and short-term investments
(000) (2) 417,455 353,710
Realized gold price per ounce1,2761,711 1,424 1,668
Average London PM Fix gold price per
ounce1,2761,722 1,411 1,669
Total cash cost per ounce (1)624460 496 438
All-in sustaining cost per ounce (1) 921684 772 681
All-in cost per ounce (1)1,215841 967 873
(1)“Total cash cost per ounce”, “All-in sustaining cost per ounce” and
“All-in cost per ounce” are non-GAAP measures. Refer to the “Cautionary
non-GAAP Measures and Additional GAAP Measures” disclosure at the end
of this MD&A for a description and calculation of these measures.
(2)Cash and short-term investments are shown as at December 31, 2013 and
December 31, 2012.
Fourth Quarter and Full Year 2013 Financial Results
The Company continued to generate strong operating margins in 2013despite a substantial decrease in the gold price, as low cash costscontributed to the Company generating 15.1 million (0.12 per share)cash provided by operating activities in the fourth quarter of 2013.Cash from operating activities decreased 76% relative to the sameperiod of 2012 as a result of lower gold sales.
Earnings before income taxes in the fourth quarter of 2013 were 6.6million or 0.05 per basic share, compared to 51.9 million or 0.43per basic share in the fourth quarter of 2012. On an after-tax basis,the Company recorded a loss in the fourth quarter of 2013 of 5.3million or 0.04 per basic share compared to earnings of 37.9million in the same period of 2012 as a result of lower gold sales, aone-time deferred tax charge of 9.8 million associated with therecent tax reform in Mexico, and a 1.5 million charge relating toseverance payments to be incurred as a result of the transition tocontract mining. On a year-to-date basis, cash flow from operationsand earnings decreased substantially in 2013 relative to 2012 as aresult of a significant decline in the gold price throughout theyear.
Capital expenditures in 2013 totalled 59.7 million. Sustainingcapital spending in Mexico in 2013 included operating and expansioncapital of 19.1 million, consisting of 6.9 million for componentchanges on mobile equipment, 2.2 million for interlift liners, 1.3million for mobile equipment, 1.9 million for improvements to thecamp at Mulatos, and 5.4 million invested in other smaller capitalprojects. In 2014, the Company expects sustaining capital to decreaseto approximately 13.2 million, as the Company transitions tocontract mining.
In addition, the Company invested 20.5 million at Mulatos inexpansion capital and capitalized exploration in 2013. This includeddevelopment of the Escondida Deep area, in order to access high gradeore to provide gravity mill feed, and completing the haul road to theEl Victor and San Carlos deposits during the fourth quarter. TheCompany also invested 17.8 million in development projects inTurkey, focused on engineering, permitting and community relationsactivities.
Key financial highlights for the three months and years ended 2013and 2012 are presented at the end of this release in Table 1. Theunaudited interim consolidated statements of financial position,comprehensive income, and cash flows for the three months and yearsended 2013 and 2012 are presented at the end of this release in Table2.
Fourth Quarter and Full Year 2013 Operating Results
Gold production of 190,000 ounces in 2013 decreased 5% compared to200,000 ounces in 2012. In the fourth quarter of 2013, the Mulatosmine produced 39,000 ounces of gold, bringing full year production tothe midpoint of the Company’s guidance. Production in the fourthquarter was lower than previous quarters as a result of lower thananticipated grades milled from the high grade Escondida deposit.
Total crusher throughput in the fourth quarter of 2013 averaged nearrecord levels of 17,900 tpd, above the annual budgeted rate of 17,500tpd for the fifth consecutive quarter. For 2013, crusher throughputaveraged 17,900 tpd, up 12% from 16,000 tpd in 2012. During thefourth quarter of 2013, mill throughput exceeded budgeted levels at550 tpd. In 2014, the Company intends to increase mill throughput toan average of 700 tpd.
The grade of the crushed ore stacked on the leach pad in the fourthquarter of 2013 was 0.96 grams per tonne of gold (“g/t Au”). For thefull year 2013, the grade of crushed ore stacked on the leach pad was1.07 g/t Au, above the 2013 budgeted grade of 0.98 g/t Au. The gradeof the Escondida high-grade zone mined and milled in the fourthquarter of 2013 was 3.46 g/t Au, below the Company’s full yearbudgeted average grade of 11 g/t Au. For the full year, the grademined and milled from the Escondida high-grade zone was approximately6.84 g/t Au.
The reconciliation of mined blocks to the block model for the globalMulatos Pit, including Escondida, for the quarter was 21%, -6% and13% for tonnes, grade and ounces respectively and for the year endedDecember 31, 2013 was 15%, -6% and 8% for tonnes, grade and ouncesrespectively. Since the start of mining activities in 2005, theproject-to-date reconciliation is 4%, 5%, 9% for tonnes, grade andounces, respectively. Positive variances indicate that the Company ismining more gold than was indicated in the reserve model.
The ratio of ounces produced to contained ounces stacked or milled(“recovery ratio”) in the fourth quarter was 71% and averaged 73% for2013, an improvement from 70% achieved in 2012.
Cash operating costs of 426 per ounce of gold sold in 2013 was inline with the Company’s full year guidance, and 20% higher than 355per ounce reported in 2012. This increase is primarily attributableto lower grades mined and milled in 2013 compared to 2012. Includingthe 5% royalty, total cash costs were 496 per ounce of gold sold in2013.
Key operational metrics and production statistics for the fourthquarter and full year 2013 compared to the same periods of 2012 arepresented in Table 3 at the end of this press release.
Turkey Developments
In August 2013, the Company received an Environmental ImpactAssessment (“EIA”) Positive Decision Certificate for Kirazli from theMinistry of the Environment and Urbanization (the “Ministry”). TheEIA for Agi Dagi has been submitted and is currently under review. InJanuary 2014, the Canakkale Administrative Court in Turkey (the”Court”) issued an injunction order to the Ministry regarding itsapproval of the EIA for the Company’s Kirazli project, on the basisthat it failed to assess the “cumulative impacts” of the Kirazliproject in conjunction with other potential mining projects in theregion. Given that there had not previously been any requirement toinclude such an assessment in such an EIA report, the Ministry isformally challenging the Court’s decision to temporarily revoke theEIA on this basis. A hearing on the merits of the claim which formedthe basis for the injunction is expected to take place within 6months. In the interim, the Company will amend its EIA for theKirazli project to account for the cumulative impact of potentialsurrounding projects in the event that a revised EIA is required. TheCourt’s basis for the injunction does not relate to concerns with anytechnical aspect of the Kirazli project.
With the Company already awaiting forestry and operating permits andgiven the recent political developments in Turkey, including criminalcorruption investigations implicating several Government officials,as well as local and federal elections upcoming during the year, theCompany does not expect the injunction to significantly alter thedevelopment timeline for the Kirazli project.
The Company has budgeted spending of 4.8 million in Turkey in 2014associated with permitting, community and government relations, andgeneral administration costs only. Given the continuing delay inreceipt of key permits, the Company has reduced its headcount andcurtailed spending significantly in Turkey. The full developmentbudget for Kirazli and Agi Dagi will be re-initiated once allrequired permits are received. The capital spending budget for theseprojects is not expected to differ materially from the June 2012preliminary feasibility study, with the exception that the recentdevaluation of the Turkish Lira would result in significant capitaland operating savings that would improve the overall projecteconomics.
Fourth Quarter and Full Year 2013 Exploration Update
Total exploration expenditures in 2013 were 16.1 million. AtMulatos, total exploration spending was 12.1 million. This included4.9 million of drilling costs at San Carlos and infill drilling atMulatos, which were capitalized and 7.2 million of drilling costs atEast Estrella, El Realito and Puerto del Aire (“PdA”), andadministration costs, which were expensed. Total exploration spendingin Turkey was 3.0 million, of which 2.7 million was capitalized,focused primarily on infill and step-out drilling at the Camyurtdeposit. Further, 1.0 million of spending at the Esperanza goldproject was capitalized as development costs. These costs wereprimarily related to the collection of baseline study data to supportresubmission of the EIA.
In 2014, a minimum of 56,100 metres (“m”) of reverse-circulation(“RC”), directional drilling, core, and underground core drilling isplanned at Mulatos in 2014, focusing on the San Carlos Northeastextension; East Estrella; El Realito and the Mulatos Mine area.Exploration activities at Esperanza will be focused on required workfor resubmission of the EIA for the project, which includes 7,000 mof confirmatory and condemnation drilling around the Esperanzadeposit. At Quartz Mountain, the Company plans to complete a minimumof 16,000 m of drilling with a focus on infill and expansiondrilling.
Outlook
The Company anticipates producing between 150,000 and 170,000 ouncesof gold in 2014 at total cash costs of between 700 and 740 perounce of gold sold, assuming a 1,250 gold price.
The lower gold production planned for 2014 relative to 2013 isprimarily attributable to the lower budgeted grade for the mill feedof 5.3 g/t Au due to the transition to Escondida Deep and San Carlosin 2014, as well as a lower budgeted grade stacked on the leach padof 0.85 g/t Au in 2014 compared to 1.07 g/t Au in 2013. The Companyexpects to transition to underground mining at Escondida Deep in thesecond quarter and then to San Carlos in the second half of 2014.With the transition to San Carlos, the Company expects to increasemill throughput rates to an average of 700 tpd in 2014 to help offsetthe decrease in grade. Underground throughput rates at San Carlos areexpected to gradually ramp up to the expanded mill capacity throughthe second half of the year.
Looking beyond 2014, the Company expects development of the CerroPelon and La Yaqui satellite deposits to bring on additional low costproduction which will help drive annual production closer to thelevel achieved in 2013. Both deposits are higher grade than Mulatosand could add annualized production of between 60,000 and 70,000ounces. The Company continues the legal process to obtain thenecessary surface rights to these areas, which is expected to beresolved within 6 months. In the interim, the Company is continuingnegotiations with the land owners in an attempt to resolvedifferences in value expectations prior to the expropriationdecision. It is expected that permitting and construction will take18 months to complete after securing the necessary land accessrights.
The 2014 Mulatos capital budget is 43.5 million. Sustaining capitalspending is forecast to be approximately 13.2 million in 2014.Development spending of 30.3 million in 2014 will be focused ondevelopment of the San Carlos and Escondida Deep areas, in order toaccess high-grade ore to provide additional gravity mill feed.
The Company’s mineral reserve and resource update is expected to bereleased at the end of the first quarter of 2014. The current focusof exploration at Mulatos is on continuing to delineate high-grademineral reserves to provide mill feed beyond the life of theEscondida and San Carlos high-grade deposits.
Gold production from the first of the Company’s Turkish projects,Kirazli, is expected within 18 months of receipt of the outstandingforestry and operating permits. The Company remains confident thatthese permits will be granted. However, recent legal developments andpolitical changes have added to the lack of clarity with respect tothe expected timing for receipt of these permits. Accordingly, theCompany has implemented a cost reduction program in Turkey pendingfurther progress on the current permitting challenges.
With the completion of the Esperanza and Orsa acquisitions in 2013,the Company has grown its development pipeline substantially.Development spending at Esperanza in 2014 of approximately 11.3million (which includes 2.8 million of exploration spending) will befocused on baseline work required for the resubmission of an EIAreport and an internal feasibility study to further supportdevelopment of the project. Spending at the Quartz Mountain Propertywill be focused on validating the existing mineral resources.
The Company continues to strengthen its financial position,generating free cash flow from Mulatos in 2013 and ending the yearwith over 417 million in cash and cash equivalents and no debt. TheCompanys development capital and exploration spending in 2014 is allexpected to be financed from cash flow, and the Company is wellpositioned to pursue accretive opportunities and to deliver on itslonger term growth objectives.
Associated Documents
This press release should be read in conjunction with the Company’sconsolidated financial statements for the years ended December 31,2013 and December 31, 2012 and associated Management’s Discussion andAnalysis (“MD&A”), which are available from the Company’s website,www.alamosgold.com, in the “Investors” section under “Reports andFinancials”, and on SEDAR (www.sedar.com) and EDGAR (www.sec.gov).
Reminder of Fourth Quarter and Year-End 2013 Results Conference Call
The Company’s senior management will host a conference call onThursday, February 20, 2014 at 12:00 pm ET to discuss the fourthquarter and year-end 2013 financial results and update operating,exploration, and development activities.
Participants may join the conference call by dialling (416) 340-8527or (877) 677-0837 for calls within Canada and the United States, orvia webcast at www.alamosgold.com.
A playback will be available until March 6, 2014 by dialling (905)694-9451 or (800) 408-3053 within Canada and the United States. Thepass code is 8457270. The webcast will be archived atwww.alamosgold.com.
About Alamos
Alamos is an established Canadian-based gold producer that owns andoperates the Mulatos Mine in Mexico, and has exploration anddevelopment activities in Mexico, Turkey and the United States. TheCompany employs more than 550 people and is committed to the higheststandards of sustainable development. Alamos has approximately 410million in cash and cash equivalents, is debt-free, and unhedged tothe price of gold. As of February 19, 2014, Alamos had 127,357,488common shares outstanding (139,229,554 shares fully diluted), whichare traded on the TSX and NYSE under the symbol “AGI”.
The TSX and NYSE have not reviewed and do not accept responsibilityfor the adequacy or accuracy of this release.
Cautionary Note
No stock exchange, securities commission or other regulatoryauthority has approved or disapproved the information containedherein. This News Release includes certain “forward-lookingstatements”. All statements other than statements of historical factincluded in this release, including without limitation statementsregarding forecast gold production, gold grades, recoveries,waste-to-ore ratios, total cash costs, potential mineralization andreserves, exploration results, and future plans and objectives ofAlamos, are forward-looking statements that involve various risks anduncertainties. These forward-looking statements include, but are notlimited to, statements with respect to mining and processing of minedore, achieving projected recovery rates, anticipated production ratesand mine life, operating efficiencies, costs and expenditures,changes in mineral resources and conversion of mineral resources toproven and probable reserves, and other information that is based onforecasts of future operational or financial results, estimates ofamounts not yet determinable and assumptions of management.
Exploration results that include geophysics, sampling, and drillresults on wide spacings may not be indicative of the occurrence of amineral deposit. Such results do not provide assurance that furtherwork will establish sufficient grade, continuity, metallurgicalcharacteristics and economic potential to be classed as a category ofmineral resource. A mineral resource that is classified as “inferred”or “indicated” has a great amount of uncertainty as to its existenceand economic and legal feasibility. It cannot be assumed that any orpart of an “indicated mineral resource” or “inferred mineralresource” will ever be upgraded to a higher category of resource.Investors are cautioned not to assume that all or any part of mineraldeposits in these categories will ever be converted into proven andprobable reserves.
Any statements that express or involve discussions with respect topredictions, expectations, beliefs, plans, projections, objectives,assumptions or future events or performance (often, but not always,using words or phrases such as “expects” or “does not expect”, “isexpected”, “anticipates” or “does not anticipate”, “plans”,”estimates” or “intends”, or stating that certain actions, events orresults “may”, “could”, “would”, “might” or “will” be taken, occur orbe achieved) are not statements of historical fact and may be”forward-looking statements.” Forward-looking statements are subjectto a variety of risks and uncertainties that could cause actualevents or results to differ from those reflected in theforward-looking statements.
There can be no assurance that forward-looking statements will proveto be accurate and actual results and future events could differmaterially from those anticipated in such statements. Importantfactors that could cause actual results to differ materially fromAlamos’ expectations include, among others, risks related tointernational operations, the actual results of current explorationactivities, conclusions of economic evaluations and changes inproject parameters as plans continue to be refined as well as futureprices of gold and silver, as well as those factors discussed in thesection entitled “Risk Factors” in Alamos’ Annual Information Form.Although Alamos has attempted to identify important factors thatcould cause actual results to differ materially, there may be otherfactors that cause results not to be as anticipated, estimated orintended. There can be no assurance that such statements will proveto be accurate as actual results and future events could differmaterially from those anticipated in such statements. Accordingly,readers should not place undue reliance on forward-lookingstatements.
Note to U.S. Investors
Alamos prepares its disclosure in accordance with the requirements ofsecurities laws in effect in Canada, which differ from therequirements of U.S. securities laws. Terms relating to mineralresources in this presentation are defined in accordance withNational Instrument 43-101 – Standards of Disclosure for MineralProjects under the guidelines set out in the Canadian Institute ofMining, Metallurgy, and Petroleum Standards on Mineral Resources andMineral Reserves. The United States Securities and ExchangeCommission (the “SEC”) permits mining companies, in their filingswith the SEC, to disclose only those mineral deposits that a companycan economically and legally extract or produce. Alamos may usecertain terms, such as “measured mineral resources”, “indicatedmineral resources”, “inferred mineral resources” and “probablemineral reserves” that the SEC does not recognize (these terms may beused in this presentation and are included in the public filings ofAlamos, which have been filed with the SEC and the securitiescommissions or similar authorities in Canada).
Cautionary non-GAAP Measures and Additional GAAP Measures
Note that for purposes of this section, GAAP refers to IFRS. TheCompany believes that investors use certain non-GAAP and additionalGAAP measures as indicators to assess gold mining companies. They areintended to provide additional information and should not beconsidered in isolation or as a substitute for measures ofperformance prepared with GAAP. Non-GAAP and additional GAAP measuresdo not have a standardized meaning prescribed under IFRS andtherefore may not be comparable to similar measures presented byother companies.
(i) Cash flow from operating activities before changes in non-cashworking capital
“Cash flow from operating activities before changes in non-cashworking capital” is a non-GAAP performance measure that could providean indication of the Company’s ability to generate cash flows fromoperations, and is calculated by adding back the change in non-cashworking capital to “Cash provided by (used in) operating activities”as presented on the Company’s consolidated statements of cash flows.
The following table reconciles the non-GAAP measure to theconsolidated statements of cash flows.
Q4 2013Q4 2012YTD 2013YTD 2012
—————————————–
Cash flow from operating activities
– IFRS (000) 15,087 69,14586,627 183,424
Changes in non-cash working capital
(000)2,350(15,622)(26,652)(4,890)
—————————————–
Cash flow from operating activities
before changes in non-cash working
capital (000) 12,737 53,523 113,279 178,534
—————————————–
—————————————–
(ii) Mining cost per tonne of ore
“Mining cost per tonne of ore” and “Cost per tonne of ore” arenon-GAAP performance measures that could provide an indication of themining and processing efficiency and effectiveness of the mine. Thesemeasures are calculated by dividing the relevant mining andprocessing costs and total costs by the tonnes of ore processed inthe period. “Cost per tonne of ore” is usually affected by operatingefficiencies and waste-to-ore ratios in the period. The followingtable reconciles the non-GAAP measure to the consolidated statementsof comprehensive income.
Q4 2013Q4 2012YTD 2013YTD 2012
——————————————-
Mining and processing costs –
IFRS (000)23,90323,48084,52170,168
Inventory adjustments and period
costs (000)(2,725)(1,968)(1,804)1,979
——————————————-
Total cost (000)21,17821,51282,71772,147
Tonnes Ore stacked / milled (000)1,649.41,649.76,518.35,823.0
——————————————-
Total cost per tonne of ore12.8413.0412.6912.39
——————————————-
——————————————-
(iii) Cash operating costs per ounce and total cash costs per ounce
“Cash operating costs per ounce” and “total cash costs per ounce” asused in this analysis are non-GAAP terms typically used by goldmining companies to assess the level of gross margin available to theCompany by subtracting these costs from the unit price realizedduring the period. These non-GAAP terms are also used to assess theability of a mining company to generate cash flow from operations.There may be some variation in the method of computation of “cashoperating costs per ounce” as determined by the Company compared withother mining companies. In this context, “cash operating costs perounce” reflects the cash operating costs allocated from in-processand dore inventory associated with ounces of gold sold in the period.”Cash operating costs per ounce” may vary from one period to anotherdue to operating efficiencies, waste-to-ore ratios, grade of oreprocessed and gold recovery rates in the period. “Total cash costsper ounce” includes “cash operating costs per ounce” plus applicableroyalties. Cash operating costs per ounce and total cash costs perounce are exclusive of exploration costs.
The following table reconciles these non-GAAP measure to theconsolidated statements of comprehensive income.
Q4 2013Q4 2012YTD 2013YTD 2012
——————————————–
Mining and processing costs –
IFRS (000)23,903 23,480 84,521 70,168
Divided by: Gold ounces sold
(1),(2)42,19862,516198,198197,516
——————————————–
Total Cash operating costs per
ounce566 376 426 355
——————————————–
——————————————–
Mining and processing costs –
IFRS (000)23,903 23,480 84,521 70,168
Royalties – IFRS (000)2,4595,25513,82916,411
——————————————–
Total Cash costs (000)26,362 28,735 98,350 86,579
Divided by: Gold ounces sold42,19862,516198,198197,516
——————————————–
Total Cash costs per ounce624 460 496 438
——————————————–
——————————————–
(iv) All-in sustaining cost per ounce
Effective 2013, in conjunction with a non-GAAP initiative beingundertaken by the gold mining industry, the Company is adopting an”all-in sustaining cost per ounce” non-GAAP performance measure. TheCompany believes the measure more fully defines the total costsassociated with producing gold; however, this performance measure hasno standardized meaning. Accordingly, there may be some variation inthe method of computation of “all-in sustaining cost per ounce” asdetermined by the Company compared with other mining companies. Inthis context, “all-in sustaining cost per ounce” reflects totalmining and processing costs, corporate and administrative costs,exploration costs, sustaining capital, and other operating costs.Sustaining capital expenditures are expenditures that do not increaseannual gold ounce production at a mine site and excludes allexpenditures at the Company’s development projects as well as certainexpenditures at the Company’s operating sites that are deemedexpansionary in nature.
The following table reconciles these non-GAAP measures to theconsolidated statements of comprehensive income.
Q4 2013Q4 2012YTD 2013YTD 2012
—————————————–
Mining and processing costs (000)23,90323,480 84,521 70,168
Royalties (000)2,4595,25513,82916,411
Corporate and administration (000)
(1)4,0604,07419,96412,368
Share-based compensation (000)(740)8763,2047,634
Exploration costs (000) (2)3,8491,90011,3798,444
Reclamation cost accretion (000)214113902486
Sustaining capital expenditures
(000)5,1067,07319,11818,987
—————————————–
38,85142,771 152,917 134,498
Divided by: Gold ounces sold42,19862,516198,198197,516
—————————————–
All-in sustaining cost per ounce921684 772 681
—————————————–
—————————————–
(1)Excludes corporate and administration costs incurred at the Company’s
development projects
(2)Excludes exploration associated with the Company’s development projects
(v) All-in cost
Effective 2013, in conjunction with a non-GAAP initiative beingundertaken by the gold mining industry, the Company is adopting an”all-in cost per ounce” non-GAAP performance measure; however, thisperformance measure has no standardized meaning. Accordingly, theremay be some variation in the method of computation of “all-in costper ounce” as determined by the Company compared with other miningcompanies. In this context, “all-in cost per ounce” reflects totalall-in sustaining cash costs, plus capital, operating, andexploration costs associated with the Company’s development projects.
Q4 2013Q4 2012YTD 2013YTD 2012
——————————————–
All-in sustaining cost (above)38,851 42,771 152,917 134,498
Add: Development and expansion
capital (000)10,7825,79233,02526,645
Add: Turkey / other exploration
(000)1,0303,3343,7589,565
Add: Turkey G&A (000)5906821,9751,809
——————————————–
51,25352,579191,675172,517
Divided by: Gold ounces sold42,19862,516198,198197,516
——————————————–
All-in cost per ounce1,215 841 967 873
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——————————————–
vi. Other additional GAAP measures
Additional GAAP measures that are presented on the face of theCompany’s consolidated statements of comprehensive income and are notmeant to be a substitute for other subtotals or totals presented inaccordance with IFRS, but rather should be evaluated in conjunctionwith such IFRS measures. The following additional GAAP measures areused and are intended to provide an indication of the Company’s mineand operating performance:
—Mine operating costs – represents the total of mining and processing,
royalties, and amortization expense
—Earnings from mine operations – represents the amount of revenues in
excess of mining and processing, royalties, and amortization expense.
—Earnings from operations – represents the amount of earnings before net
finance income/expense, foreign exchange gain/loss, other income/loss,
and income tax expense
Table 1: Financial Highlights
———————————————————————–
—–
Q4 2013Q4 2012201320122011
—————————————————————————-
Cash provided
by operating
activities
before
changes in
non-cash
working
capital
(000)(1) (2)12,73053,523113,279178,534107,226
Changes in
non-cash
working
capital2,35715,622(26,652)4,890(692)
Cash provided
by operating
activities
(000)15,08769,14586,627183,424106,534
Earnings
before
income taxes
(000)6,62751,94379,504166,925105,935
Earnings
(loss) (000)(5,274)37,90638,792117,95660,081
Earnings
(loss) per
share
– basic(0.04)0.310.300.980.51
– diluted(0.04)0.310.300.980.51
Comprehensive
income (000)(6,078)38,81238,763117,97260,333
Weighted
average
number of
common
shares
outstanding
– basic127,709,000120,796,000 127,340,000119,861,000 117,375,000
– diluted127,757,000121,746,000 127,480,000120,904,000 118,669,000
Assets (000)
(3)898,028753,856599,224
(1)A non-GAAP measure calculated as cash provided by operating activities
as presented on the consolidated statements of cash flows and adding
back changes in non-cash working capital.
(2)Refer to “Cautionary non-GAAP Measures and Additional GAAP Measures”
disclosure at the end of this MD&A for a description and calculation of
this measure.
(3)Assets are shown as at December 31, 2013, December 31, 2012, and
December 31, 2011.
Table 2: Unaudited Consolidated Statements of Financial Position,Comprehensive Income, and Cash Flows
ALAMOS GOLD INC.
Consolidated Statements of Financial Position
(Unaudited – stated in thousands of United States dollars)
December 31,December 31,
20132012
——————————
ASSETS
Current Assets
Cash and cash equivalents409,663306,056
Short-term investments7,79247,654
Available-for-sale securities1,89610,340
Other financial assets4421,118
Amounts receivable11,2007,647
Advances and prepaid expenses9,0683,207
Inventory37,97242,046
——————————
Total Current Assets478,033418,068
Non-Current Assets
Other non-current assets2,6961,058
Exploration and evaluation assets214,387127,015
Mineral property, plant and equipment202,912207,715
——————————
Total Assets898,028753,856
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities23,48724,874
Income taxes payable1,78315,497
——————————
Total Current Liabilities25,27040,371
Non-Current Liabilities
Deferred income taxes38,71538,365
Decommissioning liability21,40613,934
Other liabilities690714
——————————
Total Liabilities86,08193,384
——————————
EQUITY
Share capital510,473393,752
Warrants21,667–
Contributed surplus24,23622,606
Accumulated other comprehensive loss(1,093)(1,064)
Retained earnings256,664245,178
——————————
Total Equity811,947660,472
——————————
Total Liabilities and Equity898,028753,856
——————————
ALAMOS GOLD INC.
Consolidated Statements of Comprehensive Income
(Unaudited – stated in thousands of United States dollars, except pershare amounts)
For the three-month
periods endedFor the year ended
——————————————————–
December 31,December 31,December 31,December 31,
2013201220132012
——————————————————–
OPERATING REVENUES53,831106,946282,187329,372
——————————————————–
MINE OPERATING COSTS
Mining and
processing23,90323,48084,52170,168
Royalties2,4595,25513,82916,411
Amortization11,24718,11556,48850,678
——————————————————–
37,60946,850154,838137,257
——————————————————–
EARNINGS FROM MINE
OPERATIONS16,22260,096127,349192,115
EXPENSES
Exploration3,2821,4487,5596,488
Corporate and
administrative4,6504,75821,93914,177
Share-based
compensation(740)8763,2047,634
——————————————————–
7,1927,08232,70228,299
——————————————————–
EARNINGS FROM
OPERATIONS9,03053,01494,647163,816
OTHER INCOME
(EXPENSES)
Finance income7976893,1313,133
Financing expense(224)(148)(912)(536)
Foreign exchange
(loss) gain(917)(833)(8,312)14
Other (loss) income(2,059)(779)(9,050)498
——————————————————–
EARNINGS BEFORE
INCOME TAXES FOR
THE PERIOD6,62751,94379,504166,925
INCOME TAXES
Current tax expense(5,751)(19,265)(40,362)(45,612)
Deferred tax
recovery (expense)(6,150)5,228(350)(3,357)
——————————————————–
EARNINGS (LOSS) FOR
THE PERIOD(5,274) 37,90638,792117,956
Other comprehensive
income (loss) to be
reclassified to
profit or loss in
subsequent periods:
– Unrealized loss on
securities(804)(1,065)(2,697)(2,350)
– Reclassification
of realized losses
(gains) on
available-for-sale
securities included
in earnings–1,9712,6682,366
——————————————————–
COMPREHENSIVE INCOME
(LOSS) FOR THE
PERIOD(6,078) 38,81238,763117,972
——————————————————–
EARNINGS PER SHARE
– basic(0.04) 0.310.300.98
– diluted(0.04) 0.310.300.98
——————————————————–
Weighted average
number of common
shares outstanding
– basic127,709,000120,796,000127,340,000119,861,000
– diluted127,757,000121,746,000127,480,000120,904,000
——————————————————–
ALAMOS GOLD INC.
Consolidated Statements of Cash Flows
(Unaudited – stated in thousands of United States dollars)
For the three-month
periods endedFor the years ended
December 31, December 31, December 31, December 31,
2013201220132012
—————————————————-
CASH PROVIDED BY (USED
IN):
OPERATING ACTIVITIES
Earnings (loss) for the
period(5,274)37,90638,792117,956
Adjustments for items
not involving cash:
Amortization11,24718,11556,48850,678
Financing expense224148912536
Unrealized foreign
exchange loss (gain)9007225,938(1,352)
Deferred tax
(recovery) expense6,150(5,228)3503,357
Share-based
compensation(740)8763,2047,634
Loss (gain) on sale of
securities–1,3906,840460
Other230(406)755(735)
Changes in non-cash
working capital:
Fair value of forward
contracts–(150)––
Amounts receivable(5,855)(4,142)(21,356)(18,865)
Inventory1,9283,365(2,797)(5,655)
Advances and prepaid
expenses4,770(673)(4,311)(1,090)
Accounts payable and
accrued liabilities,
and income taxes
payable1,50717,2221,81230,500
—————————————————-
15,08769,14586,627183,424
—————————————————-
INVESTING ACTIVITIES
Sales (purchases) of
securities–(6,470)111,116(185)
Short-term investments
(net)(4,104)(17,785)39,8625,434
Contractor advances(385)–(1,440)–
Acquisition of Esperanza––(44,663)–
Acquisition of Orsa––(3,403)–
Exploration and
evaluation assets(5,920)(7,307)(21,437)(18,561)
Mineral property, plant
and equipment(11,575)(9,511)(38,295)(38,815)
—————————————————-
(21,984)(41,073)41,740(52,127)
—————————————————-
FINANCING ACTIVITIES
Common shares issued–3,7464,88328,178
Shares repurchased and
cancelled––(2,624)–
Dividends paid(12,770)(12,073)(25,519)(24,023)
—————————————————-
(12,770)(8,327)(23,260)4,155
—————————————————-
Effect of exchange rates
on cash and cash
equivalents(640)(731)(1,500)1,133
—————————————————-
Net increase (decrease)
in cash and cash
equivalents(20,307)19,014103,607136,585
Cash and cash
equivalents – beginning
of the period429,970287,042306,056169,471
—————————————————-
CASH AND CASH
EQUIVALENTS – END OF
PERIOD409,663306,056409,663306,056
—————————————————-
Table 3: Production Summary & Statistics (1)
———————————————————————–
—–
Production
summaryQ1 2013Q2 2013Q3 2013Q4 2013YTD 2013YTD 2012
—————————————————————————-
Ounces produced
(1)55,00053,00043,00039,000190,000200,000
Crushed ore
stacked on
leach pad
(tonnes) (2)1,568,400 1,552,000 1,610,000 1,598,6006,329,000 5,646,000
Grade (g/t Au)1.251.100.990.961.071.19
————————————————————
Contained
ounces stacked63,10054,80051,30049,300218,500216,000
Crushed ore
milled
(tonnes)45,60046,00046,90050,800189,300176,500
Grade (g/t Au)6.5910.946.733.466.8412.49
————————————————————
Contained
ounces milled9,60016,20010,1005,70041,60070,900
Ratio of total
ounces
produced to
contained
ounces stacked
and milled76%75%70%71%73%70%
Total ore mined
(tonnes)1,509,000 1,900,000 1,777,000 1,843,0007,029,000 5,786,000
Waste mined
(tonnes)702,000907,000992,000784,0003,385,000 3,360,000
————————————————————
Total mined
(tonnes)2,211,000 2,807,000 2,769,000 2,627,000 10,414,000 9,146,000
Waste-to-ore
ratio0.460.480.560.460.480.58
Ore crushed per
day (tonnes) –
combined17,90017,60018,00017,90017,90016,000
(1)Reported gold production for Q4 2013 and YTD 2013 is subject to final
refinery settlement and may be adjusted.
(2)Excludes mill tailings stacked on the heap leach pad during the period.
Contacts:
Alamos Gold Inc.
Scott K. Parsons
Director, Investor Relations
(416) 368-9932 x 439
www.alamosgold.com
SOURCE: Alamos Gold Inc.
