Alamos Gold seeks Turkish partner, ups dividend by 33%

Alamos Gold Inc. [AGI-TSX, NYSE] is looking at partners for its Kirazli Project in Turkey amid continued local opposition to a proposed mine the company has described as one of the highest-return, undeveloped gold projects in any price environment.

Alamos CEO John McCluskey made the comment during a conference call October 29 following the release of banner third quarter results, including record free cash flow of $76 million. That was enough to support a 33% increase in the company’s dividend.

Alamos shares were largely unchanged on Friday October 30, easing 0.94% or $0.115 to $12.04 on volume of 695,373. The shares are currently trading in a 52-week range of $15.52 and $4.43.

Alamos is a Canadian intermediate gold producer with production from four mines in North America: Young-Davidson and Island Gold mines in Ontario, and the Mulatos and El Chanate mines in Mexico.

The company produced 494,500 ounces of gold last year, meeting production targets for the fifth year in a row. Alamos previously said it expects its annual production to increase to 600,000 ounces in 2021. The expected increase in 2021 was to include a full year of production from Kirazli.

During the conference call, McCluskey said as gold market conditions continue improve the company is considering selling certain non-core assets. These are assets “clearly far smaller for us now than when they were initially acquired,” McCluskey said. His comments are in a Scotiabank report to investors.

“Turkey clearly isn’t as core as it once was. And questions have come up over the last few quarters on these calls, and in conferences and investor meetings, and we’ve been candid about being disappointed with the delays we experienced.”

McCluskey added that he doesn’t see things improving in Turkey. “Alamos may benefit from taking on a Turkish partner,” he said. “It’s no secret that we get all kinds of inbound interest on these assets, particularly from Turkish mining entities.”

The Kiralzi Project is in on the Biga Peninsula, northwestern Turkey. According to a February 2017 feasibility study, the operation could produce an average of 104,000 ounces of gold annually over five years at an all-in-sustaining cost of US$373/oz. Proven and Probable Reserves are 670,000 ounces of gold and 10.1 million ounces of silver.