Alamos Gold forecasting 17% production increase

Alamos Gold Inc. [AGI-TSX, NYSE] said annual gold production is expected to increase by 17% next year to between 470,000 and 510,000 ounces. The increase will be driven by significantly higher production from its Young-Davidson mine in northern Ontario, which is poised to be the company’s flagship operation.

As production ramps up at Young-Davidson, the company is also predicting an 8% drop in total cash costs in 2021 to between US$710 and US$760/oz.

The company is planning to build the Lynn Lake open pit mine in northern Manitoba by 2025.

Meanwhile, in forecasts that were released after the close of trading on December 9, 2021, the company said it remains on track to meet it revised guidance for this year of between 405,000 and 435,000 ounces of gold. Production forecasts for 2020 were revised in late July to reflect the impact of the COVID-19 pandemic as well as related operational suspensions and delays during Q2 2020.

Alamos previously said it expected its annual production to increase to 600,000 ounces in 2021, an increase that was slated to reflect a full year of production from the Kirazli Project in Turkey.

However, the company suspended construction activities at Kirazli pending the renewal of its Turkish mining concessions which expired on October 13, 2019. Alamos is working with the Turkish Department of Energy and Natural Resources on securing the renewal of the mining concessions to allow construction to resume. Alamos recently said it is looking at partners for its Kirazli Project.

Meanwhile, the company said Young-Davidson will be a key driver of strong ongoing free cash flow generation supporting both higher returns to shareholders and reinvestment into higher-return growth opportunities at Island Gold and Mulatos.

Looking ahead to 2025, Alamos is expecting annual production to increase to 600,000 ounces from existing operating mines, including a Phase 3 expansion at the Island Gold mine in Ontario. It also sees additional growth potential to 750,000 ounces, reflecting the contribution of the Lynn Lake Project, where permitting is expected by 2022.

Alamos described Lynn Lake as one of the highest-grade open pit gold deposits in Canada. A feasibility study completed in 2017 envisages average annual production of 143,000 ounces at an AISC of US$745/oz.