Solid Fourth Quarter Drives Record Annual Production, Revenue and Operating Cash Flow
All amounts are in United States dollars, unless otherwise stated.
TORONTO, Feb. 21, 2024 (GLOBE NEWSWIRE) — Alamos Gold Inc. (TSX:AGI, NYSE:AGI) (“Alamos” or the “Company”) today reported its financial results for the quarter and year ended December 31, 2023.
“With the strong finish to the year, we delivered a record operational and financial performance in 2023. Production increased 15% to a record 529,300 ounces, achieving the top end of our increased full year guidance. Costs were also in line with annual guidance and decreased 4% from 2022 reflecting strong performances across our operations. With the record production, lower costs, and higher gold price we set a number of financial records in 2023. Revenue increased 25% to a record $1 billion, and cash flow from operations increased 44% to a record $519 million. We also generated $124 million of free cash flow while reinvesting in growth that will support higher levels of free cash flow in the years ahead,” said John A. McCluskey, President and Chief Executive Officer.
“This reinvestment in high-return growth continues to create long-term value. Global Mineral Reserves increased for the fifth consecutive year with grades also increasing driven by another year of exploration success. This included higher-grade additions at Island Gold and PDA, supporting longer-life, and more valuable assets. The growth at PDA will be incorporated into a development plan to be completed later this quarter that we expect will outline a significant mine life extension at Mulatos. The Phase 3+ Expansion at Island Gold continues to advance having achieved a significant milestone with the start of shaft sinking in December. The expansion remains on track to deliver significant production growth at substantially lower costs in 2026 and beyond.”
Fourth Quarter and Full Year 2023 Highlights
Operational and Financial Highlights
Produced a record 529,300 ounces of gold in 2023, achieving the top end of increased production guidance and representing a 15% increase from 2022. This included a strong finish to the year from all three operations with fourth quarter production of 129,500 ounces
The Mulatos District exceeded guidance, producing 212,800 ounces in 2023, a 58% increase from the prior year, reflecting a strong performance from La Yaqui Grande in its first full year of production. The higher margin ounces from La Yaqui Grande drove a significant increase in mine-site free cash flow1 to $142.1 million, including $27.4 million in the fourth quarter
Young-Davidson produced 185,100 ounces in 2023, meeting guidance and generating record mine-site free cash flow1 of $117.6 million. This marked the third consecutive year mine-site free cash flow has exceeded $100 million, demonstrating the strong ongoing performance and consistency of the operation, including $35.0 million in the fourth quarter
Island Gold produced 131,400 ounces in 2023, meeting guidance and continuing to self fund the majority of $178.1 million of growth capital invested in the Phase 3+ Expansion during the year
Total cash costs1 of $850 per ounce, all-in sustaining costs (“AISC”1) of $1,160 per ounce, and cost of sales of $1,212 per ounce for the full year were in line with guidance. Fourth quarter total cash costs of $900 per ounce, and AISC of $1,233 per ounce were consistent with quarterly guidance
Record financial performance with full year gold sales totaling 526,258 ounces at an average realized price of $1,944 per ounce for record revenue of $1.0 billion, a 25% increase from 2022. This included fourth quarter sales of 129,005 ounces at an average realized price of $1,974 per ounce, generating $254.6 million in revenue. The average realized gold price was $3 per ounce above the London PM fix for both the quarter and the year
Record annual cash flow from operating activities of $472.7 million (including $518.9 million, or $1.31 per share before changes in working capital1), a 58% increase from 2022. Fourth quarter cash flow from operating activities was $124.1 million ($120.2 million, or $0.30 per share, before changes in working capital1)
Strong free cash flow1 of $123.8 million in 2023 while funding the Phase 3+ Expansion at Island Gold
Realized adjusted net earnings1 of $208.4 million, or $0.53 per share1 in 2023. Reported net earnings were $210.0 million, or $0.53 per share
Realized adjusted net earnings1 for the fourth quarter of $49.2 million, or $0.12 per share1. Adjusted net earnings includes adjustments for net unrealized foreign exchange gains recorded within deferred taxes and foreign exchange of $12.6 million, offset by other adjustments, net of taxes totaling $14.7 million. Reported net earnings were $47.1 million, or $0.12 per share
Cash and cash equivalents increased $95.0 million, or 73%, to $224.8 million at year end, with no debt and $13.0 million in equity securities
Paid dividends of $39.4 million, or $0.10 per share for the full year
Growth Projects, Mineral Reserves and Resources and Other Highlights
Issued three-year guidance on January 10, 2024, which included increased production guidance for 2024 of between 485,000 and 525,000 ounces. Production is expected to increase 7% by 2026, with AISC decreasing 11% reflecting low cost production growth from Island Gold with the completion of the Phase 3+ Expansion
Reported year-end 2023 Mineral Reserves of 10.7 million ounces of gold, a 2% increase from 2022, with grades also increasing 1%. This marked the fifth consecutive year Mineral Reserves have grown for a combined increase of 10% with grades also increasing 9% over that time frame. Additionally, Measured and Indicated Mineral Resources increased 12% to 4.4 million ounces, with grades increasing 9%, and Inferred Mineral Resources increased 3% to 7.3 million ounces, at 1% higher grades
Advanced construction of the Phase 3+ Expansion with completion of key shaft site infrastructure in 2023 including the headframe and hoist house. Construction remains on schedule with shaft sinking commencing in December and engineering on the mill and paste plant well underway
Received approval of the updated Closure Plan Amendment from the Ontario Government in December allowing for the start of construction on the larger mill expansion and paste plant as outlined in the Phase 3+ Expansion study
Achieved a significant permitting milestone for the Lynn Lake project in March with a positive Decision Statement issued by the Department of Environment and Climate Change Canada based on the completed Federal Environmental Impact Statement, and Environment Act Licenses issued by the Province of Manitoba
Completed an updated Feasibility Study on the Lynn Lake project in August outlining a larger, longer-life, low-cost operation with attractive economics and significant exploration upside. Lynn Lake is expected to produce an average of 176,000 ounces of gold per year at mine-site AISC of $699 per ounce over its initial 10 years
Completed the acquisition of Manitou Gold in May, adding significant exploration potential across the Michipicoten Greenstone Belt by more than tripling the regional land package adjacent to and along strike from Island Gold
Publication of Alamos’ inaugural Climate Change Report, outlining corporate governance around climate-related risks and opportunities, and issued the 2022 Environmental, Social and Governance (“ESG”) Report, outlining the Company’s progress on its ESG performance
Announced the acquisition of Orford Mining in January 2024, through which the Company will consolidate its existing ownership of Orford shares and add the highly prospective Qiqavik Gold Project, located in Quebec, Canada. The Company expects to issue approximately 0.9 million shares for total consideration of approximately $12 million with the transaction expected to close in April 2024
(1) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
Highlight Summary
Three Months Ended December 31,
Years Ended December 31,
2023
2022
2023
2022
Financial Results (in millions)
Operating revenues
$
254.6
$
231.9
$
1,023.3
$
821.2
Cost of sales (1)
$
166.7
$
153.4
$
637.7
$
608.9
Earnings from operations
$
71.9
$
61.6
$
318.1
$
111.5
Earnings before income taxes
$
51.2
$
52.6
$
293.7
$
102.4
Net earnings
$
47.1
$
40.6
$
210.0
$
37.1
Adjusted net earnings (2)
$
49.2
$
33.7
$
208.4
$
107.9
Earnings before interest, taxes, depreciation and amortization (2)
$
101.6
$
100.4
$
486.4
$
351.7
Cash provided by operations before working capital and taxes paid (2)
$
120.2
$
109.3
$
518.9
$
361.6
Cash provided by operating activities
$
124.1
$
102.3
$
472.7
$
298.5
Capital expenditures (sustaining) (2)
$
26.6
$
26.5
$
104.2
$
95.2
Capital expenditures (growth) (2) (3)
$
73.0
$
50.2
$
216.7
$
191.9
Capital expenditures (capitalized exploration)
$
10.1
$
8.1
$
28.0
$
26.6
Free cash flow (2)
$
14.4
$
17.5
$
123.8
$
(15.2
)
Operating Results
Gold production (ounces)
129,500
134,200
529,300
460,400
Gold sales (ounces)
129,005
133,164
526,258
456,574
Per Ounce Data
Average realized gold price
$
1,974
$
1,741
$
1,944
$
1,799
Average spot gold price (London PM Fix)
$
1,971
$
1,726
$
1,941
$
1,800
Cost of sales per ounce of gold sold (includes amortization) (1)
$
1,292
$
1,152
$
1,212
$
1,334
Total cash costs per ounce of gold sold (2)
$
900
$
810
$
850
$
884
All-in sustaining costs per ounce of gold sold (2)
$
1,233
$
1,138
$
1,160
$
1,204
Share Data
Earnings per share, basic and diluted
$
0.12
$
0.10
$
0.53
$
0.09
Adjusted earnings per share, basic (2)
$
0.12
$
0.09
$
0.53
$
0.28
Weighted average common shares outstanding (basic) (000’s)
396,577
393,034
395,509
392,172
Financial Position (in millions)
Cash and cash equivalents
$
224.8
$
129.8
(1) Cost of sales includes mining and processing costs, royalties, and amortization expense.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
(3) Includes growth capital from operating sites.
Three Months Ended December 31,
Years Ended December 31,
2023
2022
2023
2022
Gold production (ounces)
Young-Davidson
49,800
44,600
185,100
192,200
Island Gold
31,600
40,500
131,400
133,700
Mulatos District (7)
48,100
49,100
212,800
134,500
Gold sales (ounces)
Young-Davidson
48,052
44,781
182,796
192,186
Island Gold
30,464
39,145
127,629
130,652
Mulatos District
50,489
49,238
215,833
133,736
Cost of sales (in millions) (1)
Young-Davidson
$
64.6
$
62.2
$
248.2
$
250.5
Island Gold
$
33.8
$
35.2
$
123.6
$
120.4
Mulatos District
$
68.3
$
56.0
$
265.9
$
238.0
Cost of sales per ounce of gold sold (includes amortization) (1)
Young-Davidson
$
1,344
$
1,389
$
1,358
$
1,303
Island Gold
$
1,110
$
899
$
968
$
922
Mulatos District
$
1,353
$
1,137
$
1,232
$
1,780
Total cash costs per ounce of gold sold (2)
Young-Davidson
$
920
$
942
$
938
$
878
Island Gold
$
775
$
605
$
669
$
637
Mulatos District
$
957
$
851
$
883
$
1,134
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
Young-Davidson
$
1,211
$
1,284
$
1,208
$
1,133
Island Gold
$
1,136
$
863
$
1,017
$
918
Mulatos District
$
1,030
$
922
$
967
$
1,241
Capital expenditures (sustaining, growth, and capitalized exploration) (in millions) (2)
Young-Davidson (4)
$
24.0
$
20.6
$
67.2
$
71.5
Island Gold (5)
$
73.9
$
53.9
$
233.1
$
157.3
Mulatos District (6)
$
8.4
$
5.5
$
30.4
$
62.7
Other
$
3.4
$
4.8
$
18.2
$
22.2
(1) Cost of sales includes mining and processing costs, royalties, and amortization expense.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
(3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses.
(4) Includes capitalized exploration at Young-Davidson of $1.3 million and $5.1 million for the three months and year ended December 31, 2023, respectively ($1.5 million and $5.0 million for the three months and year ended December 31, 2022, respectively).
(5) Includes capitalized exploration at Island Gold of $3.3 million and $11.1 million for the three months and year ended December 31, 2023, respectively ($4.9 million and $18.8 million for the three months and year ended December 31, 2022, respectively).
(6) Includes capitalized exploration at Mulatos District of $5.5 million and $11.8 million for the three months and year ended December 31, 2023, respectively ($1.7 million and $2.8 million for the three months and year ended December 31, 2022, respectively).
(7) The Mulatos District includes both the Mulatos pit, as well as La Yaqui Grande.
Environment, Social and Governance Summary Performance
Health and Safety
Total recordable injury frequency rate1 (“TRIFR”) of 1.45 in the fourth quarter, a decrease from 1.84 in the third quarter of 2023
Lost time injury frequency rate1 (“LTIFR”) of 0.10, an increase from 0.09 in the third quarter of 2023
Full year TRIFR of 1.50 and LTIFR of 0.07, a reduction of 6% and an increase of 7%, respectively, from 2022
Mulatos received the Silver Helmet Award from CAMIMEX for the second consecutive year. The Silver Helmet Award recognizes high safety standards & processes in the mining sector in Mexico
During the fourth quarter of 2023, TRIFR decreased with 15 recordable injuries, as compared to 21 in the prior quarter, and one lost time injury, contributing to a significant improvement in annual safety performance.
Alamos strives to maintain a safe, healthy working environment for all, with a strong safety culture where everyone is continually reminded of the importance of keeping themselves and their colleagues healthy and injury-free. The Company’s overarching commitment is to have all employees and contractors return Home Safe Every Day.
Environment
Zero significant environmental incidents and zero reportable spills in the fourth quarter and full year
Updated Closure Plan Amendment received for Island Gold, allowing for construction of the larger mill expansion and paste plant, as outlined in the Phase 3+ Expansion study
Completed year one of Alamos’ Independent Tailings Review Board work
Alamos’ climate change risk assessment was updated to evaluate the effects of material risks and opportunities on the Company’s strategy and financial position, using updated climate scenarios and industry practices. This exercise is expected to be completed in the first quarter of 2024 and will incorporate climate risk into Alamos’ financial performance, corporate strategy and mitigation plans in line with IFRS S2 and recommendations of the Taskforce on Climate-Related Financial Disclosure (“TCFD”)
The Company is committed to preserving the long-term health and viability of the natural environment that surrounds its operations and projects. This includes investing in new initiatives to reduce our environmental footprint with the goal of minimizing the environmental impacts of our activities and offsetting any impacts that cannot be fully mitigated or rehabilitated.
Community
Ongoing donations, medical support and infrastructure investments were provided to local communities, including:
Various sponsorships to support local youth sports teams and community events, and donations to local charities and organizations around the Company’s mines
Scholarships awarded to local students in Matarachi, and students in Canada as part of the Young Mining Professionals Scholarship Program
Health campaigns in Matarachi including full body health assessments for several hundred residents, and vaccination campaigns for influenza and COVID
Ongoing support to our community beekeeping project involving both the Mulatos Mine and participants from Matarachi
Community clean-up in Mulatos and Matarachi in preparation for the Day of the Dead and Mexican Revolution holidays
The Company believes that excellence in sustainability provides a net benefit to all stakeholders. The Company continues to engage with local communities to understand local challenges and priorities. Ongoing investments in local infrastructure, health care, education, cultural and community programs remain a focus of the Company.
Governance and Disclosure
Published Alamos’ 2022 ESG Report, outlining the Company’s progress on its ESG performance in accordance with the Sustainability Accounting Standards Board Metals & Mining Industry Standard, the recommendations of the TCFD, and the Global Reporting Initiative Standards for sustainability reporting “Core” requirements. It focuses on economic, environmental, social and governance topics and indicators that are of the greatest interest to Alamos’ stakeholders
The Mulatos mine was awarded the Empresa Socialmente Responsible award by the Mexican Center for Philanthropy for the 15th consecutive year, and the Ethics and Values in Industry award from CONCAMIN for the fourth consecutive year
The Company maintains the highest standards of corporate governance to ensure that corporate decision-making reflects its values, including the Company’s commitment to sustainable development. During the quarter, the Company continued to advance its implementation of the Responsible Gold Mining Principles, developed by the World Gold Council as a framework that sets clear expectations as to what constitutes responsible gold mining.
(1) Frequency rate is calculated as incidents per 200,000 hours worked.
Outlook and Strategy
2024 Guidance
Young-Davidson
Island Gold
Mulatos
Lynn Lake
Total
Gold production (000’s ounces)
180 – 195
145 – 160
160 – 170
485 – 525
Cost of sales, including amortization (in millions)(3)
$620
Cost of sales, including amortization ($ per ounce)(3)
$1,225
Total cash costs ($ per ounce)(1)
$950 – $1,000
$550 – $600
$925 – $975
—
$825 – $875
All-in sustaining costs ($ per ounce)(1)
$1,125 – $1,175
Mine-site all-in sustaining costs ($ per ounce)(1)(2)
$1,175 – $1,225
$875 – $925
$1,000 – $1,050
—
Capital expenditures (in millions)
Sustaining capital(1)
$40 – $45
$50 – $55
$3 – $5
—
$93 – $105
Growth capital(1)
$20 – $25
$210 – $230
$2 – $5
—
$232 – $260
Total Sustaining and Growth Capital (1) – producing mines
$60 – $70
$260 – $285
$5 – $10
—
$325 – $365
Growth capital – development projects
$25
$25
Capitalized exploration(1)
$10
$13
$9
$9
$41
Total capital expenditures and capitalized exploration(1)
$70 – $80
$273 – $298
$14 – $19
$34
$391 – $431
(1) Refer to the “Non-GAAP Measures and Additional GAAP” disclosure at the end of this press release and associated MD&A for a description of these measures.
(2) For the purposes of calculating mine-site all-in sustaining costs at individual mine sites, the Company does not include an allocation of corporate and administrative and share based compensation expenses to the mine sites.
(3) Cost of sales includes mining and processing costs, royalties, and amortization expense, and is calculated based on the mid-point of total cash cost guidance.
The Company’s objective is to operate a sustainable business model that supports growing returns to all stakeholders over the long-term, through growing production, expanding margins, and increasing profitability. This includes a balanced approach to capital allocation focused on generating strong ongoing free cash flow while re-investing in high-return internal growth opportunities, and supporting higher returns to shareholders.
2023 Year in Review
With the strong finish to the year, the Company delivered record operational and financial performance in 2023. This included record annual production of 529,300 ounces which drove record revenues of $1.0 billion and record operating cash flows of $472.7 million. Full year production was 15% higher than 2022 and achieved the high end of increased guidance. Costs were also in line with annual guidance. Reflecting the strong operational and financial performance, and balanced approach to growth, the Company generated consolidated free cash flow of $123.8 million in 2023 while investing in the Phase 3+ Expansion.
La Yaqui Grande continued to outperform, contributing to a 58% increase in production from the Mulatos District, at 22% lower costs. This exceeded annual production guidance, driving a substantial increase in mine-site free cash flow from Mulatos to $142.1 million. Young-Davidson delivered its third consecutive year of mine-site free cash flow in excess of $100 million and is well positioned to deliver similar levels of free cash flow over the long-term. Island Gold continued to perform well while self-funding the majority of the Phase 3+ Expansion capital. The expansion remains on track for completion in 2026 with significant progress made through 2023. All the major components of the shaft site infrastructure have now been completed, including the headframe and hoist house, which enabled the start of shaft sinking in December 2023.
Additionally, the Company delivered on a number of key catalysts, supporting ongoing value creation within its pipeline of growth projects. This included achieving a significant permitting milestone and completing an updated Feasibility Study on the Lynn Lake project, which outlined a larger, longer-life, low-cost operation with attractive economics and significant exploration upside. The Company also demonstrated another year of exploration success, most notably at Island Gold and Puerto Del Aire (“PDA”) driving a further increase in high-grade Mineral Reserves and Resources. The increase in high-grade Mineral Reserves at PDA is being incorporated into a development plan to be completed during the first quarter of 2024 which is expected to outline a significant mine life extension at Mulatos.
As announced earlier this week, Global Mineral Reserves increased to 10.7 million ounces of gold (202 mt grading 1.65 g/t Au), a 2% increase from 2022, with a further 1% increase in grades. This marks the fifth consecutive year of growth in Mineral Reserves for a combined increase of 10% over that time frame. Grades have also increased 9% over that period as Mineral Reserves continue to grow both in size and quality. The increase in 2023 driven by higher-grade additions at Island Gold and PDA, as well as growth at Lynn Lake.
Island Gold’s tremendous pace of growth continued in 2023 with an 18% increase in Mineral Reserves to 1.7 million ounces, and 16% increase in combined Mineral Reserves and Resources to 6.1 million ounces. PDA’s Mineral Reserves increased 33% to 1.0 million ounces with grades increasing a further 16%. Both deposits remain open in multiple directions, highlighting the significant potential for this growth to continue. Reflecting the continued exploration success and growth potential, the Company has increased its 2024 exploration budget to the largest in its history.
2024 Outlook
The Company provided three-year production and operating guidance in January 2024, which outlined growing production at declining costs over the next three years. Refer to the Company’s January 10, 2024 guidance press release for a summary of the key assumptions and related risks associated with the comprehensive 2024 guidance and three-year production, cost and capital outlook. Gold production in 2024 is expected to range between 485,000 and 525,000 ounces, a 3% increase from the previous three-year guidance provided in January 2023 (based on the mid-point). Total cash costs and AISC are expected to be consistent with 2023.
The increased production guidance was driven by higher expected production from the Mulatos District through residual leaching of the Mulatos leach pad. La Yaqui Grande is expected to supply approximately 75% of Mulatos District production at a similar low-cost structure as 2023. The remaining production is expected to come from residual leaching of the main Mulatos leach pad which carries higher reported AISC, though with the majority of these costs previously incurred, the recovery of these ounces is expected to be very profitable from a cash flow perspective.
Production is expected to be slightly higher during the first half of 2024, with the recovery of ounces through residual leaching at Mulatos expected to decline through the year. First quarter production is expected to be between 123,000 and 133,000 ounces with total cash costs and AISC above the top end of annual guidance reflecting a larger proportion of production coming through residual leaching at Mulatos and slightly lower planned grades at Young-Davidson. Consistent with annual guidance, costs are expected to trend lower through the year reflecting declining rates of production from residual leaching at Mulatos.
Production is expected to increase 7% by 2026 to between 520,000 and 560,000 ounces, with AISC decreasing 11% to between $975 and $1,075 per ounce reflecting low-cost production growth from Island Gold with the completion of the Phase 3+ Expansion. The three year guidance excludes the higher grade PDA project which represents potential production upside at Mulatos as early as 2026. This upside is expected to be outlined in a development plan for PDA to be released during the first quarter of 2024. Looking beyond 2026, the Lynn Lake project is expected to support further potential growth as early as the second half of 2027.
Capital spending is expected to increase from 2023 reflecting inflation, higher capital at Island Gold and Lynn Lake, and an increased capitalized exploration budget. Capital spending on the Lynn Lake project is expected to more than double the amount spent in 2023. Spending at Lynn Lake will be focused on upgrades to site access and infrastructure, including early work on the power line upgrade, in advance of a construction decision anticipated in 2025. Additionally, a portion of the 2024 exploration program will be focused on converting Mineral Resources at the Burnt Timber and Linkwood satellite deposits into a smaller, higher quality Mineral Reserve. A study incorporating these deposits into the Lynn Lake project is expected to be completed in the fourth quarter of 2024, and represents potential production and economic upside to the 2023 Feasibility Study.
Given the strong profitability of the Mulatos operation in 2023, the Company expects to pay significantly higher cash tax payments in Mexico in 2024, which includes the 2023 year-end tax payment due in the first quarter of approximately $40 million. Combined with an expected decrease in costs through the year, the Company expects stronger free cash flow starting in the second quarter of 2024.
The global exploration budget for 2024 is $62 million, a 19% increase from $52 million spent in 2023. The increase reflects expanded budgets across all key assets following up on broad-based exploration success in 2023. Island Gold and the Mulatos District account for approximately 60% of the total budget with $19 million planned for each asset. This is followed by $12 million at Young-Davidson, $9 million at Lynn Lake and $2 million at Golden Arrow.
The Company’s liquidity position remains strong, ending the year with $224.8 million of cash and cash equivalents, $13.0 million in investments in equity securities, and no debt, an increase from $129.8 million at the end of 2022 reflecting strong free cash flow generation throughout the year. Additionally, the Company has a $500 million undrawn credit facility, providing total liquidity of $737.8 million.
Fourth Quarter and Year-End 2023 results
Young-Davidson Financial and Operational Review
Three Months Ended December 31,
Years Ended December 31,
2023
2022
2023
2022
Gold production (ounces)
49,800
44,600
185,100
192,200
Gold sales (ounces)
48,052
44,781
182,796
192,186
Financial Review (in millions)
Operating Revenues
$
94.8
$
78.1
$
355.3
$
347.8
Cost of sales (1)
$
64.6
$
62.2
$
248.2
$
250.5
Earnings from operations
$
29.8
$
15.6
$
104.2
$
93.0
Cash provided by operating activities
$
59.0
$
44.6
$
184.8
$
172.8
Capital expenditures (sustaining) (2)
$
13.9
$
15.2
$
49.0
$
48.8
Capital expenditures (growth) (2)
$
8.8
$
3.9
$
13.1
$
17.7
Capital expenditures (capitalized exploration) (2)
$
1.3
$
1.5
$
5.1
$
5.0
Mine-site free cash flow (2)
$
35.0
$
24.0
$
117.6
$
101.3
Cost of sales, including amortization per ounce of gold sold (1)
$
1,344
$
1,389
$
1,358
$
1,303
Total cash costs per ounce of gold sold (2)
$
920
$
942
$
938
$
878
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
$
1,211
$
1,284
$
1,208
$
1,133
Underground Operations
Tonnes of ore mined
687,738
661,012
2,878,155
2,783,831
Tonnes of ore mined per day
7,475
7,185
7,885
7,627
Average grade of gold (4)
2.39
2.32
2.20
2.30
Metres developed
2,045
2,731
9,085
11,664
Mill Operations
Tonnes of ore processed
724,670
697,816
2,878,047
2,859,608
Tonnes of ore processed per day
7,877
7,585
7,885
7,835
Average grade of gold (4)
2.38
2.31
2.20
2.31
Contained ounces milled
55,412
51,814
203,791
212,548
Average recovery rate
91
%
91
%
90
%
91
%
(1) Cost of sales includes mining and processing costs, royalties and amortization.
(2) Refer to the “Non-GAAP Measures and Additional GAAP Measures” disclosure at the end of this press release and associated MD&A for a description and calculation of these measures.
(3) For the purposes of calculating mine-site all-in sustaining costs, the Company does not include an allocation of corporate and administrative and share based compensation expenses.
(4) Grams per tonne of gold (“g/t Au”).
Operational review
Young-Davidson produced 49,800 ounces of gold in the fourth quarter, a 12% increase compared to the prior year period, reflecting higher grades mined. With the strong finish to the year, Young-Davidson produced 185,100 ounces in 2023, achieving the low end of annual guidance.
Underground mining rates averaged 7,475 tpd in the fourth quarter, higher than the prior year period but below annual guidance due to maintenance on the headframe ore bin apron feeder. For the full year, mining rates averaged 7,885 tpd, consistent with guidance. Grades mined averaged 2.39 g/t Au in the fourth quarter, a 16% increase from the third quarter and a 3% increase compared to the prior year period. Grades increased as planned, reflecting the mining of higher grade stopes that had been deferred from the third quarter. Grades averaged 2.20 g/t Au for the year, in line with guidance.
Milling rates averaged 7,877 tpd in the fourth quarter, exceeding the prior year period as well as mining rates, with surface stockpiles supplementing mill feed. Milling rates averaged 7,885 tpd for the full year, consistent with the prior year and annual guidance. Mill recoveries averaged 91% in the quarter and 90% for the full year, both in line with guidance.
Financial Review
Fourth quarter revenues of $94.8 million were 21% higher than the prior year period, resulting from a higher realized gold price and a 7% increase in ounces sold. Full year revenues of $355.3 million were 2% higher than the prior year, due to the higher realized gold price, offset by less ounces sold.
Cost of sales of $64.6 million in the fourth quarter were 4% higher than the prior year period, resulting from higher unit costs and higher tonnage processed. Underground mining costs were CAD $55 per tonne in the quarter, an increase from earlier in the year reflecting fewer tonnes mined, as well as inflationary pressures, primarily labour. Cost of sales of $248.2 million for the full year were in line with the comparable period.
Total cash costs were $920 per ounce in the fourth quarter and $938 per ounce for the full year. Mine-site AISC were $1,211 per ounce in the quarter and $1,208 per ounce for the full year. Both metrics were consistent with annual guidance in the fourth quarter and full year. Full year costs were higher than the comparative periods due to inflationary pressures and slightly lower grades processed.
Capital expenditures in the fourth quarter included $13.9 million of sustaining capital and $8.8 million of growth capital. Additionally, $1.3 million was invested in capitalized exploration in the quarter. Capital expenditures, inclusive of capitalized exploration, totaled $67.2 million for the full year, a 6% decrease from the prior year and in line with annual guidance.
Young-Davidson continues to demonstrate strong operational and financial consistency with mine-site free cash flow of $35.0 million in the fourth quarter, and a record $117.6 million for 2023. This marked the third consecutive year the operation has generated more than $100 million of mine-site free cash flow. With a 15-year Mineral Reserve life, Young-Davidson is well positioned to generate similar levels of free cash flow over the long-term.
Island Gold Financial and Operational Review
Three Months Ended December 31,
Years Ended December 31,
2023
2022
2023
2022
Gold production (ounces)
31,600
40,500
131,400
133,700
Gold sales (ounces)
30,464
39,145
127,629
130,652
Financial Review (in millions)
Operating Revenues
$
60.0
$
68.0
$
247.8
$
235.3
Cost of sales (1)
$
33.8
$
35.2
$
123.6
$
120.4
Earnings from operations
$
25.3
$
32.1
$
120.5
$
110.2
Cash provided by operating activities
$
39.9
$
39.1
$
164.9
$
148.1
Capital expenditures (sustaining) (2)
$
10.9
$
10.1
$
43.9
$
36.5
Capital expenditures (growth) (2)
$
59.7
$
38.9
$
178.1
$
102.0
Capital expenditures (capitalized exploration) (2)
$
3.3
$
4.9
$
11.1
$
18.8
Mine-site free cash flow (2)
$
(34.0
)
$
(14.8
)
$
(68.2
)
$
(9.2
)
Cost of sales, including amortization per ounce of gold sold (1)
$
1,110
$
899
$
968
$
922
Total cash costs per ounce of gold sold (2)
$
775
$
605
$
669
$
637
Mine-site all-in sustaining costs per ounce of gold sold (2),(3)
$
1,136
$
863
$
1,017
$
918
Underground Operations
Tonnes of ore mined
114,895