Alamos Gold (AGI) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Second quarter production totaled 137,000 ounces, up 10% from the first quarter, in line with quarterly guidance [3] - All-in sustaining costs decreased by 18% compared to the first quarter, with further declines expected in the second half of the year [4] - Record revenues of $438 million were achieved, with free cash flow of $85 million [5][13] - Adjusted net earnings were $144 million or $0.34 per share, while operating cash flow before changes in non-cash working capital was a record $233 million [14] Business Line Data and Key Metrics Changes - Island Gold District production totaled 64,400 ounces, a 9% increase over the first quarter [19] - Young Davidson produced 38,700 ounces, also a 9% increase from the first quarter [26] - Mulatos District production totaled 34,100 ounces, a 12% increase over the first quarter [29] - Mine site free cash flow increased significantly across all operations, with Young Davidson generating a record $59 million [30] Market Data and Key Metrics Changes - Average realized gold price was $3,223 per ounce, with total cash costs of $10.75 per ounce and all-in sustaining costs of $14.75 per ounce [13] - Full year total cash costs are now expected to be between $975 and $1,025 per ounce, and all-in sustaining costs between $1,400 and $1,450 per ounce, reflecting a 12% increase in guidance [17] Company Strategy and Development Direction - The company is focused on expanding the Island Gold District, with a base case life of mine plan projecting average annual production of 411,000 ounces at mine site all-in sustaining costs of $915 per ounce [7] - An expansion study is underway, expected to outline a larger and more profitable operation, with potential milling rates evaluated at 20,000 tons per day [8][9] - The company anticipates strong ongoing free cash flow while funding growth projects, with expectations to exceed $1 billion in annual free cash flow at current gold prices [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting production guidance despite a slow start to the year, citing strong operational performance expected in the second half [36][38] - The transition of processing high-grade ore within the Magino mill is seen as a key step towards realizing significant cost synergies [32] - Management highlighted the potential for significant increases in production and declining costs over the next several years, driven by the completion of expansion projects [11] Other Important Information - The company has a cash balance of $345 million and total liquidity of $845 million, positioning it well to internally fund growth plans [15] - The Phase three plus expansion is progressing well, with significant capital already committed [25] Q&A Session Summary Question: Confidence in meeting production guidance - Management expressed strong confidence in meeting production guidance, citing a long track record of accurate forecasting and operational performance [36][38] Question: Exploration potential near Magino Mill - Management highlighted exciting exploration results and ongoing efforts to convert resources to reserves, with plans to incorporate findings into the upcoming expansion study [42][44] Question: Groundwater issues at Young Davidson - Management confirmed that groundwater issues have been resolved and additional pumping capacity has been added to prevent recurrence [53][54] Question: Throughput expectations at Magino Mill - Management indicated a gradual ramp-up in throughput, expecting to reach 11,200 tonnes per day by the end of the quarter [68][69] Question: Contribution from Island underground ore - Management confirmed that contributions from Island underground ore will increase in the second half of the year, targeting approximately 1,400 tonnes per day by Q4 [71]