Alamos Gold set a quarterly record of 136,000 ounces of gold and two northeastern Ontario mines played a role in achieving that benchmark.
The Toronto mid-tier gold miner released its second quarter financial and production results this week for the period ending June 30.
With three prolific mines in Ontario and Mexico, Alamos said gold production mark is up 31 per cent from the same quarter last year and has improved by 6 per cent from this year’s first quarter. Most of these results were driven by strong production from the company’s Mulatos Mine in Sonora, Mexico.
The company’s reported net earnings were $75.1 million, or $0.19 per share.
Alamos set a free cash flow record of $61.6 million. With gold prices surging, the company said it expects to continue generating strong cash flow for years to come while funding expansion at Island Gold.
The Young-Davidson Mine, outside Matachewan, generated a quarterly record of $35.4 million in free cash flow on the back of producing 45,200 ounces. Through the first half of 2023, the mine generated $51.7 million in free cash flow and is on track to generate more than $100 million for the third consecutive year.
Alamos expects Young Davidson will kick it up a notch in the second half of this year with higher grades expected to drive stronger production.
Island Gold produced 30,500 ounces in the quarter, down 18 per cent from the same time last year, but the company attributes that to unexpected downtime caused by forest fire smoke and weather-related power outages.
The Dubreuilville area is a blizzard of construction activity with the sinking of a new shaft at Island Gold as part of a third phase of mine expansion.
In a news release, Alamos said the expansion is “progressing well” with the construction of the hoist house “largely complete.” The headframe is “well underway” and the shaft sinking is on schedule to start in this year’s fourth quarter.
Island Gold has produced 63,400 ounces so far this year. Higher mining and milling rates are expected to increase in the second part of this year. The mine is on track to meet its 2023 gold target, known in mining vernacular as guidance.
The expansion project will boost production to 2,400 tonnes per day by the time construction is complete in 2026. And instead of trucking ore and waste rock up a ramp to the surface, the operation will transition to skipping ore and waste through new infrastructure in the shaft.
At the end of June, Alamos said 36 per cent of the $756-million project budget has been spent. Capital spending is expected to range between $165 million and $185 million in 2023 and should stay roughly the same through 2024 and 2025 before dropping off in 2026 when the project will be done.
On the exploration side, $14 million has been budgeted for 45,000 metres of mostly underground exploration at Island Gold to find mineralization close to its existing resource or reserve blocks. Last month, Alamos posted a news release that its 2023 drilling program has been successful in extending high-grade gold mineralization further out from the Island Gold deposit.
Exploration continues at Young-Davidson where $8 million has been budgeted for this year with 21,600 metres on tap for underground drilling. The focus is to expand gold reserves and resources in five target areas close to existing underground infrastructure.
During the quarter, Alamos completed the acquisition of its Dubreuilville neighbour Manitou Gold on May 23. The acquisition will more than triple its regional land package, giving them more elbow room to keep exploring along strike from Island Gold.
“We delivered a record performance in the second quarter on multiple fronts,” said President-CEO John A. McCluskey in a statement. “With the solid first half, we are well positioned to achieve our full year production and cost guidance.
“The strong production growth and margin expansion led to a record quarter financially across a number of metrics including record revenue and operating cash flow. We also generated record free cash flow of $62 million while continuing to advance our growth initiatives that will in turn support further free cash flow growth.
"The Phase 3+ Expansion at Island Gold remains on track with construction of the shaft surface infrastructure well underway, and the updated feasibility study for the Lynn Lake (Manitoba) project is in the final stages of completion. Both projects are key components of our strong outlook, with the capacity to nearly double our rate of production in Canada at significantly lower costs,” he said.