Alamos Gold

Financials:

Primary ticker: NYSE:AGI; TSX:AGI
Stage of development: Production
Primary minerals: Gold
Project to promote: Island Gold, Young-Davidson, Mulatos
Project location: Canada and Mexico
Website: www.alamosgold.com/home/default.aspx

Alamos is a Canadian-based intermediate gold producer with diversified production from three operating mines in North America and a strong portfolio of growth projects. This includes the Young-Davidson and Island Gold mines in northern Ontario, Canada and the Mulatos mine in Sonora State, Mexico. Alamos employs more than 1,900 people and is committed to the highest standards of sustainable development. The Company’s shares are traded on the TSX and NYSE under the symbol “AGI”.

 

Cash: USD$122M

Debt: NIL

 

Major shareholders:
Van Eck Associates Corporation – 11%
BlackRock Investment Management (U.K.), LTD – 8%
Dimensional Fund Advisors, L.P. (U.S.) – 5%
The Vanguard Group, Inc. – 3%
First Eagle Investment Management, LLC – 3%
Management Ownership – 1%

Management Profile

John McCluskey – President and CEO

John McCluskey is the President and Chief Executive Officer of Alamos Gold Inc. and has held this position since 2003, when he co-founded the Company with mining hall of famer Chester Millar. Mr. McCluskey was formerly a Director of the World Gold Council and is currently an Alternative Director. Mr. McCluskey was the recipient of the 2018 Murray Pezim Award for Perseverance and Success in Financing Mineral Exploration by the British Columbia Association for Mineral Exploration. This award recognized Mr. McCluskey’s role in the acquisition, financing, and encouragement of successive discoveries at Mulatos, as well as his ongoing success as CEO of Alamos. Mr. McCluskey was also named Ontario’s 2012 Ernst & Young Entrepreneur of The Year, based on a judging panel’s assessment of financial performance, vision, leadership, innovation, personal integrity and influence, social responsibility, and entrepreneurial spirit.

Scott Parsons – VP, Investor Relations
Scott Parsons joined Alamos Gold in 2013 and was appointed Vice President of Investor Relations in 2015. Mr. Parsons has nearly 20 years of capital markets, finance and investor relations experience in progressive roles, primarily in the mining industry. Prior to joining Alamos Gold, Mr. Parsons was an Equity Research Associate and Analyst in the mining group at TD Securities. He graduated with an Honours Bachelor of Business Administration degree from Brock University and is a CFA Charterholder.

What is your rationale for taking part in 121 Mining Investment?

Meet with new investors and existing shareholders

What recent news would you like to highlight to investors attending?

• On June 29th, Alamos Gold announces Phase 3+ Expansion of Island Gold to 2,400 tpd, driving a Larger, more profitable operation with average annual gold production of 287k oz, industry low all-in sustaining costs of $576/oz, and a 31% increase in net present value to $2.0 billion at $1,850/oz gold

• On June 20th, La Yaqui Grande completed construction ahead of schedule and started the commercial production. This operation is ramping up and will be a big driver of higher production, lower costs and growing free cash flow in 2H2022 and beyond

• On June 13rd, Alamos Gold announced initial 30% reduction target in greenhouse gas emissions by 2030

What are your key goals in 3 months, 6 months, 12 months?

• Deliver growing production and declining costs in the 2H 2022 and into 2023 with the ramp up of low-cost production from La Yaqui Grande

• Continue advancing Phase 3+ expansion at Island Gold
• Ongoing exploration success at Island Gold
• Completion of permitting of Lynn Lake project in Manitoba, Canada

What do you think makes your company such a compelling investment?

• Fully funded organic growth

o Gold production of ~460k oz in 2022 with longer term organic growth potential of ~800k oz per year

 

• Declining cost profile

o All-in sustaining costs of ~$1,215/oz in 2022 with costs expected to steadily decline starting in H2/22 to below ~$1,000/oz in 2024 and beyond. 

o This improvement in costs is expected to be driven by low-cost production from expansions at existing operations

 

• Low geopolitical risk profile

o 85% of company valuation supported by Canadian assets

o 100% of production from North America

o 100% of growth coming from Canada 

 

• High quality asset base including two of the largest and most valuable gold mines in Canada

o Island Gold and Young-Davidson are among the largest, lowest cost and most profitable gold mines in Canada

o Upon completion of the expansion at Island Gold, it is expected to be the 7th largest in terms of production, the lowest cost, and 5th most profitable

 

• Conservative business model

o Focus on high-quality assets in safe jurisdictions 

o Strong debt-free balance sheet with $122m in cash as of June 30, 2022

 

• Countercyclical approach to M&A; long term track record of value creation

o $1.7B of value created at Young-Davidson and Island Gold since their respective acquisitions through acquiring at cycle lows and then expanding and growing through exploration

 

• Long term track record of returning capital to shareholders

o Current dividend of $0.10/sh annually; dividend paid for 13 consecutive years

o Share buy back in place – 1.1 million shares repurchased in H1/22

o $275m return to shareholders since 2010 through dividends and share buy backs, including $38m YTD in 2022

o Balanced approach to capital allocation; balancing growth and maintaining strong balance sheet with returns to shareholders

 

• ESG – leading across key metrics

o Well below average GHG emissions per ounce of gold produced with a further improvement expected by 2030 as part of 30% reduction in GHG emissions target

o Strong relative performance and positive ratings trend from key ESG rating agencies

 

• Attractive valuation

o Despite gold prices remaining near historically high levels, Alamos is trading at 0.8x its consensus analyst Net Asset Value.