Q3 2023 Alamos Gold Inc Earnings Call
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All participants please standby your conference is ready to begin.
Good morning, I will now turn the call over to Scott Parsons Alamos Senior Vice President of Investor Relations. Please go ahead.
Thank you operator, and thanks to everybody for attending almost as third quarter 2023 conference call.
In addition to myself, we have on the line today, John Mccluskey, President and Chief Executive Officer, Craig Fischer, Chief Financial Officer, Luke Chemo.
<unk> operating officer, and Scott RG, Parsons, Vice President of exploration.
We will be referring to a presentation. During the conference call that is available through the webcast and on our website.
I would also like to remind everyone that our presentation will be followed by a Q&A session.
As we will be making forward looking statements during the call. Please refer to our cautionary notes included in the presentation news release and MD&A as well as the risk factors set out in our annual information form.
Technical information in this presentation has been reviewed and approved by Chris Bostwick, Our senior Vice President Technical services and a qualified person.
Also please bear in mind that all of the dollar amounts mentioned in this conference call are in U S dollars unless otherwise noted.
Now John will provide you with an overview.
Thank you Scott.
Yes.
Starting with slide three.
We delivered another strong quarter with production of 134.
35400 ounces exceeding quarterly guidance.
Cost near the low end of annual guidance.
This reflected a solid quarter from island gold and another excellent quarter for Lee Aki Grande.
With year to date production of 400000 ounces, we are on pace to achieve a new annual record driven by an outstanding year from them allowed Us district.
Given the strong performance, we are increasing our production guidance by 5% to a new range of 515000 530000 ounces.
We're also on track to achieve our cost guidance for the year with total cash costs and all in sustaining costs well below the midpoint of guidance year to date.
It was also a solid quarter financially.
Putting us on pace for a record year across a number of metrics, including revenue and cash flow from operations.
This is giving us the capacity to both grow as a company and generate solid free cash flow.
Including 37 million in the quarter at $109 million year to date.
Now looking at slide four.
We continue to create value from within our growth projects.
In August we released an updated feasibility study on the Lynn Lake project with a 44% increase in reserves supporting a larger longer my a longer life low cost operation with attractive economics.
Unknown Executive: Once again, please continue to stand by. We thank you for your patience. [inaudible] All participants, please stand by.
As part of our balanced approach to growth. Our current focus is on the phase III plus expansion at island gold, but literally remains a key part of our longer term growth plans. That's another long life low cost project in Canada with significant exploration upside, which we expect will further enhance the economics of the project.
In September we provided another exploration update from <unk>, where we continue to extend high grade mineralization at P. D. A.
We expect this exploration success will drive a further increase in higher grade reserves and resources as the deposits.
Unknown Executive: Your conference is ready to begin. Good morning.
There's a pause that's beyond the million ounces defined at the end of last year.
Scott Parsons: I will now turn the call over to Scott Parsons. All the most senior vice president of investor relations. Please go ahead. Thank you operator.
This growth is being incorporated into a development plan to be completed later this year.
Scott Parsons: And thanks to everybody for attending Alamos's third quarter, 2023 conference call. In addition to myself, we have on the line today John McCluskey, President and Chief Executive Officer, Greg Fisher, Chief Financial Officer, Luc Guimond, Chief Operating Officer, and Scott Argy Parsons, vice president of exploration. We will be referring to a presentation during the conference call that is available through the webcast and on our website.
Which we expect will outline another attractive project and significant mine life extension of a lot of us.
Construction of the phase III expansion at island gold is advancing well with the head frame is substantially complete and shaft sinking on track to start by year end.
<unk> remains on schedule and on budget and we expect to be operating from the shaft and extended mill in the first quarter of 2026.
These projects are key drivers of our strong outlook supporting growing production declining costs and increased profitability.
Scott Parsons: I would also like to remind everyone that our presentation will be followed by a Q&A session. As we will be making forward looking statements during the call, please refer to our cautionary notes, included in the presentation, news release, and MDNA, as well as the risk factors set out in our annual information form. Technical information in this presentation has been reviewed and approved by Chris Boswick, our senior vice president, technical services, and a qualified person. Also, please bear in mind that all of the dollar amounts mentioned in this conference call are in US dollars unless otherwise noted.
I'll now turn the call over to our CFO Greg Fisher.
Review, our financial performance correct.
Thank you John.
On slide five during the third quarter, we sold 133000 ounces of gold at an average realized price of $1932 per ounce $4 above the London PM fix for revenues of $256 million.
Total cash cost of $835 per ounce and all in sustaining cost of $1121 per ounce for both towards the low end of full year guidance.
John McCluskey: Now John will provide you with an overview. Thank you Scott. Starting with slide three, we delivered another strong quarter with production of 135,400 ounces, exceeding quarterly guidance at cost near the low end of annual guidance. This reflected a solid quarter for my own gold and another excellent quarter for Miyaki Grande. With year-to-date production of 400,000 ounces, we are on pace to achieve a new annual record driven by an outstanding year from the Molotos District.
We are on track to once again achieve full year cost guidance.
Our reported net earnings of $39 million in the third quarter or <unk> 10 per share included unrealized foreign exchange losses of $12 million recorded within deferred taxes, and other noncash losses of $3 million.
Excluding these items, our adjusted net earnings were $55 million or <unk> 14 per share.
Operating cash flow before changes in noncash working capital was $133 million or <unk> 34 per share.
Given our solid production growth and margin expansion. This year, we are on pace for a record year in terms of revenue earnings and cash flow from operations.
John McCluskey: Given the strong performance, we are increasing our production guidance by 5%, to a new range of 515,000 to 530,000 ounces. We are also on track to achieve our cost guidance for the year, with total cash costs and all in sustaining costs both below the midpoint of guidance here today. We are also a solid quarter financially, putting us on pace for a record year across a number of metrics including revenue and cash flow from operations. This is giving us the capacity to both grow as a company and generate solid pre-cash flow including 37 million in the quarter and 109 million year-to-date.
This is driving strong free cash flow generation at the time that we're also investing in growth.
This includes $37 million of free cash flow in the quarter and 109 million year to date.
We expect the strong free cash flow generation to continue while funding the phase III expansion.
Capital spending totaled $75 million in the quarter and included $27 million of sustaining capital $42 million of growth capital and $6 million of capitalized exploration through.
Through the first nine months of the year capital spending totaled $239 million consistent with our annual guidance.
John McCluskey: Elodie is Slide 4. We continue to create value from within our growth projects. In August, we released an updated feasibility study on the Lynn Lake Project with a 44% increase in reserves, supporting a larger, longer life low cost operation with attractive economics. As part of our balanced approach to growth, our current focus is on the Phase 3-plus expansion of Island Gold. But Lynn Lake remains a key part of our longer-term growth plans as another long-life low-cost project in Canada with significant exploration upside, which we expect will further enhance the economics of the project.
We paid cash taxes of $3 million in the quarter at <unk> with a similar payment anticipated in the fourth quarter, we expect significantly higher cash tax payments in Mexico in 2024, reflecting the strong profitability of modest in 2023, the $115 million of free cash flow generated from the operation year to date.
Our balance sheet continues to improve with our cash balance growing to $216 million, a 14% increase from the previous quarter and a 66% increase in the start of the year, we remain debt free and well positioned to fund our growth initiatives I will now turn the call over to our CLO rupee mall to provide an overview of our operator.
Yeah.
Thank you Greg moving to slide six young Davidson produced 45100 ounces in the quarter consistent with the previous few quarters with record milling rates of 8200 tonnes per day offsetting slightly lower grades.
John McCluskey: In September, we provided another exploration update from Alados, where we continue to extend high-grade mentalization at PDA. We expect this exploration success will drive a further increase in higher-grade reserves and resources as the deposits beyond the million ounces defined at the end of last year. This growth is being incorporated into a development plan to be completed later this year, which we expect will outline another attractive project and significant mine-life extension of Alados.
Costs were in line with annual guidance, both in the quarter and year to date.
Grades are expected to increase in the fourth quarter as mining higher grade stopes that had been deferred from the third quarter.
This is expected to drive production higher in the fourth quarter, putting the operation on track to achieve full year production and cost guidance.
John McCluskey: Construction of a Phase 3-expansion at Island Gold is advancing well with the headframes substantially complete and shafts sinking on track to start by year end. The project remains on schedule and on budget, and we expect to be operating from the shaft and expected mill in the first quarter of 2026. These projects are key drivers of our strong outlook, supporting growing production, declining costs, and increased profitability.
The operation continues to be a consistent performer with mine site free cash flow of $31 million in the quarter and 83 million year to date.
For the third consecutive year young Davidson is on track to deliver more than $100 million and free cash flow.
Over to slide seven.
Island Gold produced 36400 ounces in the quarter, a 19% increase over the second quarter, reflecting both higher grades and tonnes processed.
It was a strong quarter operationally with mining and milling rates, both increasing to exceed annual guidance of 200 tonnes per day.
Greg Fisher: I'll now turn the call over to our CFO Greg Fisher to review our financial performance. Great. Thank you, John. On slide 5, during the third quarter, we sold 133,000 ounces gold at an average realized price of $1,932 per ounce, $4 above the London PM6 for revenues of $256 million. Total cost costs of $835 per ounce, and all in sustained cost of $1,121 per ounce are both towards the low end of full-year guidance.
This helped drive cost down from the second quarter towards the low end of annual guidance.
Given the strong year to date performance, including production of 100000 ounces. The operation is well positioned to achieve full year production and cost guidance.
Over to slide eight.
Work on the Phase III plus expansion continues to progress with a focus on completion of the remaining shop site surface infrastructure.
Construction of the headframe is substantially complete.
Greg Fisher: We are on track to once again achieve full-year cost guidance. Our reporting net earnings of $39 million in the third quarter, or $0.10 per share, included unrealized foreign exchange losses of $12 million, recorded within deferred taxes, and other non-cash losses of $3 million. Excluding these items, our adjusted net earnings for $55 million, or $0.14 per share. Operating cash flow before changes in non-cash work in capital was $133 million, or $0.34 per share.
Construction of the shaft area substation.
Pre commissioning tests on the Ehealth electrical systems have commenced and.
And construction of the warehouse is well underway.
Oh fitting of the gallery to be used in the shaft sinking is over 50% complete putting the shaft sink on track to start by year end.
Over to slide nine.
Total of $35 million of capital related to the phase III plus expansion and capital development was spent in the quarter.
Greg Fisher: Given our solid production growth and margin expansion this year, we are on pace for a record year in terms of revenue, earnings, and cash flow from operations. This is driving a strong free cash flow generation at a time that we are also investing in growth. This includes $37 million of free cash flow in the quarter and $109 million year to date. We expect this strong free cash flow generation to continue while funding the Phase 3 Plus expansion.
The expansion remains on budget with 45% of the total initial capital of 756 million spent and committed to the end of September.
With the shop site with a shop site surface infrastructure nearing completion.
Spending will shift towards the shaft sinking later this year.
And the mill expansion and paste plant into next year.
The overall expansion remains on track to be completed in 2026.
That's forming island gold into one of the largest lowest cost and most profitable mines in Canada.
Greg Fisher: Capital spending totaled $75 million in the quarter, and included $27 million of sustaining capital, $42 million of growth capital, and $6 million of capitalized expiration, through the first nine months of the year, capital spending total 239 million, consistent with our annual guidance. We paid cash taxes of 3 million in the quarter at Molados, with a similar payment anticipated in the fourth quarter. We expect significantly higher cash tax payments in Mexico in 2024, reflecting the strong profitability of Molados in 2023, and the 115 million of free cash will generate from the operation year to date. Our balance sheet continues to improve with our cash balance growing to 216 million, a 14% increase in the previous quarter, and a 66% increase in the start of the year.
Moving to slide 10.
<unk> production of 53900 ounces was down from the second quarter as guided reflecting the return to design mining rates of La Yaqui Grande and then the mining within the main <unk> pit.
Our Yoki Grande continued to outperform with grades exceeding guidance due to positive grade reconciliation.
Mine site free cash flow was $31 million in the quarter and an impressive $115 million year to date.
As previously guided production is expected to decrease in the fourth quarter, reflecting the end of the whole lot of pets and a decrease in grades guidance to guidance levels at La Yaqui Grande.
Greg Fisher: We remain debt-free and well positioned to fund our growth initiatives.
With year to date production of 164700 ounces.
Luc Guimond: I will now turn the call over to our COMO, Luc Guimond, to provide an overview of our operations. Thank you, Greg. Moving to slide 6, young Davidson produced 45,100 ounces in the quarter, consistent with the previous few quarters, with record milling rates of 8,200 tons per day, offsetting slightly lower grades. Costs were in line with annual guidance, both in the quarter and year to date. Grays are expected to increase in the fourth quarter, as my and higher grade slopes that have been deferred from the third quarter.
<unk> is on track to exceed its full year guidance driven by the strong outperformance from La Yaqui Grande.
Costs are expected to increase in the fourth quarter.
<unk> within guidance for the full year.
Moving to slide 11.
John noted the updated feasibility study on the Lynn Lake project is outline a bigger longer life and more attractive operation relative to the 2017 study.
The updated study incorporates a 44% larger mineral reserve and a 14% larger mill at 8000 tonnes per day.
Luc Guimond: This is expected to drive production higher in the fourth quarter, putting the operation on track to achieve full-year production and cost guidance. The operation continues to be a consistent performer with mind-side free cash flow of 31 million in the quarter, and 83 million year to date. For the third consecutive year, young Davidson is on track to deliver more than 100 million in free cash flow. Over to slide 7, Island Gold produced 36,400 ounces in the quarter, a 19% increase over the second quarter, reflecting both higher grades and tons processed.
Production over the first 10 years is expected to average 176000 ounces per year up 23% from 2017.
Lower all in sustaining costs of $699 per ounce.
Over the last several years, we have completed an extensive amount of additional engineering geotechnical and other work, including obtaining approval of the environmental impact statement back in March.
This work has significantly Derisked. The project provides us with a high degree of confidence in the capital and operating cost estimates.
These estimates support attractive base case economics for the project and.
Luc Guimond: It was a strong quarter operation with mining and milling rates, both increasing to exceed annual guidance of 1,200 tons per day. This helped drive costs down from the second quarter towards the low end of annual guidance. Given the strong year to date performance, including production of 100,000 ounces, the operation is well-positioned to achieve full-year production and cost guidance. Over to slide 8, work on the phase 3 plus expansion continues to progress with the focus on completion of the remaining shop site surface infrastructure.
And at current gold prices represent a 22% after tax internal rate of return.
We also see significant upside potential given several near mine and regional exploration opportunities that could be incorporated into the project.
Under the current mine plan, the Mcallen and Gordon deposits will be mined over the first 11 years for.
Luc Guimond: Construction of the headframe is substantially complete, as is construction of the shop area substation. Pre-commissioning tests on the e-house electrical systems have commenced, and construction of the warehouse is well underway. Outfitting of the galloway to be used in the shop, sinking is over 50% complete, putting the shop sink on track to start by year end. Over to slide 9, a total of 35 million of capital related to the phase 3 plus expansion and capital development was spent in the quarter.
For the remaining six years, we will be processing lower grade stockpiles.
With our fleet of mining equipment available from years 11 onward, we are evaluating several nearby targets such as Bernd timber and liquid as additional sources of mill feed.
These deposits represent upside to the feasibility study is they would help sustain higher rates of production well beyond the first 10 years.
To review that upside in more detail I will turn the call over to our VP of exploration Scott RG Parsons.
Luke over to slide 12.
August we provided an exploration update at Lynn Lake highlighting the significant upside potential across a number of near mine and regional targets.
Luc Guimond: The expansion remains on budget with 45% of the total initial capital of 756 million spent and committed to the end of September. With the shop site surface infrastructure nearing completion, spending will shift towards the shop sinking later this year and the mill expansion and plant into next year. The old one expansion remains on track to be completed in 2026.
It includes bird timber in Lakewood two deposits in proximity to the planned mill at Mcclelland that could potentially be incorporated into the mine plan.
They are located approximately 28 kilometers away from Maclellan site interconnected by at all everybody existing all season road.
The two deposits because they had one 6 million ounces of inferred resources that were not factored into the feasibility study.
Luc Guimond: Transforming Island Goal into one of the largest, lowest cost, and most profitable mines in Canada Moving to slide 10, at Palados, production of 53,900 ounces was down from the second quarter as guided. Reflecting the return to design mining rates at Leachy Grande, and end of mining within the main Palados pit. Leachy Grande continued to outperform with grades exceeding guidance due to positive grade reconciliation. Minesite free cash flow was 31 million in the quarter, and an impressive 115 million year to date.
Updated geological models have been completed on both deposits demonstrating the potential for a smaller higher quality of mineral resource.
We see excellent potential the truck this though mcclellan building infrastructure after the mcallen deposit has been mined.
This would not only helps sustain higher rates of production well beyond the first 10 years, but also expand the mine life and enhance the project economics.
I heard a similar stage target with similar potential is another satellite deposit located 20 kilometers by road from the planned mill.
All 15 holes drilled are made or to date have intersected gold mineralization over 700 meter strike length and depth of 280 meters. This.
Luc Guimond: As previously guided, production is expected to decrease in the fourth quarter, reflecting the end of the Palados pit, and a decrease in grades guided to guided levels at Leachy Grande. With year-to-day production of 164,700 ounces, Alamos is on track to exceed its full-year guidance driven by the strong health performance from Leachy Grande. Costs are expected to increase in the fourth quarter, but remain within guidance for the full year.
This includes higher grade intercepts that just five nine grams per tonne over 12 meters.
These are just a few examples of the potential that we see across the Lynn Lake Greenstone belt, a large under explored district.
He will be starting with a 17 year reserve life based on the updated study however, given the opportunities we see across our 58000 hectare land package, we fully expect to be mining in the district well beyond that.
Over to slide 13.
John McCluskey: Moving to slide 11, as John noted, the updated feasibility study on the little lake project has outlined a bigger, longer life, and more attractive operation relative to the 2017 study. The updated study incorporates a 44% larger mineral reserve and a 14% larger mill at 8,000 tons per day. Production over the first 10 years is expected to average 176,000 ounces per year, up 23% from 2017, and more all in sustaining costs of $699 per ounce.
In September we announced a second exploration update this year in <unk>, where we continue to have success, both regionally and in your mind.
P. A step out drilling has further extended high grade mineralization beyond reserves and resources, which will support additional growth beyond the currently defined 1 million ounces.
We are currently working on an updated reserve based on drilling to the end of July there'll be incorporating that into an updated development plan to be completed towards the end of the year.
We expect this will outline another significant mine life extension of them a lot of.
Based on the success of the program to date, we've increased our exploration budget of models for the second time this year to $25 million.
John McCluskey: Over the last several years, we have completed an extensive amount of additional engineering, geotechnical, and other work, including obtaining approval of the environmental impact statement back in March. This work has significantly de-risked the project and provides us with a high degree of confidence in the capital and operating cost estimates. These estimates support attractive base case economics for the project, and that current goal prices represent a 22% after tax internal rate of return.
This includes drilling a PDA through the rest of this year with 50000 meters planned up from the original budget of 15000 meters.
We are still in the early stages of testing the potential within our broader PDA area.
Our success to date and with the deposit open in multiple directions, we see excellent potential for PTA to continue to grow in the years ahead.
We also released additional results from the cap on regional targets target located four kilometers east of the modest pit.
John McCluskey: We also see significant upside potential given several near-mine and regional exploration opportunities that could be incorporated into the project. Under the current mine plan, the McClellan and Gordon deposits will be mined over the first 11 years. For the remaining six years, we will be processing lower grade stockpiles. With our fleet of mining equipment available from years 11 onward, we are evaluating several nearby targets, such as burnt timber and liquid, as additional sources of mill feed. These deposits represent upside to the feasibility study, as they would help sustain prior rates of production well beyond the first 10 years.
Drilling continues to intersect wide intervals of significant oxide and sulfide mineralization within a breccia along the Kaplin fault.
This included two seven grams per tonne over 121 meter core length, the best hole drilled the data Kaplan.
Highlighting the significant potential in this area and within the broader mottos districts.
With that I'll turn the call back to John.
Thank you Scott.
So that concludes the formal presentation.
I'll now ask the operator to open the calls for the open the lines for your questions.
Thank you we will now take questions from the telephone lines.
Scott Parsons: To review that upside in more detail, I will turn the call over to our VP of exploration, Scott R.G. Parsons. Thank you, Luke.
You have a question and you are using a speaker phone please lift the handset before making your selection.
Have a question. Please press star one on your devices Keypad you may cancel your question at any time by pressing star two.
Scott Parsons: Over to slide 12. You know, obviously, provided an exploration update of limb lake, highlighting the significant upside potential across the number of near-mine and regional targets. This includes burnt timber and liquid, two deposits in proximity to the plan, mill of McClellan, that could potentially be incorporated into the mine plan. They are located approximately 28 kilometers away from McClellan site, and are connected by existing alt-season roads. The two deposits contain 1.6 million ounces of inferred resources that were not factored into the feasibility study update that your logical models have been completed on both deposits, demonstrating the potential for a smaller higher quality mineral resource.
Please press star one at this time you can have a question there will be a brief pause while the participants register quick questions. Thank you for your patience.
Okay.
My first question is from Cosmos Xu. Please go ahead your line is open.
Thank you John right.
Scott and Scott.
Congrats on a very strong Q3, and it's good to see that.
Okay.
Production about costs.
Maybe first off in in Mexico.
As you mentioned you know yeah like Yaqui Grande has done really well year to date.
Positive grade reconciliation.
But at the same time, you say you know that the grade will likely trend back.
To more normal levels.
No you know what happened there why were you able to have been positive grade reconciliation is there a potential for it to.
Scott Parsons: Maynard is a similar staged target with similar potential as another satellite deposit located 20 kilometers by road from the plan mill. All 15 holes in all the maynard to date have intersected gold mineralization over 700 meters per night length and to the depth of 280 meters. This includes hired maintenance that's just 5.9 grams per time over 12 meters. These are just a few examples of the potential that we see across the limb-lakerings dumbbell, a large under-explored district. We'll be starting with a 17-year reserve life based on the updated study. However, given the opportunities we see across our 58,000 Hector land package, we fully expect the mining and the district will be on that.
To continue.
Alright, Hi, Cosmos look here.
Yes, our expectation is that we will will be more in line with our grades are as we move forward, we won't necessarily see that over performance whats really happening as we get deeper into the benches of La Yaqui Grande.
The drill density gets tighter so we expect to see more consistent.
<unk> actual versus.
Our model moving forward.
Understood.
And then maybe sticking with Mexico.
Unknown Executive: Over to slide 13.
Quite a bit of noise these days and the country of Mexico, either the security issues or some of them.
Scott Parsons: In September, we announced a second expiration that the update is here in Molatos where we continue to have success both regionally and your mind. A PEA step of drilling is further extended high grade mineralization beyond reserves and resources, which will support additional growth beyond the currently defined 1 million ounces. We are currently working on an updated reserve based on drilling to vendor July. We'll be incorporating that in an updated development plan to be completed towards the end of the year.
Here or.
Or you know the ongoing potential changes to the mine and Bob could you maybe talk about is there any potential impact to or has there been any potential impact to animals.
Hi, Cosmos, its John and John I would say that you know if you can.
Never rule anything out just given you know it could happening in Canada, I think everybody recalls we had a big old hoist at our airport here in person. So I don't think you could ever real rule anything out from that point of view, but I would say that we.
Scott Parsons: We expect as well to find another significant mine-life extension of Molatos. Based on the success of the program today, we've increased our expiration budget of Molatos for the second time this year to $25 million. This includes drilling a PEA to the rest of this year, with 50,000 meters planned out from the original budget of 15,000 meters. We were still in the early stages of testing the potential within a broader PDA area.
No we've been operating in and allowed us for a long long time, we've we significantly increased our security over the last five years and on top of that the the Mexican government has stepped up security in the region quite significantly there theres a lot of of mining operations in this part of Mexico and I would.
Scott Parsons: Based on the success today, and with the deposit open in multiple directions, we see excellent potential for PDA to continue to grow in the years ahead. We also have reduced additional results in the Kaplan Regional Target target located 4 kilometers east of the Molatos pit. The demo drilling continues to intersect wide intervals with significant oxide and fault-fied mineralization within a breccia along the Kaplan Bolt. This included 2.7 grams per ton, over 120 meter core length, the best total drill to date a Kaplan. Highlighting the significant potential in this area, and within the broader Molatos districts.
Say the Mexican government carries a great deal about that so I don't see I don't see anything.
Petit.
Particularly unusual about about where we're operating I think it's.
It's.
It's secure as it's ever been we we've we've been operating there for but we've been there 22 years now we've been in production for 19 of those years.
We've only ever had one really incident.
John McCluskey: With that, I'll call Dr. John. Thank you, Scott.
So I would say looking forward we're.
Unknown Executive: So that concludes the formal presentation. I'll now ask the operator to open the lines for your questions. Thank you. We'll mount the questions from the telephone lines. If you have a question and you're using a speaker phone, please lift your hands up before making your selection. If you have a question, please press star 1 on your device's keypad. You may cancel your question any time by pressing star 2. Please press star 1 on this time. If you have a question, there will be a brief pass for the participants' registration for questions.
We're pretty confident that.
Unknown Executive: Thank you for your patience.
With that our site continue to can continue to operate without a.
Any unusual impacts.
Okay sounds good.
Maybe switching gears, a little bit of island gold you know it sounds like the.
Plus expansion is going well it sounds like all the surface infrastructure is almost complete now.
Shops Simpson.
As we moved into shops.
You know maybe could you talk about some of the key deliverables, even key risk in terms of you know what the next sort of.
Cosmos Chiu: Our first question is from Cosmos Chiu. Please go ahead. Her line is open. Thank you, John. Greg, Luke, Scott, and Scott. Congrats on a very strong Q3 and good to see that you were able to share guidance on production and cost introduction. Maybe first off in Mexico. As you mentioned, you know, Yaki Grande has done really well here to date. Positive, great reconciliation. But at the same time you say, you know, that's great.
Stage of the project entails clearly, it's all your personal audio John.
Shops thinking thing.
Does that help I guess that would raise bore and this is a bit different but you know does that help you know can you talk about what we should expect with the next stage of our shops.
Thanks, Dan.
The key factor.
Yes, Cosmo look here so.
We're in the final stages of actually getting the.
Cosmos Chiu: We're likely, you know, turned back to to more normal levels. So I just want to know, you know, what happened to you? Why would you able to have the positive, great reconciliation? Is there potential for to continue? Hi. Hi, Cosmos. Luke here. Hello. Yeah. Our expectation is that we will will be more in line with our grades as we move forward. We won't necessarily see that over performance. What's really happening as we get deeper into the benches of Yaki Grande, the drill density gets tighter.
The requirements for a gearing up of the shop to be able to start the syncing. Our expectation is that we will start that to.
At the end of Q4, and and and get them to shop on a consistent basis, obviously in.
Continuing with the benching aspect I mean, we're using a reputable contractor redpath mining have done shops, all over the world certainly in Canada, but all over the world. So you know, we're not obviously concerned with them being able to deliver on what their expectations are.
Cosmos Chiu: So we expect to see more consistent performance, actual versus our model moving forward. And that may be sticking with Mexico, you know, quite a bit of noise these days in the country of Mexico, either the security issues for some of your peers or, you know, the ongoing potential changes to mind involved. Could you maybe talk about, is there any potential impacts to, or has there been a potential impact to animals? Hi, Cosmos.
Once they get the.
The setup completed and they get the cycle going over our expectation is that we would be thinking at about three meters per day.
Over the next couple of years until the the shaft is completed late 2025.
Great and then maybe one last question.
So Greg as you mentioned.
Very profitable in Mexico. This year, which also means a bug attached to build next year could you remind me when does that come.
When would it come out.
How how can we potentially estimate what that seamlessly.
Yes, cosmos its Greg here, so yeah. The yearend tax filing is due in March so the.
Cosmos Chiu: John. Hi, John. I would say that, you know, you can never rule anything out just given, you know, it could happen in Canada. I think everybody recalls we had a big gold heist at our airport here at Pearson. So I don't think you could ever rule anything out from that point of view. But I would say that, you know, we've been operating in molotus for a long, long time. We've significantly increased security over the last five years.
Payments to for the 2023 tax bill would be due in the first quarter of <unk>.
Of 2024 and that would relate to both income taxes in mining taxes, we have paid.
Paid about 3 million this year were going on in the third quarter and about $3 million in the fourth quarter, but given our profitability, though there will be a pretty significant catch up when we filed our final tactical in March of 'twenty 'twenty four.
Cosmos Chiu: And on top of that, the Mexican government has stepped up security in the region quite significantly. There's a lot of mining operations in this part of Mexico and I would say the Mexican government cares a great deal about that. So I don't see anything particularly unusual about where we're operating. I think it's, it's as secure as it's ever been. We've been operating there for, but we've been there 22 years now. We've been in production for 19 of those years and we've only ever had one really incident.
Great. Thank you those are all the questions I have Ah congrats.
Congrats again on a very strong team.
Okay.
Thank you.
Our next question is from Mike Parkin. Please go ahead.
Thanks, guys and congrats on the great quarter.
Speak too.
The Island project what is the critical path.
And you know what kind of budget did in there.
Sure.
And do you have any kind of flexibility to weather.
<unk> added a night shift gear it up it did prove to show any signs of falling behind schedule.
Hey, Mike look here as I mentioned earlier with the previous question right now all of our main focus has been around the the shop set up on the shaft sinking in preparation for that.
Cosmos Chiu: So I would say looking forward, we're pretty confident that our site can continue to operate without any unusual impacts. Of course, sounds good. Maybe, you know, switching gears a little bit, the island gold, it all sounds like the base 3 plus expansion is going well. Sounds like other, you know, surface infrastructures almost complete. Now, you know, comes the shafts, as we moved into shop syncing, you know, maybe could you talk about some of the key deliverables, even key risk in terms of, you know, what the next sort of stage of the project entails.
And are you know certainly they had pretty much everything is well well advanced and we are in the final stages of preparing to commission for the shaft sinking so our expectation is.
But late Q4, we'll start that process as I mentioned, we've got a reputable contractor. That's you know got a lot of.
A lot of expertise and skill set to complete that on time and on budget.
We fully expect them to be able to do that.
Other components that we've been certainly working on with regards to the phase III plus expansion is the detailed engineering for the mill expansion as well as the piece Brett. So those have been ongoing over the course of this year and you know we'll start to.
Cosmos Chiu: Clearly, it's not your personal deal, John, you know, you send a shop syncing thing down to the past. Does that help? I guess that was raised for, and this is a bit different, but, you know, does that help? You know, can you talk about what we should expect with the next stage of shop syncing with the extension of some of the key factors you look at. Yeah, Cosmos, look here. So we're in the final stages of actually getting, you know, the requirements for gearing up of the shop to be able to start the syncing.
It gets into more serious.
Aspects of the construction into next year and into 2025 with regards to the both of those components on the other components that are required for US is obviously an upgrade to our.
Existing power distribution to the site, we will be basically doubling doubling our load from where we are today and.
And we are certainly currently working on that as well to have a construction timeline to have that all in place as well.
What's all the other components of the phase III plus expansion or completed two startup in Q1 end of Q1 2026.
Cosmos Chiu: Our expectations that we will start that to near the end of Q4, and get in the shop on a consistent basis, obviously, and continue with the benching aspect. I mean, we're using a reputable contractor, Red Pass mining, have done shops all over the world, certainly in Canada, but all over the world. So, you know, we're not obviously concerned with them being able to deliver on what their expectations are. Once they get, you know, the setup completed and they get the cycle going, our expectation is that we would be syncing at about three meters per day over the next couple of years until the shop is completed late 2025.
Right.
A follow up for Greg.
Can you just remind me what was the Bud you did Canadian dollar and are you guys.
Looking to take advantage of the current weaker I would assume weaker Canadian dollar versus budget. So it just helps.
To give you a bit of additional tailwind on that project.
Yeah, we had budgeted at 75 cents. So the the weaker Canadian dollar will help from a capex perspective, but also on our operating costs through.
Our existing operations.
And can you just remind me roughly what percentage of the Capex would be Canadian I guess, probably all your labor and contractor would mostly be Todd.
Cosmos Chiu: Great. And then maybe one last question. Great, as you mentioned, very profitable in Mexico this year, which also means a larger tax bill next year. Could you remind me when does that large payment come out? When would it come out? And, you know, how can we potentially estimate what that payment is going to be? Yeah, Cosmos is this right here. So yeah, the year in tax filing is doing in March. So the payments for the 2023 tax bill would be doing in the first quarter of 2024, and that would relate to both income taxes and mining taxes.
I imagine it's pretty high.
Mike I'll have to get back to you on that.
I don't have the details right now, but I'll I'll take that offline alright.
Alright, and then.
All of this is some pretty exciting news coming out later this quarter with P. D. A.
Can you just give me is there any ability to talk to but you're already at a million ounces a total resource.
Bumped up the budget on the drilling a couple of times already this year recognizing that you've got the July cut off.
But it seems like things are going really well there.
Cosmos Chiu: We have paid about three million this year. We're going to have in the third quarter and about three million in the fourth quarter, but given our profitability, there will be a pretty significant catch up when we file that final tax bill in March of 2024. Great. Thank you. Those are all the questions I have. Congrats again on a very strong Q3. Thank you.
Do we have an idea what we should be kind of thinking of in terms of scale like it seems like it's getting bigger and bigger and bigger or is it going to be possibly a project that you would like your phase one and then I did opens up adding a second processing line in the mill.
Is there anything you can kind of talk to you.
Yeah, Mike It's Luke you're again, yeah. So I mean, it's still kind of early stages. I mean, we've just recently completed some of the Geo Tech drilling required for the mine design aspect of the operation and in that mine design, we'll we'll put a mine plan together.
Mark Parkin: Our next question is from Mark Parkin. Please go ahead. Thanks, guys, and congrats on a great quarter. Could you just speak to the island project? What is the critical path and, you know, what's kind of budgeted in there for it? Do you have any kind of flexibility to whether I added a night shift, geared up if it did prove to show any signs of falling behind schedule? I might move here. As I mentioned earlier with the previous question.
We've also in conjunction in parallel been working through some technical studies with regards to the metallurgy and the mill Mill design.
So our expectation is we will have a development study completed by the end of the year with some preliminary numbers with regards to the mining rates and milling and supporting milling rates I mean high level at this point I mean, we've been kind of targeting 2000 tonnes per day based on what we've seen so far.
Mark Parkin: Right now all of our main focus has been around the the shop setup and the shop thinking and preparation for that. And, you know, certainly they had premium everything as well, well advanced, and we're in the final stages of preparing to commission for the shop thinking so our expectation is a late Q4 will start that process. As I mentioned, we've got a reputable contractor that, you know, got a lot of... A lot of expertise and skill set to complete that on time and on budget, and we fully expect them to be able to do that.
With regards to the success, we've had with the the exploration and some early review of what we've been seeing with regards to the mine design and building right.
I mean, there's always opportunity for expansion I mean, you know, we we can certainly start on that basis with the mining waste, but mining waste can certainly increase over time, if it's supported based on the geometry of the ore body and the strike length of the ore body.
And obviously with regards to expanding the mill to support a higher mining rate that opportunity also still exists I mean, you can always add components to that the mill circuit to be able to expand to a higher milling rate if required.
Mark Parkin: The other components that we've been certainly working on, which regards to the phase three plus expansion, is the detail engineers for the mill expansion, as well as the phase plant. So those have been ongoing over the course of this year, and we'll start to get into more serious aspects of the construction into next year and into 2025, which regards to both of those components. And the other component that's required for us is obviously an upgrade to our existing power distribution to the site, and we will be basically doubling our load from where we are today, and we are certainly currently working on that as well, to have a construction timeline, to have that all in place as well.
And you do you guys have power to say no or you would have thought is it something you would still P. D. A.
We're currently still on diesel generation, but we're in the process of doing a conversion from diesel generation power to the site to grid power and the expectation on that would be by by the end of this year. So that'll provide obviously further upside for the longer term with la Yaqui, but also with P. D. A.
Any other opportunities to develop within our of a lot of district.
Okay. So the PGA study would assume grid power connection correct. Okay.
Mark Parkin: Once all the other components of the phase three plus expansion are completed, to start off in Q1, and in Q1, 2026. Right. Follow-up for Greg. Can you just remind me what was the budgeted Canadian dollars, are you guys looking to take advantage of the current I would assume, the Canadian dollar versus budget, to just help give you a bit of additional tailwind on that project? Yeah, we had budgeted at 75 cents, so the weaker Canadian dollar will help from a CapEx perspective, but also on our operating cost through our existing operations. And can you just remind me roughly what percentage of the CapEx would be Canadian? I guess probably all your labor and contractor would mostly be CAD. I imagine it's pretty high.
That's it for me guys. Thanks, so much.
Okay.
Thank you.
Once again, please press star one at this time if you have a question. Our next question is from Ov.
Please go ahead.
Hi, John and Alamos team that's on the.
And increased production guidance.
Just a couple of questions for me are number one in regards to the parallel structures that was discovered at island gold.
At the site in mid Summer you mentioned that you had already started to mind. Some of these structures now are we likely to see some.
All of these ounces from construction in Q4 and going into 'twenty 'twenty four yeah, essentially what I'm trying to ask is.
These ounces are expected to come into the island Gold mine plan in the future.
Hi, Yes look here again, yes, I mean, we started mining some of those are certainly sub parallel zones in the north south zones that we've talked about previously.
Mark Parkin: Mike, I'll have to get back to you on that, but I don't have the details right now, but I'll take that off one. All right, thanks. And then all this is some pretty exciting news coming out later this quarter with PDA. Can you just give me, is there any ability to talk about, like you already had a million ounces of total resource, you bumped up the budget on the drilling a couple of times already this year, recognizing that you got the July cut off.
So we've we started some of that late in Q3, there's opportunity certainly to bring some more of that into Q4, but as we further are you now.
Understand it and develop it will actually start to incorporate that into the mine plan over the longer term.
Okay sounds good.
Eventually in terms of what you see in WPS viral instructions there both of those.
Existing on breakfast.
Mark Parkin: But seems like things are going really well there. We have an idea of what we should be thinking of in terms of scale, like it seems like it's getting bigger and bigger and bigger. Is it going to be possibly a project that you would phase, like the phase one, and then as it opens up, add in a second processing line in the mill, what is there anything you can kind of talk to you?
It's not like you would have to do a lot more development zone.
No because I mean.
These are kind of running off of the east West are striking zones that were currently mining.
And from a sequence perspective actually it makes more sense to incorporate these into the mine plan as we are in those areas.
Just from a point of view of just following a proper sequencing being able to basically extract the there's the zones and retreat in those areas based on our lunch tool to retreat mining method.
Mark Parkin: Yeah, Mike, let's look here again. Yeah, so I mean, still kind of roomy stages. I mean, we've just recently completed some of the geotech drilling required for the mine design aspect of the operation, and in that mine design, we'll put a mine plan together. We've also in conjunction and parallel been working to some technical studies with regards to the metallurgy and the mill design. So our expectation is we will have a development study completed by the end of the year with some preliminary numbers which regards to mining rates and supporting milling rates.
Yeah. Thanks, Thanks for the color on that Luke just switching gears to P. D. A.
Paul Odd to Mike My question I believe the expectation is to release a new mine plan in Q1 next year.
So in regards to the advancement or P. D. What kind of what I mentioned would be required and do you see any risk that those formats.
Sorry that was in relation to P. D a.
Mark Parkin: I mean, high level at this point and we've been kind of targeting 2,000 tons per day based on what we've seen so far, which regards to the success we've had with the exploration and some early review of what we've been seeing with regards to the mine design and mill design. I mean, there's always opportunity for expansion. I mean, you know, we can serve and start on that basis with the mining rates, but mining rates can certainly increase over time if it's supported based on the geometry of the ore body and the strike thinks of the ore body.
Correct, Yeah. So as I mentioned there were we're looking to have a development study by the end of the year.
End of Q4 to Q1 at the latest.
With regards to permits.
Well basically within all of this the mining in the milling operations will be all within our existing concessions. So it would be just a question of getting and amended our EMEA basically which is what it's referred to in Mexico.
Mark Parkin: And obviously, with regards to expanding the milk to support a higher mining rate, that opportunity also still exists. I mean, you can always add components to that milk circuit to be able to expand to a higher milling rate if required. And you, do you guys have power to site now or you would have by the time you would build PDA? We're currently still on diesel generation, but we're in the process of doing a conversion from diesel generation power to the site to grid power and expectation on that would be by the end of this year.
Because of the fact that it's it's not new processes, we've done underground mining there in the past so it's not new to the district, we had a milling processes wallet conventional milling process in the past as well so that's not new to our to the district and as a result of that we would just be looking to get amendments to our existing he is to be able to construct.
The new requirements for the mining milling operations for PTA.
Perfect. Thanks, Thank you for that and that's it for me and thanks for taking my questions.
Thank you.
Mark Parkin: So that will provide, obviously, for the rough side for the longer term of a yachty, but also with PDA and any other opportunities to develop within our Volados district. Okay, so the PDA study would assume grid power connection. Correct. Okay, that's it for me guys. Thanks so much. Thank you. Once again, please press star one at this time.
Our next question is from Man Kerry Smith. Please go ahead.
Thanks, operator.
Look for before the phase three at island.
162 million for development.
Underground and you've completed 64 million can you just remind me how many years of development isn't included in that $62 million number.
Ovais Habib: If you have a question or next question is from Ovais Habib, please go ahead. Hi, John and Alamo. Same from that on the Q3D and increased production guidance.
Yeah.
Ooh.
Let's say, it's at least a couple of kilometers plus Oh, not one carried out to get back to you to get a more firm number but that's in relation to all of the shop access development altogether development, that's required to establish that our infrastructure as far as crushing rock breakers loading pocket everything associated.
Ovais Habib: Just a couple of questions for me. Number one in regards to the parallel structures that was discovered at Ivan Gore. You know, at the site trip in mid summer, you mentioned that you had already started mining some of these structures. Now, are we expecting to see some of these ounces from the structures in Q4 and going in 2024? Yeah, you know, it's essentially what I'm going to ask is, are these ounces expected to come into the Ivan Gore mine line in the future?
With all of that infrastructure for the underground, but I'd have to get back to you with a firm number on that.
Okay, Okay, and Thats and Youre doing that development with your own crews correct.
Correct for the most part I mean, we do still have red passing some of the development.
Shop, a sharp ramp access development, but starting next year, we'll it'll be 100% Alamos development Bruce Yeah, Okay, and so those costs should be pretty much in line because you don't you're using your own guys. Okay. Thanks Donald.
Ovais Habib: Hi, I have to look here again. Yes, I mean, we have started mining some of those, certainly some parallel zones on the nerve cells zones that we've talked about previously. So we started some of that late in Q3. There's an opportunity to bring some more that into Q4, but as we further, you know, understand it and develop it, will actually start to incorporate that into the mine plan over the longer term.
And then maybe for either you or Scott D.
444 meters of underground drifting that you had planned for the exploration underground in Ireland is that drifting all complete now or is there still some more of that to complete this year.
Ovais Habib: Okay, sounds good. So there's, there's, eventually in terms of what you see in terms of the parallel structures, they're close to the existing infrastructure. So it's not like you'd have to do a lot more development in the accesses zones. No, because, you know, these are kind of running off of the east-west striking zones that were currently mining. And from a sequence perspective, actually, it makes more sense to incorporate these into the mine plan as we're in those areas. Just from a point of view of just following a proper sequence and being able to basically extract the zones and retreat in those areas based on our launch tool or retreat mining method.
Yeah, Scott, it's a ongoing all this throughout the year and sequence into the development schedule I mean, we were advancing.
Laterally at the west side of the deposit for multiple levels and then also R&R hanging wall exploration drift at 945, so what we'll do it kind of systematically as we go out go to establish a drill baby drill off the targets from that.
That drove able are well advanced the development of as required so it's kind of a ongoing throughout the year.
Okay I got you.
Ovais Habib: Thanks, thanks for the column that look. Just switching gears to PDA, just a follow-up call on to Mike's question. I believe the expectation is to release a new mine plan in Q1 next year. You know, so in regards to the advancement of PDA, what kind of permits will be required and do you see any risk of those permits? So that was in relation to PDA. That's correct. So as I mentioned there, we're looking to have a development study out by the end of the year, and of Q4, already Q1 at the latest.
And then Greg just just so I'm clear the.
The $2 7 million of cash taxes, you paid at mulatto seen Q3, and then you're forecasting a similar amount in Q4, those will be prepayments against taxes. Due in March of next year correct. Correct. Those are those are installment payments with respect to our 2023 tax bill right.
Ovais Habib: With regards to permits, we've, basically, we've within our, all of this, the mining and the milling operations will be all within our existing concessions. So it would be just a question of getting an amended mea, basically, which is what it's referred to in Mexico. Because of the fact, it's, it's not new processes. We've done underground mining there in the past, so it's not new to the district. We had a milling process as well, a conventional milling process in the past as well, so that's not new to, to the district. And as a result of that, we would just be looking to get amendments to our existing meas to be able to construct a new requirements for the mining and milling operations for PDU.
Right, Okay, Okay perfect. Thanks very much.
Ovais Habib: Perfect. Thanks. Thank you for that.
Thank you.
Yeah.
There are no further questions at this time. This concludes this morning's call. If you have any further questions that have not been answered please feel free to contact Mr. Scott Parsons at 4163.
368993.
You may now disconnect.
Ovais Habib: And that's it for me. And thanks for taking my questions. Thank you.
Kerry Smith: Our next question is from Kerry Smith.
Kerry Smith: Please go ahead. Thanks, Operated. Luke, for, for the phase period at Ireland, you have 162 million per development underground. Karen, you've completed 64 million. Can you just remind me how many meters of development is included in that $162 million number? Oh, I'd say it's at least a couple of kilometers plus on that one, Kerry. I have to get back to get a more firm number. But you know, that's in relation to all of the shop access development, all the other developments that's required to establish that infrastructure as far as crushing rock breakers, loading pocket, everything associated with all of that infrastructure for the underground. But I have to get back to you with a firm number on that.
Kerry Smith: Okay. And you're doing that development with your own crews, correct? Correct. For the most part, I mean, we do still have Red Pops doing some of the development shop, the shop ramp access development. But starting next year, it'll be 100% animals development crews. Yeah.
Kerry Smith: Okay. And so those costs should be pretty much in line because you're using your own guys.
Kerry Smith: Okay.
Kerry Smith: Thank you.
Kerry Smith: And then maybe for a side of your Scott, the 44 meters of underground grifting that you had planned for the expiration underground at Island, is that grifting all complete now or is there still some more of that too complete this year? Yeah, Kerry, Scott is ongoing obviously throughout the year and sequenced into the development schedule. I mean, we were advancing literally at the West East side of the deposit of multiple levels.
Kerry Smith: And then also on our annual expiration draft at 9.45. So we'll do it kind of systematically as we get, I would get to establish a drill bay drill off the targets from that drill bay will advance the development as required. So it's kind of ongoing throughout the year.
Greg Fisher: Okay. I got you. And then Greg, just so I'm clear, the 2.7 million of cash taxes you paid at Milados in Q3. And then you're forecasting a similar amount in Q4. Those will be prepayments against the taxes due in March of next year, correct? Correct. Those are installing payments with respect to our 223 tax bill.
Greg Fisher: Right.
Greg Fisher: Okay.
Greg Fisher: Perfect.
Kerry Smith: Thanks very much.
Unknown Executive: Thank you.
Unknown Executive: There are no further questions at this time.
Unknown Executive: This concludes this morning's call.
Scott Parsons: If you have any further questions that have not been answered, please feel free to contact Mr. Scott Parsons at 416-368-9932.