Alamos Gold (AGI) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Alamos Gold Inc. achieved record revenues of just over $1.3 billion for the full year, up 32% from 2023, driven by record production and higher realized gold prices [19] - The company reported net earnings of$ 88 million in Q4, or $0.21 per share, with adjusted net earnings of$ 103 million, or $0.25 per share [21] - Free cash flow reached a record$ 272 million for the full year, net of all spending on the Phase Three expansion and the largest exploration program to date [22] Business Line Data and Key Metrics Changes - The Island Gold mine produced a record 155,000 ounces for the year, achieving the top end of 2024 guidance [26] - Young Davidson mine produced 45,700 ounces in Q4, with total production for the year at 174,000 ounces, slightly below guidance due to lower grades mined [40][46] - The Mulatos District produced 205,000 ounces for the full year, exceeding guidance and generating record mine site free cash flow of $240 million [48] Market Data and Key Metrics Changes - The average realized gold price was$ 2,632 per ounce in Q4 and $2,379 per ounce for the full year [19] - Total cash costs were$ 981 per ounce in Q4 and $927 per ounce for the full year, while all-in sustaining costs were$ 1,333 per ounce in Q4 and $1,281 per ounce for the full year [20] Company Strategy and Development Direction - The company plans to achieve 7% production growth in 2025, targeting approximately 605,000 ounces, with further growth expected to 700,000 ounces in 2026 and 900,000 ounces by 2028 [11][12] - Alamos Gold is focused on low-cost growth and has significant ongoing projects, including the Phase Three expansion at Island Gold and the Lynn Lake project [12][13] - The company is also exploring opportunities in Mexico, noting a positive change in the regulatory environment and the potential for further investment [95][102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth profile, highlighting strong free cash flow and the ability to fund growth initiatives internally [11][75] - The management noted that the operational and financial performance in 2024 was exceptional, with a strong outlook for the coming years [75] - The company anticipates a seamless transition from open-pit to underground production at the Milatos project, with expected production changes in 2027 [99] Other Important Information - The company reported a 31% increase in global reserves to 14 million ounces, marking the sixth consecutive year of growth [16] - Alamos Gold amended and upsized its credit facility from$ 500 million to $750 million, enhancing its financial capacity [24] Q&A Session Summary Question: Synergies from Island Gold and Magino combination - The company realized about$ 100 million of capital synergies in 2024 and 2025, with the majority of operating synergies expected to ramp up starting in 2026 [81][84] Question: Tax implications and cash taxes - The deferral of cash taxes is expected to last about two years, with significant cash taxes anticipated to start around 2027 [86] Question: Young Davidson grades and future expectations - The lower grades in 2024 were due to slight variances in the mining sequence, but the company expects to meet guidance in 2025 [87][90] Question: Cost drivers and inflationary pressures - The increase in costs is driven by inflation, lower grades, and timing of sustaining capital [92] Question: Investment opportunities in Mexico - Management noted a positive change in the regulatory environment in Mexico and indicated potential for further investment in the Milatos district [95][102] Question: Dividend policy reconsideration - The company is focused on aggressive growth initiatives and does not plan to increase dividends in the near future [114]