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Alamos Gold on track to hit FY'19 production target, expects lower FY'20 output

Alamos Gold Inc. said Dec. 11 that it is on track to reach its full-year 2019 guidance for production and all-in sustaining costs, but is forecasting lower gold production and higher cost in 2020 before bouncing back in 2021.

The Toronto-listed firm said output for this year is expected within its forecast guidance range of 480,000 ounces and 520,000 ounces, with costs to come in between US$920 per ounce and US$960/oz.

However, in 2020, lower gold production is expected at a range of 425,000 ounces to 465,000 ounces, with a higher all-in sustaining cost range of US$1,020/oz to US$1,060/oz.

A previously guided lower output at the Young-Davidson mine in Ontario in the first half, coupled with the end of production from the El Chanate mine in Mexico, resulted in the lower 2020 forecast output.

Capital budget range for 2020 was slashed to a range of US$180 million to US$205 million, from a range of US$240 million to US$265 million in 2019. The budget will primarily be used toward the lower mine expansion at the Young-Davidson mine and the upgrades to the surface infrastructure at the Island mine in Ontario.

Dividends will be increased by 50% to an annual rate of 6 U.S. cents per share, starting in 2020, reflecting a strong free cash flow outlook.

In 2021, output is forecast to increase to about 500,000 ounces per year from its existing operations, reflecting higher mining rates at the Young-Davidson operation.

Meanwhile, a phase-three expansion study and construction decision for the La Yaqui Grande project in Mexico is due in the second quarter of 2020.