Alamos Gold Raises Production Guidance By 13% In 2024, 22% In 2025
Alamos Gold Inc. (TSX: AGI) has unveiled an updated three-year production and capital expenditure forecast, which includes major revisions following the recent acquisition of the Magino mine from Argonaut Gold. This updated outlook showcases significant production increases for the years 2024 through 2026, driven largely by the integration of Magino and the expansion of Island Gold operations.
One of the most significant changes in the forecast is the increase in consolidated production guidance for 2024, which has been revised upward by 13%, reaching between 550,000 and 590,000 ounces of gold. This increase is largely attributed to the outperformance of La Yaqui Grande in the Mulatos District, as well as the inclusion of production from Magino in the second half of the year.
“The addition of Magino has enhanced our already strong growth profile,” said John A. McCluskey, President and CEO of Alamos Gold. “Our near-term rate of production has increased by more than 20%. Longer-term, we have the capacity to grow company-wide production to approximately 900,000 ounces per year, with further upside potential through future expansions of the Island Gold District.”
Looking ahead to 2025 and 2026, production guidance sees even more substantial increases of 22% and 21%, respectively. These figures reflect the full integration of Magino, which is expected to operate at its designed capacity of 10,000 tonnes per day (tpd) in 2025.
The combination of Island Gold and Magino operations will result in production from 575,000 to 625,000 ounces in 2025, and 630,000 to 680,000 ounces in 2026.
The Magino mine, acquired in mid-2024, will contribute approximately 40,000 to 50,000 ounces of gold production in the second half of this year. However, its true impact on the company’s production profile will become more evident in 2025, when it will be fully operational for the entire year.
Magino is a central part of Alamos’ plan to increase its overall production. Notably, Magino will be integrated with Island Gold, and both operations will feed ore into a centralized processing facility at the Magino site.
By 2026, the Magino mill’s capacity is expected to expand further to 12,400 tpd, allowing it to process 10,000 tpd from Magino and 2,400 tpd from Island Gold.
This expanded mill capacity could push production levels even higher, enabling Alamos Gold to move closer to its goal of producing over 900,000 ounces annually by 2027, assuming other planned expansions and improvements, such as the Puerto Del Aire (PDA) project, stay on schedule.
While production increases are a clear positive, Alamos Gold has also revised its cost guidance to account for Magino’s relatively higher operational costs, especially during its ramp-up phase. The company’s all-in sustaining costs (AISC) are projected to average 11% higher across 2024, 2025, and 2026 compared to prior forecasts.
In 2024, consolidated AISC is expected to range between $1,250 and $1,300 per ounce—up from the previous estimate of $1,125 to $1,175 per ounce.
AISC is set to decline over time, driven by efficiencies at Island Gold and improvements at Magino. By 2026, Alamos Gold expects to reduce its AISC to between $1,100 and $1,200 per ounce, a 10% decrease from 2024 figures.
“Our costs remain well below the industry average and are expected to decrease significantly over the next several years as we deliver on our low-cost growth initiatives,” McCluskey remarked.
The acquisition of Magino also necessitated revisions to the company’s capital guidance, with capital expenditures set to increase in 2025 and 2026. For 2024, capital spending will be between $330 million and $375 million, with the increase driven by the inclusion of Magino from July 2024. In contrast, costs for Island Gold’s expansion were slightly reduced due to synergies with the larger Magino mill, which will eventually process ore from Island Gold, eliminating the need for its mill expansion and tailings lift.
For 2025, capital spending has increased to between $425 million and $475 million, reflecting development for the PDA project, the completion of the Magino mill expansion, and various deferred projects that were left unfinished by Argonaut Gold, including infrastructure upgrades and connecting the mine to the electrical grid.
Capital estimates for the Phase 3+ Expansion at Island Gold have also been updated to account for inflation and additional scope changes. The updated initial capital for the expansion has increased by 5%, now projected at $796 million, up from $756 million in the original 2022 estimate.
The higher capital estimate includes a $40 million increase to expand the Magino mill to handle the combined output from both operations. Inflation, particularly in labor and material costs, contributed $90 million to the higher capital budget. However, Alamos expects to partially offset these increases with $90 million in synergies stemming from the elimination of duplicative infrastructure, such as the cancellation of the Island Gold mill expansion.
Alamos also anticipates benefiting from a $30 million reduction in capital costs due to favorable currency exchange rates, given the weaker Canadian dollar.
Despite the increases in capital expenditure, Alamos Gold remains confident about its ability to generate strong cash flow in the coming years. The company produced $131 million in free cash flow during the first half of 2024, and with gold prices remaining robust, it expects to continue generating substantial cash flow even while funding its major expansion projects.
The completion of the Phase 3+ Expansion in 2026 and the PDA development in 2027 are expected to drive higher production and lower costs, further enhancing Alamos Gold’s free cash flow generation.
In addition to its near-term projects, the company is currently evaluating an expansion of the Magino mill to process 15,000 to 20,000 tonnes per day, a move that could bring the company’s total production closer to one million ounces annually.
Alamos Gold last traded at $27.27 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
